TIDMFIF
RNS Number : 0520I
Finsbury Food Group PLC
19 March 2018
Date: 19 March 2018
On behalf Finsbury Food Group Plc ('Finsbury',
of: 'the Company' or 'the Group')
Embargoed until: 0700hrs+
Finsbury Food Group Plc
Interim Results
Finsbury Food Group Plc (AIM: FIF), a leading UK speciality
bakery manufacturer of cake, bread and morning goods for the retail
and foodservice channels, is pleased to announce its unaudited
interim results for the 26 weeks ended 30 December 2017.
Summary
-- Group revenue of GBP157.8m up 0.7% (H1 2016: GBP156.6m) like
for like*(1) up 2.5% to GBP144.8m.
-- Group operating profit of GBP8.7m up 4.7% (H1 2016: GBP8.3m).
-- Group operating profit margin of 5.5% (H1 2016: 5.3%).
-- Profit*(2) before tax of GBP8.4m up 6.3% (H1 2016: GBP7.9m)
-- Adjusted*(3) diluted EPS, up 4.3% at 4.8p per share (H1 2016:
4.6p per share), adjusted EPS, up 6.4% at 5.0p per share (H1 2016:
4.7p per share)
-- Interim dividend per share increased 10% to 1.1p (H1 2016: 1.00p per share)
-- Net debt of GBP16.6m reduced to 0.6 times annualised EBITDA
of the Group (H1 2016: GBP21.0m, 0.8 times).
Strategic highlights
-- New state of the art cake line now fully operational.
-- High level of capital spend maintained.
-- Bread and morning goods Foodservice like for like*(1) revenue up 8.2%.
-- Loss-making bakery now closed with most employees having
found alternative external employment.
-- Winner of Quality Food Awards for a number of products.
Post period highlights
-- New five year banking facility to February 2023 of GBP45m RCF plus GBP45m accordion.
-- Purchase of the freehold property at Lightbody bakery for GBP2.6m.
*(1) like for like revenue is the revenue from operations
excluding the revenue from the closed bakeries during the first
half of the current year.
*(2) Profit is before significant non-recurring and other
items.
*(3) adjusted and adjusted diluted EPS have been calculated
using earnings excluding the impact of amortisation of intangibles
and significant non-recurring and other items as shown on the face
of the Statement of Comprehensive Income. The adjusted diluted EPS
and adjusted EPS have been given, as in the opinion of the Board
this will allow shareholders to gain a clearer understanding of the
trading performance of the Group.
Commenting on the results, John Duffy, Chief Executive of
Finsbury Food Group Plc, said:
"Our revenue and profit growth in the period illustrates the
Group's resilience to what has been a sustained period of
market-wide headwinds. The investment into the business that we
have implemented over this and previous years, alongside a focus on
operational excellence has positioned us well and enabled us to
continue to deliver robust results. This, alongside the strength of
our balance sheet has underpinned our ability to increase our
interim dividend.
"The headwinds will persist into the period ahead, but we are
determined to deliver against our strategic objectives and continue
to drive growth both organically and through acquisition. With our
resilient and diversified Group, by category, channel and
geography, we are confident that we will continue to deliver steady
progress in the period ahead."
For further information:
Finsbury Food Group Plc www.finsburyfoods.co.uk
John Duffy (Chief Executive) 029 20 357 500
Stephen Boyd (Finance Director)
Cenkos Securities plc
Bobbie Hilliam (Corporate Finance)
Alma PR finsbury@almapr.com
Rebecca Sanders-Hewett 020 8004 4217
Sam Modlin
STRATEGY
Our strategic objective is to create sustainable value for our
shareholders, customers and other stakeholders through our vision
to build the leading speciality bakery group in the UK. We produce
a broad range of high-quality bread, cake and bakery snacking
products targeted at growing channels and market niches. These
deliver growth and differentiation for our major customers and
fulfil the needs of end consumers.
Our strategy to achieve our vision is as follows:
-- Invest in our people and our manufacturing sites to form a
strong foundation for us to deliver our strategy.
-- Create innovative, high-quality bakery products that anticipate key market trends.
-- Ensure customer and consumer needs are at the heart of our decision making.
-- Develop a strong licensed brand portfolio to complement our
core retailer brand relationships.
-- Aim to succeed in both the retail grocery and out-of-home channels.
-- Grow through a combination of organic growth and targeted acquisitions.
Our growth strategy will continue to be delivered through a
combination of organic growth and targeted acquisitions. Future
acquisitions will typically consolidate our market share in
existing product areas or introduce further diversification into
additional specialist product areas, customers and channels.
Net debt of GBP16.6 million at half year, equating to 0.6 times
annualised EBITDA, results in a healthy balance sheet and
considerable scope to invest further, develop site capabilities and
participate in industry consolidation and appropriate M&A.
The Group has refinanced its current debt facilities. The new
facility is a GBP45m revolving credit facility provided by a club
of three banks - HSBC, Rabobank and RBS. The facility is on
improved terms, is available for five years and also includes scope
for the facility to be increased by up to a further GBP45m. The new
facility and the potential for it to be increased further provides
increased capacity for the Group to explore future growth
opportunities and support its long-term investment strategy.
Our core strategy is centred on generating returns for
shareholders. Adjusted diluted earnings per share are up 4.3% year
on year at 4.8p per share, adjusted earnings per share is up 6.4%
at 5.0p per share.
A final dividend for the year to 1 July 2017 of 2.00p per share
was paid on 22 December 2017 to shareholders on the register at the
close of business on 24 November 2017. This brought the total
dividend for the year to 1 July 2017 to 3.00p per share.
The Board of Directors is announcing an interim dividend for the
year ending 30 June 2018 of 1.1p per share (H1 2016: 1.00p per
share), an increase of 10.0%. The interim dividend will be paid on
27 April 2018 to shareholders on the register at the close of
business on 3 April 2018. The election deadline for participants in
the Company's Dividend Re-investment Plan will be 3 April 2018.
OUTLOOK
The first half year results have been delivered despite a
backdrop of commodity and exchange rate driven inflationary
headwinds and consequentially challenging grocery environment. The
results delivered demonstrate the benefits of our strategy and the
investment implemented over prior years. Our balance sheet remains
strong allowing us to continue to invest in our businesses and
therefore maintain the delivery of our stated growth strategy. The
broader channel, customer and product diversification achieved has
created a solid platform for the business and will continue to
benefit us given our access to higher growth opportunities such as
the faster growing foodservice channel.
The UK grocery market continues to be challenging with food
inflation becoming entrenched. As previously noted, this is a
result of increased commodity prices, the adverse impact of USD and
Euro exchange rates and the annual above inflation increase in the
National Living wage. The Group is working hard to mitigate this
input cost inflation through continued operational efficiency,
investment in automation and, inevitably, price increases.
Whilst we are cognisant of the price recovery process, we expect
the Group's steady performance to continue into the second half of
the financial year and are confident that we have created a
resilient business that can not only withstand the current
headwinds but will continue to progress.
OPERATING REVIEW
UK Bakery
H1 2017 H1 2016 Movement
GBPm GBPm
------------------ -------- -------- ---------
Revenue 140.5 139.0 +1.1%
------------------ -------- -------- ---------
Operating profit 7.3 7.4 -0.7%
------------------ -------- -------- ---------
Operating margin 5.2% 5.3%
------------------ -------- --------
UK Bakery comprises the supply of cake, bread and morning goods
in the Grocery and Foodservice channels. Revenue in the period has
increased by 1.1% to GBP140.5 million. Operating profit has
decreased by 0.7% to GBP7.3 million.
The grocery ambient cake and the bread and morning goods markets
are both large mature markets. The grocery ambient cake market sees
year on year volume decline of -2.1% and value growth of +1.3%
(Source: IRI 26 weeks ending 6th January 2018) and the bread and
morning goods grocery market sees year on year volume decline of
-1.3% and value growth of +2.2% (source: Kantar Worldpanel 24 weeks
ending 31st December 2017).
UK Bakery Operating profit margin has decreased to 5.2% due to
commodity price pressure, particularly the spike in butter
prices.
The UK Bakery figures includes GBP13.0m (H1 2016: GBP15.4m) of
turnover form bakeries closed during the first half of the year.
Note 2 provides details on the Grain D'Or bakery closure where
trading activities ceased partway through the 26 weeks to 30
December 2017.
Overseas
H1 2017 H1 2016 Growth
GBPm GBPm
----------- -------- -------- -------
Revenue 17.3 17.6 -2.1%
----------- -------- -------- -------
Operating
profit 1.2 1.0 24.2%
----------- -------- -------- -------
Operating
margin 7.0% 5.5%
----------- -------- --------
The Overseas business comprises Lightbody Europe which trades
primarily in France. The business specialises in the import and
sale of premium UK manufactured food products. It is an important
channel into Europe for Group UK manufactured licensed celebration
cake and bite style products.
The business is heavily exposed to the Euro which has had a
favourable impact on translation of Euro denominated sales and
profit. In Euro terms the business has performed well too and we
are pleased with the operating profit performance of Overseas
business.
Revenue and Operating Profit
Group revenue increased in H1 2017 by 0.7% year on year to
GBP157.8 million. Profit before interest, tax and significant
non-recurring and other items was up 4.7% to GBP8.7 million.
Interest Payable
Interest payable and charges on related interest rate swaps on
the Group's bank debt in H1 2017 was GBP331,000 (H1 2016:
GBP433,000), a decrease of GBP102,000. The decrease in charges is a
consequence of the lower average debt balance over the period.
Taxation
The Group's effective tax rate in H1 2017 was 21.2%, which
compares to 21.2% in H1 2016. The effective rates represent a blend
of the UK and French corporation tax rates. There was a decrease in
the UK tax rate offset by a higher proportion of profits charged at
the higher French corporation tax rate.
Earnings per share
The Group considers both adjusted and adjusted diluted earnings
per share to be the most appropriate EPS measure. The adjusted
earnings per share were up 6.4% to 5.0p, (H1 2016: 4.7p) and
adjusted diluted earnings per share were up 4.3% to 4.8p, (H1 2016:
4.6p). Further earnings per share information is given in Note
6.
FINANCIAL REVIEW
Cash flow and net debt
Cash inflow from operating profit before changes in working
capital is GBP12.7 million, which compares with GBP12.0 million in
H1 2016. The increase arises from some upside from organic growth
in profit. Net debt at 30 December 2017 is GBP16.6 million which
compares to GBP21.0 million at H1 2016 a reduction of GBP4.4
million. Working capital remained steady in H1 2017 (H1 2016:
growth +GBP3.8m). The year on year improvement is driven by the
exit of the loss- making business. Capital expenditure of GBP4.9
million driven by the phasing of spend on two major projects, the
new cake line and new business IT system was incurred in H1 2017
which is GBP0.5 million lower than H1 2016. The cash out-flow
relating to restructuring and reorganisation costs were GBP2.4
million in H1 2017.
Pensions
The Group has one defined benefit pension scheme within its
Memory Lane Cake business in Cardiff. All remaining group companies
have defined contribution schemes. The Memory Lane Cake pension
scheme has been closed to future accruals and new members since 31
May 2010. The net pension deficit (before related deferred tax) is
GBP10,498,000 at 1 July 2017, the next accounting valuation update
will be carried out at 30 June 2018. Cash contributions (including
the PPF levy) were GBP199,000 in the six months to 30 December
2017.
Principal risks and uncertainties
A number of risks and uncertainties have been identified that
could potentially have a material impact on the financial position
of the Group. These are set out in the Strategic Report section of
the Annual Report for the year to 1 July 2017 and the Board
considers these remain applicable.
Commodity price inflation and the National Living Wage
legislation presents a challenge that the Group is preparing for
through a number of initiatives. Adjusting and mitigating the
impact will take time and will require ever-greater focus on
efficiency improvements and cost reduction programmes and,
ultimately, price recovery.
Forward looking statements
Throughout this report certain statements have been made which
are forward looking. These statements have been made based on
latest knowledge and expectations of the future. The Board
considers the statements to be reasonable. Inevitably there are
risks associated with these forward-looking statements which are
usually outside the control of the Group. Actual results or
performance may therefore differ from the outcome implied by these
forward-looking statements.
Consolidated Statement of Comprehensive Income (unaudited)
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 December 31 December 1 July
Note 2017 2016 2017
---------------------------------- ------- -------------- -------------- -----------
GBP'000 GBP'000 GBP'000
Revenue 157,787 156,619 314,296
Cost of sales (110,292) (108,401) (216,493)
---------------------------------- ------- -------------- -------------- -----------
Gross profit 47,495 48,218 97,803
Administrative expenses (38,788) (39,899) (80,368)
---------------------------------- ------- -------------- -------------- -----------
Results from operating
activities 8,707 8,319 17,435
Finance expense 5 (331) (433) (877)
Share of losses of associates
after tax (11) (15) (22)
---------------------------------- ------- -------------- -------------- -----------
Profit before taxation 8,365 7,871 16,536
Taxation (1,772) (1,673) (3,578)
---------------------------------- ------- -------------- -------------- -----------
Profit after tax before
significant non-recurring
and other items 6,593 6,198 12,958
---------------------------------- ------- -------------- -------------- -----------
Significant non-recurring
and other items - finance
income/(expense):
Defined benefit pension
scheme - net finance expense 5 - - (204)
Movement in fair value
swaps 5 11 461 555
Significant non-recurring
and other items - net
finance income/(expense) 11 461 351
---------------------------------- ------- -------------- -------------- -----------
Significant non-recurring
and other items - other:
Restructuring, reorganisation
and impairment costs 2 (9,683) - (4,000)
Movement in fair value
of foreign exchange contracts 88 13 (71)
Defined benefit pension
scheme - administration
costs - - 200
Significant non-recurring
and other items - other (9,595) 13 (3,871)
---------------------------------- ------- -------------- -------------- -----------
Taxation relating to significant
non-recurring and other
items 1,691 (85) 619
---------------------------------- ------- -------------- -------------- -----------
Total significant non-recurring
and other items (7,904) 389 (2,901)
---------------------------------- ------- -------------- -------------- -----------
(Loss)/profit for the
period after significant
non-recurring and other
items (1,300) 6,587 10,057
---------------------------------- ------- -------------- -------------- -----------
Other comprehensive income
Actuarial loss on defined
benefit pension scheme
net of deferred taxation - - (3,410)
Other comprehensive income,
net of income tax - - (3,410)
---------------------------------- ------- -------------- -------------- -----------
Total comprehensive income (1,300) 6,587 6,647
---------------------------------- ------- -------------- -------------- -----------
(Loss)/Profit attributable
to:
Equity holders of the
parent (1,810) 6,145 9,048
Non-controlling interest 510 442 1,009
---------------------------------- ------- -------------- -------------- -----------
(Loss)/Profit for the
financial period (1,300) 6,587 10,057
---------------------------------- ------- -------------- -------------- -----------
Total comprehensive income
attributable to:
Equity holders of the
parent (1,810) 6,145 5,638
Non-controlling interest 510 442 1,009
---------------------------------- ------- -------------- -------------- -----------
Total comprehensive income
for the period (1,300) 6,587 6,647
---------------------------------- ------- -------------- -------------- -----------
Consolidated Statement of Financial Position (unaudited)
Unaudited Unaudited Audited
30 December 31 December 1
July
2017 2016 2017
Note GBP000 GBP000 GBP000
Non-current assets
Intangibles 81,965 77,327 80,302
Property, plant and equipment 47,446 52,463 48,857
Investments in equity accounted
investees 258 196 269
Other financial assets 28 28 28
Deferred tax assets 5,158 3,344 4,063
134,855 133,358 133,519
---------------------------------- ----- ------------ ------------ ----------
Current assets
Inventories 13,257 14,874 12,684
Trade and other receivables 50,832 50,387 50,018
Cash and cash equivalents 7 4,106 4,777 3,024
Other financial assets
- fair value of foreign
exchange contracts 490 321 560
---------------------------------- ----- ------------ ------------ ----------
68,685 70,359 66,286
---------------------------------- ----- ------------ ------------ ----------
Total assets 203,540 203,717 199,805
---------------------------------- ----- ------------ ------------ ----------
Current liabilities
Other interest bearing
loans and borrowings 7 (16,315) (18,394) (14,586)
Trade and other payables (61,831) (62,972) (60,461)
Provisions (6,621) (119) (18)
Other financial liabilities
- interest rate swaps/
fair value of foreign exchange
contracts (65) (5) (234)
Current tax liabilities (1,093) (1,482) (1,650)
(85,925) (82,972) (76,949)
---------------------------------- ----- ------------ ------------ ----------
Non-current liabilities
Other interest-bearing
loans and borrowings 7 (4,353) (7,271) (5,800)
Provisions and other liabilities (211) (132) (221)
Deferred tax liabilities (1,278) (1,557) (1,335)
Pension fund liability (10,498) (6,463) (10,498)
---------------------------------- ----- ------------ ------------ ----------
(16,340) (15,423) (17,854)
---------------------------------- ----- ------------ ------------ ----------
Total liabilities (102,265) (98,395) (94,803)
---------------------------------- ----- ------------ ------------ ----------
Net assets 101,275 105,322 105,002
---------------------------------- ----- ------------ ------------ ----------
Equity attributable to equity holders of the parent
Share capital 8 1,304 1,304 1,304
Share premium account 64,956 64,956 64,956
Capital redemption reserve 578 578 578
Employee share reserve (3,282) (3,783) (3,585)
Retained earnings 35,322 40,242 39,862
---------------------------------- ----- ------------ ------------ ----------
Total shareholders' equity 98,878 103,297 103,115
Non-controlling interest 2,397 2,025 1,887
---------------------------------- ----- ------------ ------------ ----------
Total equity 101,275 105,322 105,002
---------------------------------- ----- ------------ ------------ ----------
Consolidated Statement of Changes in Equity (unaudited)
Capital Employee Non-controlling
Share Share redemption share Retained interest Total
capital premium reserve reserve earnings GBP000 equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Balance as
at 2 July 2016 1,304 64,956 578 (3,920) 36,569 1,583 101,070
Profit for
the 26 weeks
ended 31 December
2016 - - - - 6,145 442 6,587
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Other comprehensive - - - - - - -
income
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Total comprehensive
income for
the period - - - - 6,145 442 6,587
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Transactions
with owners,
recorded directly
in equity:
Own shares
acquired - - - 137 (137) - -
Foreign exchange
differences - - - - 40 - 40
Dividends paid - - - - (2,375) - (2,375)
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Balance as
at 31 December
2016 1,304 64,956 578 (3,783) 40,242 2,025 105,322
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Profit for
the 26 weeks
ended 1 July
2017 - - - - 2,903 567 3,470
Other comprehensive
income/(expense):
Remeasurement
on defined
benefit pension - - - - (4,031) - (4,031)
Deferred tax
movement on
pension scheme
remeasurement - - - - 621 - 621
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Other comprehensive
income - - - - (3,410) - (3,410)
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Total comprehensive
income for
the period - - - - (507) 567 60
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Transactions
with owners,
recorded directly
in equity:
Own shares
acquired - - - 198 (21) - 177
Impact of share
based payments - - - - 1,240 - 1,240
Deferred tax
on share options - - - - 47 - 47
Foreign exchange
differences - - - - 131 - 131
Dividends paid - - - - (1,270) (705) (1,975)
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Balance as
at 1 July 2017 1,304 64,956 578 (3,585) 39,862 1,887 105,002
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
(Loss)/Profit
for the 26
weeks ended
30 December
2017 - - - - (1,810) 510 (1,300)
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Other comprehensive - - - - - - -
income
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Total comprehensive
income for
the period - - - - (1,810) 510 (1,300)
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Transactions
with owners,
recorded directly
in equity:
Own shares
issued/(acquired) - - - 303 (218) - 85
Foreign exchange
differences - - - - 41 - 41
Dividends paid - - - - (2,553) - (2,553)
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Balance as
at 30 December
2017 1,304 64,956 578 (3,282) 35,322 2,397 101,275
--------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Consolidated Cash Flow Statement (unaudited)
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 December 31 December 1 July
2017 2016 2017
Note GBP000 GBP000 GBP'000
------------------------------------------------------ ----- ------------ ------------ ----------
Cash flows from operating activities
(Loss)/profit after taxation for the period (1,300) 6,587 10,057
Adjustments for:
Taxation 81 1,758 2,959
Finance expenses 5 320 (28) 526
Share of losses of associates after tax 11 15 22
Depreciation 3,694 3,363 6,948
Amortisation of intangibles 269 268 537
Significant non-recurring expenses 9,683 - 4,000
Movement in fair value foreign exchange contracts (88) (13) 71
Contributions by employer to pension scheme - - (200)
Operating profit before changes in working capital 12,670 11,950 24,920
Changes in working capital
Increase in inventories (574) (2,273) (39)
Increase in trade and other receivables (343) 47 153
Increase in trade and other payables 918 (1,590) (2,566)
Cash generated from operations 12,671 8,134 22,468
Interest paid (323) (439) (892)
Corporation taxes paid (1,789) (1,336) (2,650)
------------------------------------------------------ ----- ------------ ------------ ----------
Net cash generated from operating activities 10,559 6,359 18,926
------------------------------------------------------ ----- ------------ ------------ ----------
Cash flows from investing activities
Purchase of property, plant & equipment (4,874) (5,325) (12,542)
Costs associated with closure of operations (2,425) - -
Investment in Associate - - (80)
------------------------------------------------------ ----- ------------ ------------ ----------
Net cash used in investing activities (7,299) (5,325) (12,622)
------------------------------------------------------ ----- ------------ ------------ ----------
Cash flows from financing activities
Repayment of bank loans (1,468) (1,468) (2,937)
Drawdown of revolving credit 2,500 5,000 -
(Repayment)/drawdown of invoice discounting (749) (373) 822
(Repayment) of asset finance facilities (33) (95) (133)
Options exercised 85 - 177
Non-controlling interest dividend paid - - (705)
Dividend paid to shareholder (2,553) (2,375) (3,645)
------------------------------------------------------ ----- ------------ ------------ ----------
Net cash (out)/in from financing activities (2,218) 689 (6,421)
------------------------------------------------------ ----- ------------ ------------ ----------
Net increase/(decrease) in cash and cash equivalents 1,042 1,723 (117)
Opening cash and cash equivalents 3,024 3,024 3,024
Effect of exchange rate fluctuation 40 30 117
------------------------------------------------------ ----- ------------ ------------ ----------
Cash and cash equivalents at end of the period 4,106 4,777 3,024
------------------------------------------------------ ----- ------------ ------------ ----------
NOTES TO THE FINANCIAL STATEMENTS
1) BASIS OF PREPARATION
This interim report, which is unaudited, does not constitute
statutory accounts within the meaning of section 434(3) of the
Companies Act 2006. The comparative figures for the financial year
ended 1 July 2017 have been extracted from the statutory accounts
for that year. Those accounts, which were prepared in accordance
with International Financial Reporting Standards as adopted by the
EU ("adopted IFRSs"), have been reported on by the company's
auditor and delivered to the registrar of companies. The report of
the auditor was (i) unqualified, (ii) did not include a reference
to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, and (iii) did not contain
a statement under section 498(2) or (3) of the Companies Act
2006.
It should be noted that current liabilities exceed current
assets. Having reviewed the Group's short and medium-term plans and
available financial facilities, the Board has reasonable
expectations that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Group has
stayed within its banking facilities during the period, meeting
covenant requirements. The Group in February 2018 signed a new
facility of GBP45m revolving credit facility plus scope for the
facility to be increased by up to a further GBP45m. In addition,
the Group has a strong trade debtor book and strong asset backing,
further strengthened by the purchase of its freehold bakery
property in Hamilton in Scotland on 28 February 2018. Accordingly,
the Board continues to adopt the going concern basis in preparing
the Financial Statements.
2) SIGNIFICANT NON-RECURRING ITEMS
The Group presents certain items as non-recurring and
significant. These relate to items which, in management's
judgement, need to be disclosed by virtue of their size or
incidence in order to obtain a more meaningful understanding of the
financial information.
A decision was made on the 23 August 2017 to close the Grain
D'Or bakery based in London. The company had implemented a range of
initiatives to improve the business including strict cost controls
and new working practices. Despite this Grain D'Or continued to
incur operating losses. Grain D'Or traded in a particularly
competitive environment which created strong competition for
contracts. Together with cost pressures being experienced across
the industry, Grain D'Or lost two large contracts after the
financial year ending 1 July 2017 further impacting on the
financial performance. Formal consultations to close the bakery
were concluded and closure was completed in early December
2017.
The Group also closed its much smaller Campbells bakery in
Twechar, Scotland in October 2017 following employee consultation.
A rationalisation program had decreased the volumes considerably at
the bakery and the overhead cost of running a small remote bakery
was not sustainable in today's competitive market. These closures
fit with the Company's strategy of focusing investment behind
profitable product niches to drive long term market growth and
value within specialty bakery.
The turnover from those operations was GBP12,995,000 in H1 2017,
(H1 2016: GBP15,360,000), the Company has included in its half year
results costs of GBP9,683,000 relating to restructuring and
re-organisation resulting from the closures. The net cash out-flow
relating to these costs was GBP2,425,000 during the six months to
30 December 2017. The negotiations relating to the cost of exiting
of the Grain D'OR bakery are ongoing.
During the second half of the year ended 1 July 2017 an
impairment of GBP4,000,000 was taken against the assets of Grain
D'Or.
3) SEGMENT INFORMATION
Operating segments are identified on the basis of the internal
reporting and decision making. The Group's Chief Operating Decision
Maker is deemed to be the Board as it is primarily responsible for
the allocation of resources to segments and the assessment of
performance by segment. The Board assesses profit performance
principally through adjusted profit measures consistent with those
disclosed in the Annual Report and Accounts.
The UK Bakery segment manufactures and sells bakery products to
UK grocery and food service sectors. It comprises six subsidiaries
all of which manufacture and supply food products through the
channels described above. These subsidiaries have been aggregated
into one reportable segment as they share similar economic
characteristics. The economic indicators considered are the nature
of the products and production process, the type and class of
customer, the method of distribution and the regulatory
environment.
The European segment procures and sells bakery products to
European grocery and food service sectors.
Reportable Segments 26 weeks to 30 December 26 weeks to
2017 31 December
GBP000 2016
Total GBP000
Total
--------------------- ------------------------ -------------
Revenue UK Bakery 140,512 138,973
Revenue Overseas 17,275 17,646
--------------------- ------------------------ -------------
Total revenue 157,787 156,619
--------------------- ------------------------ -------------
Adjusted operating
profit UK Bakery 7,326 7,378
Adjusted operating
profit Overseas 1,202 968
Adjusted operating
profit Group 179 (27)
--------------------- ------------------------ -------------
Total adjusted
operating profit 8,707 8,319
--------------------- ------------------------ -------------
The Group has two customers (2016: two) which individually
account for more than 10 per cent of the Group's total revenue.
These customers account for 18 per cent and 14 per cent
respectively. In the prior year these same two customers accounted
for 20 per cent and 13 per cent respectively of the revenue in the
six months to 31 December 2016.
In addition to the Europe sales disclosed in Reportable
Segments, the Group also made sales to European markets through UK
based organisations.
4) SHARE BASED PAYMENTS
The Group operates both approved and unapproved share option
schemes. Following the adoption of IFRS2 'Share-based payments'
charges have been made to the Income Statement to reflect the
calculated fair value of employee share options. The cost is
calculated at the date of grant and is charged equally over the
vesting period. The fair value is based on the best available
estimate of the number of options expected to vest. The
corresponding adjustment is made to reserves.
During the 26 weeks to 30 December 2017 1,652,817 options were
granted (H1 2016: 1,462,095).
Administration costs include a charge in the first six months of
GBP122,000 (H1 2016: GBP137,000) in relation to the fair value of
share options.
5) FINANCE INCOME AND EXPENSES
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 December 31 December 1 July
2017 2016 2017
GBP'000 GBP'000 GBP'000
------------------------------ ------------- ------------- ----------
Change in fair value
of interest rate swaps 11 461 555
Bank interest receivable - - -
Finance income 11 461 555
------------------------------- ------------- ------------- ----------
Net interest on net
pension position - - (204)
Net bank interest payable (318) (364) (752)
Charge on interest rate
swaps (13) (69) (125)
Change in fair value - - -
of interest rate swaps
Finance expense (331) (433) (1,081)
------------------------------- ------------- ------------- ----------
Net finance income/(expense) (320) 28 (526)
------------------------------- ------------- ------------- ----------
The Group has one interest rate swap arrangement for GBP20.0
million for five years from 3 July 2017 at 0.455% maturing 3 July
2022
to hedge its risks associated with interest rate
fluctuations.
These arrangements do not meet the conditions necessary for
hedge accounting to be applied and, therefore, changes in their
fair value are recognised immediately in the income statement
resulting in a credit of GBP11,000 (H1 2016: credit
GBP461,000).
6) EARNINGS PER ORDINARY SHARE
Basic earnings per share for the period is calculated on the
basis of profit for the period after tax, divided by the weighted
average number of shares in issue of 127,467,000 (31 December 2016:
126,874,000).
Basic diluted earnings per share for the period is calculated by
adjusting the weighted average number of shares in issue to assume
conversion of all potential dilutive ordinary shares, which for 30
December 2017 is 131,942,000 (31 December 2016: 130,497,000).
An adjusted earnings per share has also been calculated as, in
the opinion of the Board, this will allow shareholders to gain a
clearer understanding of the trading performance of the Group.
The adjusted earnings per share exclude amounts shown under
significant and non-recurring items in the Consolidated Statement
of Comprehensive Income and exclude amortisation of
intangibles.
26 weeks to 26 weeks to
30 Dec 2017 31 Dec 2016
---------------------------------- ---------- ---------------------- ----------------------
Profit
---------------------------------- ---------- ---------------------- ----------------------
(Loss)/Profit attributable
to equity holders of
the Company (basic) GBP000 (1,810) 6,145
Significant non-recurring
and other items GBP000 7,893 (389)
Amortisation of intangibles GBP000 269 268
---------------------------------- ---------- ---------------------- ----------------------
Numerator for adjusted
earnings per share calculation
(adjusted basic) GBP000 6,352 6,024
Shares Basic Diluted Basic Diluted
---------------------------------- ---------- ---------- ---------- ---------- ----------
Weighted average number
of ordinary shares in
issue during the period '000 127,467 127,467 126,874 126,874
Dilutive effect of share
options '000 - 4,475 - 3,623
---------------------------------- ---------- ---------- ---------- ---------- ----------
127,467 131,942 126,874 130,497
---------------------------------- ---------- ---------- ---------- ---------- ----------
Earnings per share
---------------------------------- ---------- ---------- ---------- ---------- ----------
Basic and diluted Pence (1.4) (1.4) 4.8 4.7
---------------------------------- ---------- ---------- ---------- ---------- ----------
Adjusted basic and adjusted
diluted Pence 5.0 4.8 4.7 4.6
---------------------------------- ---------- ---------- ---------- ---------- ----------
7) ANALYSIS OF NET DEBT
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 December 31 December 1 July
2017 2016 2017
GBP'000 GBP'000 GBP'000
------------------------------------- ------------- ------------- ----------
Net cash at bank 4,106 4,777 3,024
Loans within one year (5,437) (7,937) (2,937)
Loans after more than one
year (4,389) (7,325) (5,857)
Invoice discounting within
one year (10,897) (10,451) (11,646)
Asset finance within one
year (24) (71) (57)
Asset finance after more - (24) -
than one year
------------------------------------- ------------- ------------- ----------
Net bank debt excluding unamortised
transaction costs (16,641) (21,031) (17,473)
------------------------------------- ------------- ------------- ----------
Unamortised transaction costs:
within one year 43 65 54
more than one year 36 78 57
------------------------------------- ------------- ------------- ----------
Total unamortised transaction
costs 79 143 111
------------------------------------- ------------- ------------- ----------
Bank debt net of unamortised
transaction costs within
one year (12,209) (13,617) (11,562)
------------------------------------- ------------- ------------- ----------
Bank debt net of unamortised
transaction costs more than
one year (4,353) (7,271) (5,800)
------------------------------------- ------------- ------------- ----------
Bank debt net of unamortised
transaction costs (16,562) (20,888) (17,362)
------------------------------------- ------------- ------------- ----------
8) SHARE CAPITAL
No shares were issued during the period or the comparative prior
year period.
At 30 December 2017 2,704,030 shares (2016: 3,360,030) were held
by the Finsbury Food Group Plc Employee Benefit Trust.
Advisers
Secretary Auditor
Laura Nuttall KPMG LLP
ONE Advisory Limited Chartered Accountants
201 Temple Chambers 3 Assembly Square
3-7 Temple Avenue Britannia Quay
London Cardiff Bay
EC4Y 0DT CF10 4AX
Tel: 0207 583 8304
Registrars
Registered Office Capita Registrars
Maes-y-coed Road 34 Beckenham Road
Cardiff Beckenham
CF14 4XR Kent
Tel: 029 2035 7500 BR3 4TU
Nominated Adviser & Broker Solicitors
Cenkos Securities plc CMS Cameron McKenna LLP
6.7.8 Tokenhouse Yard Cannon Place
London 78 Cannon Street
EC2R 7AS London
EC4N 6AF
Remuneration Committee
Advisor
Deloitte LLP
Four Brindleyplace,
Birmingham,
B1 2HZ
Registered Number
00204368
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFIDVLIRLIT
(END) Dow Jones Newswires
March 19, 2018 03:00 ET (07:00 GMT)
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