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Zetar PLC (ZTR)

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Tuesday 19 January, 2010

Zetar PLC

Interim Results

RNS Number : 7472F
Zetar PLC
19 January 2010
 




19th January 2010



Zetar Plc 


("Zetar", "the Company" or the "Group")


Interim Results for the six months ended 31 October 2009



Zetar Plc, the AIM listed confectionery and snack foods group, announces its interim results for the six months ended 31 October 2009.


Financial Highlights

  • Turnover up 7% to £57.1m (2008:£53.6m)

  • EBITDA* up 18% to £3.9m (2008: £3.3m)

  • Adjusted operating profit ** up 29% to £2.7m (2008: £2.1m)

  • Adjusted diluted earnings per share up 37% to 12.7p (2008: 9.3p)

  • Reduced net borrowings at 31 October 2009 of £27.0m (31 October 2008: £30.5m)

  • Turnover for eight months to 31 December 2009 up 10% to £80m (2008: £73m)

      * EBITDA is stated before share based payment costs.

** Adjusted operating profit is stated before amortisation of intangible assets, share based payment costs and the change in market value of derivatives.  


Operational Highlights

  • Stronger balance sheet and continued progress in reducing borrowings

  • Business recovery remains on track

  • Turnover growth fuelled by continued innovation and manufacturing flexibility:

    • Economy products in both divisions

    • Launch of "all year round" impulse confectionery range

    • Healthier fruit snacks and brand flavoured nuts

  • Board strengthened by appointments of Group Finance Director and additional Non-executive Director
  • Proportionately more Christmas sales have been realised post the period end 

  • Confident of delivering strong growth for the full year in line with market expectations


Ian Blackburn, Chief Executive of Zetar Plc said:

"Following last year's challenges, the business is back on track and we were pleased to grow revenues by 10% in the first eight months of the year.


"We have achieved this through the combined effort of all our staff and by working closely with customers to develop innovative cost efficient products. At the same time we have kept overheads under strict control and focussed on cash management to reduce borrowings to below target levels.


"Despite adverse macro market conditions we continue to trade well and following a good Christmas, anticipate that a successful Easter will underpin our confidence in a successful full year."



Enquiries:

 

Zetar Plc

Tel: 020 7284 9509

Ian Blackburn (Chief Executive)




Altium Capital Limited

Tel: 020 7484 4040

Tim Richardson/ Sam Fuller




Financial Dynamics

Tel: 020 7831 3113

Jonathon Brill / Caroline Stewart


  ZETAR Plc


Operational review


Overview

The interim results of Zetar Plc ("Zetar" or the "Group") are for the six months ended 31 October 2009.


The Group has delivered strong organic growth in the first half of the year with revenues and adjusted operating profits up 7% and 29% respectively, despite some Christmas deliveries being deferred into the second half of the year.


The Confectionery division's results were adversely affected by margin pressures at Lir (our Irish subsidiary) due to the weakness of sterling and some start up costs at the York factory related to a significant uplift in production volumes. These costs were partially offset by a £0.6 million reduction in administration overheads in the period resulting from a reorganisation of Zetar's head office and of the Confectionery division at the end of last year following the sale of the Baked Snacks operation and the closure of Woolworth's. 


Actions taken last year have strengthened the Group's financial position and provided an ability to exploit identified market opportunities. In February 2009 we raised £2.0 million from shareholders at 120 pence per share to allow us to target additional turnover in the current year. We are on track to exceed the £3 million of additional turnover we originally identified. The Group's continued focus on product innovation and its flexible manufacturing processes have combined to deliver positive results in a challenging marketplace characterised by high promotional activity and commodity price instability.


The Group has adapted well to the current economic climate by introducing value for money products, which appeal to customers and consumers alike in these promotionally driven markets. Nonetheless, innovation continues to be of paramount importance and the Group has significantly extended its confectionery range of "all year round" impulse products. The Natural & Premium Snacks division has made further progress in its aim of increasing the proportion of value added products, with the introduction of the first brand flavoured nuts and has also diversified its fruit snacking range.  


The Group's financial position is also much stronger. Despite funding the working capital required to support a larger business, total borrowings were £3.5 million lower than at the comparable date last year and amounts due to trade creditors were £3.0 million lower.


Group financial results

Group sales from continuing operations in the six months to 31 October 2009 were £57.1 million (2008: £53.6 million), an increase of 7 per cent. Group adjusted operating profit from continuing operations (stated before amortisation of intangible assets and share based payment charges) for the period was £2.7 million (2008: £2.1 million), an increase of 29 per cent.


Total finance costs in the period amounted to £0.3 million (2008: £1.2 million). Included in this total are movements on foreign exchange and interest rate financial instruments which, in the period under review, resulted in a credit of £0.2 million (2008: charge of £0.3 million). Underlying net interest payable reduced to £0.5 million (2008: £0.8 million) as a result of lower borrowings and interest rates.


The tax charge for the period is based on the estimated effective tax rate on profits for the full year of 25% (2008: 27%), reflecting a weighted average tax rate of 27% on the profits of UK companies and 12.5% on the profits of Irish companies.


Adjusted diluted earnings per share for continuing operations for the period were 12.7p (2008: 9.3p), an increase of 37%.


The Group's working capital requirement peaked, as usual, just before the period end, but was £3.5 million lower than last year at £27.0 million (2008: £30.5 million), despite a 7 per cent increase in sales in the period and a reduction in amounts owed to trade creditors at 31 October 2009 of £3.0 million. As in every year, this seasonal working capital movement is anticipated to reverse before the April 2010 year end. Capital expenditure in the period amounted to £1.3 million (2008: £2.5 million) and is estimated to be approximately £2 million for the full year compared to £3.8 million for the previous year.


The Group's revolving credit facilities, which fluctuate on a monthly basis in accordance with the seasonal working capital requirements of the Group, mature in December 2010. The Company's initial discussions with its bankers have been positive and the Company expects to have new facilities in place by the time its full year results are announced.


Business review

Results by division were as follows:



Confectionery division

Six months ended 31 October  



2009

2008



£'000

£'000  


Sales

33,091

31,092

+6%

Adjusted operating profit

1,366

1,419

-4%

Margin

4.1%

4.6%



In the six months ended 31 October 2009, sales increased by 6%, despite a deferral of certain added value seasonal sales from the first to the second half of the year as retailers took delivery of some Christmas product later than in previous years. However, adjusted operating profit was 4% lower, impacted by larger than anticipated start up costs for our new line at York and the continued weakness of sterling against the Euro, which affected the profitability of our Irish operation. 


The new production line installed to manufacture sugar coated chocolate products at our York factory had to accommodate tripled production volumes in a very short time frame as new contracts were considerably larger than originally indicated. This adversely affected its operational performance resulting in additional start up costs of approximately £0.2 million. The management infrastructure at York has been reinforced to deal with new factory pressures resulting from this significant increase in turnover and the factory is expected to deliver an improved result in the second half.  


Whilst Lir achieved strong volume sales growth to UK customers of both Bailey's and private label chocolates, including fair trade ranges, the continued weakness of sterling against the Euro reduced the value of Lir's UK sales and operating profits by approximately £0.25 million against the comparable period.


Excluding the influence of these two factors, the operating margin of the division would have improved, despite the promotional pricing pressure exerted by the market, due to a reduction in the division's indirect overheads.


The product development undertaken during the 2009 financial year enabled the division to successfully launch a wide range of retailer brand economy chocolates and all year round impulse products including indulgence bars, twist wrap truffles and both sugar and chocolate coated chocolate products during the period. Christmas deliveries of advent calendars and other novelty chocolate gift sets have also increased from last year, assisted by new sales opportunities from erstwhile European suppliers that were identified at the time of last year's placing. Our range has been enhanced by the acquisition of good character licences which included Hello Kitty, High School Musical and Ben 10 alongside the ever popular Simpsons and Barbie. We also introduced a range of Top Gear products, including the chocolate coin "Stiggy Bank". 


The division gained some significant new retail and third party business for chocolate, sugar coated chocolate, chocolate coated fruit and nuts for all year round and seasonal products manufactured at its York factory. Following last year's major investment in Lir (Irish factory) and subsequent renewed focus on product development, the luxury product range has been considerably extended resulting in strong volume sales growth to several UK supermarkets of both Bailey's and private label chocolates.


Natural & Premium Snacks division


Six months ended 31 October 


2009

2008



£'000

£'000  


Sales

23,999

22,551

+6%

Adjusted operating profit

1,351

684

+98%

Margin

5.6%

3.0%



The division delivered a promising performance for the six months ended 31 October 2009 as sales and operating profits increased by 6% and 98% respectively. The impact of price increases earlier in the year, following 2008's significant increase in raw material costs (exaggerated by the depreciation of sterling) helped margins to recover from 3% to 5.6%. 


Reduced consumer spending contributed to a decline in sales of our organic lines, particularly dried fruit, although the launch of a number of discount lines more than compensated for this. The Fruit Factory brand continues to establish itself with retail customers and consumers and the fruit snacking range was further extended with the addition of fruit hearts and stars to complement our fruit bars, fruit flakes and fruit strings. We were also pleased by the sales performance of Unilever's flavoured nut range, Marmite Cashews, which was launched at the start of the year.


The division has increased its investment in product development in line with its commitment to expand the added value snacking proportion of its business and we are looking forward to introducing a number of market "firsts" in the second half of the year.  


We believe that this division is well placed to benefit from the shift towards healthier snacking and particularly a return to home-baking as families adapt to tightening financial circumstances. 


Board changes

We recently announced the appointment of Mark Stott as Group Finance Director, with effect from 1 March 2010. Mark is a qualified chartered accountant with considerable experience in the Food and Beverage industry having previously worked as Group Finance Director of Noble Foods Limited (Europe's largest egg company) and in various senior finance roles with Dairy Crest PLC (a leading UK chilled dairy foods company).  


In October 2009 we announced the appointment of Roger Matthews as an additional non executive director. Roger has extensive food and general industry experience having previously held the posts of Group Finance Director of J. Sainsbury's PLC and Managing Director and Finance Director of Compass Group plc.


These appointments strengthen the Board and enable Ian Blackburn, the Chief Executive, to relinquish the duties of interim Finance Director and to focus on delivering the Group's organic growth and strategic development.  


Outlook

The second half of the year has started well as the Christmas orders deferred into the second half (referred to above) were delivered. Sales for the eight months to 31 December 2009 increased by 10% to £80 million (2008: £73 million).


The Christmas sell through of our products by retailers to consumers appears to have been robust, which in turn suggests a positive outlook on the part of our retail customers for Easter. Given this outlook, the Board remains confident of delivering strong growth for the full year in line with market expectations.  


Ian Blackburn

Chief Executive




Consolidated income statement 

for the 6 months ended 31 October 2009



Unaudited


Unaudited(Re-presented**)


Audited



six months ended 31 October 2009


six months ended 31 October 2008


year ended 30 April 2009



 Adjusted

Adjusting

 


Adjusted

Adjusting

 


Adjusted

Adjusting

 



results*

Items

Total


results*

items

Total


results*

items

Total

 

Note

£'000

£'000

£'000

 

£'000

£'000

£'000

 

£'000

£'000

 £'000

Continuing operations













Revenue

4

57,090

-

57,090


  53,643

-

  53,643


  118,602

-

 118,602

Cost of sales

 

(46,044)

-

(46,044) 

 

(42,864)

-

(42,864)

 

(93,857)

-

(93,857)

Gross profit 


11,046

  -

11,046


10,779

  -

10,779


24,745

  -

24,745

Distribution costs


(2,232)

-

(2,232)


(1,991)

-

(1,991)


(4,777)

-

(4,777)

Administrative expenses


-

-

-







-


- Other administrative expenses


(6,097)

-

(6,097)


(6,685)

-

(6,685)


(13,917)

-

(13,917)

- One-off items


-

-

-


-

(968)

(968)



(1,508)

(1,508)

- Amortisation of intangible assets


-

(169)

  (169)


-

(264)

(264)


-

(456)

(456)

- Share-based payment charges

 

 -

(159)

(159)

 

-

(41)

(41)

 

-

  116

  116

Operating profit


  2,71

  (328)

2,389


2,103

(1,273)

830


6,051

(1,848)

4,203

Interest income 

5

-

172

172


-

     -

-


47

-

47

Finance costs

5

(506)

-

  (506)

 

(846)

(315)

(1,161)

 

(1,556)

(680)

(2,236)

Profit/(loss) from continuing operations before taxation


2,211

(156)

2,055


  1,257

(1,588)

(331)


4,542

(2,528)

2,014

Tax on profit /(loss) from continuing operations 

6

(544)

(20)

  (564)

 

(123)

(116)

(239)

 

(1,241)

-

(1,241)

Net result from continuing operations 


1,667

(176)

  1,491


  1,134

(1,704)

(570)


3,301

(2,528)

773

Net result from discontinued operations 

 

-

-

 

 

(3,880)

(3,880)

 

-

(5,836)

(5,836)

Net result for the period 

 

1,667

(176)

  1,491

 

  1,134

(5,584)

(4,450)

 

3,301

(8,364)

(5,063)














Basic earnings per share (p)

8



 11.3




(39.0)




(42.9)

Diluted earnings per share (p)

8



  11.3




(39.0)




(42.6)

Adjusted basic earnings per share (p)

8

12.7




  9.9




  28.0



Adjusted diluted earnings per share (p)

8

12.7

 


 

9.3

 

 

 

27.8

 

 



*Adjusted results are stated before: (i) the charges separately identified above as "adjusting items"; (ii) the elements of total finance costs set out in note 5 in respect of discount charges on contingent consideration provisions and changes in market value of derivatives.

** The results for the 6 months ended 31 October 2008 have been re-presented to be consistent with the presentation of the results of discontinued operations for the financial year ended 30 April 2009. 



Consolidated statement of comprehensive income 

for the 6 months ended 31 October 2009




Unaudited 


Unaudited 


Audited


 Six months

ended 

31 October 2009


 Six months

ended 

31 October 2008


Year ended

30 April

2009 


Total


Total


Total

 

£'000

 

£'000

 

 £'000

Profit for the year 

  1,491 


(4,450)


(5,063)

Other comprehensive income:






Currency translation differences  

(394)


(58)


1,404

Other comprehensive income net of tax 

(394)


(58)


1,404

Total comprehensive income for the year 

1,097


(4,508)


(3,659)







Attributable to:






- Owners of the parent

1,097


(4,508)


(3,659)


 

Consolidated balance sheet

as at 31 October 2009



Unaudited

Unaudited

Audited



31 October

31 October

30 April



2009

2008

2009


Notes

£'000

£'000

£'000

Non-current assets





Goodwill


30,828

31,245

30,821

Other intangible assets


451

724

623

Property, plant and equipment


15,471

16,640

15,283

Deferred tax asset


150

182

198



46,900

48,791

46,925

Current assets





Inventories


21,433

19,946

14,319

Trade and other receivables


26,511

29,497

19,190

Current tax assets


-

125

-

Cash at bank


3,178

501

5,405



51,122

50,069

38,914

Total assets


98,022

98,860

85,839

Current liabilities





Trade and other payables


(25,459)

(28,441)

(23,763)

Performance related contingent consideration


-

(1,065)

(220)

Current tax liabilities


(452)

-

(252)

Obligations under finance leases

11

(110)

(350)

(214)

Derivative financial instruments 


(435)

(201)

(607)

Borrowings and overdrafts

11

(27,160)

(24,220)

(15,712)



(53,616)

(54,277)

(40,768)

Net current liabilities


(2,494)

(4,208)

(1,854)

Non-current liabilities





Obligations under finance leases

11

(120)

(247)

(167)

Borrowings

11

(2,829)

(6,218)

(4,676)

Deferred tax liabilities


(1,548)

(1,915)

(1,575)

Performance related contingent consideration


(300)

(522)

(300)



(4,797)

(8,902)

(6,718)

Total liabilities


(58,413)

(63,179)

(47,486)

Net assets


39,609

35,681

38,353






Equity





Share capital


1,324

1,151

1,324

Share premium account


28,252

26,449

28,252

Merger reserve


3,411

3,411

3,411

Equity reserve


2,484

1,411

2,719

Retained earnings


4,138

3,259

2,647

Total shareholders' equity


39,609

35,681

38,353


Consolidated statement of changes in equity

for the six months ended 31 October 2009



Share






Share

premium

Merger

Equity

Retained

 


capital

account

reserve

reserve

earnings

Total


£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 May 2008

1,151

26,449

3,411

1,431

7,859

40,301

Comprehensive income 







(Loss) 

-

-

-

-

(4,450)

(4,450)

Other comprehensive income 







  - Foreign exchange (loss) on translation of foreign operations.

-

-

-

(58)

-

(58)

Total other comprehensive income 




(58)

-

(58)

Total comprehensive income 

-

-

-

(58)

(4,450)

(4,508)

Transactions with owners 







- Share based payment charge

-

-

-

41

-

41

  - Deferred tax on share-based payment charge

-

-

-

(3)

-

 (3)

  - Purchase of treasury shares 

-

-

-

-

(150)

(150)

Total transactions with owners  

-

-

-

38

(150)

(112)

Balance at 31 October 2008

1,151

26,449

3,411

1,411

3,259

35,681








Balance at 1 May 2008 

1,151 

26,449 

3,411

1,431

7,859

40,301

Comprehensive income 







(Loss) 





(5,063)

(5,063)

Other comprehensive income 







  - Foreign exchange gain on translation of foreign operations.




1,404


1,404

Total other comprehensive income 

-

-

-

1,404

-

1,404

Total comprehensive income 

-

-

-

1,404

(5,063)

3,659

Transactions with owners 







- Share based payment (credit)

-

-

-

(116)

-

(116)

  - Purchase of treasury shares 

-

-

-

-

(149)

(149)

  - Proceeds from shares issued 

173

1,803

-

-

-

1,976

Total transactions with owners  

173

1,803

-

(116)

(149)

1,711

Balance at 30 April 2009

1,324

28,252

3,411

2,719

2,647

38,353








Balance at 1 May 2009

1,324

28,252

3,411

2,719

2,647

38,353

Comprehensive income 







Profit 





1,491

1,491

Other comprehensive income 







  - Foreign exchange (loss) on translation of foreign operations.




(394 )


(394)

Total other comprehensive income 

-

-

-

(394)

-

(394)

Total comprehensive income 

-

-

-

(394)

1,491

1,097

Transactions with owners 







- Share based payment charge

-

-

-

159

-

159

Total transactions with owners  

-

-

-

159

-

159

Balance at 31 October 2009

1,324

28,252

3,411

2,484

4,138

39,609


  Consolidated cash flow statement 

for the six months ended 31 October 2009



Unaudited

Unaudited

(Re-presented*)

Audited



six months

six months

year



ended

ended

ended



31-Oct

31-Oct

30-Apr



2009

2008

2009

 

Notes

£'000

£'000

£'000

Cash flow from operating activities





Profit/(Loss) on ordinary activities before taxation


2,055

(331)

  2,014

Finance costs


506

  1,161

  2,236

Interest income 


(172)

  -

(47)

Share-based payment charge


159

  41

(116)

Depreciation (including trademark ammortisation)


1,157

  1,196

  2,346

Loss on sale of property, plant and equipment


-

  4

  22

Amortisation of intangible assets


169

  264

  457

One-off items 


-

  968

  1,388

Net movement in working capital


(12,741)

(13,276)

(2,469)

(Increase) in inventories 

 

(7,115)

(6,171)

(1,299)

(Increase) in receivables


(7,321)

(15,133)

(4,504)

(Increase) in payables

 

1,695

  8,028 

  3,334

Cash flow from continuing operations


(8,867)

(9,973)

  5,831

Cash flow from discontinued operations


-

(1,017)

(1,002)

Total cash flow from operations 

 

(8,867)

(10,990)

  4,829

Net interest paid


(506)

(846)

(1,510)

Tax paid

 

(268)

(602)

(782)

Cash generated from activities in continuing operations 


(9,641)

(11,421)

  3,539

Cash flow generated from operating activities in discontinued operations 


-

(1,017)

(1,002)

Total cash flow from operating activities

 

(9,641)

(12,438)

  2,537






Cash flow from investing activities





Purchase of property, plant and equipment


(1,338)

(2,438)

(3,847)

Proceeds from sale of plant and equipment


-

-

  42

Disposal of subsidiary 


-

-

(220)

Total cash impact of acquisitions 


(220)

(888)

(879)

Acquisitions of businesses(including contingent consideration)

 

(220)

(888)

(879)

Net borrowings assumed on acquisition 

 


 

 

Net cash outflow from continuing investing activities


(1,558)

(3,326)

(4,904)

Net cash outflow from discontinued investing activities


-

(44)

     -

Net cash flow from investing activities 

 

(1,558)

(3,370)

(4,904)






Cash flows from financing activities





Net proceeds from issue of ordinary share capital


-

-

  1,976

Purchase of own shares


-

(150)

(149)

Proceeds from new borrowings


-

-

-

Repayment of borrowings


(1,306)

(1,140)

(3,536)

Finance lease repayments

 

(152)

(242)

(457)

Net cash flow from financing activities

 

(1,458)

(1,532)

(2,166)

Net decrease in cash and cash equivalents

10

(12,657)

(17,340)

(4,533)

Cash and cash equivalents at the beginning of the period


(8,127)

(3,331)

(3,331)

Effect of foreign exchange rate movements

 

(478)

(16)

(263)

Cash and cash equivalents at the end of the period

11

(21,262)

(20,687)

(8,127)






Cash and cash equivalents consist of:





Cash at bank


3,178

  501 

  5,405 

Bank overdrafts

 

(24,440)

(21,188)

(13,532)

 

11

(21,262)

(20,687)

(8,127)



* The results for the 6 months ended 31 October 2008 have been re-presented to be consistent with the presentation of the results of discontinued operations for the financial year ended 30 April 2009. 


Notes to the interim financial information

for the six months ended 31 October 2009


1. General information

Zetar Plc was incorporated on 8 December 2004 and was admitted to trading on the AIM on 6 January 2005. The Company was established for the purpose of acquiring or making investments in companies or businesses engaged primarily in the confectionery and snack foods or related markets.

The condensed consolidated interim financial information, which has been subject to independent review, but not audited, was approved for issue on 19 January 2010.


2. Basis of preparation

The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 30 April 2009, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

The interim financial information for each of the six month periods ended 31 October 2009 and 31 October 2008 has not been audited and does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 2006. The information for the year ended 30 April 2009 does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 2006, but is based on the statutory accounts for that year, on which the Group's auditors gave an unqualified report and which have been filed with the Registrar of Companies.


3. Accounting policies

The accounting policies applied are those which will be adopted in the annual financial statements for the year ending 30 April 2010. These are consistent with the accounting policies used in the financial statements for the year ended 30 April 2009 and which are set out in those annual financial statements.


The Group has adopted the following amended IFRS's as of 1 May 2009: 

* IAS 1 (revised) 'Presentation of financial statements' - effective 1 January 2009. The revised standard requires the separate presentation of changes in equity not related to transactions with owners in a statement of comprehensive income. As a result the Group has presented all owner changes in equity in the consolidated statement of changes in equity and all non-owner changes in equity in the consolidated statement of comprehensive income. Comparative information has been re-presented so that it is in conformity with the revised standard and has not impacted the Group's earnings per share.


* IFRS 8 'Operating segments' - effective 1 January 2009. The revised standard requires the group to present its operating segments on the same basis as that provided to the chief operating decision maker; such chief operating decision maker being the chief executive director. The presentation of segmental results has not had to be restated as a result of the adoption of the amended standard as the basis of presentation in prior periods is consistent with that required in the standard.  


Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.




  4. Segment information


Unaudited 

Unaudited 

Audited


six months 

six months

year


ended

ended 

ended


31 October 

31 October

30 April


2009

2008

2009


£'000 

£'000 

£'000 

Business segments




Revenue




Confectionery

33,091

31,092

75,093

Natural & Premium Snacks

23,999

22,551

43,509

Total 

57,090

53,643

118,602





Operating profit




Confectionery 

1,218

377

2,695

Natural & Premium Snacks

1,094

453

1,508

Total 

2,312

830

4,203





Adjusted operating profit




Confectionery

1,366

1,419

4,378

Natural & Premium Snacks

1,351

684

1,673

Total 

2,717

2,103

6,051





Revenue by destination




UK

52,202

47,912

107,790

Europe

1,898

2,583

5,089

Australasia

1,801

702

1,698

Rest of the world

1,189

2,446

4,025


57,090

53,643

118,602


  • Operating segments are identified on the same basis as the Group allocates its resources such as management, tangible assets and working capital.

  • The two reportable operating segments derive their revenue primarily from the manufacture and sale of chocolate and natural and premium snacks.

  • The performance of reportable segments is assessed on a measure of adjusted operating profit, excluding non-recurring items such as restructuring costs; share based payment (charges)/credits; amortisation of intangible assets and unrealised gains/(losses) on financial instruments. 

  5. Finance costs


Unaudited

Unaudited

Audited


six months

six months

year


Ended

Ended

ended


31 October

31 October

30 April


2009

2008

2009


£'000

£'000

£'000

Net bank interest payable and similar charges

506

846

1,509

Discount charge on contingent consideration provisions

-

42

-

Change in market value of derivatives

(172)

273

680


334

1,161

2,189


6. Taxation

The income tax expense for the six months ended 31 October 2009 has been calculated on the basis of the estimated effective tax rate on profits for the full year.


7. Dividends

The directors do not propose to pay a dividend for the period (2008: £Nil).


8. Earnings per share


Unaudited

six months ended

31 October 2009

Unaudited

six months ended 

31 October 2008

Audited

year ended 30 

April 2009















Weighted



Weighted



Weighted




average

Per


average 

Per 


average 

Per



no. of

 share


no. of

 share


no. of

 share


Earnings

shares

amount 

Earnings

shares

amount

Earnings

shares

amount


£'000 

000s

Pence

£'000 

000s

Pence

£'000 

000s

Pence

Basic earnings per share

1,491

13,142

11.3

(4,450)

11,418

(39.0p)

(5,063)

11,796

(42.9)

Diluted earnings per share

1,491

13,142

11.3

(4,450)

11,418

(39.0p)

(5,063)

11,887

(42.6)

Adjusted basic earnings per share

1,667

13,142

12.7

1,134

11,418

9.9p

3,301

11,796

28.0

Adjusted diluted earnings per share

1,667

13,142

12.7

1,134

12,151

9.3p

3,301

11,887

27.8

Basic loss per share on discontinued operations 

-

-

-

(3,880)

11,418

(33.9)

(5,836)

11,796

(49.5)

Basic loss per share on discontinued operations

-

-

-

(3,880)

12,151

(31.9)

(5,836)

11,887

(49.1)


The calculation of basic earnings per share is based on the profit after tax and the weighted average number of shares during each period. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potentially dilutive ordinary shares. Potentially dilutive ordinary shares arise from share options and warrants.


Adjusted basic earnings per share and adjusted diluted earnings per share have also been calculated as in the opinion of the Directors this allows shareholders to gain a clearer understanding of the sustainable trading performance of the Group.


9. Business combinations

Performance related deferred consideration, in relation to the acquisition of Lir Chocolates is payable within the next two years, dependent on the results of the business. The final performance related deferred consideration totalling £220,000 was paid during the six months ended 31 October 2009 in respect of the Horsley, Hick & Flower acquisition.


10. Reconciliation of net cash flow to movement in net debt


Unaudited

Unaudited

Audited


six months

six months

year


Ended

Ended

ended


31 October

31 October

30 April


2009

2008

2009


£'000 

£'000

£'000 

Decrease in cash and cash equivalents

(12,657)

(17,340)

(4,533)

Cash outflow/(inflow) from movement in debt financing

1,306

1,140

3,536

Cash outflow from movement in lease financing

152

242

457

Movement in net debt arising from cash flows

(11,199)

(15,958)

(540)

Other non-cash changes

(478)

(14)

(262)

Debt acquired with subsidiary

-

-

-

Net debt brought forward

(15,364)

(14,562)

(14,562)

Net debt carried forward

(27,041)

(30,534)

(15,364)


Other non-cash changes in the current period relate solely to the effect of foreign exchange rate movements.


11. Analysis of net debt


Unaudited

Unaudited

Audited


31 October

31 October

30 April


2009

2008

2009


£'000

£'000

£'000 

Cash at bank

3,178

501

5,405

Bank overdrafts

(24,440)

(21,188)

(13,532)

Cash and cash equivalents

(21,262)

(20,687)

(8,127)

Debt due within one year

(2,720)

(3,032)

(2,180)

Debt due after more than one year

(2,829)

(6,218)

(4,676)

Finance leases

(230)

(597)

(381)

Net debt

(27,041)

(30,534)

(15,364)



This information is provided by RNS
The company news service from the London Stock Exchange
 
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