Chairman's Review

This is an extract from the 2009 Chairman's Review for Fresca Group Limited, the parent company of Mack.

A Word from the Chairman

In my memory this is certainly one of the hardest years the business has faced. Historically the fresh produce industry has been relatively immune to the effects of a national economic recession but on this occasion, things have been different. The greatest impact on us has been the collapse of sterling against both the US Dollar and the Euro, followed closely by heightened competition in our retail customers putting further pressure on our margins.

Put simply, many of our cost prices saw increases of up to 30% whilst our customers wanted to maintain or even lower the price they were paying for goods. In these circumstances I am pleased to be able to report that the Group produced a profit before tax of £8.93 million on sales of £352 million. The operating profit for the Group on a like for like basis was some 2.8% lower than in the previous year.

This robust performance is directly attributable to the quality and commitment of the teams that we have in the business. We have continued to invest and seek opportunities, despite the trading climate. During the year we have opened new facilities in Southampton to support our growing cruise ship business and Channel Islands customers, and we have recently taken on additional facilities for our very successful Bristol branch.

We now have a stake in British strawberry production with our investment in Wallings Nursery in Essex. It would also be impossible to ignore the high profile opening of the UK’s largest glasshouse complex, Thanet Earth.

I am very proud of what has been achieved at Thanet – that we have managed to make this business so environmentally sustainable, that we are operating another successful joint venture model, and that after a complex four year planning period our tomato, pepper and cucumber crops are now to be found on retail shelves. This hasn’t been easy, and we are not anticipating any profit generation until 2010/11, but again, it’s only thanks to the commitment of all those involved with the project that we have got off to such a flying start.

I am pleased to be able to report that the performance of our two Evesham-based businesses, ValeFresh and Primafruit, was much improved. They have managed to build business with important new customers following a loss of business last year, with a fresh outlook and greatly improved operational efficiency.

Our established joint ventures, Manor Fresh and MMG both had successful years despite the pressures they faced. The Manor Fresh team did an excellent job in driving their principal customer’s business during this tough period and this has been acknowledged in the recent renewal of the existing sole supply arrangement on potatoes. MMG, the 50:50 joint venture with Spain’s leading citrus exporter, Martinavarro, continues to provide an excellent model of supply base integration providing its customers with outstanding fruit, varietal development and service with a very competitive cost base.

Fresca has had to respond to the economic recession by challenging its costs. This led to some tough decisions and some sad departures over the past 12 months. However, we are a people business and at all times we have tried to protect this valuable resource. It is through the effort and ability of many of our people that Fresca has produced a result for the year which I think is very satisfactory in tough times.

Looking forward, we will focus on conserving our resources and on making a success of all the businesses that we operate. We will continue to invest in our people. We remain committed to investing in new varietaldevelopment and finding new ways of working with both our customers and our suppliers. And we will continue to explore ways of expanding the base of the business, with new customers and new products whilst at the same time managing risk at an acceptable level.

Christopher Mack
August 2009