That’s a drop of £6.73m, or 17%, on the £39.4m post-tax profit made on a smaller turnover of £151.7m in 2018. The difference appears to be caused by costs, which jumped by 22% from £92.3m in 2018 to £112.66m last year.
In a directors’ report signed off by managing director Colin Blair on November 5 which also refers to this year’s trading, Shetland and Orkney-based Cooke Scotland said it has been fortunate that after an initial slump caused by Covid-19, its main markets have proven to be robust and trading has remained steady, albeit at a lower level than would have otherwise been expected.
No Covid lay-offs
“Measures have been taken in various areas of the business to ensure the safety of employees and to date no employees have been furloughed, laid off or made redundant,” said the company, which is a subsidiary of Canadian family-owned aquaculture giant Cooke Inc.
It added that there is expected to be some reduction in cashflow over the next 12 months until the hospitality sector fully recovers and the demand for salmon returns to the levels prior to Covid-19.
“In recent months we have experienced increased distribution costs, particularly in relation to airfreight which is currently not supported by volume passenger travel which previously diluted this cost,” said the directors.
“Overall, it is estimated that trading and cashflow will reduce by 10 to 15% of normally expected levels – however this still results in a viable and cash generative business.”
Expansion by acquisition
In the report, written before last week’s announcement by Norwegian fish farmer Grieg Seafood that it intends to sell its salmon farms in Shetland, Cooke Scotland stated that it will continue to strengthen, develop and improve while seeking to expand its production capability by natural expansion or by acquisition as suitable opportunities arise.
In a separate strategic report accompanying the accounts, Cooke said the EU was a significant market for its fish, and it had taken steps to prepare for selling and distributing its product based on its understanding of the increased compliance that will be required if there is no agreement on a Brexit trade deal.
“We continue to monitor developments and will take steps to mitigate the risks associated with the export of our product to the EU,” said Cooke.
£87.5m from Europe
In 2019 Cooke Scotland made revenue of £87.5m (2018: £73.0m) from customers in mainland Europe, along with £52.9m (£52.4m) from sales in the UK and £29.9m (£26.2m) from sales to the rest of the world.
It made a gross profit of £55.7m (£59.4m) and paid £7.3m (£8.8m) in tax.
Cooke Scotland paid £10.84m (£9.61m) in wages, social security and pension costs to 282 staff. The directors received £455,939 (£425,000), with the highest-paid director receiving £187,579 (£161,738).