ANNUAL
REPORT & ACCOUNTS
2017
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 1
ANNUAL REPORT 2017
Corporate Profile and Group Operations
Financial Highlights
Chairman’s Statement
Financial Review
Shareholder Information
Board of Directors
Corporate Information
Directors’ Report
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the consolidated financial statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Notes to the accounts
Consolidated Historical Financial Summary
FINANCIAL CALENDAR 2018
Page
1
2
3 - 5
6 - 7
8 - 9
10
11
12 - 23
24
25 – 30
31 - 32
33
34
35
36 - 79
80
81
82 - 86
87
Announcement of preliminary results
Annual Report posted to shareholders
Annual General Meeting
28 March 2018
13 April 2018
23 May 2018
Announcement of interim results
19 September 2018
CORPORATE PROFILE
Background
Norish plc is a leading provider of temperature controlled warehousing and related services to the food
manufacturing, distribution, retail and food service sectors. Norish was founded in 1975 and became a
public company in 1986. Its shares are listed on the Alternative Investment Market of the London Stock
Exchange.
Norish mainly operates strategically located temperature controlled storage centres, each of which provides
storage, freezing, picking, order assembly services to food companies engaged in processing, wholesaling
and retailing.
Norish is also involved in both commodity trading (Meat, Dairy and Fish) and a dairy farming operation in
Kilkenny, Ireland.
Group Operations
Kieran Mahon – Group Managing Director - kieran.mahon@norish.com
Northern Industrial Estate
Bury St Edmunds
Suffolk IP32 6NL
Tel: 01293 862498
Mob: 00 353 87 987 9111
Locations and Segments
North West
Brierley Hill, West Midlands (Cold store)
Wrexham, Clwyd (Cold store)
South East
Bury St. Edmunds, Suffolk (Cold store)
Braintree, Essex (Cold store)
Lympne, Kent (Cold store)
Gillingham, Kent (Cold store)
Commodity Trading
Newry, Northern Ireland (Townview Foods Limited offices)
Dublin, Ireland (Foro International Connections Limited offices)
Dairy Farming
Kilkenny, Ireland (Cantwellscourt Farm)
Discontinued Operations
Leeds, Yorkshire (Cold store) – sold during 2016
Dublin, Ireland (FMCG business based at Foro International Connections Limited offices)
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 1
FINANCIAL HIGHLIGHTS
Revenue - Continuing operations
Operating profit-continuing
Profit before tax-continuing
Basic earnings per share – continuing (pence)
Diluted earnings per share – continuing (pence)
Net debt to EBITDA (times)
Dividend paid per share
- interim for current year
- final for previous year
Capital employed
Shareholders’ funds
Net borrowings
2017
£’000
2016
£’000
42,183
32,098
1,710
1,507
3.6p
3.6p
2.2
Nil
1.50c
872
633
1.5p
1.5p
3.5
Nil
1.50c
1.50c
1.50c
£’000
15,953
5,387
£’000
15,261
5,244
21,340
20,505
Gearing – excluding goodwill (see Note 1 below)
40%
41%
Note 1
The above gearing figures are expressed as net borrowings (total borrowings less cash) divided by net assets
(excluding goodwill).
2 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
CHAIRMAN’S STATEMENT
I am pleased to present the Annual Report of Norish Plc for 2017.
Financial Highlights
Total revenue increased by 31.5% to £42.2m (2016: £32.1m)
Revenue from the Cold Store division increased by 13.3% to £14.3m (2016: £12.6m)
Revenue from the Sourcing division increased by 41% to £27.4m (2016: £19.5m)
Revenue from the Dairy division amounted to £0.5m (2006: Nil)
Operating profit for the Group increased by 96% to £1.71m (2016: £0.87m)
Profit before tax increased by 138% to £1.5m (2016 : £0.6m)
Diluted adjusted Eps increased by 140% to 3.6p (2016 : 1.5p)
Dividend increased by 10% to 1.65 €cent (2016: 1.50 €cent)
Net debt was £5.4m at year end (2016: £5.2m)
Operational Highlights
Cold stores comprise, by far the greatest proportion of our capital employed. This division recorded
sales growth of 13.3%, when compared with 2016. Divisional contribution increased from £2.1m
to £3.3m
The North West Cold store division recorded sales growth of 15.9% and contribution growth of
85% in 2017, compared to the prior year. The South East Cold store division recorded sales growth
of 10.8% and contribution growth of 28.5% on the same basis. This growth, at both divisions, is the
result of a combination of increased volumes, improved profile of work and improved pricing.
The contribution of Town View Foods which is a Protein Sourcing business, was ahead of the last
year, with sales growth of 29% and contribution ahead by 12%.
Our start-up businesses, including dairy and Foro International Connections Limited generated a
combined loss of £0.3m in 2017. We expect both businesses to be profitable in 2018.
Operations
Cold Store Division
The North West cold store division which comprises the freehold sites at Wrexham and Birmingham
performed strongly in 2017, reflecting a combination of increased intakes, greater blast freezing volumes,
improved pricing with an increasing focus on costs, particularly towards the back end of the year.
The South East division, which comprises the sites at Bury St. Edmunds (freehold), Braintree (leasehold),
Gillingham (long term leasehold at a peppercorn rent) and East Kent (leasehold) performed ahead of the
same period last year. Within the mix Bury saw strong growth in profitability, albeit from a low base, which
helped overall divisional performance. Sales in the South East increased by 10.8%, reflecting higher intakes
and greater blast freezing volumes.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 3
CHAIRMAN’S STATEMENT (CONTINUED)
Sourcing Division
Our Sourcing division which was previously known as the Commodity division consists of Town View
Foods Limited and Foro International Connections Limited. Sales for the division accounted for £27.4m
and £19.5m last year. The division contributed £0.53m for the period unchanged from the same period last
year.
Town View Foods Limited accounted for sales of £23.8m, against £18.5m last year. It contributed £0.62m
for the period, up from £0.56m for the same period last year. Town View Foods sources protein products
mainly beef, pork, lamb and chicken. Sales from pork and chicken increased by £3.7m during the period,
while sales from beef and lamb increased by £1.6m.
Foro International Connections Limited trades in the sale of juice to the ready to drinks market along with
other retail goods. Sales increased to £3.5m from £1m. It recorded a loss of £0.1m against a breakeven in
2016.
Dairy
The dairy division continues to make progress. We have completed our capital investment phase in the
business - we now have a high quality leased asset which should deliver attractive returns on capital out
over the next decade and beyond. Our asset utilization and operational efficiency will continue to improve
as we build our dairy herd at Cantwellscourt Farm, through 2018. Our 2018 Spring calving experience has
been very good with all key KPI’s delivered on.
Capital
During the period we invested £1.8m (2016: £1.7m), £1.3m in the dairy farm in Kilkenny and £0.5m in
routine capital expenditure in the cold store division.
Outlook
We anticipate another strong year of profit growth in 2018, underpinned by the initiation of a continuous
improvement programme across the business.
In our Cold Store Divisions , both our North West and South East Divisions have delivered profit growth
in the first two months of 2018. We are actively engaged in programmes to both control and, where
appropriate reduce costs.
Despite the current volatility in its underlying markets, our protein sourcing division had a good start to
the year. We are confident that its low risk operating model can continue to deliver in line with
expectation.
Our dairy farming division is expected to increase asset utilisation and operational efficiency in 2018 as
we build our herd at Cantwellscourt Farm. Our Spring calving experience in 2018 has been very good
with all key KPIs delivered on. We believe our dairy business has significant scope to grow from its
existing asset base but also via adjacent opportunities along the value chain in the years ahead.
We expect the group's cash conversion metrics to continue to improve through 2018, driven by an
improved operating performance, lower tax rate and reduced capital expenditures.
4 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
CHAIRMAN’S STATEMENT (CONTINUED)
Financial Review
Total equity at 31 December 2017 stood at £16m (2016: £15.3m). Net debt at 31 December 2017 was £5.4m
compared to £5.2m at 31 December 2016.
Dividend
The board recommends the payment of a final dividend of 1.65€cent per share. This will be paid on 19
October 2018 to those shareholders on the register on the 28 September 2018. It will bring the total dividend
in respect of the financial year to 1.65 €cent per share, against 1.50€cent per share last year, an increase of
10%.
Brexit
The United Kingdom is due to leave the EU on the 29 March 2019. It is difficult to pin point any direct
impacts from the ongoing Brexit discussions other than to say they are hardly positive for business
generally. However, our balance sheet is in good shape and leaves us well positioned to benefit from any
disruption and consequent opportunity which may arise.
On behalf of the board, I would like to thank the management team and staff for their commitment and
contribution in 2017.
Ted O’Neill
Chairman
27 March 2018
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 5
FINANCIAL REVIEW
The number of pallets handled in increased by 8%, and we handled 15% additional pallets for blast
freezing in 2017. The average occupancy increased from 85% to 92%.
The significant feature of the year was the improvement of the profitability and returns at our cold
stores.
Sales
Total Group revenue increased by 31.5% to £42.2m (2016: £32.1m). Cold store revenues increased by
13.3% to £14.3m (2015: £12.6m). Revenues were up mainly as a result of an increase in blast freezing
volumes. Revenues in the sourcing division increased by 41% to £27.4m (2016: £19.5m). Townview Foods
mainly accounted for the increased sales. Revenues in the Dairy division accounted for £0.5m (2016 : £Nil).
Gross profit
Gross profit increased to £2.6m (2016: £1.3m).
Deferred consideration
During the year we provided £0.1m (2016 : nil) in respect of the additional payments required in respect of
the acquisition of Townview Foods.
Operating profit
Operating profit increased to £1.7m (2016: £0.9m).
Finance expense (net)
Finance expense decreased to £0.21m (2016: £0.27m).
Loss from discontinued operations
As part of the Group’s strategy to exit the ambient sector we recorded a loss of Nil (2016: £0.1m).
In 2016, the Group exited the FMCG market and recorded a loss of £0.1m during 2017 (2016: £0.1m).
Earnings per share
The basic adjusted earnings per share increased to 3.6p (2016: 1.5p).
Capital
During the year we invested £1.9m (2016: £1.7m): £1.3 in capital outlay in the dairy farm in Kilkenny and
£0.6m in routine capital expenditure in the cold store division.
Cash Position
Net debt increased to £5.4m (2016: £5.2m). Operating activities generated £2.5m (2016: used £0.3m) and
financing activities absorbed £1.1m (2016: absorbed £0.9m). Investment in assets was made of £1.9m
(2016: £1.7m).
6 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
FINANCIAL REVIEW (CONTINUED)
Dividend
The board recommends the payment of a final dividend of 1.65 €cent per share. This will be paid on 19
October 2018 to those shareholders on the register on the 28 September 2018. It will bring the total dividend
in respect of the financial year to 1.65 €cent per share, against 1.50 €cent per share last year, an increase of
10%.
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, derivatives, and various items, such as trade
receivables, trade payables etc., that arise directly from its operations. The main purpose 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 and, liquidity 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, £2.9m term
loans of which, £0.4m are at floating base rate plus a bank margin of 1.2% and £0.7m are at floating base
rate plus a bank margin of 1.75% and £0.41m are floating at bank base rate plus a bank margin of 2.75% and
£1.12m are floating at bank base rate plus a margin of 3% and £0.27m are at a floating rate of 3.75%.
In February 2018 the Group renegotiated its terms loans and have refinanced £2.2m of the above term loans
at floating base rate plus a margin of 1.85%.
Liquidity risk
The Group’s policy is that, in order to ensure continuity of funding, a significant portion of its borrowings
should mature in more than one year. At the year-end, 66% of the Group’s borrowings were due to
mature in more than one year. The Group achieves short-term flexibility by means of invoice finance and
overdraft.
Aidan Hughes
Finance Director
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 7
SHAREHOLDERS INFORMATION
Shareholder analysis at 27 March 2018
Number of shares
Number of
accounts
Percentage
of accounts
Number of
shares (000)
Percentage
of shares
1 – 1,000
1,001 – 10,000
10,001 – 100,000
Over 100,000
Total
109
86
69
57
321
34
27
21
18
100
49
368
2,438
27,105
29,960
0
1
8
91
100.0
Share price data (€)
Year ended 31 December 2017
48.5p (€0.55)
37p (€0.43)
48.5p (€0.55)
Year ended 31 December 2016
46p (€0.52)
32.5p (€0.42)
43.5p (€0.51)
High
Low
31 December
The market capitalisation of Norish plc at 31 December 2017 was £14.6m (€16.5m) compared with £12.4m
(€14.6m) at 31 December 2016, and £23.4m (€26.6m) at 27 March 2018.
Investor relations
Investor enquiries should be addressed to Aidan Hughes, Company Secretary, at:
Norish plc, Northern Industrial Estate, Bury St Edmunds, Suffolk, IP32 6NL
Email: aidan.hughes@norish.com
Registrars
Administrative enquiries relating to the holding of Norish shares should be directed to the Company’s
Registrars whose address is:
Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands,
B63 3DA.
Telephone: +44 (0121) 585 1131
8 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
SHAREHOLDERS INFORMATION (CONTINUED)
Amalgamation of accounts
Shareholders who have multiple accounts in their name and who receive duplicate mailings should contact
the Company’s Registrars in order to have these accounts amalgamated.
Dividends
Dividends when payable to shareholders will be paid net of withholding tax, which is currently 20%.
Provided certain administrative procedures are adhered to, a withholding tax exemption will apply to certain
classes of shareholder.
Individuals who are tax resident in Ireland are not entitled to a withholding tax exemption.
CREST
Norish participates in the CREST share settlement scheme. Shareholders may continue to hold paper share
certificates or they may hold their shares electronically.
Annual General Meeting
The Annual General Meeting will be held at the premises South Bank House, Barrow Street, Dublin 4 on
Wednesday 23 May 2018 at 11am.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 9
BOARD OF DIRECTORS
Executive Directors
Executive Chairman
Ted O’Neill (66) was appointed to the board and became Chairman in 2003. He is a Chartered Accountant
and an investor and director of private companies, based in Ireland.
Managing Director
Kieran Mahon (52) Kieran was appointed to the Board on 19 August 2015 and joined Norish from Davy,
where he was an equity analyst. Kieran holds a Masters Degree in Business Administration from Dublin
City University.
Finance Director & Company Secretary
Aidan Hughes (53) joined Norish as Group Accountant in 1996 and was appointed Finance Director in
September 2006. He has carried out the role of Company Secretary since 2004. He is a Chartered
Accountant and has previous experience in the travel industry.
Non-Executive Directors
Torgeir Mantor (61) was appointed to the board in 1993. He is Chairman of Norse Group, USA and
VisionMonitor Software LLC, both in Houston, Texas, and is a director of Tore B. Mantor AS, a company
based in Norway.
Willie McCarter (70) was appointed to the board in 2004, and was subsequently appointed as the Senior
Independent Non-Executive Director. He was a director of Cooley Distillery plc up to January 2012 and
was formerly Chief Executive of Fruit Of The Loom International, Chairman of the International Fund for
Ireland and the Enterprise Equity Venture Capital Group.
Seán Savage (71) was appointed to the board in 2012 and has previous experience in the food industry,
having started his career in 1970 with Cadbury plc, where he worked as a plant manager and supervisor
across a number of Cadbury's Irish plants. He was general manager of Manor Farm Chickens from 1985 to
1994, before establishing Eatwell UK in 1995. He sold the company to Goodman Group in 2003 and
remained with the company until 2004.
10 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
Solicitors
Mason Hayes & Curran
South Bank House
Barrow St
Dublin 4
Nomad and Brokers
Davy
Davy House
49 Dawson Street
Dublin 2
Bankers
HSBC Bank plc
Bank of Ireland plc
Chartered Accountants and Statutory
Audit Firm
Grant Thornton
Chartered Accountants
Molyneux House
Bride Street
Dublin 8
Registrars
Neville Registrars Limited
Neville House
18 Laurel Lane
West Midlands
B63 3DA
CORPORATE INFORMATION
Directors
Ted O’Neill – Executive Chairman
Kieran Mahon – Group Managing Director
Aidan Hughes – Finance Director
Torgeir Mantor (Norwegian) *
Willie McCarter *
Seán Savage*
* non-executive
Company Secretary
Aidan Hughes
Audit Committee
Torgeir Mantor
Willie McCarter
Remuneration Committee
Torgeir Mantor
Willie McCarter
Nomination Committee
Consists of all Directors
Registered Office
6th Floor
South Bank House
Barrow St
Dublin 4
Operational Head Office
Northern Industrial Estate
Bury St Edmunds
Suffolk
IP32 6NL
Domicile
Republic of Ireland
Company Registration
Registered in Ireland under
Registration number - 51842
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 11
DIRECTORS’ REPORT
The Directors present their Annual Report together with the audited financial statements of the Group for
the financial year ended 31 December 2017.
Principal Activities and Review of Business
Norish plc is a provider of temperature controlled services, protein and product sourcing, and dairy farming
in the United Kingdom and Ireland.
Townview Foods Limited is a protein sourcing company based in Newry, Northern Ireland. It procures
supplies of raw and cooked beef, mutton, lamb, pork and poultry products from around the world in order
to supply major food manufacturing and wholesale companies across the UK, including Northern Ireland.
Townview Foods Limited, which we purchased in October 2012 contributed £622,000 (2016: £556,000).
Increased turnover at lower margins helped to improve the contribution.
The North West cold store division which comprises the freehold sites at Wrexham and Birmingham
performed well in 2017. This was mainly as a result of growth in exports of pig meat to China.
The South East division, which comprises the sites at Bury St. Edmunds (freehold), Braintree (leasehold),
Gillingham (long term leasehold at a peppercorn rent) and East Kent (leasehold) performed ahead of the
same period last year. Within the mix Bury saw strong growth in profitability, albeit from a low base, which
helped overall divisional performance.
Across our two temperature controlled divisions the number of pallets into our stores increased by 8%, blast
freezing volumes increased 15% and our average occupancy increased from 85% to 92%.
Details of the Group’s subsidiary undertakings are set out in Note 28 to the financial statements.
Further commentaries on the Group’s development and performance, including the principal risks and
uncertainties facing the business, are contained in the Chairman’s Statement and the Financial Review on
pages 3 to 7.
Dividends
The board recommends the payment of a final dividend of 1.65 €cent per share. This will be paid on the 19
October 2018 to those shareholders on the register on the 28 September 2018. It will bring the total dividend
in respect of the financial year to 1.65 €cent per share compared with 1.50 €cent per share last year.
Post Balance Sheet Events
Subsequent to the year end, the Group replaced its existing financing facilities for three of its four term
loans resulting in more favourable terms for the Group.
12 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
DIRECTORS’ REPORT (CONTINUED)
Transactions with Related Parties
Marketing services totalling £16,000 (2016:£Nil) were provided where one of our Directors held a
shareholding during the year. There was £8,000 outstanding as at 31 December 2017 (2016:£Nil).
Creditor payment policy
It is the Group’s policy to abide by the payment terms agreed with suppliers whenever it is satisfied that the
supplier has provided the goods and services in accordance with agreed terms and conditions.
The average supplier payment terms for 2017 for the Group was 42 days (2016: 43 days). This was
calculated by taking the year end creditors listing as a percentage of the total supplies and services invoiced
during the year, multiplied by 365 days.
Key risks and uncertainties
Please refer to the Financial Review on pages 6 to 7 to understand the key financial risks facing the Group
and management’s approach to same.
In respect of operational risks our largest customer accounts for 14.6% (2016 – 12.8%) of the Group’s
turnover from continuing operations. However, the directors are satisfied that this business could be
replaced if it was ever lost.
In the event of there being a power supply failure at one of our storage sites, the majority of the operations
in our storage business will come to a standstill. Refrigeration plant, lights, computer and telephone systems
will not operate. Contingencies in place include alternative site operation for computer systems, portable
power generation for systems and lighting, commitment by power network operators to supply emergency
power generation.
In the event of a food related health concern in respect of key products bought and sold by Townview Foods
Limited, there could be a significant decrease in customer demand. To mitigate against this, a range of
products are bought and sold so as not to unnecessarily concentrate risk into one particular food group.
The majority of our commercial arrangements are non contractual. As a result, there is a risk that customers
could terminate agreements to either use Norish facilities or buy Norish goods without giving notice, thus
placing revenue streams at risk. To mitigate against this, regular review meetings are held with all major
customers in order to determine trends and changes in customer's requirements.
Key performance indicators
For our cold store operations, the number of pallets into our sites increased by 8% to 372,658, blast freezing
volumes increased by 15% to 145,389 pallets and closing customer stocks at the year end increased by 11%
to 47,221 pallets. Our average electricity price per unit increased by 4% in 2017 and the number of units
consumed decreased by 1%.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 13
DIRECTORS’ REPORT (CONTINUED)
Directors
The Board currently comprises the Executive Chairman, Managing Director, Finance Director and three
non-executive Directors. Under the criteria adopted by the Committee on Corporate Governance, Torgeir
Mantor and Sean Savage would not be perceived to be independent due to their interests in the Company’s
shares. None of the non-executive Directors are involved in the day-to-day management of the Group.
The names of the Group’s Directors at 31 December 2017 together with brief biographical notes are set out
on page 10.
In accordance with regulation 90 (a) of the Company’s Constitution, Mr Ted O’Neill, Mr Torgeir Mantor
and Mr Willie McCarter retire by rotation, and being eligible, offer themselves for re-election. In
accordance with regulation 90 (b) of the Company’s Constitution, Mr Kieran Mahon retires, and being
eligible, offers himself for re-election.
The Executive Chairman, Group Managing Director and Finance Director have service contracts with the
Group companies that are terminable by either party giving 12 months’ notice. None of the non-executive
Directors have service contracts.
All directors have third party indemnity insurance in place.
Interests of Directors and Secretary
There were no contracts or arrangements during the year in which a Director of the Company was materially
interested and which were significant in relation to the Group’s business.
The interests, all of which are beneficial, of the Directors and the Secretary who held office at 31 December
2017 (including their respective family interests) in the share capital of Norish plc were as follows:
Ted O’Neill
Kieran Mahon
Aidan Hughes
Torgeir Mantor *
Willie McCarter
Seán Savage
31 December 2017
Ordinary Shares
31 December 2016
Ordinary Shares
3,000,000
1,985,286
207,500
12,600
-
1,000,333
2,920,000
1,985,286
207,500
12,600
-
1,000,333
* Torgeir Mantor is a director of T. B. Mantor AS, which also holds 1,243,027 (2016: 1,243,027)
shares and is owned by the Mantor family.Torgeir Mantor is also a director and shareholder of
Vestergyllen AS, which holds 24,152 shares (2016: 24,152).
14 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
DIRECTORS’ REPORT (CONTINUED)
The interests of the Directors and Secretary in options, granted in accordance with the Company’s share
option scheme, to subscribe for ordinary shares in the Company, are as follows:
1 Jan 2017
Cancelled
/Lapsed
in year
Grant in
year
31 Dec
2017
Exercise
Price
Exercisable
from
Expiry
date
Aidan Hughes
110,000
‘ -
‘ -
110,000
58p
June 2011
June 2018
Total
110,000
‘ -
‘ -
110,000
The mid-market price of an ordinary share on 31 December 2017 was 48.5p (€0.55) and the price range
during the year was between 37p (€0.43) and 48.5p (€0.55). Apart from the interests disclosed above,
neither the Directors nor the Secretary had an interest at any time during the year in the share capital of the
Company or Group companies. There have been no changes in the above interests between 31 December
2017 and the date of this Report.
Pensions
Executive Directors are entitled to become members of the Group’s defined contribution pension scheme
or, if preferred, to receive payment of a fixed percentage of salary into an approved personal pension
scheme.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 15
DIRECTORS’ REPORT (CONTINUED)
Substantial shareholdings
At 27 March 2018 the Company had been advised of the following shareholdings in excess of 3% of its
issued share capital:
Miton Group Plc
Ted O’Neill
Kieran Mahon
John Teeling
BNY GCM
T.B. Mantor AS
Tom Cunningham
Seán Savage
Number of shares
4,765,237
Percentage held
15.91
3,000,000
1,985,286
1,364,465
1,400,000
1,243,027
1,049,497
1,000,333
10.21
6.25
4.55
4.67
4.15
3.50
3.33
Apart from these holdings, the Company has not been notified of any other interest of 3% or more in its
issued share capital.
Executive share option scheme
The percentage of share capital that can be issued under the scheme and the individual grant limits comply
with the published guidelines of the Irish Association of Investment Managers.
The aggregate nominal value of shares issued under the scheme may not exceed 10% of the nominal value
of the issued ordinary share capital. Between 1989 and 2011 the Company issued a total of 1,252,237
ordinary options.
To date 46,000 options have been exercised and 1,096,237 options have expired. At 31 December 2017
options were outstanding over 250,000 ordinary shares.
Group website
Our website, www.norish.com, provides our customers, shareholders and the general public with useful
information on the Group’s facilities and services, together with key financial data, company
announcements, etc.
16 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
DIRECTORS’ REPORT (CONTINUED)
Personnel development
The Group is committed to ensuring that its employees are capable of achieving the highest standards in
their employment by providing training at all levels for current and future business needs. Emphasis is
placed on training in key areas such as computer skills, safe driving of vehicles and the proper utilisation of
materials handling equipment. The Group seeks to ensure that all employees receive up-to-date information
on current business events and developments pertaining to their own work place.
Disabled employees
The policy of Norish plc is to offer the same opportunities to disabled people as to all employees in respect
of recruitment, promotion and career development depending on their skills and abilities. Employees who
become disabled will, wherever possible, be rehabilitated, retrained and redeployed if necessary.
Electoral Act, 1997
The Group did not make any political contributions during the year.
Environmental policies
The Group continues to implement improved working practices with a view to minimising harmful
environmental impacts. It is committed to maintaining its efforts in the area of energy conservation by way
of improving the insulation within the cold store sites and replacing refrigeration doors with modern highly
efficient refrigeration doors. It is has also replaced one of its larger sites, West Midlands in 2012, with a
new highly efficient ammonia refrigeration system which will significantly reduce the power consumption
at the site.
Country of Incorporation
Norish plc was incorporated and is domiciled in the Republic of Ireland under company number 51842.
Significant Customers
During 2017, £6.17m or 14.6% (2016: £4.12m or 12.8%) of the Group’s revenues from continued
operations depended on a single customer in the sourcing segment (2016 : sourcing segment).
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 17
DIRECTORS’ REPORT (CONTINUED)
Corporate governance
The Directors are committed to the UK Corporate Governance Code (2016).
Principles of good corporate governance
The Directors are accountable to the shareholders for good corporate governance and the following
voluntary statement describes how the relevant principles of good governance set out in the 2016 UK
Corporate Governance Code in Norish plc.
Board of Directors
The Board of Directors comprises an Executive Chairman, Group Managing Director and Finance Director
and three Non-Executive Directors. On appointment all non-executive directors receive comprehensive
briefing documents on the Group and its operations, and further appropriate briefings are provided to non-
executive directors on an ongoing basis. Willie McCarter is the Senior Independent Non-Executive
Director.
It is the practice of the Group that the Board comprises at least two non-executive Directors.
Due to the small size of the board, all Directors are members of the Nomination Committee.
The Board takes the major strategic decisions and retains full effective control while allowing operating
management sufficient flexibility to run the business efficiently and effectively within a centralised
reporting framework.
Torgeir Mantor or Sean Savage would not be considered to be independent due to their interests in the
Company’s shares. Torgeir Mantor has also served on the Board for more than 9 years, however, it is the
opinion of the Board that the Non-Executive Directors are independent of management and have no business
or other relationship which could interfere materially with the exercise of their judgement.
The Board delegates to committees, which have specific terms of reference and which are reviewed
periodically, the responsibility in relation to audit and senior executive remuneration issues. Minutes of these
committees are supplied to all Directors for information and to provide the Board with an opportunity to have
its views taken into account.
The Board has a regular schedule of meetings together with further meetings when required. In addition,
there is a formal schedule of matters reserved specifically to the Board for its decision, including the
approval of the annual financial statements, budgets, significant contracts, significant capital expenditure
and senior management appointments.
The Non-Executive Directors meet with the Executive Chairman separately during the year to discuss the
business and strategy.
The Company Secretary is responsible to the Board for ensuring that Board procedures are followed and that
applicable rules and regulations are complied with. The Group’s professional advisors are available for
consultation by the Board as required. Individual Directors may take independent professional advice, if
necessary, at the Group’s expense.
The Executive Chairman holds regular business review meetings with Senior Management.
The Company Secretary is responsible to the Board for ensuring that Board procedures are followed and that
applicable rules and regulations are complied with. The Group’s professional advisors are available for
consultation by the Board as required. Individual Directors may take independent professional advice, if
necessary, at the Group’s expense.
18 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
DIRECTORS’ REPORT (CONTINUED)
Attendance
The Board meets regularly and details of attendances by individual Directors at meetings of the Board and
its Committees during the year ended 31 December 2017 are as follows:
Table of attendance
Meetings held
Meetings Attended:
Ted O’Neill
Kieran Mahon
Aidan Hughes
Torgeir Mantor
Willie McCarter
Seán Savage
Board
Remuneration Audit
5
5
5
5
4
5
5
1
1
N/A
N/A
N/A
1
1
1
N/A
N/A
N/A
1
1
1
One nomination meeting was held during the year.
Directors’ Remuneration
The remuneration of Directors and senior management is determined by the Remuneration Committee
consisting of 2 of the non-executive Directors whose names are listed on page 10. The Remuneration
Committee is chaired by Mr Willie McCarter. This committee also recommends the granting of share
options to Executive Directors and senior management. In considering and agreeing salaries and benefits
as well as performance related incentives the Committee aims to ensure that remuneration packages are
competitive and that individuals are fairly rewarded relative to their responsibilities, experience and value
to the Group. The committee takes advice where appropriate from external professional advisors in
assessing salary levels and determining its remuneration policy and practice.
Norish plc’s remuneration policies and procedures meet with the Best Practice Provisions of the Irish Stock
Exchange’s requirements on Directors’ remuneration. In particular the Company has applied all of the
relevant principles set out in UK Corporate Governance Code (2016). In designing schemes of
performance-related remuneration, the Remuneration Committee has given full consideration to the
provisions in UK Corporate Governance Code (2016).
Details of the interests of Directors and Secretary in shares and options are set out earlier in this Report and
details of Directors’ remuneration are given in Note 26 to the financial statements.
Relations with Shareholders
Recognising the importance of communications with shareholders the Board seeks to provide through its
Annual Report a clear and balanced assessment of Group performance and prospects. The Group’s Internet
website, www.norish.com, provides investors with the full text of the Annual and Interim Reports. The
Chairman and Directors maintain an ongoing dialogue with the Company’s institutional shareholders on
strategic issues. All shareholders are encouraged to attend the Annual General Meeting.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 19
DIRECTORS’ REPORT (CONTINUED)
Internal control
The Board is ultimately responsible for the Group’s system of internal control and for reviewing its
effectiveness. The system is designed to manage rather than eliminate the risk of failure to achieve business
objectives, and can only provide reasonable and not absolute assurance against material misstatement or
loss.
The Board confirms that an ongoing process for identifying, evaluating and managing the significant risks
faced by the Group has been put in place for the year under review and up to the date of approval of the
annual report and accounts, and that this process is regularly reviewed by the board and accords with the
2016 UK Corporate Governance Code.
The Board has reviewed the effectiveness of the system of internal control. In particular it has reviewed
the process for identifying and evaluating the significant risks affecting the business and the policies and
procedures by which these risks are managed.
The Group’s overall internal control system includes:
an organisation structure with clearly defined lines of authority and accountability;
appropriate terms of reference for Board committees with clearly stated responsibilities;
a budgeting and monthly financial reporting system for all Group business units, which enables close
monitoring of performance against plan and facilitates remedial action where necessary; and
comprehensive policies and procedures in relation to financial controls, capital expenditure, operational
risk and treasury and credit risk management.
The Group’s system of internal financial controls is established to provide reasonable assurance of:
the maintenance of proper accounting records and the reliability of financial information;
the safeguarding of assets against unauthorised use or disposal; and
the prevention or early detection of material errors or irregularities.
The Group’s internal controls, including financial controls, are reviewed systematically by the Audit
Committee. In these reviews the emphasis is placed on areas of significant risk. The Finance Director is
responsible for carrying out detailed risk assessments in all business units and for reporting to divisional
and ultimately senior management on the effectiveness of the internal control system.
Annual report and accounts
The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Group’s performance,
business model and strategy.
20 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
DIRECTORS’ REPORT (CONTINUED)
Audit Committee and Auditors
The Audit Committee is chaired by Willie McCarter. The other member is Torgeir Mantor. Its written terms
of reference deal clearly with its authority and duties. The committee meets to review the Group’s annual
financial statements before their submission to the Board, to review the appropriateness and effectiveness
of the Group’s internal controls, accounting policies and procedures and financial reporting, to assess the
effectiveness of the external audit and the Group Internal Audit function and to report back to the Board
how it has discharged its responsibilities.
The Group’s policy regarding external auditor independence and the provision of non-audit services by the
external auditors is that, where appropriate, non-audit related work is put out to competitive tender. Details
of the year’s fees payable to the external auditors are given in Note 8 to the financial statements.
The Directors and senior management, the Group’s external auditors and internal audit, as appropriate,
attend meetings of the committee.
Nomination committee
The Nomination Committee comprises the Executive Chairman, the Managing Director and Sean Savage.
The Nomination Committee met once during the year. The purpose of the Nomination Committee is to
ensure a rigorous process is adhered to in relation to both the selection and appointment of new directors
having considered the capabilities required for any given role based on an evaluation of the balance of
skills, knowledge and experience required by the Board. The Nomination Committee also considers the
structure, size and composition of the Board and satisfies itself with regards to succession planning.
Compliance statement
Norish has complied during the year to 31 December 2017 with all provisions of the Principles of Good
Governance and Code of Best Practice as contained in the 2016 UK Corporate Governance Code except for
the following matters:
The Board’s Nomination Committee consists of all members of the Board. This decision was taken
because of the small size of the board.
Due to the small size of the Board, performance evaluation of the Board, its Committees and Directors
has not been conducted.
Most of the directors have a direct interest in the share capital of Norish plc as detailed on page 14.
Willie McCarter is the only director who does not have any beneficial interest in the share capital.
Each of the persons who are directors at the time when this Directors’ report is approved acknowledged
that they are responsible for securing the group’s compliance with its relevant obligations.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 21
DIRECTORS’ REPORT (CONTINUED)
To ensure that the group has achieved material compliance with its relevant obligations, the directors
confirm that they have:
drawn up a compliance policy statement setting out the group’s policies respecting compliance by
the group with its relevant obligations.
put in place appropriate arrangements and structures that are designed to secure material
compliance with the group’s relevant obligations.
conducted a review, during the financial year, of the arrangements and structures, referred to
above.
Relevant Audit Information
Each of the persons who are directors at the time when this Directors’ report is approved has confirmed
that:
so far as that director is aware, there is no relevant audit information of which the company’s
auditors are unaware; and
that director has taken all the steps that ought to have been taken as a director in order to be aware
of any relevant audit information and to establish that the company’s auditors are aware of that
information.
Going concern
The Directors, having made appropriate enquiries, have a reasonable expectation that the Group as a whole
has adequate resources to continue in operation for the foreseeable future.
The Group borrowings are underpinned by a portfolio of freehold and long leasehold properties and at the
financial year end there were agreed, but undrawn facilities of £1.7m along with cash reserves of £1.6m.
The Group also has the ability to raise equity funds through the London Stock Exchange (AIM) market.
Taking into account all of the above, the directors consider it appropriate to adopt the going concern basis
in preparing the financial statements.
Future developments
The Group is committed to developing the Commodity trading business together with improving the
profitability of the Temperature controlled business.
The dairy division continues to make progress. We have completed our capital investment phase in the
business - we now have a high quality leased asset which should deliver attractive returns on capital out
over the next decade and beyond. Our asset utilization and operational efficiency will continue to improve
as we build our dairy herd at Cantwellscourt Farm, through 2018. Our 2018 Spring Calving experience
has been very good with all key KPI’s delivered on.
22 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
DIRECTORS’ REPORT (CONTINUED)
Accounting records
The measures taken by the directors to ensure compliance with the requirements of Sections 281 to 285 of
the Companies Act 2014 with regard to the keeping of accounting records, are the employment of
appropriately qualified accounting personnel and the maintenance of computerised accounting systems. The
company's accounting records are maintained at the company's registered office at 6th Floor, South Bank
House, Barrow Street, Dublin 4.
Auditor
In accordance with Section 383(2) of the Companies Act 2014 the Chartered Accountants and Statutory
Audit Firm, Grant Thornton, will continue in office.
On behalf of the board:
T.J. O’Neill
Chairman
A.V. Hughes
Finance Director
27 March 2018
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 23
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT
OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The directors are responsible for preparing the Directors' report and the financial statements in accordance
with applicable Irish law and regulations.
Irish company law requires the directors to prepare group and parent company financial statements for each
financial year. Under that law the directors have elected to prepare the group financial statements in
accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union.
Under Company law the directors must not approve the financial statements unless satisfied that they give
a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group
and Company for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies for the company financial statements and then apply them
consistently;
make judgments and estimates that are reasonable and prudent;
state whether the financial statements have been prepared in accordance with applicable
accounting standards, identify those standards, and note the effect and the reasons for any material
departure from those standards; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the group will continue in business.
The directors are responsible for ensuring that the company keeps or causes to be kept adequate accounting
records which correctly explain and record the transactions of the company, enable at any time the assets,
liabilities, financial position and profit or loss of the company to be determined with reasonable accuracy,
enable them to ensure that the financial statements and directors' report comply with the Companies Act
2014 and Companies (Accounting) Act 2017 and enable the financial statements to be audited. They are
also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the group's website. Legislation in Ireland governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
On behalf of the Board
T.J. O’Neill
Chairman
A.V Hughes
Finance Director
27 March 2018
24 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
OF NORISH PLC
Opinion
We have audited the financial statements of Norish Plc for the financial year ended 31 December 2017
which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent
Statements of Financial Position, the Consolidated Statement of Cash Flows, and the Consolidated and
Parent Statement of Changes in Equity and the related notes, including the summary of significant
accounting policies.
The financial reporting framework that has been applied in their preparation is Irish law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, Norish Plc’s financial statements:
give a true and fair view in accordance with IFRSs as adopted by the European Union of the
financial position of the Group and of the Company as at 31 December 2017 and of the Group
financial performance and cash flows for the financial year then ended; and
have been properly prepared in accordance with the requirements of the Companies Act 2014 and
the Companies (Accounting) Act 2017.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (‘ISAs
(Ireland)’) and applicable law. Our responsibilities under those standards are further described in the
‘Responsibilities of the auditor for the audit of the financial statements’ section of our report. We are
independent of the Group and Company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in Ireland, namely the Irish Auditing and Accounting Supervisory
Authority (IAASA) Ethical Standard concerning the integrity, objectivity and independence of the auditor.
We have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (Ireland) require
us to report to you where:
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties
that may cast significant doubt about the Group’s or the parent Company’s ability to continue to
adopt the going concern basis of accounting for a period of at least twelve months from the date
when the financial statements are authorised for issue.
Under the Listing Rules we are required to review the directors' statement, set out on page 22, in relation
to going concern. We have nothing to report having performed our review.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in the audit, and the directing of efforts of
the engagement team. These matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and therefore we do not provide a separate opinion on
these matters.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 25
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
OF NORISH PLC (CONTINUED)
Overall audit strategy
We designed our audit by determining materiality and assessing the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgements, for
example the selection of pricing sources to value the investment portfolio. We also addressed the risk of
management override of internal controls, including evaluating whether there was any evidence of
potential bias that could result in a risk of material misstatement due to fraud.
How we tailored the audit scope
The Group has three operating segments that are operated principally in the United Kingdom, with
operations in the Republic of Ireland since 2014.
We tailored the scope of our audit taking into account the areas where the risk of misstatement was
considered material to the Group.
In establishing the overall approach to our audit we assessed the risk of material misstatement at a Group
level, taking into account the nature, likelihood and potential magnitude of any misstatement. As part of
our risk assessment, we considered the control environment in place at Norish plc.
Materiality and audit approach
The scope of our audit is influenced by our application of materiality. We set certain quantitative
thresholds for materiality. These, together with qualitative considerations, helped us to determine the
scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements, both individually and on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the Group as follows: 1% of Revenue
for the financial year ended 31 December 2017.
We agreed with the board of directors that we would report to them misstatements identified during our
audit above 5% of materiality as well as misstatements below that amount that, in our view, warranted
reporting for qualitative reasons.
Significant risks identified
The risks of material misstatement that had the greatest effect on our audit, including the allocation of our
resources and effort, are set out below as significant risks together with an explanation of how we tailored
our audit to address these specific areas in order to provide an opinion on the financial statements as a
whole. This is not a complete list of all risks identified by our audit.
a. Carrying value of Goodwill
Under International Financial Reporting Standards, the Group is required to annually test the amount of
goodwill for impairment. This annual impairment test was significant to our audit because the carrying
value of goodwill is £2,338,000, as of 31 December 2017, which is material to the financial statements. In
addition, management’s assessment process is complex and highly judgemental and is based on
assumptions, specifically the underlying profitability of the acquired business, which depends upon a
number of factors including prices and volumes negotiated with both key suppliers and customers, as well
as the impact of expected future market conditions, particularly those in the United Kingdom.
We assessed management’s calculations for reasonableness and recalculated the Weighted Average Cost
of Capital (WACC) applying industry averages and available data. In addition, we performed sensitivity
analysis, challenging the underlying assumptions, and corroborating based on our understanding of the
business and industry. Based on our testing, we did not identify any issues with the carrying value of
goodwill.
26 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
OF NORISH PLC (CONTINUED)
b. Valuation of properties – value in use
The Group owns properties from which the cold storage division operates. Given the significance of the
carrying value of these properties, £12,065,000, as of 31 December 2017, this matter is material to the
financial statements. In addition, management’s assessment process is complex and highly judgemental
and is based on assumptions, specifically the underlying profitability of the various cold store sites, which
depends upon a number of factors including prices and intake volumes negotiated with customers, as well
as the impact of expected future market and economic conditions, particularly those in the United
Kingdom.
We assessed management’s calculations for reasonableness and recalculated the Weighted Average Cost
of Capital (WACC) applying industry averages and available data. In addition, we performed sensitivity
analysis, challenging the underlying assumptions, and corroborating based on our understanding of the
cold store division.
Based on our testing, we did not identify any issues with the carrying value of the properties.
c. Existence and impairment of trade receivables
Given the significance of the net trade receivables balance, £6,533,000, as of 31 December 2017, it is
material to the financial statements. We have considered the risk of impairment of the trade receivable
balances and have reviewed management’s assessment of the impairment of the trade receivables balance
in addition to performance of substantive procedures over existence and recoverability of the trade
receivables.
Our audit approach involved the use of sampling and Computer Assisted Auditing Techniques (CAAT) to
select a sample of trade receivable balances for testing to determine existence and recoverability by
verification to relevant post year end cash receipts. Furthermore, we reviewed trade receivables outside
normal credit terms to assess likelihood of recoverability in conjunction with management’s impairment
provision.
Based on our testing, we did not identify any issues with the recoverability of trade receivables.
Other information
Other information comprises information included in the Annual Report, other than the financial
statements and our auditor’s report thereon, including the Directors’ Report. The directors are responsible
for the other information. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we
identify such material inconsistencies in the financial statements, we are required to determine whether
there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 27
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
OF NORISH PLC (CONTINUED)
Matters on which we are required to report by the Companies Act 2014 & the Companies
(Accounting) Act 2017
We have obtained all the information and explanations which we consider necessary for the
purposes of our audit.
In our opinion the accounting records of the Group and the Company were sufficient to permit the
financial statements to be readily and properly audited.
The financial statements are in agreement with the accounting records.
In our opinion the information given in the directors’ report is consistent with the financial
statements.
Based solely on the work undertaken in the course of our audit, in our opinion, the directors’ report
has been prepared in accordance with the requirements of the Companies Act 2014 and the
Companies (Accounting) Act 2017.
Matters on which we are required to report by exception
Under the Companies Act 2014 and the Companies (Accounting) Act 2017 we are required to report to
you if, in our opinion, the disclosures of directors’ remuneration and transactions specified by sections
305 to 312 of these Acts have not been made. We have no exceptions to report arising from this
responsibility.
Corporate governance statement
In our opinion, based on the work undertaken in the course of our audit of the financial statements, the
description of the main features of the internal control and risk management systems in relation to the
financial reporting process included in the Corporate Governance Statement, is consistent with the
financial statements and has been prepared in accordance with section 1373(2)(c) of the Companies Act
2014.
Based on our knowledge and understanding of the Group and the Company and its environment obtained
in the course of our audit of the financial statements, we have not identified material misstatements in the
description of the main features of the internal control and risk management systems in relation to the
financial reporting process included in the Corporate Governance Statement.
In our opinion, based on the work undertaken during the course of our audit of the financial statements,
the information required by section 1373(2)(a),(b),(e) and (f) is contained in the Corporate Governance
Statement.
The directors' assessment of the prospects of the Group and the Company and the principal risks
that would threaten the solvency or liquidity of the Group and the Company
Under the Listing Rules we are required to review the Directors' statement that they have carried out a
robust assessment of the principal risks facing the Group and the Company and the Directors' statement in
relation to the longer term viability of the Group and the Company. Our review was substantially less in
scope than an audit and only consisted of making inquiries and considering the Directors' process
supporting their statements; checking that the statements are in alignment with the relevant provisions of
the Code; and considering whether the statements are consistent with the knowledge acquired by us in the
course of performing our audit. We have nothing to report having performed our review.
28 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
OF NORISH PLC (CONTINUED)
Responsibilities of management and those charged with governance for the financial statements
As explained more fully in the directors’ responsibilities statement, management is responsible for the
preparation of the financial statements which give a true and fair view in accordance with International
Financial Reporting Standards as adopted by the European Union, and for such internal control as they
determine necessary to enable the preparation of financial statements are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Group and the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Group and the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group and the Company’s financial
reporting process.
Responsibilities of the auditor for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs Ireland will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs Ireland, the auditor will exercise professional judgment and
maintain professional scepticism throughout the audit. The auditor will also:
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for their opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group and the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group and the Company’s ability to continue
as a going concern. If they conclude that a material uncertainty exists, they are required to draw
attention in the auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify their opinion. Their conclusions are based on the audit
evidence obtained up to the date of the auditor’s report. However, future events or conditions may
cause the Group and the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a matter that achieves a true and fair view.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 29
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
OF NORISH PLC (CONTINUED)
The auditor shall communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that may be identified during the audit.
The auditor also provides those charged with governance with a statement that they have complied with
relevant ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on their independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, the auditor determine those matters
that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. These matters are described in the auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, the auditor
determines that a matter should not be communicated in the report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
We were appointed by the Board of Directors on 16 January 2017 to audit the financial statements for the
year ended 31 December 2017. This is the eleventh year we have been engaged to audit the financial
statements of the Group and the Company.
We are responsible for obtaining reasonable assurance that the financial statements taken as a whole are
free from material misstatement, whether caused by fraud or error. Owing to the inherent limitations of an
audit, there is an unavoidable risk that material misstatements of the financial statements may not be
detected, even though the audit is properly planned and performed in accordance with the ISAs Ireland.
Our audit approach is a risk-based approach and is explained more fully in the ‘responsibilities of the
auditor for the audit of the financial statements’ section of our report.
We have not provided non-audit services prohibited by the IAASA’s Ethical Standard and have remained
independent of the entity in conducting the audit.
The audit opinion is consistent with the additional report to the audit committee.
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Group and the Company’s members, as a body, in accordance with
section 391 of the Companies Act 2014. Our audit work has been undertaken so that we might state to the
Group and the Company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Group and the Company and the Group and the Company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.
STEPHEN MURRAY
For and on behalf of
Grant Thornton
Chartered Accountants
Statutory Audit Firm
27 March 2018
30 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2017
Notes
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Deferred Consideration
Administrative expenses
Operating profit from continuing operations
Finance income – fair value gain on swaps
Finance income – interest receivable
Finance expenses – interest paid
Finance expenses – notional interest
Profit on continuing activities before taxation
Income taxes – Corporation tax
Income taxes – Deferred tax
Profit for the financial year from continuing
operations
5
7
7
7
7
8
9
9
2017
£’000
2016
£’000
42,183
(39,550)
32,098
(30,757)
2,633
1,341
66
(100)
(889)
1,710
10
1
(201)
(13)
238
-
(707)
872
20
10
(240)
(29)
1,507
633
(413)
(28)
(210)
18
1,066
441
Loss from discontinued operations
30
(73)
(161)
Profit for the financial year
Other comprehensive income
Total comprehensive income for the year
Profit for the financial year attributable to owners of
the parent
Loss for the financial year attributable to non-
controlling interest
Total comprehensive income for the financial year
attributable to owners of the parent
Total comprehensive expense for the financial year
attributable to non-controlling interest
993
-
993
993
-
993
-
280
-
280
291
(11)
291
(11)
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 31
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2017
Notes
2017
2016
Earnings per share expressed in pence per share:
From continuing operations
- basic
- diluted
From discontinued operations
- basic
- diluted
10
10
3.6p
3.6p
1.5p
1.5p
(0.2)p
(0.2)p
(0.6)p
(0.6)p
The notes on page 36 to 79 are an integral part of these consolidated financial statements.
32 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2017
Non current assets
Goodwill
Intangible assets
Property, plant and equipment
Biological assets
Current assets
Trade and other receivables
Inventories
Cash and cash equivalents
Assets of disposal group classified as held for sale
TOTAL ASSETS
Equity attributable to equity holders of the patent and non-
controlling interest
Share capital
Share premium account
Other reserves
Treasury shares
Retained earnings
Equity attributable to equity holders of the parent
Non controlling Interest
TOTAL EQUITY
Non-current liabilities
Borrowings
Financial liabilities at fair value through profit or loss
Deferred tax
Current liabilities
Trade and other payables
Financial liabilities at fair value through profit or loss
Current tax liabilities
Borrowings
Liabilities of disposal group classified as held for sale
Notes
11
11
12
13
14
15
23
30
21
21
22
19
16
20
17
16
18
19
30
2017
£’000
2016
£’000
2,338
141
17,759
624
20,862
7,537
709
1,558
279
10,083
2,338
65
16,635
540
19,578
6,264
483
2,044
698
9,489
30,945
29,067
5,616
7,281
103
(563)
3,516
15,953
-
15,953
2,390
-
953
3,343
6,680
29
367
4,555
18
11,649
5,616
7,281
23
(563)
2,926
15,283
(22)
15,261
3,006
44
925
3,975
5,082
255
205
4,282
7
9,831
TOTAL EQUITY AND LIABILITIES
30,945
29,067
The notes on page 36 to 79 are an integral part of these consolidated financial statements.
Approved on behalf of the board on 27 March 2018 by:
T.J. O’Neill
Chairman
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 33
A. Hughes
Finance Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the financial year ended 31 December 2017
Share
Share
Other Treasury Retained
Non-
Controlling
Total
capital premium
£'000
£'000
Reserves
£'000
shares earnings
£'000
£’000
Total
£'000
interest Equity
£'000
£'000
At 1 January 2016
5,344
6,990
23
Net profit/(loss) for the financial
year
Total comprehensive income for
the financial year
Issue of share capital
Equity dividends paid (recognised
directly in equity)
Treasury shares acquired
Transactions with owners
At 31 December 2016
Net profit for the financial year
Total comprehensive income for
the financial year
Issue of share capital
Equity dividends paid (recognised
directly in equity)
Foreign Exchange gain
Minority Interest acquired
Transactions with owners
-
-
272
-
-
-
-
291
-
-
272
5,616
291
7,281
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23
-
-
-
-
80
-
80
-
-
-
-
(563)
(563)
(563)
-
-
-
2,981 15,338
(11) 15,327
291
291
(11)
280
291
-
(346)
-
(55)
291
563
(346)
(563)
(55)
(11)
-
-
-
(11)
280
563
(346)
(563)
(66)
2,926 15,283
(22) 15,261
993
993
993
-
993
-
(381)
(381)
-
(22)
590
80
(22)
670
-
-
-
-
-
22
22
993
993
-
(381)
80
-
692
At 31 December 2017
5,616
7,281
103
(563)
3,516 15,953
- 15,953
The notes on page 36 to 79 are an integral part of these consolidated financial statements.
34 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
CONSOLIDATED CASH FLOW STATEMENT
for the financial year ended 31 December 2017
Notes
Profit on continuing activities before taxation
Gain on biological assets
Amortisation of Intangible assets
Foreign exchange gain
Loss on discontinued activities
Deferred consideration
Finance expenses
Finance income
Depreciation – property, plant and equipment-net
Changes in working capital and provisions:
Increase in inventories
Increase in trade and other receivables
Increase/(decrease) in current liabilities held for sale
Increase in payables
Cash generated from operations
Interest paid
Interest received
Taxation paid
Net cash generated/(used in) from operating activities
Investing activities
Investment in Intangible assets
Purchase of property, plant and equipment
Purchase of biological assets
Net cash used in investing activities
Financing activities
Dividends paid to shareholders
Deferred consideration payments
Invoice finance receipts
Overdraft receipt
Finance lease capital repayments
Term loan advance
Finance lease advance
Term loan repayments
Net cash outflow from financing activities
24
2017
£’000
1,507
(66)
6
63
(73)
100
214
(11)
709
2,449
(226)
(854)
11
1,598
2,978
(201)
1
(251)
2,527
2016
£’000
633
(238)
-
-
(161)
-
269
(30)
625
1,098
(97)
(1,130)
(200)
885
556
(240)
10
(49)
(277)
(82)
(1,816)
(19)
(1,917)
(65)
(1,375)
(302)
(1,742)
(381)
(372)
487
(94)
(189)
266
24
(837)
(1,096)
(346)
(220)
440
304
(147)
-
218
(1,123)
(874)
Net decrease in cash and cash equivalents
(486)
(2,339)
Cash and cash equivalents and bank overdrafts,
Beginning of period
2,044
4,383
Cash and cash equivalents end of period
23
1,558
2,044
The notes on page 36 to 79 are an integral part of these consolidated financial statements.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 35
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
General information
1
Norish plc is a provider of temperature controlled, ambient storage, supplies of commodity to
major food manufacturing and wholesale companies, dairy farming and other related services to
the food industry in the United Kingdom and Republic of Ireland.
The Group is listed on the Alternative Investments Market (“AIM”), and is incorporated and
domiciled in the Republic of Ireland. The address of its registered office is Norish plc, 6th Floor,
South Bank House, Barrow Street, Dublin 4, Republic of Ireland. Norish plc is registered in
Republic of Ireland under registration number 51842.
Summary of significant accounting policies
2
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
Basis of preparation
The consolidated financial statements of Norish plc have been prepared in accordance with
International Financial Reporting Standards (IFRS), as adopted by the European Union, applicable
Irish law and the AIM rules.
The financial statements have been prepared under the historical cost convention as modified by
the revaluation of financial assets and financial liabilities (including derivative instruments) at fair
value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of
applying the Group’s accounting policies.
The financial statements are presented in Pounds Sterling which is both the Group’s functional
and presentational currency, rounded to the nearest thousand pounds.
Going concern
The Directors, having made appropriate enquiries, have a reasonable expectation that the Group as
a whole has adequate resources to continue in operation for the foreseeable future.
The group borrowings are underpinned by a portfolio of freehold and long leasehold properties
and at the year end there were agreed, but undrawn facilities of £1.7m along with cash reserves of
£1.6m. The group also has the ability to raise equity funds through the London Stock Exchange
(AIM) market.
Taking into account all of the above the directors consider it appropriate to adopt the going concern
basis in preparing the financial statements.
36 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Changes in accounting policies
The Group has adopted the following new standards, interpretations, revision and amendments to
IFRS issued by the IASB, which are relevant to and effective for the Group’s financial statements
for the annual period beginning 1 January 2017:
Amendments to IAS 7 Cash Flow Statement
The amendments require entities to provide disclosures that enable investors to evaluate changes
in liabilities arising from financing activities, including changes arising from cash flows and non-
cash changes. Movements in the Group’s liabilities arising from financing activities derive solely
from cash flow movements. Accordingly the amendments have no impact on the Group.
Amendment to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses
The amendment focuses on the recognition of deferred tax assets in respect of unrealised losses on
debt instruments. The Group does not have any such unrealised losses and, accordingly, the
amendment has no impact on the Group.
Amendment to IFRS 12: Disclosure of Interests in Other Entities
Annual Improvements to IFRS Standards 2014–2016 Cycle clarified that the disclosures required
in IFRS 12 also apply to interests held for sale and discontinued operations in accordance with
IFRS 5. This has no impact on the Group.
Standards, amendments and interpretations to existing standards that are not yet effective
and have not been adopted early by the Group
At the date of authorisation of these financial statements, certain new standards, amendments and
interpretations to existing standards have been published by the IASB but are not yet effective, and
have not been adopted early by the Group.
Management anticipates that all of the pronouncements will be adopted in the Group’s accounting
policies for the first period beginning after the effective date of the pronouncement.
Information on new standards, amendments and interpretations that are expected to be relevant to
the Group’s consolidated financial statements is provided below.
IFRS 9 Financial Instruments (effective from 1 January 2018)
The IASB have completed its project to replace IAS 39 with IFRS 9 which includes requirements
for the classification and measurement of financial assets and liabilities, impairment methodology
and general hedge accounting. The Group’s main area of focus in assessing the impact of IFRS 9
will be the classification of the Group’s financial assets and the implementation of the expected
credit loss model for recognising impairment losses in respect of the Group’s financial assets such
as trade receivables. While the Board have started to assess the impact of IFRS 9 it is not yet in a
position to provide quantitative information in this regard.
IFRS 15 Revenue from Contracts with Customers (effective from 1 January 2018)
IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue
from customers. It will supersede a numbers of standards and interpretations including IAS 18,
IAS 11 as well as IFRC 13, IFRC 15, IFRIC 18 and SIC 31. The Board are currently assessing the
impact on the Group.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 37
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The new s tandar d brings most l eases on-bal anc e s heet for l essees under a si ngle model, eli minati ng the dis tinc tion between operati ng and fi nanc e l eases . Les sor acc ounti ng however remains largel y unc hanged and the disti ncti on between oper ating and finance leas es is r etained. IFR S 16 s upersedes IAS 17 ' Leas es' and rel ated inter pretati ons and is effecti ve for periods beginning on or after 1 J anuar y 2019, wi th earlier adoption per mitted if IFR S 15 'Revenue fr om Contr acts with C ustomers' has al so been appli ed (s ubjec t to EU endorsement).
IFRS 16 Leases (effective from 1 January 2019)
The new standard brings most leases on-balance sheet for lessees under a single model, eliminating
the distinction between operating and finance leases. Lessor accounting however remains largely
unchanged and the distinction between operating and finance leases is retained. IFRS 16
supersedes IAS 17 'Leases' and related interpretations. The Group has a number of operating lease
arrangements and will consider the financial impact of IFRS 16 in due course.
Amendments to IFRS 2 Share Based Payment (effective from 1 January 2018 – yet to be
endorsed by the EU)
The amendments address the following areas: the effect of vesting conditions on the measurement
of both cash and share based payments; the classification of a share-based payment transaction
with net settlement features for withholding tax obligations; and the accounting where a
modification to the terms and conditions of a share-based payment transaction changes its
classification from cash-settled to equity settled.
Certain standards, interpretations and amendments have been issued but Management do not
consider that they have a material impact on the Group’s consolidated financial statements. These
are:
Annual Improvements to IFRS Standards 2014–2016 Cycle – Amendments to IFRS 1 and
IAS 28 (effective from 1 January 2018 – yet to be endorsed by the EU)
IFRS 17 Insurance Contracts (effective from 1 January 2021)
IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective from 1
January 2018 – yet to be endorsed by the EU)
IFRIC 23 Uncertainty over Income Tax Treatments (effective from 1 January 2019 – yet
to be endorsed by the EU)
Amendments to IFRS 4: Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance
Contracts' (effective as per IFRS 9)
Clarifications to IFRS 15 'Revenue from Contracts with Customers' (effective as per IFRS
15)
Annual Improvements to IFRS Standards 2015-2017 Cycle – Amendments to IFRS 3, IFRS
11, IAS 12 and IAS 23 (effective from 1 January 2019 – yet to be endorsed by the EU)
Amendments to IAS 40: Transfers of Investment Property (effective from 1 January 2018
– yet to be endorsed by the EU)
Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures (effective
from 1 January 2019 – yet to be endorsed by the EU)
Amendments to IFRS 9: Prepayment Features with Negative Compensation (effective
retrospectively from 1 January 2019)
38 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Basis of consolidation
The Group’s Consolidated Financial Statements include the results of Norish plc and its subsidiary
undertakings for that period. As of 31 December 2017, all subsidiary undertakings have a reporting
date of 31 December.
Subsidiaries are all entities over which the Group has the power to govern the financial and
operating policies generally accompanying a shareholding of more than half of the voting rights.
The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity. Subsidiaries are fully
consolidated using the equity method from the date on which control is transferred to the Group.
They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are also eliminated but considered an impairment
indicator of the asset transferred.
The accounting policies of the subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group. Where necessary, consolidation adjustments
have been made to ensure that the Group accounts apply consistent accounting policies.
Business combinations and goodwill
The purchase method of accounting is used to account for the acquisition of subsidiaries by the
Group.
Goodwill represents the excess of the fair value of the purchase consideration for the subsidiary
undertakings over the fair value of the identifiable assets, including any intangible assets identified,
and liabilities of a subsidiary at the date of acquisition. Contingent consideration is recognised at
its fair value at the acquisition date. It is both classified and subsequently measured in accordance
with the Group’s accounting policy for financial instruments. Transactions costs that are directly
attributable to the business combination are expensed as incurred and included within
administrative expenses.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 39
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Goodwill arising on acquisitions is capitalised and subject to impairment review at least
annually, but also when there are indications that the carrying value may not be recoverable.
Any impairment is recognised immediately in the Consolidated Statement of Comprehensive
Income and is not subsequently reversed.
Prior to 1 January 1997, goodwill was written off to reserves in the year of acquisition. Goodwill
after this date until the adoption of IFRS on 1 January 2006 was capitalised and amortised over its
useful economic life, which was presumed to be 20 years. The Group has elected not to apply
IFRS 3 “Business combinations” (as updated by IFRS 3(R)) retrospectively to business
combinations that took place before 1 January 2006 and, as a result, all goodwill arising from prior
business combinations has been frozen at this date. Any goodwill remaining on the consolidated
statement of financial position at transition is no longer being amortised but is subject to
impairment review.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any
impairment in value. Historical cost includes all expenditure that is directly attributable to the
acquisition of the assets. Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when the costs provide enhancement, it is
probable that future economic benefits associated from the item will flow to the Group and the cost
of the enhancement can be measured reliably. The asset’s residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of each reporting period. Assets carrying amount
is written down immediately to its recoverable amount if the assets carrying amount is greater than
the estimated recoverable amount. All other repair and maintenance costs are charged to profit or
loss during the financial period in which they are incurred.
With the exception of freehold land, depreciation is provided to write off the cost less the estimated
residual value of property, plant and equipment by equal annual instalments over their estimated
useful economic lives (or lease terms if shorter) which are as follows:
Freehold buildings
Leasehold buildings
Plant and equipment
50 to 55 years
35 years
3 to 10 years
Freehold land is not depreciated. Gains or losses arising on disposal of property, plant and
equipment are recognised in the Income Statement.
Impairment charges
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting
market conditions less costs to sell, and value in use based on an internal discounted cash flow
evaluation. Impairment losses recognised for cash-generating units, to which goodwill has been
allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is
charged pro rata to the other assets in the cash generating unit. With the exception of goodwill, all assets
are subsequently reassessed for indications that an impairment loss previously recognised may no longer
exist.
Impairment reviews of goodwill are carried out annually and any impairment recognised is recorded in
the Consolidated Statement of Comprehensive Income.
40 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Revenue recognition
Revenue, which arises principally from storage and handling income and the sale of goods,
represents net sales to customers outside the Group, and excludes Value Added Tax. Income from
sub-letting of warehouses is also included in revenue.
Handling revenue when invoiced relates to the receipt and eventual delivery of goods. The portion
that relates to the delivery is recognised when the goods are delivered out of store. Revenue in
respect of the storage is invoiced in advance and is recognised over the period that the storage is
provided. Revenue from the sale of goods in the commodity trading business is recognised on an
invoice basis which coincides with dispatch of goods and is the point when the Group earns its
right to consideration.
Revenue from all other activities is recognised in the periods in which the services are provided.
Financial assets/liabilities and available for sale assets
The Group classifies its financial assets/liabilities in the following categories: at fair value through
profit or loss, loans and receivables, or available for sale. The classification depends on the purpose
for which the financial assets/liabilities were acquired. Management determines the classification
of its financial assets/liabilities at initial recognition.
An assessment of whether a financial asset is impaired is made at least at each reporting date.
Receivables are non derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Receivables are considered for impairment on a case for case basis
when they are past due at the Consolidated Statement of Financial Position date or when objective
evidence is received that a specific counterparty will default.
a) Financial assets/liabilities at fair value through profit or loss
The financial assets/liabilities relate to derivatives. The Group utilises interest rate swaps
to hedge against its interest rate exposure. The interest rate swaps are initially recorded at
fair value and the fair value is re-measured at each consolidated statement of financial
position date. Fair value is obtained from external market valuations on the basis that there
is an active market for the the interest rate swaps and caps. Gains and losses arising from
changes in fair value are recognised in the profit or loss in the period in which they
arise. All recognised gains or losses resulting from the settlement of the interest rate swap
contract are recorded within finance expenses in the profit or loss. All recognised gains or
losses resulting from the option to purchase refrigerant gas are recorded in Other Income
in profit or loss. Contingent consideration has been classified as a financial liability at fair
value through profit or loss. All gains and losses resulting from changes in the fair value of
contingent consideration are recognised in Other Income in profit or loss. The Group does
not use hedging.
b) Loans and receivables
These are non derivative financial assets with fixed or determinable payments that are not
quoted on an active market. They are included in current assets, except for maturities
greater than 12 months after the Consolidated Statement of Financial Position date, which
are classified as non-current assets. Loans and receivables are carried at amortised cost.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 41
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Purchases and sales of financial assets are recognised on the trade date (the date at which the Group
commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive
the cash flows have expired or have been transferred and the Group has transferred substantially
all the risks and rewards of ownership. Any impairment recognised are recorded in the
Consolidated Statement of Comprehensive Income.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently re-measured at amortised
cost, less provision for impairment. Trade receivables are first assessed individually for
impairment, or collectively where the receivables are not individually significant. Where there is
no objective evidence of impairment for an individual receivable, it is included in a group of
receivables with similar credit risk characteristics and these are collectively assessed for
impairment. Movements in the provision for impairment of trade receivables are recorded in the
profit or loss.
Taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred
tax is generally provided on the difference between the carrying amounts of assets and liabilities and
their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on
the initial recognition of an asset or liability unless the related transaction is a business combination
or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in
subsidiaries is not provided if reversal of these temporary differences can be controlled by the group
and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available
to be carried forward as well as other income tax credits to the Group are assessed for recognition as
deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised
to the extent that it is probable that the underlying deductible temporary differences will be able to
be offset against future taxable income. Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective period of realisation, provided they are
enacted or substantively enacted at the Statement of Financial Position date.
The Group have applied the dual recovery method of deferred tax, where deemed appropriate, with
regard to properties which are expected to be disposed of in the near future. This allows the Group
to calculate the basis of recovery of the depreciable amount through use, followed by the recovery of
the residual value through disposal.
42 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the profit
or loss, except where they relate to items that are charged or credited directly to other comprehensive
income in which case the related deferred tax is also charged or credited directly to other
comprehensive income.
Discontinued operations
Where a component of the Group is classified as a discontinued operation, that component is stated
at the lower if its carrying amount and fair value less cost to sell. The post-tax profit or loss or the
component, together with any post-tax gain or loss in relation to remeasuring the carrying amount of
the component, are recognised is a single line item in the Statement of Comprehensive Income.
Assets and liabilities relating to the component are presented separately in the Statement of Financial
Position.
Foreign currencies
Transactions in foreign currencies by individual entities are recorded using the rate of exchange
ruling at the date of the transaction. The gains or losses on translation are included in the profit and
loss. Monetary assets and liabilities denominated in foreign currencies are translated using the rate
of exchange ruling at the Statement of Financial Position date and the gains or losses on translation
are included in other comprehensive income.
Non-monetary items measured at historical cost are translated using the exchange rates at the date
of the transaction (not retranslated). Non-monetary items measured at fair value are translated
using the exchange rates at the date when fair value was determined. The gains or losses on
translation are included in the other comprehensive income.
Leased assets
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Expenditure on operating leases is charged to the profit or loss on a basis representative of the
benefit derived from the asset, normally on a straight-line basis over the lease period. Benefits
received as an incentive to enter into an operating lease are also spread on a straight-line basis over
the lease term.
Assets held under finance leases are capitalised and included in property, plant and equipment at
fair value. Leases of land and buildings are classified separately and are split into a land and
building element in accordance with the relative fair values of the leasehold interest at the date the
asset is recognised initially. Depreciation is calculated using expected useful lives on the same
basis as owned assets or, where shorter, over the term of the relevant lease. The capital elements
of obligations under finance leases are recorded as liabilities. The interest element is charged to
the profit or loss over the lease term to give a constant periodic rate of interest on the outstanding
liability.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 43
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Pension costs
The costs of providing defined contribution pensions are charged to administrative expenses as
they fall due. The scheme funds are administered by trustees and are independent of the Group’s
finances. Differences between the amounts charged to the profit or loss and payments made to the
pension scheme are treated as prepayments or accruals, as necessary.
Dividends
Distributions to equity holders are not recognised in the profit or loss, but are disclosed as a
component of the movement in shareholders’ equity. Dividends unpaid at the consolidated
statement of financial position date are only recognised as a liability at that date to the extent that
they are appropriately authorised and no longer at the discretion of the Company. Unpaid dividends
that do not meet these criteria are disclosed in the notes to the financial statements. Dividends are
paid in Euros. Under the Twin Share Scheme Shareholders can opt to receive their dividends in
Sterling if they make the appropriate election in time to the company register. The Euro amount is
converted to Sterling at the official exchange rate 14 days before the payment date.
Net cash and cash equivalents
Net cash and cash equivalents in the Consolidated Statement of Financial Position and
Consolidated Cash Flow Statement comprise of cash at bank and in hand and short-term deposits
with an original maturity of less than three months.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost includes all expenditure
incurred in the normal course of business in bringing the products to their present location and
condition.
Share based payments
The Group issues equity-settled share-based payments to certain employees. In accordance with
IFRS 2, “Share-based payments”, equity-settled share-based payments are measured at fair value
at the date of grant by reference to the fair value of the equity instrument granted. Fair value is
measured by use of the Black-Scholes pricing model. The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a straight-line basis over the vesting
period, based on the Group’s estimate of the number of shares that will eventually vest. Estimates
are subsequently revised if there is any indication that the number of share options expected to vest
differs from previous estimates.
The Group has applied the exemption available, and has applied the provisions of IFRS 2 only to
those options granted after 7 November 2002 and which were outstanding at 1 January 2006 and
all options issued since that date.
The share-based payments charge is allocated to administrative expenses on the basis of headcount.
44 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Employer’s taxes on share options
Employer’s National Insurance in the UK and equivalent taxes in other jurisdictions are payable
on the exercise of certain share options. In accordance with IFRS 2, this is treated as a cash-settled
transaction. A provision is made, calculated using the fair value of the Group’s shares at the
Consolidated Statement of Financial Position date, pro-rated over the vesting period of the options.
Equity
Share capital represents the nominal value of shares that have been issued. Share Premium includes
any premiums received on issue of share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax benefits.
Treasury shares represent shares of the Company held by the Group. Treasury shares are
recognised in equity in accordance with IAS 32 Financial Instruments: Presentation and
subsequently carried at cost less impairment charges.
Retained earnings include all current and prior period retained profits. All transactions with owners of
the parent are recorded separately with equity.
Joint share ownership plan (JSOP)
The JSOP is a trust based arrangement established to hold shares in the Company that may vest,
dependent on certain vesting conditions, to employees of the Group. The JSOP was established for the
benefit of the Group through the remuneration of key employees. Furthermore, the Group funds the
JSOP and is exposed to both upside and downside risk associated with holding the shares. Accordingly,
Management consider that the Group exercises control over the JSOP which has been included in these
consolidated financial statements.
Biological assets
Biological assets are measured on initial recognition and at each subsequent balance sheet date at fair
value less estimated point of sale costs. Agricultural produce which is harvested from biological assets
is measured at it fair value less estimated point of sale costs at the point of harvest. Movements in fair
value less estimated point of sale cost are recognised in the Consolidated Statement of Comprehensive
Income.
Intangible assets
The Company recognises internally generated intangible assets to the extent that they are both
identifiable and can be measured reliably. Recognition only occurs when the Company is satisfied
that the project is feasible such that the asset will be available for use or sale; that the Company
has the intention to complete the intangible asset and either use or sell it; that the Company has the
ability to either use or sell the intangible asset; that it is probable that the intangible asset will
generate future economic benefits; and that the Company has available sufficient resources to
complete the development of the intangible asset.
Intangible assets are written off in equal annual instalments over their useful economic life which
has been assessed at 5 years. Amortisation is included within administrative expenses.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 45
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3
Financial risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency
risk, fair value interest rate risk and cash flow interest rate risk), credit risk, contingent
consideration and liquidity risk. The Group’s overall risk management programme seeks to
minimise potential adverse effects on the Group’s financial performance. The Group uses
certain derivative instruments to minimise certain risk exposures.
a) Market risk
i) Foreign exchange risk
The Group has exposure to foreign exchange risk in respect of its commodity trading
division. It manages this risk 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.
ii) Fair value and cash flow interest rate risk
As the Group has no significant interest bearing assets, the Group’s income and operating
cash flows are substantially independent of changes to market interest rates.
The Group’s interest rate risk arises from long term borrowings. Borrowings issued at
variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed
rates expose the Group to fair value interest rate risk. During 2017 and 2016, the Group’s
borrowings at variable rate were denominated in Pounds Sterling.
The Group manages its cash flow interest rate risk by using interest rate swaps and caps.
Such interest rate swaps have the economic effect of converting borrowings from floating
rates to fixed rates. Under the interest rate swap, the Group agrees with HSBC Bank plc
to exchange, at quarterly intervals, the difference between fixed contract rates and floating-
rate interest amounts by reference to the agreed notional amounts.
At 31 December 2017, if interest rates had been 1% higher with all other variables held
constant, post tax profit for the year would have been £42,000 lower, mainly as a result of
higher interest expenses on floating rate borrowings.
At 31 December 2016, if interest rates had been 1% higher with all other variables held
constant, post tax profit for the year would have been £39,000 lower, mainly as a result of
higher interest expenses on floating rate borrowings.
46 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
b) Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents,
derivative financial instruments and deposits with banks, as well as credit exposure to
customers, including outstanding receivables and committed transactions.
The credit risk in relation to trade receivables is reduced because, in most cases, the Group
has physical custody of the customer’s inventory. While this does not legally constitute
collateral in respect of trade receivables, it does provide the Group with a degree of
leverage over customers with overdue receivables balances.
c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash
equivalents, the availability of funding through an adequate amount of committed credit
facilities and the ability to close out market positions. The Group aims to maintain
flexibility in funding by keeping committed credit lines available.
The Group aims to ensure that a significant portion of its borrowings should mature in more
than one year.
The table below analyses the Group’s financial liabilities which will be settled on a net
basis into relevant maturity groupings based on the remaining period at the Consolidated
Statement of Financial Position to the contractual maturity period. The amounts disclosed
in the table below are the contractual undiscounted cash flows.
At 31 December 2017:
Within
1 year
£’000
Trade payables
Invoice finance
Overdraft
Finance Leases
Term loan interest
Bank loans
Deferred consideration
4,684
3,438
210
203
68
705
29
9,337
1 to 2
years
£’000
-
-
-
105
51
348
-
504
2 to 5
years
£’000
-
-
-
87
111
1,043
-
1,241
Greater
than 5 years
£’000
-
-
-
-
17
807
-
Total
£’000
4,684
3,438
210
395
247
2,903
29
824
11,906
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 47
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
At 31 December 2016:
Within
1 year
£’000
Trade payables
Invoice finance
Finance Leases
Term loan Interest
SWAP Interest
Bank loans
Deferred consideration
3,581
3,254
183
84
15
845
244
1 to 2
years
£’000
-
-
196
72
-
744
44
2 to 5
years
£’000
-
-
181
74
-
1,718
-
Greater
than 5 years
£’000
-
-
-
6
-
167
-
Total
£’000
3,581
3,254
560
236
15
3,474
288
8,206
1,056
1,973
173
11,408
3.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue
as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, to return capital to shareholders, issue new shares or sell assets
to reduce debt.
The Group monitors capital on the basis of the gearing ratio, calculated as net borrowings (cash
less total borrowings) divided by shareholders equity (excluding goodwill). The Group has
shareholders’ funds of £16m up from £15.3m last year. In 2017, we decreased the Gearing ratio
from 41% to 40%.
The Group’s strategy is to reduce the net borrowings as soon as possible.
The gearing ratios at 31 December 2017 and 2016 were as follows:
Total borrowings
Less cash and cash equivalents
Net borrowings
Net assets
Less goodwill
Capital employed
Gearing ratio
2017
£’000
6,945
(1,558)
5,387
15,953
(2,338)
13,615
2016
£’000
7,288
(2,044)
5,244
15,261
(2,338)
12,923
40%
41%
48 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3.3 Fair value estimation
The fair value of interest rate swaps is calculated as the present value of the estimated future
cash flows.
The carrying value less impairment provision of trade receivables and payables are assumed to
approximate their fair values due to the short term nature of trade receivables and payables.
Assets measured at fair value as at 31 December 2017
Total
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
Financial assets/liabilities at fair
Value through profit or loss
Interest rate swaps/caps
Contingent consideration
Total
-
29
29
-
-
-
-
-
-
-
29
29
Assets measured at fair value as at 31 December 2016
Total
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
Financial assets/liabilities at fair
Value through profit or loss
Interest rate swaps/caps
Contingent consideration
Total
10
289
299
-
-
-
10
-
10
-
289
289
4
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectation of future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates, will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of carrying a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are in relation to the impairment review of
goodwill.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the
accounting policy set out in Note 2. Further details are set out in Note 11.
The Group recognises revenue in the period which the services are provided. An appropriate
proportion of handling revenue invoiced in advance is deferred until the inventory is despatched.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 49
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4
Critical accounting estimates and judgements(continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their
estimated useful lives, using the straight-line method. The estimated useful lives range as follows:
The estimated useful lives range as follows:
Freehold property
Plant and machinery 10 years
Fixtures and fittings 10 years
Equipment
5-20 years
50-55 years
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted
prospectively if appropriate, or if there is an indication of a significant change since the last
reporting date.
Amortisation is charged so as to allocate the cost of other intangible assets over their estimated
useful economic lives, using the straight-line method. The estimated useful economic life has been
estimated as 5 years.
The Group has made a critical judgement and applied the dual recovery method with regard to
deferred tax in respect of its property portfolio. This could materially impact on future results if
this fails to materialise. It is expected to sell one of its freehold properties within the next 3 years,
which if this does not materialise then it will have an impact on the deferred tax calculation in
future years.
The Group values its biological assets at fair value less estimated point of sale costs.
50 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Segmental information
5
The three continuing operating segments during the year are disclosed below. During 2013 the Group
discontinued operations from the north segment and the FMCG market (see note 30). These operating
segments are monitored and strategic decisions are made on the basis of segment operating results.
The Group operates principally in the United Kingdom. Since the year ended 31 December 2014, the
Group also had operations in the Republic of Ireland. These operations generated revenues of £3.5m
(2016: £1m) with no fixed assets. During 2016, the Group established a dairy farming business in the
Republic of Ireland. These operations generated revenues of £0.5m (2016:nil) with fixed assets of
£1.8m (2016 : £0.6m).
Segment information can be analysed as follows for the reporting periods under review:
Product Sourcing business
North west cold storage
South east cold storage
Dairy farming
During 2017, £6.17m or 14.6% (2016: £4.12m or 12.8%) of the Group’s revenues from continued
operations depended on a single customer in the commodity trading business (2016 : commodity
trading business).
The segment results from continuing operations for the year ended 31 December 2017 are:
£’000
Dairy Product
Farming Sourcing
£’000
North
West
£’000
South
East Unallocated Total
£’000
£’000
£’000
Total segment revenue 488
27,403
7,697
6,595
Revenue 488 27,403
7,697
6,595
-
-
42,183
42,183
Operating profit/(loss) (148) 535
Finance income –
fair value gain -
Finance income –
interest receivable -
Finance cost –
Interest paid -
Finance cost –
notional interest -
-
-
(34)
(13)
2,008
1,315
(2,000)
1,710
-
-
-
-
-
-
-
-
10
1
10
1
(167)
(201)
-
(13)
Profit/(loss) before income tax (148)
488
2,008
1,315
(2,156)
1,507
Income tax – corporation tax -
Income tax – deferred tax -
(113)
-
-
-
-
-
(300)
(28)
(413)
(28)
Profit/(loss) for the year (148)
375
2,008
1,315
(2,484)
1,066
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 51
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Other segment items:
£’000
Dairy Product
Farming Sourcing
£’000
North
West
£’000
South
East Unallocated Total
£’000
£’000
£’000
Depreciation 37
-
– continuing operations
(Note 12)
354
253
65
709
The segment results for the year ended 31 December 2016 are:
£’000
Dairy Product
Farming Sourcing
£’000
North
West
£’000
South
East Unallocated Total
£’000
£’000
£’000
Total segment revenue -
19,504
6,642
5,952
Revenue - 19,504
6,642
5,952
-
-
32,098
32,098
Operating profit 8 546
Finance income –
fair value gain -
Finance income –
interest receivable -
Finance cost –
Interest paid -
Finance cost –
notional interest -
-
-
(29)
(34)
1,083
1,023
(1,788)
872
-
-
-
-
-
-
-
-
20
10
20
10
(206)
(240)
-
(29)
Profit before income tax 8
483
1,083
1,023
(1,964)
633
Income tax – corporation tax (1)
Income tax – deferred tax -
(95)
-
-
-
-
-
(114)
18
(210)
18
Profit for the year 7
388
1,083
1,023
(2,060)
441
Other segment items:
£’000
Dairy Product
Farming Sourcing
£’000
North
West
£’000
South
East Unallocated Total
£’000
£’000
£’000
Depreciation -
-
– continuing operations
(Note 12)
52 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
47
228
625
350
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Segment assets in respect of the trading divisions, consists primarily of property, plant and equipment,
goodwill, refrigerant gas, trade and other receivables. Unallocated assets comprise financial assets at
fair value through profit or loss.
Segment liabilities consist primarily of trade and other payables. Unallocated liabilities comprise
items such as current tax liabilities, deferred tax, and financial liabilities at fair value through
consolidated statement of comprehensive income, provisions and borrowings.
Capital expenditure comprises additions to property, plant and equipment.
The segment assets and liabilities at 31 December 2017 and the capital expenditure for the year then
ended are as follows:
Dairy Product
Farming Sourcing
£’000 £’000
Assets 2,814
Liabilities 499
7,827
5,889
North
West
£’000
11,600
2,619
South
East Unallocated Total
£’000
£’000
£’000
7,296
1,487
1,129 30,666
4,481 14,975
Capital expenditure (Note 12) 1,241 18
173
329
55
1,816
The segment assets and liabilities at 31 December 2016 and the capital expenditure for the year then
ended are as follows:
Dairy Product
Farming Sourcing
£’000 £’000
Assets 1,375
Liabilities 173
5,996
4,291
North
West
£’000
11,759
3,706
South
East Unallocated Total
£’000
£’000
£’000
7,223
1,531
2,016 28,369
4,098 13,799
Capital expenditure (Note 12) 573
-
330
395
77
1,375
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 53
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6
Staff costs
The average number of persons employed by the Group including executive directors is analysed
into the following categories:
2017
2016
Management
Administration
Technical
Operational
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
20
24
9
121
174
2017
£’000
4,682
419
67
20
24
9
106
159
2016
£’000
4,005
362
46
5,168
4,413
There was an accrual for £13,000 (2016: £10,000) included above for pension costs at 31 December
2017.
There group capitalised employee costs of £37,689 (2016: £41,797) in respect of the Foro Juice
business as an intangible asset.
54 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIALSTATEMENTS
(CONTINUED)
Key management personnel
Key management personnel are those persons having authority and responsibility for planning,
directing and controlling the activities of the entity, directly or indirectly, including any director
(whether executive or otherwise) of that entity.
The Group is of the opinion that there are no other key management personnel other than the executive
and non-executive directors. Details of directors’ remuneration are set out in note 26.
7
Financial income and expenses
Fair value gains on interest rate swaps/caps
Interest receivable
Finance income
Interest expense on bank overdrafts and loans
Notional interest on deferred consideration
Finance costs
Net finance costs
2017
£’000
2016
£’000
10
1
11
20
10
30
(201)
(13)
(240)
(29)
(214)
(269)
(203)
(239)
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 55
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
8
Profit before tax
The following items have been charged/(credited) to the Consolidated Statement of Comprehensive
Income in arriving at profit before tax:
Depreciation of property, plant and equipment (Cost of Sales)
709
2017
£’000
2016
£’000
625
Staff costs (Note 6)
5,168
4,413
Foreign exchange (gain)/loss
(96)
9
Rentals payable under operating leases
- Buildings
- Plant and machinery
Auditors’ remuneration - audit service
- non audit services
476
792
45
-
536
915
33
-
56 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
9
Income taxes
(a) Analysis of charge in year
UK
Corporation tax at 19.25% (2016: 20%)
Adjustment in respect of previous periods
Ireland
Corporation tax at 12.5% (2016: 12.5%)
Adjustment in respect of previous periods
Current tax charge
Deferred tax charge/(credit) (Note 20)
Deferred tax charge/(credit)
(b) Factors affecting tax charge for year
Profit on ordinary activities before taxation
Profit on ordinary activities multiplied
by standard UK tax rate 19.25% (2016: 20%)
Effects of:
Other expenses not deductible for tax purposes
Adjustment for tax effect of discontinued operations
Adjustment in respect tax payable on Irish Income (12.5%)
Adjustments in respect of previous periods
Adjustments in respect of Deferred Consideration
Adjustments in respect of IBA and tax rate change
Total tax charge for year
2017
£’000
2016
£’000
369
-
44
-
413
28
28
157
9
44
-
210
(18)
(18)
2017
£’000
1,507
2016
£’000
633
290
127
10
(14)
(20)
-
19
156
441
8
(32)
(26)
9
-
106
192
The deferred tax charge of £28,000 (2016: credit of £18,000) has arisen under IAS 12. In 2009 the
company applied the dual recovery method in respect of one of its main assets which triggered a tax
credit. The charge in 2017 relates to the temporary difference between the carrying value of the asset
in the consolidated statement of financial position and its tax base. The dual recovery method continues
to be applied as disposal of the asset is anticipated.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 57
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Earnings per share
10
Basic earnings per share figures are calculated by dividing the weighted average number of
Ordinary Shares in issue during the period into the profit after taxation attributable to the owners
of the parent for the year.
Profit attributable to owners of parent – continuing (£’000)
Loss attributable to owners of parent – discontinuing (£’000)
Weighted average number of
ordinary shares outstanding
Basic earnings per share – continuing operations
Basic loss per share – discontinuing operations
Basic earnings per share
2017
1,066
(73)
2016
441
(161)
993
280
29,851,233
29,851,233
3.6p
(0.2)p
3.4p
1.5p
(0.6)p
0.9p
For the purposes of calculating diluted earnings per share, dilutive potential ordinary shares are
deemed to have been converted into ordinary shares at the beginning of the period.
Profit attributable to owners of parent – continuing (£’000)
Loss attributable to owners of parent – discontinuing (£’000)
2017
1,066
(73)
2016
441
(161)
993
280
Weighted average number of ordinary shares outstanding
Dilutive effect of share options
29,851,233
-
29,851,233
-
Weighted average number of shares for the calculation
of diluted earnings per share
29,851,233
29,851,233
Diluted earnings per share -continuing operations
Diluted loss per share – discontinuing operations
Diluted earnings per share- total
3.6p
(0.2)p
3.4p
1.5p
(0.6)p
0.9p
The exercise prices of all share options in issue were above the average market share price and hence
have no dilutive effect in the current year or the prior year.
58 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
11
Goodwill and intangible assets
The net book value of goodwill at 31 December 2017 was £2,338,000 (31 December 2016: £2,338,000)
and relates to the Commodity Trading business segment. The goodwill arose on the acquisition of
Townview Foods Limited in 2012 and this is the cash generating units (CGUs) to which the goodwill
has been allocated.
The recoverable amount of the CGU is based upon value in use. The key assumption in determining
value in use is the underlying profitability of the acquired business which depends upon a number of
factors including prices and volumes negotiated with both key suppliers and customers. The business
has an established trading history, which together with input from both the board and existing
management team of Townview Foods Limited, is forecast to generate net cash flows for each of the
next ten years. A discount rate of 9.4% has been used.
Other intangible assets
During 2017 we secured the rights to use a juice brand under a contractual arrangement with a third
party. During the year we capitalised £83,000 (2016 : £65,000) and amortised £7,000 ( 2016 : nil).
At 1 January
Additions
Amortisation
At 31 December
2017
£’000
2016
£’000
65
83
(7)
141
-
65
-
65
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 59
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
12
Property, plant and equipment
Cost
At 1 January 2017
Additions
Foreign exchange
At 31 December 2017
Depreciation
At 1 January 2017
Charge for year
At 31 December 2017
Net book value
31 December 2017
Freehold
Land
£’000
Buildings
£’000
Plant and
Equipment
£’000
Total
£’000
27,261
1,816
17
13,726
761
16
9,991
1,055
1
14,503
11,047
29,094
4,440
242
6,186
467
10,626
709
4,682
6,653
11,335
3,544
-
-
3,544
-
-
-
3,544
9,771
4,444
17,759
60 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Included within the net book value of £17.8m is £761,000 (2016: £828,000) relating to assets
held under finance lease. Security of these financed assets are held with the relevant finance
companies. The depreciation charged in the financial statements in the year in respect of such
assets amount to £55,000 (2016: £35,000).
The company has carried out impairment reviews on a number of its properties. In carrying out
the review an annual discount factor of 9.4% was applied to future cash flows and best estimates
were used for realisable values at the end of the period. It was concluded that there were no
impairments necessary in 2017 (2016: £Nil).
13 Biological Assets
During 2016 the Group acquired a dairy herd which was measured at fair value less point of sale
costs of £302,000. During 2017 £25,000 of additional stock were acquired and £25,000 were
disposed. The herd produced calves in Spring 2017 to be used for milk production thereafter. The
fair value less point of sale costs of the herd at the balance sheet date was £624,000 (2016 :
£540,000) resulting in a movement in fair value of £66,000 (2016 : £238,000) which has been
recognised in the Consolidated Statement of Comprehensive Income.
At 1 January
Foreign exchange
Additions
Disposals
Movement in fair value less estimated point of sale costs
At 31 December
2017
£’000
2016
£’000
540
18
25
(25)
66
624
-
-
302
-
238
540
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 61
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
14
Trade and other receivables
Trade receivables
Less: Provision for impairment of trade receivables
Trade receivables - net
Other receivables
Prepayments
Transfer to disposal group (note 30)
2017
£’000
6,558
(25)
6,533
429
854
(279)
2016
£’000
5,356
(8)
5,348
907
707
(698)
7,537
6,264
All amounts fall due within one year therefore the fair value is considered to be approximately
equal to the carrying value. All of the Group’s trade and other receivables are denominated in
Pounds sterling.
The maximum exposure to credit risk at the reporting date is the fair value of each class of
receivables mentioned above. The Group does not hold any collateral as security.
The group has entered into a confidential invoice discounting facility. This facility is secured on
the trade receivables above.
As at 31 December 2017 trade receivables of £25,000 (2016: £8,000) were impaired. The other
classes within trade and other receivables do not contain impaired assets.
As of 31 December 2017, trade receivables of £2,272,000 (2016: £1,416,000), were past due of
which £25,000 (2016: £8,000) were impaired. These relate to a number of independent customers
for whom there is no recent history of default. The ageing analysis of these receivables is as
follows:
Up to 3 Months
Over 3 Months
2017
£’000
2,139
133
2,272
2016
£’000
1,393
23
1,416
62 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
15
Inventories
Goods for resale
2017
£’000
709
2016
£’000
483
709
483
Goods for resale consist of commodity products purchased by Townview Foods Limited and Foro
International Connections Limited for resale. There were no write downs of stock during the
financial year.
16
Financial liabilities
At 1 January 2016
Deferred consideration paid
Charged to the Consolidated Statement of
Comprehensive Income
At 31 December 2016
Deferred consideration paid
Charged to the Consolidated Statement of
Comprehensive Income
At 31 December 2017
Current fair value financial liabilities
Non-current fair value financial liabilities
At 31 December 2017
Contingent
Consideration
£’000
479
(220)
29
288
(372)
113
29
29
-
29
Caps/
Swaps
£’000
31
-
(20)
11
-
(11)
-
-
-
-
Total
£’000
510
(220)
9
299
(372)
102
29
29
-
29
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 63
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Fair value of interest rate swaps/caps
The notional principal amount of the outstanding interest rate swaps contract at 31 December 2017
was £Nil (2016: £3m).
Financial assets/liabilities at fair value though profit or loss are presented within the section on
investing activities in the Cash Flow Statement.
Changes in fair value of financial assets/liabilities through profit or loss are recorded within
finance income/expense in the Consolidated Statement of Comprehensive Income - see note 7.
The above assessment has been performed applying valuation techniques derived from quoted
prices.
This assessment has been consistent between periods and as such it is considered that level 2 of
the fair value hierarchy as defined in IFRS 13 has been applied consistently.
Contingent consideration
At 31 December 2012, the Group recognised contingent consideration of £1,588,000 in connection
with the acquisition of Townview Foods Limited (see note 29). The directors valued the contingent
consideration using a probability weighted discounted cash flow model. The most significant
assumption is the quantum of earnings before interest and tax of Townview Foods Limited for each of
the next three years.
At date of acquisition the Group paid £2,750,000 for the net assets on completion. The net assets
acquired were £2,858,000 and the balance of £110,000 was paid in January 2013. During the year
ended 31 December 2017 £372,000 (2016: £220,000) of contingent consideration was paid.
As explained in note 29, the Board re-assessed the remaining amount of contingent consideration to
be paid at 31 December 2013 resulting in a credit of £737,000 to the Consolidated Statement of
Comprehensive Income. The Board re-assessed the remaining amount of contingent consideration to
be paid at 31 December 2014, 31 December 2015 and 31 December 2016 and concluded that that there
had not been a significant change in the value of the liability. The Board have also re-assessed the
remaining amount of contingent consideration to be paid at 31 December 2017 and concluded that
there had been a significant change in the value of the consideration and that a charge of £100,000 was
required for the year ended 31 December 2017. Interest of £13,000 (2016: £29,000) has been charged
to the Consolidated Statement of Comprehensive Income representing unwinding of the discount.
There has been no change to the fair value on the contingent consideration as a result of changes in the
assessment of credit risk.
Of the total amount of contingent consideration recognised at 31 December 2017, £29,000 (2016:
£244,000) has been included within current liabilities and £Nil (2016: £44,000) has been included in
non-current liabilities. The gross undiscounted payments equate to £29,000.
In respect of the above assessment it is considered that level 3 of the fair value hierarchy as defined
in IFRS 13 has been applied.
64 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
17
Trade and other payables
Trade payables
Value added tax and payroll taxes
Accruals
Deferred Income
Transfer to disposal group (note 30)
2017
£’000
4,684
393
1,544
77
(18)
2016
£’000
3,581
388
1,083
37
(7)
6,680
5,082
All amounts are short term. The net carrying value of trade payables is considered a reasonable
approximation of fair value.
18
Current tax liabilities
Corp oration tax - UK
Corporation tax - Ireland
The above liabilities are all payable within 1 year.
2017
£’000
412
(45)
367
2016
£’000
165
40
205
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 65
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
19
Borrowings
Current
Finance Leases
Invoice finance
Bank overdraft
Term Loans
Non Current
Finance Leases
Non-current bank borrowings
2017
£’000
203
3,437
210
705
2016
£’000
182
2,951
304
845
4,555
4,282
192
2,198
378
2,628
2,390
3,006
Total Borrowings
6,945
7,288
The Group arranged the following borrowing facilities with HSBC Bank plc and its subsidiary
HSBC Invoice Finance Limited.
(a) HSBC Bank plc agreed to a term loan of £7.5 million drawn down in December 2005 over a
maximum period of 15 years and an overdraft facility of £0.4 million which is reviewed annually.
(b) HSBC Bank plc agreed to a term loan of £2 million drawn down in March 2008 over a
maximum period of 15 years.
(c) HSBC Bank plc agreed to a term loan of £0.9 million drawn down in January 2012 over a
maximum period of 10 years.
(d) HSBC Bank plc agreed to a term loan of £1.5 million drawn down in May 2014 over a
maximum period of 5 years with a 15 year repayment profile.
(e) HSBC Bank plc agreed to a term loan of £2.2 million drawn down in February 2018 over a
maximum period of 7. This loan replaces (b), (c) & (d) which were repaid in full in February
2018.
(f) Finance Ireland Agri agreed a term loan for £0.27m (€0.3m) drawn down in December 2017
for a maximum period of 8 years.
(e) HSBC Invoice Finance Limited agreed to allow the Group to borrow up to an amount
equivalent to 90% of trade debtors in respect of Norish Limited debtors, 90% in respect of
Townview Foods Limited debtors, and 90% in respect of Foro International Connections Limited
subject to an overall maximum limit of £4.25m (2016: £4.25m) which is reviewed annually.
66 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Overdraft interest is charged quarterly at an interest rate of bank base rate plus 2.25% (2016:
2.25%). Invoice finance interest is charged on a daily basis at bank base rate plus 2.25% (2016:
2.25%). Term Loan (a) above is charged quarterly at an interest rate of bank base rate plus 1.2%
(2016: 1.2%). Term Loan (b) above is charged quarterly at an interest rate of bank base rate plus
1.75% (2016:1.75%).Term Loan (c) above is charged quarterly at an interest rate of bank base rate
plus 2.75% (2016: 2.75%). Term Loan (d) above is charged quarterly at an interest rate of bank
base rate plus 3% (2016:3%). Term loan ( e ) above is charged quarterly at an interest rate of bank
base rate plus 1.85% ( 2016: n/a). Term Loan (f) is charged monthly at an interest rate of 3.75%.
The liabilities of Norish Plc pursuant to these facilities agreements are secured by:
(1) debentures creating first fixed and floating charges over all the assets, past present and future
of Norish Limited and its subsidiaries;
(2) unlimited multilateral guarantees given by all Group companies each guaranteeing payment
of the liabilities of the other;
(3) legal mortgages held over the Bury St. Edmunds, West Midlands, and Gillingham
properties.
The fair value of the Group’s financial liabilities as at 31 December 2017 was as follows:
2016
2017
Current bank borrowings
Non-current bank borrowings
Book
Value
£’000
4,555
2,390
Fair
Value
£’000
4,555
2,390
Book
Value
£’000
4,282
3,006
Fair
Value
£’000
4,282
3,006
6,945
6,945
7,288
7,288
The Group pays interest at the base rate plus a margin of 1.2% to 3.75% which is reviewed
quarterly. It is assumed that the Book Value reflects the Fair Value.
The carrying amounts of the Group’s borrowings are all denominated in Pounds Sterling.
The un-drawn committed facilities available to the Group are set out below:
Floating rate, expiring within one year
Invoice finance
Bank overdraft
2017
£’000
1,514
190
2016
£’000
1,187
96
1,704
1,283
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 67
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
20
Deferred tax
Deferred tax liabilities:
Deferred tax liabilities to be recovered after more than 12 months
Deferred tax liabilities to be recovered within 12 months
2017
£’000
933
20
953
2016
£’000
905
20
925
The movement in deferred tax liabilities during the year, without taking into consideration the
offsetting of balances within the same tax jurisdiction, is as follows:
Deferred tax liabilities
Accelerated
capital
allowances
£’000
Fair value
gains
£’000
At 1 January 2016
(Credited) to the Consolidated Statement of
Comprehensive Income
At 31 December 2016
Charged (credited) to the Consolidated Statement of
Comprehensive Income
At 31 December 2017
936
(12)
924
29
953
6
(5)
1
(1)
-
Total
£’000
942
(17)
925
28
953
The deferred tax liability due after more than one year prior to offsetting is £933,000 (2016:
£905,000).
As a result of using the deferred tax dual recovery method in regard to the sale of assets it could
potentially give rise to a deferred tax asset totalling £97,000 (2016: £97,000). However, the board
feels that it is highly unlikely that this will ever be recoverable and have not provided this amount
in the accounts.
68 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
21
Share capital
Authorised
2017
£’000
2016
£’000
60,000,000 (2016: 60,000,000) Ordinary shares of €25c each
10,836
10,836
Allotted, called up and fully paid
Ordinary shares of €25c each
At 1 January 2016
Issued during the year
At 31 December 2016
Issued during the year
At 31 December 2017
Number
£’000
28,533,693
1,426,685
5,344
272
29,960,378
5,616
-
________
-
29,960,378
5,616
During the year, the company issued Nil (2016: 1,426,685) Ordinary shares of €25c each for a
total cash consideration of £Nil (2016: £564,000). The excess over nominal value of £Nil (2016:
£291,000) less share issue costs of £nil (2016: £Nil) has been transferred to the share premium
account.
All shares are equally eligible to receive dividends and the repayment of capital and represent one vote
at a shareholders’ meeting.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 69
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Share Premium
At 1 January
Share Issue
Issue costs
At 31 December
Share options
2017
£’000
7,281
-
-
2016
£’000
6,990
291
-
7,281
7,281
The Board shall in its absolute discretion select any number of individuals who may at the intended
date of grant be participants and invite them to apply for the grant of options to acquire shares in the
company. The subscription price at which shares may be acquired on the exercise of any option
granted in response to the application shall be determined by the Board but shall not be less than the
mid-market value of the share on the day the invitation to apply for the option is issued or the nominal
value of the share.
The shares can be exercised between the third and the tenth anniversary of the date of grant, provided
the Board is satisfied that there has been an increase in the earnings per share at least equivalent to
the percentage increase in the Consumer Price Index plus 5% (or such greater percentage as is fixed
by the Board) compound per annum.
The Group has applied the exemption available, and has applied the provisions of IFRS 2 only to
those options granted after 7 November 2002 and which were not vested at 1 January 2006 and all
options granted since that date.
70 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Movements in the number of share options outstanding and their related weighted average exercise
price are as follows:
2017
2016
Weighted
Average
Exercise
Price
Options
Number
Weighted
Average
Exercise
Price
Options
Number
Outstanding at 1 January
250,000 0.58
250,000
Outstanding at 31 December
250,000 0.58
250,000
0.58
0.58
Exercisable at 31 December
250,000 0.58 250,000
0.58
The share options outstanding at the end of the year expire June 2018 at an exercise price of 58p.
The fair value of options granted was estimated on the date of grant using the Black-Scholes option
pricing model. While the Black-Scholes model does not take into account the performance conditions
attached to the award, the directors are of the opinion that the charge recorded would not be materially
different if a lattice model (which would take such conditions into account) had been employed. The
following assumptions were used for the option grant in 2007:
Modification date
Grant date
Share price at grant date
Exercise price
Shares under option
Vesting period (years)
Expected volatility
Expected life (years)
Risk free rate
Dividend yield
Fair value
27 June 2008
18 September 2007
£0.58
£0.58
250,000
3
40%
3.5
5%
3%
£42,500
A modification was carried out on 27 June 2008 so that the shares would qualify under the Enterprise
Management Incentive Scheme (EMI). The original shares issued under a HMRC unapproved
company share option scheme were cancelled and new shares were issued to replace these under the
EMI scheme. Expected volatility was calculated at 40% which was relatively typical at the time of
the grant of shares for a FTSE 100 company. The company has an 18% volatility over the 5 years
between September 2008 and November 2010.
During 2016 the Group agreed to establish a Joint Share Ownership Plan (JSOP) whereby
employees or directors may be invited to acquire, jointly with a trust, shares in the company. The
employee or director benefits from future growth in the share price subject to certain performance
criteria being met. There were no transactions connected with the JSOP during the year.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 71
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
22
Other reserves
Capital conversion reserve fund
Foreign exchange
2017
£’000
23
80
103
2016
£’000
23
-
23
During 1999 the company re-denominated the authorised share capital of the company from Irish
Punts to Euro in accordance with Section 26 of the European Monetary Union Act 1998. This
resulted in a reduction in respect of the issued shares which was transferred to the Capital
conversion fund.
23
Cash and cash equivalents
Cash at bank and on hand
24
Dividends
Final dividend paid in respect of the previous year
of 1.50 cent (2016: 1.50 cent) per ordinary share
2017
£’000
1,558
2016
£’000
2,044
1,558
2,044
2017
£’000
381
2016
£’000
346
The Board recommends the payment of a final dividend of 1.650 cent per share. This will be paid on 19
October 2018 to those shareholders on the register on 28 September 2018. It will bring the total dividend in
respect of the financial year to 1.65 cent per share compared with 1.50 cent last year.
72 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
25
Commitments and contingencies
(a) Operating leases
The Group leases various warehouses under non-cancellable operating lease agreements.
The leases have varying lease terms, escalation clauses and renewal rights.
The Group also leases various plant and equipment under operating lease agreements.
The lease expenditure charged in the year is shown in Note 8.
The future aggregate minimum lease payments under non-cancellable operating leases are
as follows:
2017
2017
Other
Land and operating
leases
Buildings
£’000
£’000
2016
2017
2016
Other
Land and operating
leases
£’000
Total Buildings
£’000
£’000
Expiring:
Within one year
Between two and five years
Beyond five years
515
2,061
2,087
323
424
-
838
2,485
2,087
468
1,715
2,283
655
829
-
2016
Total
£’000
1,123
2,544
2,283
4,663
747
5,410
4,466
1,484
5,950
(b) Guarantees on leasehold properties
The annual operating lease commitment on land and buildings of £520,000 (2016:
£468,000) arises on leasehold properties and land.
(c) Capital commitments
At 31 December 2017, the Group had £Nil (2016: £344,000) of capital projects authorised
of which £Nil (2016: £344,000) was contracted at 31 December 2017.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 73
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(d) Finance leases
The future aggregate minimum lease payments under non-cancellable finance leases are
as follows:
Within one year
Between two and five years
Beyond five years
26
Directors’ remuneration
Aggregate emoluments
Company pension contributions
2017
£’000
217
196
-
413
2017
£’000
497
34
531
2016
£’000
182
295
83
560
2016
£’000
409
9
418
Details of directors’ interests in shares and share options are set out on pages 14 and 15.
Directors’ remuneration shown above comprises all of the fees, salaries, pensions and other
benefits and emoluments paid to Directors.
The basis of the Directors’ remuneration and the level of bonuses paid are fixed by the
Remuneration Committee of the Board.
27
Pensions
The Group operates a defined contribution scheme. The assets of the scheme are independent of
the assets of Norish plc and are invested with assurance companies and are held in trusts for the
employees concerned.
Total pension costs for the year were £67,000 (2016: £46,000).
There was an accrual for £13,000 (2016: £10,000) included above for pension costs at 31
December 2017.
74 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
28
Group undertakings
Subsidiary undertakings Holding
Nature of business
Incorporated in Republic of Ireland
Direct
Roebuck Investments Limited
95% (Note 1)
Intermediate holding company
Foro International Connections Ltd 90%
Commodity trading
Cantwellscourt Farm Limited
100%
Dairy Farming
Grass to Milk Company Limited
90%
Dormant
Incorporated in Northern Ireland
Norish (U.K.) plc
Norish (N.I.) Limited
100%
100%
Townview Foods Limited
(subsidiary of Roebuck Investments Limited)
100%
Incorporated in England
Investment company
Property management
Commodity trading
Norish Limited
(subsidiary of Norish (N.I.) Limited)
100%
Cold storage
Note 1: As part of the transaction to acquire Townview Foods Limited in 2012, the vendor acquired a
5% interest in the ordinary shares of the acquisition vehicle, Roebuck Investments Limited, a
subsidiary undertaking of Norish plc. Subject to certain conditions, Norish plc has the right to acquire
these shares at their nominal value (£5) on or after 1 August 2018. Furthermore, through the ownership
of the preferred ordinary shares in Roebuck Investments Limited, Norish plc has secured the entire
equity interest in Townview Foods Limited to 1 August 2018 and beyond. Accordingly, the board
consider that a financial liability of £5 should be recorded in these consolidated financial statements in
respect of the vendor’s interest and that Norish plc should account for 100% of the equity interest in
Townview Foods Limited.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 75
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(a) The registered offices of Norish plc and its subsidiary undertakings are set out below:
Norish plc
Roebuck Investments Limited
Foro International Connections Limited
Cantwellscourt Farm Limited
Grass to Milk Company Limited
South Bank House,
Barrow Street, Dublin 4, Republic of Ireland
Norish (U.K.) plc,
Norish (N.I.) Limited
79 Chichester Street
Belfast BT1 4JE
Norish Limited,
Northern Industrial Estate
Belvedere Warehousing Limited,
Norish Warehousing Limited
Townview Foods Limited
Bury St Edmunds, Suffolk, IP32 6NL
7 Carrivekeeney Road
Newry, County Down, BT35 7LU
(b) The issued share capital of the subsidiary undertakings is as follows:
Norish (U.K.) plc
50,000 Ordinary shares of £1 each
10,146,180 A Ordinary shares of £0.0001 each
Norish (N.I.) Limited
480,000 Ordinary shares of £1 each
1 A Ordinary share of £1 each
Norish Limited
60,000 Ordinary shares of £1 each
Townview Foods Limited
100 Ordinary shares of £1 each
Roebuck Investments Limited
95 Ordinary shares of €1 each
5 Preferred ordinary shares of €1 each
Foro International Connections Ltd 1,000 Ordinary shares of £1each
472,120 Preferred shares of £1 each
Cantwellscourt Farm Ltd
100,000 Ordinary shares of €1 each
Grass to Milk Company Ltd
100 Ordinary shares of €1 each
76 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
29 Contingent Consideration
In 2012, the Group acquired the entire issued share capital of Townview Foods Limited, a meat
import company based in Newry, Northern Ireland.
At date of acquisition the Group paid £2,750,000 for the net assets on completion. The net assets
acquired were £2,858,000 and the balance of £110,000 was paid in January 2013. During the year
ended 31 December 2017, £372,000 (2016: £220,000; 2015: £185,000; 2014: £174,000; 2013:
£170,000) of contingent consideration was paid.
Contingent consideration is payable at the rate of 50% of Townview Foods Limited’s earnings
before interest and tax payable in six monthly instalments for each of the five years ending
following the acquisition subject to a maximum amount payable to the vendor of £8.25m. In
addition to these amounts, in the six month periods ending 30 June 2014 and 31 December 2014
amounts became payable to the vendor if earnings before interest and tax in any given six month
period exceeded £868,000 and £970,000 respectively. No payments have been made in respect of
these amounts.
The five year period since acquisition ended in October 2017. Based on performance in 2017, the
Board have ascertained that £29,000 is the final payment that is due which is to be paid in March
2018. This amount is reflected a Financial Liability under Current liabilities.
Interest of £13,000 (2016: £33,000) has been charged to the Consolidated Statement of
Comprehensive Income representing unwinding of the discount.
At 31 December 2017 liabilities include £29,000 (2016: £288,000).
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 77
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
30 Discontinued operations and assets classified as held for sale
During 2013, the Board made the decision to focus the Group’s storage operations exclusively on
cold storage in both the South East and North West of the United Kingdom. Consequently, the
Board agreed to exit the Group’s storage operations in the North of England comprising both the
York ambient storage site and Leeds cold store. The York ambient storage site’s carrying value
was to be recovered by a sale of the site and accordingly, these activities were classified as held
for sale. The disposal of the site completed during 2014. The Leeds site was sold in March 2016
for £425,000 (net of fees of £25,000) of which £300,000 was paid in 2017 and the balance of
£150,000 was paid in March 2018.
Prior to the transfer of these sites to assets held for sale in 2013, the group impaired the carrying
value by £677,022 to £2.3m. During 2014, the group impaired a further £200,000.
During the year ended 31 December 2016 the Group discontinued the FMCG business in the
commodity trading division.
Financial information in respect of this component of the Group is summarised below.
Operating cash flows
Investing cash flows
Financing cash flows
2017
£’000
430
-
-
2016
£’000
(62)
-
-
Total cash flows
430
(62)
Other current assets
2017
£’000
279
Total assets of the disposal group classed as held for sale
279
2016
£’000
698
698
78 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
2017
£’000
2016
£’000
Trade and other payables
(18)
(7)
Total liabilities of the disposal group classed as held for sale
(18)
(7)
Revenue
Expenses
2017
£’000
-
(73)
2016
£’000
491
(652)
Loss after tax of discontinued operations
(73)
(161)
32 Post-reporting date events
No significant events have taken place since the year-end that would result in adjustment to the
financial statements or the inclusion of a note thereto.
33 Related party transactions
Marketing services totalling £16,000 (2016:£Nil) were provided where one of our Directors held
a shareholding during the year. There was £8,000 outstanding as at 31 December 2017
(2016:£Nil).
34 Approval of financial statements
The Board of Directors approved these financial statements on 27 March 2018.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 79
COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2017
Note
5
6
7
8
Fixed assets
Investments – Shares in group undertakings
Current assets
Debtors
Creditors: amounts falling due within one year
Net current assets
Net assets
Equity
Called up share capital
Share premium account
Capital conversion reserve fund
Treasury shares
Profit and loss account
Shareholders’ funds
Approved on behalf of the board on 27 March 2018 by:
T.J. O’Neill
Chairman
A. Hughes
Finance Director
2017
£’000
2016
£’000
1,209
1,056
11,687
11,769
(388)
(426)
11,299
11,343
12,508
12,399
5,616
7,281
23
(563)
151
5,616
7,281
23
(563)
42
12,508
12,399
80 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
COMPANY STATEMENT OF CHANGES IN EQUITY
Share
Capital
£’000
5,344
-
-
-
272
-
Share
Premium
Account
£’000
6,990
-
-
-
291
-
Capital
Conversion
Reserve
Fund
£000
23
-
-
-
-
-
Treasury
Shares
£’000
-
-
-
-
-
(563)
Profit
And
Loss
Account
£’000
62
341
341
(361)
-
-
Total
£’000
12,419
341
341
(361)
563
(563)
At 1 January 2016
Profit for the financial
year
Total comprehensive
income for the year
Dividends paid(note 4)
Share issue
Treasury
acquired
shares
At 31 December 2016
5,616
7,281
23
(563)
42
12,399
Profit for the financial
year
Total comprehensive
income for the year
Dividends paid(note 4)
Treasury
shares
acquired
Share issue
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
509
551
(400)
-
509
12,908
(400)
-
-
-
At 31 December 2017
5,616
7,281
23
(563)
151
12,508
Share premium account: This represents the net proceeds from issuing shares in excess of the
nominal value of those shares.
Capital conversion fund: During 1999 the company re-denominated the authorised share capital
of the company from Irish Punts to Euro in accordance with Section 26 of the European Monetary
Union Act 1998. This resulted in a reduction in respect of the issued shares which was transferred
to the Capital conversion fund.
Profit and loss account: The represents cumulative retained profits and losses net of distributions
to shareholders.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 81
NOTES TO THE ACCOUNTS
1
Accounting policies
Norish plc is the parent company of the Norish plc group of companies. The company is listed on
the Alternative Investments Market (“AIM”), and is incorporated and domiciled in the Republic
of Ireland. The address of its registered office is Norish plc, 6th Floor, South Bank House, Barrow
Street, Dublin 4, Republic of Ireland.
The following accounting policies have been applied consistently in dealing with items which are
considered material in relation to the Company financial statements.
Basis of preparation
The individual financial statements of Norish plc have been prepared in accordance with IFRS as
adopted by the European Union, applicable Irish law and the AIM rules. The accounting policies
applied are described in the Basis of Preparation contained in the consolidated IFRS financial
accounts within these financial statements.
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise judgment in applying the Company's
accounting policies (see note 2).
82 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES TO THE ACCOUNTS (CONTINUED)
Exemptions taken
The following exemptions from the requirements of EU adopted IFRS have been applied in the
preparation of these financial statements:
(a)
(b)
(c)
(d)
(e)
the requirements of paragraphs 45(b) and 46-52 of IFRS 2 Share based Payment
because this information is given in the notes to the consolidated financial statement
for the Group;
IFRS 7 ‘Financial Instruments: Disclosures’;
the requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement;
Paragraph 38 of IAS 1, ‘Presentation of financial statements’ comparative information
requirements in respect of paragraph 79 (a) (iv).
The following paragraphs of IAS 1, ‘Presentation of financial statements’:
i. 10 (d) (statement of cash flows);
ii. 10 (f) (a statement of financial position as at the beginning of the preceding
period when an entity applies an accounting policy retrospectively or make
a retrospective restatement of items in its financial statements, or when it
reclassifies items in its financial statements);
iii. 16 (statement of compliance with all IFRS);
iv. 38A (requirement for a minimum of two primary statements, including cash
flow statements);
v. 38B-D (additional comparative information);
vi. 40A-D (requirements for a third statement of financial position);
vii. 111 (cash flow statement information); and
viii. 134-136 (capital management disclosures).
(f)
(g)
(h)
(i)
IAS 7 ‘Statement of cash flows’;
Paragraphs 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates
and errors’;
Paragraph 17 of IAS 24 ‘Related party disclosures; and
The requirements in IAS 24 ‘Related party disclosures’ to disclose related party
transactions entered into between two or more members of a group.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 83
NOTES TO THE ACCOUNTS (CONTINUED)
2
Judgments in applying accounting policies and key sources of estimation uncertainty
Impairment
In assessing impairment, management estimates the recoverable amount of each asset or cash-
generating units based on expected future cash flows and uses an interest rate to discount them.
Estimation uncertainty relates to assumptions about future operating results and the determination
of a suitable discount rate.
3
Profit of the company
In accordance with Section 304 of the Companies Act, 2014 a separate profit and loss account for
the Company has not been presented. The profit for the year arising in Norish plc amounted to
£509,000 (2016: 341,000).
4
Dividends paid and proposed
Final dividend paid in respect of the previous year
of 1.50 cent (2016: 1.50cent) per ordinary share
2017
£’000
2016
£’000
(400)
(361)
The group paid a total dividend in 2017 of £400,000 (2016: £361,000), of which £400,000 (2016:
£361,000) was paid through the company.
84 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
NOTES TO THE ACCOUNTS (CONTINUED)
5
Investments – Shares in group undertakings
Cost and net book value at 1 January
Additions
2017
£’000
1,056
153
2016
£’000
852
204
Cost and net book value at 31 December
1,209 1,056
In the opinion of the Directors, the value of shares in subsidiary undertakings is not less than the original
book value.
Details of the Company’s subsidiary undertakings are presented in Note 28 to the consolidated IFRS
accounts within these financial statements.
6
Debtors
Amount receivable from subsidiary undertakings
Other debtors
Corporation tax
2017
£’000
11,638
5
44
2016
£’000
11,764
5
-
11,687
11,769
Amounts due from Group undertakings are unsecured, interest free, have no fixed date of repayment and are
repayable on demand.
7
Creditors: Amounts falling due within one year
Amounts owed to subsidiary undertakings
Corporation tax
2017
£’000
388
-
2016
£’000
388
38
388
426
Amounts due to Group undertakings are unsecured, interest free, have no fixed date of repayment and are
repayable on demand.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 85
NOTES TO THE ACCOUNTS (CONTINUED)
8 Called up share capital
Authorised
2017
£’000
2016
£’000
60,000,000 (2016: 60,000,000) Ordinary shares of €25c each
10,836
10,836
Allotted, called up and fully paid
Number
£’000
Ordinary shares of €25c each
At 1 January 2016
Issued during the year
At 31 December 2016
Issued during the year
28,533,693
1,426,685
29,960,378
-
________
5,344
272
5,616
-
At 31 December 2017
29,960,378
5,616
The total Ordinary shares in issue are 29,960,378 (2016: 29,960,378). These are all fully paid up.
During the year, the company issued Nil Ordinary shares of €25c each for a total cash consideration
of £Nil (2016: £564,000). The excess over nominal value of £Nil (2016: £291,000) less share issue
costs of £Nil (2016: £Nil) has been transferred to the share premium account.
Details of share options that were granted by the company are presented in note 21 to the
consolidated IFRS financial accounts within these financial statements.
9
Financial commitments and contingencies
At 31 December 2017, the Group had £Nil (2016: £344,000) of capital projects authorised of which
£Nil (2016: £344,000) was contracted at 31 December 2017.
At the 31 December 2017, the Company has exposure for the debts of Norish Limited and
Townview Foods Limited totalling £6,169,000 (2016: £7,288,000) to HSBC Bank plc.
The liabilities of Norish Limited pursuant to these facilities agreements are secured by:
(1) debentures creating first fixed and floating charges over all the assets, past present and future
of Norish Limited and its subsidiaries;
(2) unlimited multilateral guarantees given by all Group companies each guaranteeing payment
of the liabilities of the other;
(3) legal mortgages held over the Bury St. Edmunds, Wrexham, York and Gillingham
properties.
86 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017
HISTORICAL FINANCIAL SUMMARY
Consolidated income statement
Revenue – continuing
– discontinuing
Trading profit – continuing
– discontinued
Other Income
Other exceptional items
Net finance expenses
Depreciation
Profit/(loss) before taxation
Taxation
2013
£’000
2014
£’000
2015
£’000
2016
£’000
2017
£’000
22,811
23,645
25,145
32,098
42,183
720
1,151
(946)
315
-
(147)
(556)
(183)
104
497
1,730
(300)
-
-
(370)
(598)
462
(164)
2,889
1,454
(223)
-
-
(279)
(615)
337
(48)
491
1,259
(161)
238
-
(239)
(625)
472
(192)
-
2,419
(73)
-
-
(203)
(709)
1,434
(441)
Profit for the financial year
(79)
298
289
280
993
Dividends
(108)
(169)
(188)
(346)
(381)
Consolidated Statement of Financial Position
2013
£’000
2014
£’000
2015
£’000
2016
£’000
2017
£’000
Total assets less current liabilities
Non-current assets
Current assets
Current liabilities
15,289
6,048
(7,512)
18,336
4,949
(6,451)
18,223
10,601
(8,233)
19,578
9,489
(9,831)
20,862
10,083
(11,649)
Financed by
Share capital
Share premium account
Other reserves
Treasury shares
Retained earnings
Non-controlling interest
Shareholders’ funds – equity
Provisions
Deferred tax
Deferred consideration
Long term liabilities
13,825
16,834
20,591
19,236
19,296
2,056
3,463
23
-
2,740
-
8,282
185
863
594
3,901
3,280
4,198
23
-
2,878
(9)
10,370
-
954
425
5,085
5,344
6,990
23
-
2,981
(11)
15,327
-
942
199
4,123
5,616
7,281
23
(563)
2,926
(22)
15,261
-
925
44
3,006
5,616
7,281
103
(563)
3,516
-
15,953
-
953
-
2,390
13,825
16,834
20,591
19,236
19,296
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017 87
N O R I S H P L C
Registered Office
6th Floor
South Bank House
Barrow Street
Dublin 4
Operational Head Office
Northern Industrial Estate
Bury St Edmunds
Suffolk
IP32 6NL
88 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2017