12th Oct 2018 09:21
LONDON (Alliance News) - Produce Investments PLC on Friday reported a swing to annual loss on lower revenue and increased administrative & operating costs, as it awaits the outcome of its proposed takeover by Promethean Investments LLP.
For the year ended June, the potato and daffodil grower posted a pretax loss of GBP9.5 million from a profit of GBP5.5 million the year before.
The company's revenue decreased 5.9% in the period to GBP188.2 million from GBP200.1 million.
Produce Investment's administrative & other operating expenses increased to GBP79.7 million from GBP64.2 million.
"In a difficult year impacted by the adverse spring weather we have seen business gains and improved operational efficiencies in our core fresh segment helping sustain our performance in a tough retail environment and I am pleased to say that we have delivered operating profit in line with the board's revised expectations," said Angus Armstrong, chief executive officer.
Armstrong continued: "Rowe Farming and Jersey both suffered due to the long periods of cold and unseasonal spring weather and our Swancote facility continued to struggle in a fragmented and competitive market sector."
Produce Investments said its decision on a final dividend has been delayed until the outcome of the proposed GBP53.0 million takeover from Promethean is "known".
For financial 2017, Produce paid a full year dividend of 7.45 pence per share.
The potato producer said its performance for year was affected by the "unexpected" impact of "extremely adverse" spring weather on its businesses in Jersey and Cornwall.
This performance resulted in GBP14.7 million in exceptional items. Produce Investments suffered GBP4.6 million and GBP6.8 million asset impairment provisions for its Swancote Foods and Rowe Farming businesses, respectively.
Its daffodil bulb biological assets suffered a GBP2.2 million downward valuation adjustment.
The new year hasn't started well for the company either.
In late September, Produce Investments said one of its major customer has decided to implement a new single-supplier strategy and, as a result, the company will lose the supply contract once the existing agreement expires in August 2019.
Armstrong said the company was "disappointed" to lose a "key customer" in the period but is "confident it will "pick up new opportunities" in the market.
Produce Investments will gradually phase out volumes to the undisclosed customer over a three-year period from the expiration of the current contract.
Armstrong added: "Looking forward, we will be increasing our presence in the daffodil market, continuing our growth with Restrain through a healthy demand for its tomato ripening and potato storage solutions and we will continue to expanding the Linwood Crops business.
"We are also working through the fair and reasonable offer from Promethean Investments and regardless of the outcome I remain confident that management and staff will continue to grow and develop the business."
Produce reached an agreement with Promethean Investments LLP for an acquisition of the company by Promethean vehicle April 1983 Bidco Ltd.
The offer of 193 pence per share in cash values Produce as a whole at GBP53.0 million.
Shares in Produce Investments were untraded Friday but last closed at 178.00 pence each.