ANNUAL
REPORT & ACCOUNTS
2018
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 1
ANNUAL REPORT 2018
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 2019
Page
1
2
3 - 5
6 - 7
8 - 9
10
11
12 - 26
27
28 – 33
34 - 35
36
37
38
39 - 81
82
83
84 - 87
88
Announcement of preliminary results
Annual Report posted to shareholders
Annual General Meeting
8 March 2019
5 April 2019
23 May 2019
Announcement of interim results
20 September 2019
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
Temperature controlled Division
n Brierley Hill, West Midlands (Cold store)
n Wrexham, Clwyd (Cold store)
n Bury St. Edmunds, Suffolk (Cold store)
n Braintree, Essex (Cold store)
n Lympne, Kent (Cold store)
n Gillingham, Kent (Cold store)
Product Sourcing
n Newry, Northern Ireland (Townview Foods Limited offices)
n Dublin, Ireland (Foro International Connections Limited offices)
Dairy Farming
n Kilkenny, Ireland (Cantwellscourt Farm)
Discontinued Operations
n Dublin, Ireland ( Juice business based at Foro International Connections Limited offices)
n Dublin, Ireland (FMCG business based at Foro International Connections Limited offices)
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 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
2018
£’000
2017
£’000
36,802
42,012
2,123
1,939
5.0p
5.0p
1.7
Nil
1.80c
1,856
1,653
4.1p
4.1p
2.1
Nil
1.65c
1.80c
1.65c
£’000
16,725
4,891
£’000
15,953
5,387
21,616
21,340
Gearing – excluding goodwill (see Note 1 below)
34%
40%
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 2018
CHAIRMAN’S STATEMENT
I am pleased to present the Annual Report of Norish Plc for 2018.
Norish plc (AIM: NSH), is pleased to announce its preliminary results for the year ended 31
December 2018.
Financial Highlights
• Profit before tax increased by 17.6% to £1.94m (2017 : £1.65m)
• Diluted adjusted Eps increased by 22% to 5p (2017 : 4.1p)
• Group revenue decreased by 12.4% to £36.8m (2017: £42.0m)
• Dividend increased by 9% to 1.80 €cent (2017: 1.65 €cent)
• Net debt was reduced from Stg£5.4m at start of year to Stg£4.9m at year
end.
• Interest cover has increased to 11.4 times (2017: 8.7 times)
Diluted adjusted EPS is calculated using profit for the financial year from continuing operations as the measure of
earnings
Operations
Cold Store Division
Cold stores are our largest business activity, accounting for circa 75% of the non-current assets in
the business. Sales were down 4%, from £14.3m to £13.7m in 2018, due mainly to a reduction in
blast freezing activity. Sales excluding blast freezing were £11.3m, down marginally from
£11.7m from the prior year. Divisional profits grew by 17%, from Stg £2.3m to Stg £2.7m.
Divisional margins improved from 16.0% to 19.7%.
2018 was characterised by lower intake, lower stock turn and higher storage revenues, when
compared with the prior year. Occupancy was up two percentage points to 94%.
Costs at site level were reduced by 7%, to more than compensate for the reduction in revenue.
Labour, our largest cost, was down 5%, year on year, while power (our second largest cost) was
reduced by 10%, against the prior year. Labour and power combined were lowered by 7% or Stg
£0.46m. Power units consumed were lower by 11%, year on year. This reflects the
aforementioned reduction in blast freezing activity, together with benefits coming through from
the implementation of energy saving initiatives.
Sourcing Division
Market conditions resulted in a reduction in protein supply during the year under review.
However, while sales fell by 17% from £27.2m to £22.5m, contribution declined by just 3% from
£0.68m to £0.64m. Townview Foods sources protein products mainly beef, pork, lamb and
chicken. Sales from pork and chicken decreased by £3.2m during the year, while sales from beef
and lamb decreased by £2.1m.
Townview Foods, the largest business within the Sourcing Division has repaid its investment, in
full, within 5 years of its acquisition. A new structure has been put in place, with management, to
continue to develop the business, for an additional 5 year period.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 3
CHAIRMAN’S STATEMENT (CONTINUED)
Dairy
The dairy division delivered some underlying progress in 2018 despite challenging weather
conditions in the Spring/Summer period. Milk deliveries were up 18% year-on-year reflecting a
more mature herd profile whilst underlying costs ex-feed were marginally lower. A cold Spring
and subsequent Summer drought resulted in lower pasture production and higher feed costs - this
also impacted milk production to some extent. Mark-to-market stock values also declined year-
on-year reflecting similar conditions across the industry.
Discontinued
During the year the group decided to exit the Juice business for the ready to drink market, which
is part of Foro International Connections. A loss of £0.38m was incurred, compared to £0.1m last
year.
In 2016, the Group exited the FMCG market and recorded a loss of £nil during 2018 (2017:
£0.1m).
Capital
During the period we invested £1.16m (2017: £1.82m), £0.33m in the dairy farm in Kilkenny and
£0.83m in routine capital expenditure in the cold store division.
Outlook
We anticipate another year of strong profit growth for the group in 2019.
In our cold store division, the year has got off to a strong start in the first two months of the year.
Management continues to focus on maximising both sales mix and pricing, in a market that is
currently more favorable to cold storage businesses, than it has been at any time in the most
recent past. Focus on underlying cost improvement will continue. We look forward to further
improving returns in this division during the current year.
The UK frozen food sector is currently the fastest growing retail category, growing at 4% per
annum. A combination of factors is driving this growth including growth in online shopping,
premiumisation of the category as well as providing a solution to food waste. This growth comes
against a background of a cold store market which has seen a lack of significant investment over
an extended number of years.
Despite the current volatility in its underlying markets, our protein sourcing division is well
placed to deliver in line with expectation on the back of its low risk operating model.
Our dairy farming division is now performing strongly. Work in relation to our major dairy
project is ongoing at pace. We have assembled a very experienced team, to drive this initiative, to
achieve the market position we have set for this development over a two to four year time frame.
4 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
CHAIRMAN’S STATEMENT (CONTINUED)
Financial Review
Total equity at 31 December 2018 stood at £16.7m (2017: £16.0m). Net debt at 31 December
2018 was £4.9m compared to £5.4m at 31 December 2017.
Dividend
The board recommends the payment of a final dividend of 1.80 € cent per share. This will be
paid on 18 October 2019 to those shareholders on the register on the 27 September 2019. It will
bring the total dividend in respect of the financial year to 1.80 €cent per share, against 1.65 €cent
per share last year, an increase of 9%.
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 excellent 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 2018.
Ted O’Neill
Chairman
07 March 2019
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 5
FINANCIAL REVIEW
The average occupancy increased from 92% to 94%. The significant feature of the year was the
improvement of the profitability and returns at our cold stores.
Sales
Total Group revenue decreased by 12.4% to £36.8m (2017: £42.0m). Cold store revenues decreased by
4% to £13.7m (2017: £14.3m). Revenues were mainly down on the back of a reduction in blast freezing
volumes. Revenues in the sourcing division decreased by 17.6% to £22.5m (2017: £27.2m). Townview
Foods mainly accounted for the decreased sales.
Gross profit
Gross profit increased by 5% to £2.93m (2017: £2.78m).
Operating profit
Operating profit increased by 14% to £2.12m (2017: £1.86m).
Finance expense (net)
Finance expense decreased to £0.19m (2017: £0.21m).
Loss from discontinued operations
During the year the group decided to exit the Juice business for the ready to drink market. A loss of
£0.38m was incurred, compared to £0.1m last year.
In 2016, the Group exited the FMCG market and recorded a loss of £nil during 2018 (2017: £0.1m).
Earnings per share
The basic adjusted earnings per share increased by 22% to 5p (2017: 4.1p).
Capital
During the period we invested £1.16m (2017: £1.82m), £0.33m in the dairy farm in Kilkenny and £0.83m
in routine capital expenditure in the cold store division.
Cash Position
Net debt decreased to £4.9m (2017: £5.4m). Cash generated from operations amount to £2.2m (2017:
£2.5m) and financing activities absorbed £0.9m (2017: £1.1m). Investment in assets was made of £1.3m
(2017: £1.9m).
Dividend
The board recommends the payment of a final dividend of 1.80€ cent per share. This will be paid on 18
October 2019 to those shareholders on the register on the 27 September 2019. It will bring the total
dividend in respect of the financial year to 1.80 €cent per share, against 1.65€ cent per share last year, an
increase of 9%.
6 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
FINANCIAL REVIEW (CONTINUED)
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 there are,
£2.2m term loans of which, £1.96m are at floating base rate plus a bank margin of 1.85% and £0.24m are at
a floating rate of 3.75%.
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, 73% 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 2018 7
SHAREHOLDERS INFORMATION
Shareholder analysis at 7 March 2019
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
104
88
67
56
315
33
28
21
18
100
45
366
2,356
27,303
30,070
0
1
8
91
100
Share price data (€)
Year ended 31 December 2018
92.7p (€1.06)
48.5p (€0.55)
64.6p (€0.72)
Year ended 31 December 2017
48.5p (€0.55)
37p (€0.43)
48.5p (€0.55)
High
Low
31 December
The market capitalisation of Norish plc at 31 December 2018 was £19.4m (€21.6m) compared with
£14.6m (€16.5m) at 31 December 2017, and £19.5m (€22.7m) at 7 March 2019.
Investor relations
Investor enquiries should be addressed to Gerard Murphy, Company Secretary, at:
Ø Norish plc, Northern Industrial Estate, Bury St Edmunds, Suffolk, IP32 6NL
Ø Email: gerard.murphy@norish.com
Registrars
Administrative enquiries relating to the holding of Norish shares should be directed to the Company’s
Registrars whose address is:
Ø Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands,
B63 3DA.
Ø Telephone: +44 (0121) 585 1131
8 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
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
Thursday 23 May 2019 at 11am.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 9
BOARD OF DIRECTORS
Executive Directors
Executive Chairman
Ted O’Neill (67) 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 (53) 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
Aidan Hughes (54) joined Norish as Group Accountant in 1996 and was appointed Finance Director in
September 2006. He is a Chartered Accountant and has previous experience in the travel industry.
Company Secretary
Gerard Murphy (33) is a Chartered Accountant and has been with Norish since the acquisition of
Townview Foods Limited in October 2012. He was appointed Company Secretary in April 2018.
Non-Executive Directors
Torgeir Mantor (62) 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 (71) 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 (72) 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 2018
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
13-18 City Quay
Dublin 2
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
Gerard Murphy
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 2018 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 2018.
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 £522,000 (2017: £622,000).
Turnover fell in 2018 but better margins helped maintain contribution.
The temperature controlled division which comprises the freehold sites at Wrexham, Birmingham, Bury
St. Edmunds Braintree (leasehold), Gillingham (long term leasehold at a peppercorn rent) and East Kent
(leasehold) performed ahead of the same period last year. The number of pallets into our stores decreased
by 9%, blast freezing volumes decreased by 18% and our average occupancy increased from 92% to 94%.
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 1.80 €cent per share. This will be paid on the
18 October 2019 to those shareholders on the register on the 27 September 2019. It will bring the total
dividend in respect of the financial year to 1.80 €cent per share compared with 1.65 €cent per share last
year.
Post Balance Sheet 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.
12 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
DIRECTORS’ REPORT (CONTINUED)
Transactions with Related Parties
Product Sales totalling £107,000 (Marketing services 2017: £16,000) were provided where one of our
Directors held a shareholding during the year. There was £Nil outstanding as at 31 December 2018 (2017:
£8,000).
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 2018 for the Group was 41 days (2017: 42 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 13% (2017 – 14.6%) 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 decreased by 9% to 339,184, blast
freezing volumes decreased by 18% to 119,070 pallets and closing customer stocks at the year end
decreased marginally to 46,959 pallets. Our average electricity price per unit increased by 8% in 2018 and
the number of units consumed decreased by 8%.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 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 2018 together with brief biographical notes are set
out on page 10.
In accordance with regulation 90 (a) of the Company’s Constitution, 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 Sean Savage 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 2018 (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
Gerard Murphy
31 December 2018
Ordinary Shares
31 December 2017
Ordinary Shares
3,020,000
1,985,286
317,500
12,600
-
1,000,333
-
3,000,000
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 (2017: 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 (2017: 24,152).
14 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
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 2018
Exercised
in year
Grant in
year
31 Dec
2018
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 2018 was 64.55p (€0.72) and the price range
during the year was between 48.5p (€0.55) and 92.75p (€1.06). 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 2018 and the date of this Report.
During the year, Aidan Hughes exercised 110,000 share options making a gain of £13,000 based on the
share price at the exercise date, although the shares have been retained.
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 2018 15
DIRECTORS’ REPORT (CONTINUED)
Substantial shareholdings
At 7 March 2019 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
5,102,237
Percentage held
16.97
3,020,000
1,985,286
1,364,465
1,339,740
1,243,027
1,049,497
1,000,333
10.04
6.60
4.54
4.46
4.13
3.49
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 156,000 options have been exercised and 1,096,237 options have expired. At 31 December 2018
there were no options outstanding.
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 2018
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 2018, £4.8m or 13% (2017: £6.17m or 14.6%) of the Group’s revenues from continued operations
depended on a single customer in the sourcing segment (2017: sourcing segment).
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 17
DIRECTORS’ REPORT (CONTINUED)
Corporate governance
The Directors recognise the importance of good corporate governance and have chosen to apply the
Quoted Companies Alliance Governance Code (the QCA Code) which was adopted during the year. The
QCA Code was developed by the QCA in consultation with a number of significant institutional small
company investors, as an alternative corporate governance code, applicable to AIM companies. The
underlying principle of the QCA code is that “the purpose of good corporate governance is to ensure that
the Group is managed in an efficient, effective and entrepreneurial manner, for the benefit of all
shareholders, over the longer term”.
Below we describe the principles of the QCA code and how the Group has complied with it.
Establish a strategy and a business mode, which promotes long term value for shareholders
Application (as set out by QCA)
The Board must be able to express a shared view of the Group’s purpose, business model and strategy. It
should go beyond the simple description of products and corporate structures and set out how the Group
intends to deliver shareholder value in the medium to long-term. It should demonstrate that the delivery of
long term growth is underpinned by a clear set of values aimed at protecting the Group from unnecessary
risk and securing its long term future.
What we do and why
Norish’s strategy is to grow each of its three business units by adopting specific strategies for each unit
individually. We prefer to pursue organic growth and maintain a strong balance sheet, as measured by
debt to EBITDA and interest cover multiples. We focus on improving returns on capital and generating
cash, which ultimately drives a virtuous cycle of earnings per share growth. The adjusted Earnings per
share has grown by 22% from 4.1p to 5p in 2018.
Seek to understand and meet shareholders needs and expectations
Application (as set out by QCA)
Directors must develop a good understanding of the needs and expectations of all elements of the Group’s
shareholder base. The Board must manage shareholders’ expectations and should seek to understand the
motivations behind shareholder voting decisions.
What we do and why
Management responds promptly to shareholder requests for meetings. The Chairman liaises with the
Group’s major shareholders and ensures their views are fully communicated to the Board. The AGM
provides a forum to meet private shareholders. The Directors make themselves available to listen to the
views of shareholders informally, following the AGM.
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 2018
DIRECTORS’ REPORT (CONTINUED)
Take into account wider stakeholder and social responsibilities and their implications for long term
success
Application (as set out by QCA)
Long term success relies upon good relations with a range of different stakeholder groups, both internal
(workforce) and external (suppliers, customers, regulators and others). The Board needs to identify the
Group’s stakeholders and understand their needs, interests and expectations.
Where matters that relate to the Group’s impact on society, the communities within which it operates or
the environment have the potential to affect the Group’s ability to deliver shareholder value over the
medium to long-term, then those matters must be integrated into the Group’s strategy and business model.
Feedback is an essential part of all control mechanisms. Systems need to be put in place to solicit,
consider and act on feedback from all stakeholder groups.
What we do and why
The Board of Norish plc visits its operating sites where relevant local management present on all aspects
of the business; customers, employees, suppliers, regulators and others. The Board is acutely aware of the
impact any business can have on the environment and actively looks to reduce such impacts.
For more information, please see our Environmental Policies section on page 17.
Embed effective risk management, considering both opportunities and threats, throughout the
organisation
Application (as set out by QCA)
The Board needs to ensure that the Group’s risk management framework identifies and addresses all
relevant risks in order to execute and deliver strategy; companies need to consider their extended
business; including the Group’s supply chain, from key suppliers to end-customer.
Setting strategy includes determining the extent of exposure to the identified risks that the Group is able to
bear and willing to take (risk tolerance and risk appetite).
What we do and why
Management considers risk to the business including operational and financial risk on an ongoing basis.
The Board considers risk to the business at every Board meeting. The Group formally reviews and
documents the principal risks to the business, at least annually. Risk management on page 13 details risks
to the business and how these are mitigated. Financial risk factors are covered on page 7.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 19
DIRECTORS’ REPORT (CONTINUED)
Maintain the Board as a well-functioning, balanced team, led by the Chair
Application (as set out by QCA)
The Board members have a collective responsibility and legal obligation to promote the interests of the
Group and are collectively responsible for defining corporate governance arrangements. Ultimate
responsibility for the quality of, and approach to, corporate governance lies with the chair of the Board.
The Board (and any committees) should be provided with high quality information in a timely manner to
facilitate proper assessment of the matters requiring decision or insight.
The Board should have an appropriate balance between executive and non-executive directors and should
have at least two independent non-executive directors. Independence is a Board judgment.
The Board should be supported by committees (e.g. audit, remuneration, nomination) that have the
necessary skills and knowledge to discharge their duties and responsibilities effectively.
What we do and why
The Group is controlled by its Board of Directors. Ted O’Neill, Executive Chairman, is responsible for
the running of the Board
All Directors receive regular and timely information about the Group’s financial and operational
performance. Relevant information is circulated to the Directors in advance of Board meetings.
The Board comprises three Executive Directors, three non- Executive Directors, together with the
Company Secretary.
The Board considers that all non- Executive Directors bring an independent judgment to meetings,
notwithstanding varying durations of service.
Ensure that between all, the Directors have the necessary up to date experience, skills and capabilities
Application (as set out by QCA)
The Board must have an appropriate balance of sector, financial and public markets skills and experience,
as well as an appropriate balance of personal qualities and capabilities. The Board should understand and
challenge its own diversity, including gender balance, as part of its composition.
The Board should not be dominated by one person or group of people. Strong personal bonds can be
important but can also divide a board.
As companies evolve, the mix of skills and experience required on the Board will change and the Board
composition will need to evolve to reflect this change.
What we do and why
The Company Secretary supports the Executive Chairman, in addressing the ongoing training needs of
Directors.
20 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
DIRECTORS’ REPORT (CONTINUED)
Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
Application (as set out by QCA)
The Board should regularly review the effectiveness of its performance as a unit, as well as that of its
committees and the individual directors.
The Board performance review may be carried out internally or, ideally, externally facilitated from time to
time. The review should identify development or mentoring needs of individual directors or the wider
senior management team.
It is healthy for membership of the Board to be periodically refreshed. Succession planning is a vital task
for boards. No member of the Board should become indispensable.
What we do and why
A number of the Board members and Company Secretary have undergone personal development training
in recent years, this is on-going.
Promote a corporate culture that is based on ethical values and behaviours
Application (as set out by QCA)
The Board should embody and promote a corporate culture that is based on sound ethical values and
behaviours and use it as an asset and a source of competitive advantage.
The policy set by the Board should be visible in the actions and decisions of the chief executive and the
rest of the management team. Corporate values should guide the objectives and strategy of the Group.
The Board should embody and promote a corporate culture that is based on sound ethical values and
behaviours and use it as an asset and a source of competitive advantage.
The policy set by the Board should be visible in the actions and decisions of the chief executive and the
rest of the management team. Corporate values should guide the objectives and strategy of the Group.
The culture should be visible in every aspect of the business, including recruitment, nominations, training
and engagement. The performance and reward system should endorse the desired ethical behaviours
across all levels of the Group.
The corporate culture should be recognisable throughout the disclosures in the annual report, website and
any other statement issued by the Group.
What we do and why
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 has also replaced one of its larger sites, West Midlands in 2012,
with a new highly efficient ammonia refrigeration system which has reduced the power consumption at
the site.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 21
DIRECTORS’ REPORT (CONTINUED)
Maintain governance structures and processes that are fit for purpose and support good decision-
making by the Board
Application (as set out by QCA)
The Group should maintain governance structures and processes in line with its corporate culture and
appropriate to its:
•
•
size and complexity; and
capacity, appetite and tolerance for risk.
The governance structures should evolve over time in parallel with its objectives, strategy and business
model to reflect the development of the Group.
What we do and why
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
Group’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.
22 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
DIRECTORS’ REPORT (CONTINUED)
The directors attended Board meetings and committees of the Board as set out below:
Meetings held
Meetings Attended:
Ted O’Neill
Kieran Mahon
Aidan Hughes
Torgeir Mantor
Willie McCarter
Seán Savage
Gerard Murphy – company secretary
Board
Remuneration Audit
4
4
4
4
4
4
4
4
1
1
N/A
N/A
N/A
1
1
1
N/A
N/A
N/A
1
1
1
N/A
N/A
The nomination committee meets as required. There were no meeting during the year.
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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 23
DIRECTORS’ REPORT (CONTINUED)
Communicate how the Group is governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
Application (as set out by QCA)
A healthy dialogue should exist between the Board and all of its stakeholders, including shareholders, to
enable all interested parties to come to informed decisions about the Group.
In particular, appropriate communication and reporting structures should exist between the Board and all
constituent parts of its shareholder base. This will assist:
•
•
the communication of shareholders’ views to the Board; and
the shareholders’ understanding of the unique circumstances and constraints faced by the Company.
It should be clear where these communication practices are described (annual report or website).
What we do and why
Norish plc encourages two way communication with both its private and institutional shareholders and
responds promptly for meeting requests.
Management try and proactively meet shareholders after both interim and full year results publication or
at any period in between, which is not in a close period.
The Chairman speaks with our major shareholders and ensures their views are communicated fully to the
Board.
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; and
•
conducted a review, during the financial year, of the arrangements and structures, referred to
above.
24 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
DIRECTORS’ REPORT (CONTINUED)
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 £0.5m along with cash reserves of £1.5m.
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
In our cold store division, the year has got off to a strong start in the first two months of the year.
Management continues to focus on maximising both sales mix and pricing, in a market that is currently
more favorable to cold storage businesses, than it has been at any time in the most recent past. Focus on
underlying cost improvement will continue. We look forward to further improving returns in this division
during the current year.
The UK frozen food sector is currently the fastest growing retail category, growing at 4% per annum. A
combination of factors is driving this growth including growth in online shopping, premiumisation of the
category as well as providing a solution to food waste. This growth comes against a background of a cold
store market which has seen a lack of significant investment over an extended number of years.
Despite the current volatility in its underlying markets, our protein sourcing division is well placed to
deliver in line with expectation on the back of its low risk operating model.
Our dairy farming division is now performing strongly. Work in relation to our major dairy project is
ongoing at pace. We have assembled a very experienced team, to drive this initiative, to achieve the
market position we have set for this development over a two to four year time frame.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 25
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
7 March 2019
26 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
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 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
7 March 2019
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 27
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF NORISH PLC
Opinion
We have audited the financial statements of Norish Plc for the financial year ended 31 December 2018
which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company
Statements of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated and
Company 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 2018 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.
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, and the ethical pronouncements established by Chartered Accountants Ireland, applied as
determined to be appropriate in the circumstances for the entity. 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.
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
28 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF NORISH PLC (CONTINUED)
Key audit matters (continued)
as a whole, and in forming our opinion thereon, and therefore we do not provide a separate opinion on
these matters.
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 valuation of 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, such as: the carrying value of goodwill; the valuation of properties and,
the existence and impairment of trade receivables.
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 2018.
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 (See Note 11)
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 2018, 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 future 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
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 29
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF NORISH PLC (CONTINUED)
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.
b. Valuation of properties – value in use (See Note 12)
The Group owns properties from which the cold storage division operates. Given the significance of the
carrying value of these properties, £11,826,000, as of 31 December 2018, 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 future 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 (See Note 14)
Given the significance of the net trade receivables balance, £5,393,000, as of 31 December 2018, 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.
30 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF NORISH PLC (CONTINUED)
Matters on which we are required to report by the Companies Act 2014
• 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.
Matters on which we are required to report by exception
Based on our knowledge and understanding of the Company and its environment obtained in the course of
the audit, we have not identified material misstatements in the Directors’ report.
Under the Companies Act 2014 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 the Act 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
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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 31
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
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
The auditor’s 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.
32 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF NORISH PLC (CONTINUED)
Responsibilities of the auditor for the audit of the financial statements (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.
Where the auditor is reporting on the audit of a group, the auditor’s responsibilities are to obtain sufficient
appropriate audit evidence regarding the financial information of the entities or business activities within
the group to express an opinion on the group financial statements. The auditor is responsible for the
direction, supervision and performance of the audit, and the auditor remains solely responsible for the
auditor’s opinion.
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.
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
7 March 2019
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 33
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2018
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
5
7
7
7
7
8
9
9
Profit for the financial year from continuing
operations
Loss from discontinued operations
30
Profit for the financial year attributable to
owners of the parent
Other comprehensive income
Total comprehensive income for the year
attributable to owners of the parent
2018
£’000
2017
£’000
36,802
(33,871)
42,012
(39,233)
2,931
2,779
43
-
(851)
2,123
-
3
(187)
-
66
(100)
(889)
1,856
10
1
(201)
(13)
1,939
1,653
(393)
(46)
(413)
(28)
1,500
1,212
(379)
(219)
1,121
993
-
1,121
-
993
34 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2018(continued)
Notes
2018
2017
Earnings per share expressed in pence per share:
From continuing operations
- basic
- diluted
From discontinued operations
- basic
- diluted
10
10
5.0p
5.0p
4.1p
4.1p
(1.3)p
(1.3)p
(0.7)p
(0.7)p
The notes on page 39 to 81 are an integral part of these consolidated financial statements.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 35
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2018
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 parent
Share capital
Share premium account
Other reserves
Treasury shares
Retained earnings
TOTAL EQUITY
Non-current liabilities
Borrowings
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
20
17
16
18
19
30
2018
£’000
2017
£’000
2,338
166
18,125
639
21,268
6,250
624
1,543
324
8,741
2,338
141
17,759
624
20,862
7,537
709
1,558
279
10,083
30,009
30,945
5,640
7,321
103
(563)
4,224
16,725
1,787
999
2,786
5,446
-
390
4,647
15
10,498
5,616
7,281
103
(563)
3,516
15,953
2,390
953
3,343
6,680
29
367
4,555
18
11,649
TOTAL EQUITY AND LIABILITIES
30,009
30,945
The notes on page 39 to 81 are an integral part of these consolidated financial statements.
Approved on behalf of the board on 7 March 2019 by:
T.J. O’Neill
Chairman
A. Hughes
Finance Director
36 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the financial year ended 31 December 2018
Share
Share
Other Treasury Retained
Controlling
Total
capital premium
Reserves
shares earnings
£'000
£'000
£'000
£’000
£'000
Total
£'000
interest Equity
£'000
£'000
Non-
At 1 January 2017
5,616
7,281
23
(563)
2,926 15,283
(22) 15,261
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80
-
80
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
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
Transactions with owners
-
-
24
-
-
24
-
-
40
-
-
40
-
-
-
-
-
-
1,121
1,121
1,121
1,121
-
64
(413)
(413)
-
-
708
772
-
-
-
-
-
-
-
-
1,121
1,121
64
(413)
-
772
At 31 December 2018
5,640
7,321
103
(563)
4,224 16,725
- 16,725
The notes on page 39 to 81 are an integral part of these consolidated financial statements.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 37
CONSOLIDATED CASH FLOW STATEMENT
for the financial year ended 31 December 2018
Notes
Profit on continuing activities before taxation
Gain on biological assets
Amortisation of intangible assets
Foreign exchange (gain)/loss
Loss on discontinued activities
Deferred consideration
Finance expenses
Finance income
Depreciation – property, plant and equipment-net
Changes in working capital and provisions:
Increase/(decrease) in inventories
Decrease/(increase) in trade and other receivables
Increase in current assets held for sale
(Decrease)/increase in current liabilities held for sale
(Decrease) /increase in payables
Cash generated from operations
Interest paid
Interest received
Taxation paid
Net cash generated from operating activities
Investing activities
Investment in intangible assets
Purchase of property, plant and equipment
Sale of biological assets
Purchase of biological assets
Net cash used in investing activities
Dividends paid to shareholders
Deferred consideration payments
Share issue proceeds
Invoice finance receipts
Overdraft repayment
Finance lease capital repayments
Term loan advance
Finance lease advance
Term loan repayments
Net cash outflow from financing activities
24
2018
£’000
1,939
(43)
141
(23)
(379)
-
187
(3)
812
2,631
85
1,287
(45)
(3)
(1,234)
2,721
(187)
3
(370)
2,167
(166)
(1,160)
68
(35)
(1,293)
(413)
(29)
64
551
(210)
(216)
2,200
73
(2,909)
(889)
2017
£’000
1,653
(66)
6
63
(219)
100
214
(11)
709
2,449
(226)
(854)
-
11
1,598
2,978
(201)
1
(251)
2,527
(82)
(1,816)
-
(19)
(1,917)
(381)
(372)
-
487
(94)
(189)
266
24
(837)
(1,096)
Net decrease in cash and cash equivalents
Cash and cash equivalents and bank overdrafts
Beginning of period
(15)
(486)
1,558
2,044
Cash and cash equivalents end of period
23
1,543
1,558
The notes on page 39 to 81 are an integral part of these consolidated financial statements.
38 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
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 the statement of comprehensive income.
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 £0.5m along with cash reserves
of £1.5m. 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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 39
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Changes in accounting policies
The Group has adopted the following new standards, interpretations, revisions 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 2018:
IFRS 9 Financial Instruments
The Group’s financial assets principally consist of trade and other receivables. Management do
not consider that these receivables have a significant financing component. The Group has
therefore applied the simplified approach permitted by IFRS 9 where the loss allowance in
relation to such receivables is based on the lifetime expected credit loss whereby the loss
allowance is measured at an amount equal to the lifetime expected credit loss at initial
recognition and throughout its life. This policy is consistent with the Group’s existing policy of
accounting for loss allowances in relation to financial assets and the impact of the adoption of
IFRS 9 has been limited accordingly.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue
from customers. It supersedes a number of standards and interpretations including IAS 18, IAS
11 as well as IFRC 13, IFRC 15, IFRIC 18 and SIC 31.
Management have aligned the Group’s revenue recognition accounting policies with IFRS 15.
After assessing each significant revenue stream management have concluded that there is no
material impact on the Group as a result of the adoption of IFRS 15.
Other interpretations, revisions 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
2018 and which management do not consider to have a material impact upon the Group are as
follows:
IFRIC 22 Foreign Currency Transactions and Advance Consideration
•
• Clarifications to IFRS 15 'Revenue from Contracts with Customers'
• Amendments to IFRS 2: Classification and measurement of share of share based payment
transactions
• Amendments to IAS 40: Transfers of Investment Property
• Annual Improvements to IFRS Standards 2014–2016 Cycle – Amendments to IFRS 1 and
IAS 28
• Amendments to IFRS 4: Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance
Contracts'
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.
40 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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.
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 and is effective for periods beginning on or after 1 January 2019, with earlier adoption permitted if IFRS 15 'Revenue from Contracts with Customers' has also been applied (subject 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 during 2019.
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:
•
IFRS 17 Insurance Contracts (effective from 1 January 2021 - yet to be endorsed by the
EU)
•
IFRIC 23 Uncertainty over Income Tax Treatments (effective from 1 January 2019)
• 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 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)
• Amendments to IAS 19: Plan Amendment, Curtailment or Settlement (effective from 1
January 2019 – yet to be endorsed by the EU)
• Amendments to References to the Conceptual Framework in IFRS Standards (effective
from 1 January 2020 – yet to be endorsed by the EU)
• Amendments to IFRS 3: Definition of a Business (effective from 1 January 2020 – yet to
be endorsed by the EU)
• Amendments to IAS 1 and IAS 8: Definition of Material (effective from 1 January 2020 –
yet to be endorsed by the EU)
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 41
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 2018, 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.
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.
42 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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 the
statement of comprehensive income 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 property
Plant and machinery
Fixtures and fittings
Equipment
50-55 years
10 years
10 years
5-20 years
Freehold land is not depreciated. Gains or losses arising on disposal of property, plant and
equipment are recognised in the statement of comprehensive income.
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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 43
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Revenue recognition
Revenue is only recognised when certain criteria are met.
Firstly, a contract must exist. A contract exists when: it has been approved and the parties are
committed to performing their respective obligations; each party’s rights can be identified;
payment terms can be identified; the contact has commercial substance; and it is probable that
consideration will be collected in respect of goods and services transferred to the customer.
Secondly, the Group must be able to identify the performance obligations within the contract. A
performance obligation is a promise to transfer either a distinct good or service or a series of
distinct goods or services. At contract inception, the Group assesses the goods or services
promised to a customer and identifies each promise to transfer as either: a good or service that is
distinct; or a series of distinct goods and services that are substantially the same and have the
same pattern of delivery to the customer.
Thirdly, it is necessary to determine the transaction price. This involves an assessment of
whether or not the revenue might be variable, contain a significant financing component, include
non-cash consideration or involve payments back to the customer.
Fourthly, it is necessary to allocate the transaction price. The transaction price is allocated to
each separate performance obligation based on their relative standalone selling prices. Discounts
are typically allocated to all performance obligations in an arrangement based on their relative
standalone selling prices. i.e. so that discount is allocated proportionately across all performance
obligations.
Revenue is then recognised when or as performance obligations are satisfied by transferring
control of the promised goods or services to the customer.
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 and it recognised on a time
apportioned basis.
Handling revenue relates to the receipt and eventual delivery of goods. The portion that relates to
receipt is recognised on invoice which coincides with the receipt into store. Similarly, the portion
that relates to 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 customer obtains control
over the goods.
Revenue from all other activities is recognised in the periods in which the services are provided.
44 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Financial assets/liabilities and available for sale assets
The Group classifies its financial assets/liabilities in the following categories: at fair value
through the statement of comprehensive income, 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 the statement of comprehensive income
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 interest rate swaps and caps. Gains and losses arising
from changes in fair value are recognised in the statement of comprehensive income 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
statement of comprehensive income. All recognised gains or losses resulting from the
option to purchase refrigerant gas are recorded in Other Income in the statement of
comprehensive income. Contingent consideration has been classified as a financial
liability at fair value through the statement of comprehensive income. All gains and losses
resulting from changes in the fair value of contingent consideration are recognised in
Other Income in the statement of comprehensive income. 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.
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 allowance for lifetime expected credit loss. Trade receivables are first assessed
individually for credit loss, or collectively where the receivables are not individually significant.
Where there is no objective evidence of credit loss for an individual receivable, it is included in a
group of receivables with similar credit risk characteristics and these are collectively assessed for
credit loss. Movements in the allowance for lifetime expected credit loss of trade receivables are
recorded in the statement of comprehensive income.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 45
46 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the
statement of comprehensive income, 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 statement
of comprehensive income. 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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 47
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Foreign currencies(continued)
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 statement of comprehensive income 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.
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 statement of comprehensive income, 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.
48 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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.
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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 49
50 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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 Group recognises internally generated intangible assets to the extent that they are both
identifiable and can be measured reliably. Recognition only occurs when the Group is satisfied
that the project is feasible such that the asset will be available for use or sale; that the Group has
the intention to complete the intangible asset and either use or sell it; that the Group 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 Group 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.
Amortisation is included within administrative expenses.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 51
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 2018 and 2017, 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 2018, if interest rates had been 1% higher with all other variables held
constant, post tax profit for the year would have been £49,000 lower, mainly as a result of
higher interest expenses on floating rate borrowings.
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.
52 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3.1 Financial risk factors(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 2018:
Trade payables
Invoice finance
Finance Leases
Term loan interest
Bank loans
Within
1 year
£’000
3,551
3,988
129
55
530
8,253
1 to 2
years
£’000
-
-
72
46
302
420
2 to 5
years
£’000
Greater
than 5 years
£’000
-
-
51
90
955
-
-
-
8
407
Total
£’000
3,551
3,988
252
199
2,194
1,096
415
10,184
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 53
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3.1 Financial risk factors(continued)
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
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 £16.7m up from £16.0m last year. In 2018, we decreased the
Gearing ratio from 40% to 34%.
The Group’s strategy is to reduce the net borrowings as soon as possible.
The gearing ratios at 31 December 2018 and 2017 were as follows:
Total borrowings
Less cash and cash equivalents
Net borrowings
Net assets
Less goodwill
Capital employed
Gearing ratio
2018
£’000
6,434
(1,543)
4,891
16,725
(2,338)
14,387
2017
£’000
6,945
(1,558)
5,387
15,953
(2,338)
13,615
34%
40%
54 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3.3 Fair value estimation
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.
The Group’s obligations under interest rate swap/cap arrangements expired during 2017 and
no new arrangements were entered into during 2018.
The Group made the final payments under the contingent consideration arrangement relating
to the acquisition of Townview Foods Limited. Accordingly, at 31 December 2018 no
obligations exist in this regard.
Liabilities measured at fair value as at 31 December 2017
Financial assets/liabilities at fair
Value through profit or loss
Contingent consideration
Total
See note 16 for further information.
Total
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
29
29
-
-
-
-
29
29
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 2018 55
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 2
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.
5
Segmental information
In previous years we analysed our results into the segments of Dairy Farming, Product Sourcing,
North West Cold Storage and South East Cold Storage. Following the expansion of the Group’s
activities the board has rationalised its segmental reporting to reflect the expanded business. The
new segments are Dairy Farming, Product Sourcing and Temperature Controlled divsion. The
comparatives for 2017 have been restated.
During 2016, the Group discontinued the FMCG business. During 2018, the Group discontinued the
Juice Business for the ready to drink 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 £4m (2017: £3.5m)
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 (2017: £0.5m) with fixed assets of £2.1m
(2017 : £1.8m).
56 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5
Segmental information (continued)
Segment information can be analysed as follows for the reporting periods under review:
• Product Sourcing business
• Temperature controlled
• Dairy farming
During 2018, £4.8m or 13% (2017: £6.17m or 14.6%) of the Group’s revenues from continued
operations depended on a single customer in the commodity trading business (2017 : commodity
trading business).
The segment results from continuing operations for the year ended 31 December 2018 are:
Dairy ProductTemperature
£’000
Farming Sourcing Controlled
£’000
£’000
Total segment revenue 527
22,540
13,735
Revenue 527 22,540
13,735
Unallocated
£’000
Total
£’000
-
-
36,802
36,802
Operating profit/(loss) (378) 643
2,709
(851)
2,123
Finance income –
interest receivable -
Finance cost –
Interest paid (10)
-
3
(41)
(136)
-
-
3
(187)
Profit/(loss) before income tax (388)
602
2,576
(851)
1,939
Income tax – corporation tax 1
Income tax – deferred tax (31)
(76)
-
(318)
(15)
-
-
(393)
(46)
Profit/(loss) for the year (418)
526
2,243
(851)
1,500
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 57
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5
Segmental information (continued)
Other segment items:
Dairy ProductTemperature
£’000
Farming Sourcing Controlled
£’000
£’000
Unallocated
£’000
Total
£’000
Depreciation 87
4
– continuing operations
(Note 12)
721
-
812
The segment results for the year ended 31 December 2017 are:
Dairy ProductTemperature
£’000
Farming Sourcing Controlled
£’000
£’000
Total segment revenue 488
27,232
14,292
Revenue 488 27,232
14,292
Operating profit/(loss) (148) 681
Finance income –
fair value gain -
Finance income –
interest receivable -
Finance cost –
Interest paid -
Finance cost –
notional interest -
-
-
(34)
(13)
2,293
10
1
(167)
-
Unallocated
£’000
Total
£’000
-
-
42,012
42,012
(970)
1,856
-
-
-
-
10
1
(201)
(13)
Profit/(loss) before income tax (148)
634
2,137
(970)
1,653
Income tax – corporation tax -
Income tax – deferred tax -
(113)
-
(300)
(28)
-
-
(413)
(28)
Profit/(loss) for the year (148)
521
1,809
(970)
1,212
Other segment items:
Dairy ProductTemperature
£’000
Farming Sourcing Controlled
£’000
£’000
Unallocated
£’000
Total
£’000
Depreciation 37
-
– continuing operations
(Note 12)
607
65
709
58 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5
Segmental information (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 the consolidated statement of comprehensive income.
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 2018 and the capital expenditure for the year then
ended are as follows:
Dairy Product Temperature
£’000 £’000
Farming Sourcing Controlled
£’000
Unallocated
£’000
Total
£’000
Assets 3,015
Liabilities 493
6,893
4,967
19,679
7,387
98 29,685
438 13,285
Capital expenditure (Note 12) 330
3
827
-
1,160
The segment assets and liabilities at 31 December 2017 and the capital expenditure for the year then
ended are as follows:
Dairy Product Temperature
£’000 £’000
Farming Sourcing Controlled
£’000
Unallocated
£’000
Total
£’000
Assets 2,814
Liabilities 499
7,827
5,889
18,896
7,668
1,129 30,666
918 14,974
Capital expenditure (Note 12) 1,241
18
502
55
1,816
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 59
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:
2018
2017
Management
Administration
Technical
Operational
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
22
23
9
121
175
2018
£’000
4,586
433
141
20
24
9
121
174
2017
£’000
4,682
419
67
5,160
5,168
There was an accrual for £27,000 (2017: £13,000) included above for pension costs at 31 December
2018.
There group capitalised employee costs of £117,000 (2017 : £38,000) in respect of the Grass to
Milk business (2017 : Foro Juice business) as an intangible asset.
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.
60 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIALSTATEMENTS
(CONTINUED)
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
8
Profit before tax
2018
£’000
2017
£’000
-
3
3
10
1
11
(187)
-
(201)
(13)
(187)
(214)
(184)
(203)
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)
812
2018
£’000
2017
£’000
709
Staff costs (Note 6)
5,160
5,168
Foreign exchange gain
(29)
(96)
Rentals payable under operating leases
- Buildings
- Plant and machinery
Auditors’ remuneration - audit service
- non audit services
489
604
45
9
476
792
45
-
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 61
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
9
Income taxes
(a) Analysis of charge in year
UK
Corporation tax at 19.00% (2017: 19.25%)
Adjustment in respect of previous periods
Ireland
Corporation tax at 12.5% (2017: 12.5%)
Adjustment in respect of previous periods
Current tax charge
Deferred tax charge (Note 20)
Deferred tax charge
(b) Factors affecting tax charge for year
Profit on ordinary activities before taxation
Profit on ordinary activities multiplied
by standard UK tax rate 19.00% (2017: 19.25%)
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
Trading losses carried forward
Total tax charge for year
2018
£’000
2017
£’000
439
(45)
-
(1)
393
46
46
369
-
44
-
413
28
28
2018
£’000
1,939
2017
£’000
1,653
368
318
9
(72)
(4)
(46)
-
174
10
439
10
(42)
(20)
-
19
156
-
441
The deferred tax charge of £46,000 (2017: charge of £28,000) 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 2018 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.
62 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
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
2018
1,500
(379)
2017
1,212
(219)
1,121
993
30,034,214
29,851,233
5.0p
(1.3)p
3.7p
4.1p
(0.7)p
3.4p
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)
2018
1,500
(379)
2017
1,212
(219)
1,121
993
Weighted average number of ordinary shares outstanding
Dilutive effect of share options
30,034,214
-
29,851,233
-
Weighted average number of shares for the calculation
of diluted earnings per share
30,034,214
29,851,233
Diluted earnings per share -continuing operations
Diluted loss per share – discontinuing operations
Diluted earnings per share- total
5.0p
(1.3)p
3.7p
4.1p
(0.7)p
3.4p
The exercise prices of all share options in issue were above the average market share price during
2017 and hence have no dilutive effect in the prior year. The share options were exercised during
2018 and none are outstanding at 31 December 2018.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 63
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
11
Goodwill and intangible assets
The net book value of goodwill at 31 December 2018 was £2,338,000 (31 December 2017:
£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 12.3% has been used.
Other intangible assets
During 2018 work commenced on a major dairy project which included DNA testing and IP
licencing costs. During the year we capitalised £166,000 (2017: £83,000) and amortised £Nil (2017:
£7,000).
At 1 January
Additions
Amortisation
Impairment
2018
£’000
141
166
-
(141)
2017
£’000
65
83
(7)
-
At 31 December
166
141
The Juice Business was discontinued during the year and the intangible asset impaired accordingly.
12
Property, plant and equipment
Included within the net book value below of £18.1m is £812,000 (2017: £771,000) 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 £59,000 (2017: £55,000).
The company has carried out impairment reviews on a number of its properties. In carrying out
the review an annual discount factor of 12.3% 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 2018 (2017: £Nil).
64 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
12
Property, plant and equipment (continued)
Freehold
Land
£’000
Buildings
£’000
Plant and
Equipment
£’000
Cost
At 1 January 2018
Additions
Foreign exchange
At 31 December 2018
Depreciation
At 1 January 2018
Charge for year
At 31 December 2018
Net book value
31 December 2018
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
Total
£’000
29,094
1,160
18
14,503
262
13
11,047
898
5
14,778
11,950
30,272
4,682
301
6,653
511
11,335
812
4,983
7,164
12,147
3,544
9,795
4,786
18,125
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
9,771
4,444
17,759
3,544
-
-
3,544
-
-
-
3,544
-
-
3,544
-
-
-
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 65
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
13 Biological Assets
During 2016 the Group acquired a dairy herd. 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 £639,000 (2017: £624,000) resulting in a movement in fair value of
£43,000 (2017: £66,000) 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
2017
£’000
624
5
35
(68)
43
2017
£’000
540
18
25
(25)
66
At 31 December
639
624
14
Trade and other receivables
Trade receivables
Less: allowance for credit losses
Trade receivables - net
Other receivables
Prepayments
Transfer to disposal group (note 30)
2018
£’000
5,419
(26)
5,393
343
825
(311)
2017
£’000
6,558
(25)
6,533
429
854
(279)
6,250
7,537
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 2018 trade receivables of £26,000 (2017: £25,000) were impaired as a result
of credit losses. The other classes within trade and other receivables do not contain impaired
assets.
66 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
14
Trade and other receivables(continued)
As of 31 December 2018, trade receivables of £1,408,000 (2017: £2,272,000), were past due of
which £Nil (2017: £25,000) 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
15
Inventories
Goods for resale
Transfer to disposal group (note 30)
2018
£’000
1,319
89
1,408
2017
£’000
2,139
133
2,272
2018
£’000
2017
£’000
637
(13)
624
709
-
709
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.
In the opinion of the directors, the replacement cost of the inventories did not differ significantly
from the figures shown above.
16
Financial liabilities
At 1 January 2017
Deferred consideration paid
Charged to the Consolidated Statement of
Comprehensive Income
At 31 December 2017
Deferred consideration paid
At 31 December 2018
Contingent
Consideration
£’000
288
(372)
113
Caps/
Swaps
£’000
11
-
(11)
29
(29)
-
-
-
-
Total
£’000
299
(372)
102
29
(29)
-
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 67
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
16
Fair value of interest rate swaps/caps
Financial liabilities(continued)
The Group’s interest rate swap/cap arrangements expired during 2017 and no new arrangements
were entered into during 2018.
Financial assets/liabilities at fair value are presented within the section on investing activities in
the Cash Flow Statement.
Changes in fair value of financial assets/liabilities 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 2018 £29,000 (2017: £372,000) 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 there
had not been a significant change in the value of the liability. The Board 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 £Nil (2017: £13,000) 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.
Following the payment in the year the deferred consideration arrangement has ceased and the Group
has no more financial obligations in this regard.
In respect of the above assessment it is considered that level 3 of the fair value hierarchy as
68 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
defined in IFRS 13 has been applied.
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)
2018
£’000
3,551
532
1,298
80
(15)
2017
£’000
4,684
393
1,544
77
(18)
5,446
6,680
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.
2018
£’000
390
-
390
2017
£’000
412
(45)
367
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 69
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
2018
£’000
129
3,988
-
530
2017
£’000
203
3,437
210
705
4,647
4,555
123
1,664
192
2,198
1,787
2,390
Total Borrowings
6,434
6,945
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 £2.2 million drawn down in February 2018 over a
maximum period of 7 years.
(b) Finance Ireland Agri agreed a term loan for £0.27m (€0.3m) drawn down in December
2017 for a maximum period of 8 years.
(c) 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 (2017: £4.25m) which is reviewed
annually.
70 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
19
Borrowings(continued)
Overdraft interest is charged quarterly at an interest rate of bank base rate plus 2.25% (2017:
2.25%). Invoice finance interest is charged on a daily basis at bank base rate plus 1.85% (2017:
2.25%). Term Loan (a) above is charged monthly at an interest rate of bank base rate plus 1.85%
(2017: 1.85%). Term Loan (b) is charged monthly at an interest rate of 3.75% (2017: 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 2018 was as follows:
2017
2018
Current bank borrowings
Non-current bank borrowings
Book
Value
£’000
4,647
1,787
Fair
Value
£’000
4,647
1,787
Book
Value
£’000
4,555
2,390
Fair
Value
£’000
4,555
2,390
6,434
6,434
6,945
6,945
The Group pays interest at the base rate plus a margin of 1.85% 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
2018
£’000
110
400
2017
£’000
1,514
190
510
1,704
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 71
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
2018
£’000
979
20
999
2017
£’000
933
20
953
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 2017
Charged/(credited) to the Consolidated Statement of
Comprehensive Income
At 31 December 2017
Charged/(credited) to the Consolidated Statement of
Comprehensive Income
At 31 December 2018
924
29
953
46
999
1
(1)
-
-
-
Total
£’000
925
28
953
46
999
The deferred tax liability due after more than one year prior to offsetting is £979,000 (2017:
£933,000).
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 (2017: £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.
72 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
21
Share capital and Share Premium
Authorised
60,000,000 (2017: 60,000,000) Ordinary shares of €25c each
10,836
10,836
2018
£’000
2017
£’000
Allotted, called up and fully paid
Ordinary shares of €25c each
At 1 January 2017
Issued during the year
At 31 December 2017
Issued during the year
Number
£’000
29,960,378
-
29,960,378
110,000
________
5,616
-
5,616
24
At 31 December 2018
30,070,378
5,640
During the year, the company issued 110,000 (2017: £Nil) Ordinary shares of €25c each for a
total cash consideration of £64,000 (2017: £Nil). The excess over nominal value of £40,000
(2017: £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 2018 73
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
21
Share capital and Share Premium(continued)
Share Premium
At 1 January
Share Issue
At 31 December
Share options
2018
£’000
7,281
40
2017
£’000
7,281
-
7,321
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.
74 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Share options(continued)
Movements in the number of share options outstanding and their related weighted average
exercise price are as follows:
2018
2017
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
0.58
Exercisable at 31 December
- - 250,000
0.58
The share options outstanding at the end of 2017 expired in June 2018 at an exercise price of
58p. They were exercised at this point. 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
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 75
performance criteria being met. There were no transactions connected with the JSOP during
either 2017 or 2018.
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
22
Other reserves
Capital conversion reserve fund
Foreign exchange
2018
£’000
23
80
2017
£’000
23
80
103
103
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 1.65 cent (2017: 1.50 cent) per ordinary share
2018
£’000
2017
£’000
1,543
1,558
1,543
1,558
2018
£’000
413
2017
£’000
381
The Board recommends the payment of a final dividend of 1.80 € cent per share. This will be
paid on 18 October 2019 to those shareholders on the register on 27 September 2019. It will
bring the total dividend in respect of the financial year to 1.80 cent per share compared with 1.65
cent last year.
76 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
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:
2018
2018
Other
Land and operating
leases
Buildings
£’000
£’000
2017
2018
2017
Other
Land and operating
leases
£’000
Total Buildings
£’000
£’000
Expiring:
Within one year
Between two and five years
Beyond five years
515
2,000
1,632
459
1,370
254
974
3,370
1,886
515
2,061
2,087
323
424
-
2017
Total
£’000
838
2,485
2,087
4,147
2,083
6,230
4,663
747
5,410
(b) Guarantees on leasehold properties
The annual operating lease commitment on land and buildings of £515,000 (2017:
£515,000) arises on leasehold properties and land.
(c) Capital commitments
At 31 December 2018, the Group had £Nil (2017: £Nil) of capital projects authorised of
which £Nil (2017: £Nil) was contracted at 31 December 2018.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 77
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
25
Commitments and contingencies(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
2018
£’000
129
123
-
252
2018
£’000
507
46
553
2017
£’000
217
196
-
413
2017
£’000
497
34
531
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.
During the year, Aidan Hughes exercised 110,000 share options at 58p.
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 £141,000 (2017: £67,000). There was an accrual for
£27,000 (2017: £13,000) included above for pension costs at 31 December 2018.
78 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
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 100%
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 2018 79
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
28
Group undertakings(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
80 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
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 2018, £29,000 (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 was paid in March
2018.
Interest of £Nil (2017: £13,000) has been charged to the Consolidated Statement of
Comprehensive Income representing unwinding of the discount.
At 31 December 2018 liabilities include £Nil (2017: £29,000) in relation to the contingent
consideration.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 81
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
30 Discontinued operations and assets classified as held for sale
During the year ended 31 December 2016, the Group discontinued the FMCG business in the
product sourcing division.
During the year ended 31 December 2018, the Group discontinued the Juice Business for the
ready to drink market in the product sourcing division.
Financial information in respect of this component of the Group is summarised below.
Operating cash flows
Investing cash flows
Financing cash flows
2018
£’000
(48)
-
-
2017
£’000
430
-
-
Total cash flows
(48)
430
Other current assets
2018
£’000
324
Total assets of the disposal group classed as held for sale
324
2017
£’000
279
279
82 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
2018
£’000
2017
£’000
Trade and other payables
(15)
(18)
Total liabilities of the disposal group classed as held for sale
(15)
(18)
Revenue
Expenses
2018
£’000
143
(522)
2017
£’000
175
(394)
Loss after tax of discontinued operations
(379)
(219)
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
Product Sales totalling £107,000 (Marketing services 2017: £16,000) were provided to a
company where one of our Directors held a shareholding during the year. There was £Nil
outstanding as at 31 December 2018 (2017: £8,000).
34 Approval of financial statements
The Board of Directors approved these financial statements on 7 March 2019.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 83
COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2018
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 7 March 2019 by:
T.J. O’Neill
Chairman
A. Hughes
Finance Director
2018
£’000
2017
£’000
1,209
1,209
12,095
11,687
(388)
(388)
11,707
11,299
12,916
12,508
5,640
7,321
23
(563)
495
5,616
7,281
23
(563)
151
12,916
12,508
84 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
COMPANY STATEMENT OF CHANGES IN EQUITY
Share
Capital
£’000
5,616
-
-
-
-
-
Share
Premium
Account
£’000
7,281
-
-
-
-
-
Capital
Conversion
Reserve
Fund
£000
23
-
-
-
-
-
Treasury
Shares
£’000
(563)
-
-
-
-
-
At 1 January 2017
Profit for the financial
year
Total comprehensive
income for the year
Dividends paid(note 4)
Share issue
Treasury
acquired
shares
At 31 December 2017
5,616
7,281
23
(563)
Profit for the financial
year
Total comprehensive
income for the year
Dividends paid(note 4)
-
-
-
-
-
-
Share issue
24
40
-
-
-
-
-
-
-
-
Profit
And
Loss
Account
£’000
42
509
509
(400)
-
-
151
778
778
Total
£’000
12,399
509
12
(400)
-
-
12,508
778
778
(434)
(434)
-
64
At 31 December 2018
5,640
7,321
23
(563)
495
12,916
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 2018 85
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 company has not prepared a Statement of cashflows, as required under IAS 1, as the
company does not hold cash and has had no cash movements in the current or prior financial
year.
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).
86 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
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
the
determination of a suitable discount rate.
to assumptions about future operating results and
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 £778,000 (2017: 509,000).
4
Dividends paid and proposed
Final dividend paid in respect of the previous year
of 1.65 cent (2017: 1.50cent) per ordinary share
2018
£’000
2017
£’000
434
400
The company paid a total dividend in 2018 of £434,000 (2017: £400,000), of which £434,000
(2017: £400,000) was paid through the company.
5
Investments – Shares in group undertakings
Cost and net book value at 1 January
Additions
2018
£’000
1,209
-
2017
£’000
1,056
153
Cost and net book value at 31 December
1,209 1,209
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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 87
NOTES TO THE ACCOUNTS (CONTINUED)
6
Debtors
Amount receivable from subsidiary undertakings
Other debtors
Corporation tax
2018
£’000
12,090
5
-
2017
£’000
11,638
5
44
12,095
11,687
Amounts due from Group undertakings are unsecured, interest free, have no fixed date of repayment and are
repayable on demand.
All of the Company’s trade and other receivable as shown above are considered to approximate fair value.
7
Creditors: Amounts falling due within one year
Amounts owed to subsidiary undertakings
Corporation tax
2018
£’000
388
-
2017
£’000
388
-
388
388
Amounts due to Group undertakings are unsecured, interest free, have no fixed date of repayment and are
repayable on demand.
All of the Company’s intra-group payables as shown above are considered to approximate fair value.
88 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
NOTES TO THE ACCOUNTS (CONTINUED)
8 Called up share capital
Authorised
2018
£’000
2017
£’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 2017
Issued during the year
At 31 December 2017
Issued during the year
29,960,378
-
29,960,378
110,000
________
5,616
-
5,616
24
At 31 December 2018
30,070,378
5,640
The total Ordinary shares in issue are 30,070,378 (2017: 29,960,378). These are all fully paid up.
During the year, the company issued 110,000 Ordinary shares of €25c each for a total cash
consideration of £64,000 (2017: £Nil). The excess over nominal value of £40,000 (2017: £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 2018, the Company had £Nil (2017: £Nil) of capital projects authorised of
which £Nil (2017: £Nil) was contracted at 31 December 2018.
At the 31 December 2018, the Company has exposure for the debts of Norish Limited and
Townview Foods Limited totalling £5,946,000 (2017: £6,169,000) 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, West Midlands and Gillingham
properties.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 89
HISTORICAL FINANCIAL SUMMARY
Consolidated income statement
2014
£’000
2015
£’000
2016
£’000
2017
£’000
2018
£’000
Revenue – continuing
23,645
25,145
32,098
42,012
36,802
– discontinuing
Trading profit – continuing
– discontinued
Other Income
Other exceptional items
Net finance expenses
Depreciation
Profit/(loss) before taxation
Taxation
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)
-
2,565
(219)
-
-
(203)
(709)
1,434
(441)
-
2,935
(379)
-
-
(184)
(812)
1,560
(439)
Profit for the financial year
298
289
280
993
1,121
Dividends
(169)
(188)
(346)
(381)
(413)
Consolidated Statement of Financial Position
2014
£’000
2015
£’000
2016
£’000
2017
£’000
2018
£’000
Total assets less current liabilities
Non-current assets
Current assets
Current liabilities
18,336
4,949
(6,451)
18,223
10,601
(8,233)
19,578
9,489
(9,831)
20,862
10,083
(11,649)
21,268
8,741
(10,498)
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
16,834
20,591
19,236
19,296
19,511
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
5,640
7,321
103
(563)
4,224
-
16,725
-
999
-
1,787
16,834
20,591
19,236
19,296
19,511
90 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018
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
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2018 91