NORISH, the cold storage group, plunged into losses before tax of £6.85 million last year. The results are much worse than expected and arose mainly from exceptional costs of £5.56 million, following store write downs, disposals and rationalisation costs associated with its decision to withdraw from the Irish cold storage market.
The latest losses are in addition to the loss of £760,000 incurred in 1994. Not surprisingly, Norish considers the results do not justify a dividend.
The loss on continuing activities before exceptional costs, amounted to £280,000. Group sales fell from £9.77 million to £9.5 million. The loss per share jumped from 17.2p to 68.7p, but exceptional costs accounted for 66.0p.
Norish resolved to dispose of come of its Irish outlets over a year ago. However, it has now decided to completely withdraw from the domestic market because of over capacity and the level of group debt. This will leave it with four operations in Britain which are profitable, said its chairman Mr Brian Joyce.
Even after rationalisation of the industry, there is still substantial overcapacity, he said. There is capacity for 260,000 tons with a demand for only half of that, he said. Mr Joyce argued that the reintroduction of intervention for beef increases demand by around 8,000 tons which might firm up demand. But he said a business cannot be run on "what might"
happen. The British market is"more vibrant" and that is where (the business will be concentrated once its last unit in Ireland has been sold.
Norish yesterday announced agreement to sell the issued share capital of Norish (Eirfreeze) to Gildale and the disposal of its 60 per cent share holding in Norish (Kilkenny) to Avonmore Foods which owns the remaining 40 per bent. Gildale is a new investment (company established to make the purchase but the identity of the shareholders have not been disclosed. The two disposals will have to be approved by Norish shareholders at an extraordinary general meeting.
Norish (Eirfreeze)is being sold for £2.5 million but an inter company loan of £1.4 million is to be repaid.. It and a subsidiary generated a profit of £900,000 last year but that (was after a one off gain of £1.06 million. Net assets amounted £2.07 million.
Norish (Kilkenny) is being sold for £100,000 but the benefit to Norish is £870,000 following the payment of a dividend tosses amounted to £180,000 and net assets came to £1.34 million.
The proceeds from the disposals will be used to reduce group borrowings. Mr Joyce said borrowings should be reduced from £6 million (to around £3 million and gearing will be just under 100 percent.
The disposals also remove the loss making activities, he added. Trading in Britain in the second quarter has "started well". Its older units, at Brierley Hill and west Suffolk, continue to "perform strongly" and the two new units, at Wrexham and at Braintree in Essex, expected to make a positive contribution.
No forecasts have been made but the group could generate between £60,000 and £700,000 in 1996. However it is likely to have reduce borrowings to a more reasonable level before there is any prospect of a return to dividends payments. This year is likely to be another barren year for share holders.
Mr Joyce has been acting C executive since Mr Leslie McCauley, a founding shareholder, resigned last September. Asked about the appointment of a new chief executive, Mr Joyce said "They have let me mind the shop." It might be "more appropriate" make an appointment when group was totally out of the Irish market its last Irish unit, at Castleblayney, Co Monaghan, is up for sale and then it might be appropriate to have a British chief executive, he said.
