PRODUCE Investments has issued a profit warning after booking non-cash write-offs worth £1 million relating to the implementation of a new back office system.
The Tayside-based potato and daffodil producer saw shares crash more than 14 per cent yesterday as it posted a £1m pre-tax loss for the first half of its year as a result of a longer than expected implementation process for a new enterprise resource planning (ERP) system.
The system is expected to deliver efficiency gains from the next financial year, but the delays along with the lowest yielding potato crop in recent UK history hit underlying profits, which fell to £200,000 from £3.4m.
In addition, the board commissioned a full review of the interim accounts to ensure all balances transferred into the new ERP system were correct, leading to exceptional charges of £547,000, and fixed asset impairment charges of £460,000.
In addition a charge of £330,000 has been booked relating to share options against trading profit. A further non-cash charge of £420,000 relating to the treatment of biological assets will be taken in the second half.
Operationally, the group saw revenue increase by one per cent to £79.3m, as volume fell five per cent.
Neil Davidson, chairman, said current trading was well ahead of last year but year-end results will depend on how much prices recover, the outcome of the daffodil and Jersey Royals potato seasons. He said: “While we believe that underlying trading profit for the year is likely to be broadly in line with the board’s original expectations, full-year profit before tax will be lower than these expectations as a result of the non-cash write-offs.”
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