Acquisition of Ultrapharm Limited

RNS Number : 4911Z
Finsbury Food Group PLC
03 September 2018
 

Date:

3 September 2018

On behalf of:

Finsbury Food Group Plc ('Finsbury', 'the Company' or 'the Group')

 

 

 

Finsbury Food Group Plc

Acquisition of gluten free bakery manufacturer

 

Finsbury Food Group Plc (AIM: FIF), a leading UK speciality bakery manufacturer of cake, bread and morning goods for both the retail and 'out of home eating' foodservice channels, is pleased to announce that it has acquired 100% of the share capital of Ultrapharm Limited ("Ultrapharm"), a Free From bakery manufacturer. The acquisition of Ultrapharm supports the Group's ongoing strategy to further diversify its product capability into high growth areas.

Established in 1993, Ultrapharm employs more than 240 staff across manufacturing sites in the UK and Poland. As a specialist 'Free From' bakery, the business has an extensive product range including bread, buns & rolls and other morning goods. Ultrapharm has a diverse customer base with long term blue-chip customers, including Finsbury itself, where it supplies Free From products to Lightbody Europe.  The opportunity to invest in the acquired sites and to expand the Group's existing facilities to manufacture Free From products, a category of which the Group has previous expertise, provides significant upside sales potential to the Group in a growing segment.   

As demand for Free From products has expanded from dietary requirement to a lifestyle choice, the UK Free From Bread & Morning Goods market has grown 92% over the last four years with the outlook set for further growth over the next five years in line with the continued growth forecast for the wider UK Free From Grocery market 1.  In EMEA, the Gluten Free Bakery market is forecast to grow at a CAGR of 10.6% over the period 2017-212. The Board believes that there is a sizeable opportunity to grow the business across a number of channels. 

For the year ended 31 December 2017, Ultrapharm generated EBITDA of £1.6 million and profit before tax of £0.8 million which have continued to grow since year end. Revenue generated was £19.5 million, up 35% from £14.5 million for the comparative period in 2016. As at period end, gross assets were £10.8 million. The acquisition will be earnings accretive immediately post completion.

The total consideration payable is split with £17 million payable in cash at completion, up to £3 million payable in annual instalments to the period to 30 June 2021 subject to the continued employment of key management and a final incentive payment subject to performance criteria over the period to 30 June 2021 estimated at approximately £1.0 million and capped at £5 million for regulatory purposes. The consideration will be funded from the Group's existing cash and debt facilities.

Finsbury was advised by Stamford Partners LLP and Gambit Corporate Finance advised the shareholders of Ultrapharm on the transaction.

 

John Duffy, Chief Executive of Finsbury Food Group plc, commented:

"We are delighted to have secured such a valuable strategic acquisition, one that presents the Group with a significant opportunity to access an exciting and high growth marketplace.

 

"Ultrapharm has a robust market position both in the UK and Europe, extensive technical ability and strong relationships across a high quality and diverse customer base. This provides Finsbury with the opportunity to build upon both businesses existing retail relationships, as well as unlocking further commercial opportunities.

 

"Alongside the growth opportunities this acquisition brings, in line with the Group's strategy, it further diversifies us by geography and category; giving us a further foothold in Europe and allowing us to diversify into the Free From market.

 

"We look forward to welcoming Ultrapharm to the team and investing in the wider Group to capitalise on such a significant opportunity for growth."

 

 

Marc Lewis, Chief Executive of Ultrapharm, commented:

 

"We are delighted to be joining the Finsbury Group and looking forward to growing Ultrapharm's exciting prospects with their support."

 

 

This announcement contains inside information.

 

1 Source: Kantar Worldpanel (52 w/e 20th May 2018)

2 Technavio 'Global Gluten Free Bakery Market 2017-2021

 

For further information:

Finsbury Food Group                      

John Duffy (Chief Executive)

Steve Boyd (Finance Director)

 

www.finsburyfoods.co.uk                  

029 20 357 500

Cenkos Securities plc

Max Hartley, Harry Hargreaves (Corporate Finance)

Nick Searle (Sales)

 

 

020 7397 8900

Alma PR                                         

Rebecca Sanders-Hewett

Sam Modlin

Susie Hudson

 

finsbury@almapr.co.uk                       

0203 865 4219

 

 

Notes to editors:

·      Finsbury Food Group Plc (AIM: FIF) is a leading UK manufacturer of cake and bread bakery goods, supplying a broad range of blue chip customers within both the grocery retail and 'out of home eating' foodservice sectors including major multiples and leading foodservice providers.

 

·      The Company is one of the largest speciality bakery groups in the UK and, with its Overseas division, has sales in the financial year ending 1 July 2017 exceeding £300m.

 

·      The Company's bakery product range is comprehensive and includes:

Large premium and celebration cakes.

Small snacking cake formats such as cake slices and bites.

Artisan, healthy lifestyle and organic breads through to rolls, muffins (sweet and savoury) and morning pastries, all of which are available both fresh and frozen dependent on customer channel requirements.

 

·      The Company is one of the largest ambient cake manufacturers in the UK, a market valued at over £950 million (source: IRI, 52 w/e 23rd June 2018). The annual retail bread and morning goods market has a value of £4.3 billion (source: Kantar Worldpanel 52 w/e 17th June 2018). The UK foodservice bread and savoury morning goods bakery sector is worth approximately £691 million per annum. The UK foodservice cake and sweet morning goods bakery sector is worth approximately £807 million per annum (UK foodservice data derived from MCA 52 w/e 31st March 2018).

 

·      The Company comprises a UK Bakery division and an Overseas division:

The UK Bakery division has manufacturing sites in Cardiff, East Kilbride, Hamilton, Salisbury, Sheffield, Manchester.

The Overseas division comprises the Company's 50% owned company, Lightbody Stretz Ltd, which supplies and distributes the Group's UK-manufactured products and third party products, primarily to Europe.

Following completion, the Company will have two additional factories in Poland and Pontypool, Wales.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
ACQLLFIRASIFIIT
UK 100

Latest directors dealings