Roebuck Food Group
Roebuck Food Group produces “A2 protein milk” and trades diary, meat and fish in the UK and Ireland. The company owns a farm in Ireland. Headquarters are in Dublin. The stock trades in London with symbol RFG. The company was formerly known as Norish Plc.
Btw, I do not think the company owns any land.
See the annual report over 2021. Key audit matters were 0.7 million GBP of capitalized development costs and 3.7 million GBP of trade receivables.
Recently share price volatility has been low but 3-year monthly volatility is very high. There are 2 reasons for this.
First, the company used to be financially distressed, at least to some degree. The current ratio was below 1 and Tangible Assets/Tangible Book was about 3. Share prices of such companies are always more volatile. But then the company sold its cold storage business at the end of 2021 for an enormous profit of 40 million GBP. It used the proceeds to pay off most debt and also paid back 49.2 million GBP to shareholders using a special dividend of 1.66 GBP per share. However (secondly) it seems the volatility has been computed with prices that have not been corrected for this special dividend. Therefore my computation is wrong. I think pricing data was adjusted for the special dividend because the it was legally structured as a repurchase.
Apart from the special dividend in 2021 the company also paid smaller dividends in 2021, 2019 and before. Almost certainly the company will not pay a dividend in 2022.
There is only one non-executive director.
I rate the current balance sheet as strong, with moderate leverage and more cash than debt.
Substantial shareholders: MI Select Managers UK Equity Fund 11.86%, executive chairman Ted O'Neill 10.09%, former director Kieran Mahon 6.60%, outsider CF Milton 4.81%, outsider John Teeling 4.54%.
Non-executive director Seán Savage also owns 1.00 million shares.
Related party transactions: I do not think there is anything worth mentioning.
My take: promising Irish farming and diary research nanocap company probably with good governance.
At a 0.15 GBP per share the market cap is only 5.3 million USD. The company is very cheap based on EV/Revenue. Therefore a small increases in revenue can increase profit margins and profit much because of the scale effect.
For now, a problem is low profitability. When excluding the one-time profit related to the sale of the cold storage business the company made a loss of several millions of GBP. This loss was mostly related to impairments of capitalized development costs of a new milk product. Development of that product was discontinued. Also some property, plant and equipment was impaired. I expect the company to run approximately break-even in 2022.
Disclosure: long Roebuck Food Group.