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Finsbury Food Group (FIF)

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Monday 20 March, 2017

Finsbury Food Group

Interim Results

RNS Number : 8782Z
Finsbury Food Group PLC
20 March 2017
 

Date:

20 March 2017

On behalf of:

Finsbury Food Group Plc ('Finsbury', '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 31 December 2016.

 

Summary

·      Group revenue of £156.6m (H1 2015: £156.6m)

·      Operating profit of £8.3m up 4.0% (H1 2015: £8.0m)

·      Group operating profit margin of 5.3% (H1 2015: 5.1%)

·      Profit before tax of £7.9m up 5.3% (H1 2015: £7.5m)

·      Adjusted*1 diluted EPS, up 4.5% at 4.6p per share (H1 2015: 4.4p per share)

·      Interim dividend per share increased 7.5% to 1.00p (H1 2015: 0.93p per share)

·      Net debt of £21.0m equates to 0.8 (H1 2015: 0.9) times pro forma annualised EBITDA of the Group

 

Strategic highlights

·      New artisan bread facility opened, baking for retail and foodservice customers.

·      Continued investment in whole cake capacity and capability, plus new cupcake innovation.

·      6 out of 8 sites now supplying into the Foodservice channel providing a significantly broader speciality bakery range, from artisan and free from breads to snacking and sharing cakes.

 

Operational highlights

·      Employee engagement programme commences following on from successful roll out of vision and values throughout the Group.

·      Investment in exciting new cupcake capability to augment our licensed product range.

·      Mary Berry cake license secured with a range of cakes launching in the second half.

·      Winner of Celebration Cake Business of the year for 2016 at the Bakery Industry Awards.

·      Winner of Quality Food Awards for a number of products.

 

 

*1 adjusted diluted EPS has 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 has 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:

 

"The latest set of results reflect a business that has transformed into a diverse, multi-channel speciality bakery group. We have delivered a strong first half performance and this demonstrates the benefits of the Group's investment and strategy implemented over prior years and reinforces our approach to innovation and diversification across our channels, customers and products.  Our balance sheet remains solid, positioning the business well for future investment and the resulting benefits.

 

"Well documented market challenges persist, however the Group has prepared well and is continuing to work hard to mitigate against these. Furthermore, the Group's track record of exceptional growth and diversification over the prior years illustrates that it has the right strategy in place to continue to deliver growth and improved shareholder value over the coming years." 



 

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)


Alex Aylen (Sales)




Redleaf Communications

[email protected]

Rebecca Sanders-Hewett

020 7382 4730

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.  The acquisitions of Fletchers Bakeries in October 2014 and Johnstone's Food Service in June 2015 reflects the Board's acquisition experience and capabilities.

Net debt of £21.0 million at half year, equating to 0.8 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.

Our core strategy is centred on generating returns for shareholders. Adjusted diluted earnings per share are up year on year at 4.6p per share.

A final dividend for the year to 2 July 2016 of 1.87p per share was paid on 16 December 2016 to shareholders on the register at the close of business on 18 November 2016. This brought the total dividend for the year to 2 July 2016 to 2.80p per share.

The Board of Directors is announcing an interim dividend for the year ending 1 July 2017 of 1.00p per share (H1 2015: 0.93p per share), an increase of 7.5%. This increase is in line with trading performance. The interim dividend will be paid on 21 April 2017 to shareholders on the register at the close of business on 31 March 2017. The election deadline for participants in the Company's Dividend Re-investment Plan will be 31 March 2017.

OUTLOOK

The Group has delivered a strong first half performance and the business is demonstrating the benefits of the investment and strategy implemented over prior years. Our balance sheet remains strong allowing us to continue to invest in our businesses in order to deliver 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 even though the wider economic environment is improving slowly. As previously noted, increasing commodity prices, the adverse impact on USD and Euro exchange rates and the National Living wage means the Group is working hard to mitigate input cost inflation through continued operational efficiency, investment in automation and, inevitably, price increases; all of which are ongoing. 

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.



 

OPERATING REVIEW

UK Bakery


H1 2016 £m

H1 2015 £m

Movement

Revenue

139.0

143.2

-2.9%

Operating profit

7.4

7.2

+2.2%

Operating margin

5.3%

5.0%


 

UK Bakery comprises the supply of cake, bread and morning goods in the Grocery and Foodservice channels. Revenue in the period has decreased by 2.9% to £139.0 million. Operating profit in the period has increased by 2.2% to £7.4 million.

The grocery cake and the bread and morning goods markets are both large mature markets.  The grocery Cake market sees year on year volume decline of -4.8% and value decline of -1.5% (Source: IRI Infoscan for 26 weeks ending 31 December 2016) and the bread and morning goods grocery market sees year on year volume growth of +0.6% and value decline of -0.2% (source: Kantar Worldpanel bread and morning goods data 24 weeks ended w/e 01 January 2017).  In Cake, Finsbury has followed the market. Celebration continues to perform but round cake has seen decline on the back of lower promotional activity, a common response to higher input prices. In bread our focus is on more niche style bakery products as opposed to traditional bread and therefore revenue exceeds market performance.

UK Bakery Operating profit margin has increased to 5.3% due to operational efficiencies within our factories and includes the benefit of significant capital expenditure over the last two years.  The Group will continue to invest in automation and operational improvements to increase product capabilities and maintain margins.

Overseas


H1 2016 £m

H1 2015 £m

Growth

Revenue

17.6

13.4

31.7%

Operating profit

1.0

0.8

26.0%

Operating margin

5.5%

5.7%


 

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 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.



 

FINANCIAL REVIEW

Revenue and Operating Profit

Group revenue in H1 2016 was flat year on year at £156.6 million.  Profit from operations before interest, tax and significant non-recurring and other items was up by 4.0% or £0.3 million to £8.3 million.

Interest Payable

Interest payable and charges on related interest rate swaps on the Group's bank debt in H1 2016 was £433,000 (H1 2015: £517,000), a decrease of £84,000. 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 2016 was 21.2%, which compares to 21.9% in H1 2015. The effective rates represent a blend of the UK and French corporation tax rates. The reduction in the effective rates when comparing half years arises from a 0.25% reduction in the annual hybrid UK corporation tax rates offset slightly by a higher proportion of profits charged at the higher French corporation tax rate.

Earnings per share

The Group considers adjusted diluted earnings per share to be the most appropriate EPS measure. The adjusted diluted earnings per share were up 4.5% to 4.6p, (H1 2015: 4.4p).

Cash flow and net debt

Cash inflow from operating profit before changes in working capital is £12.0 million, which compares with £11.6 million in H1 2015. The increase arises from the organic growth in profit. Net debt at 31 December 2016 is £21.0 million which compares to £21.1 million at H1 2015, flat year on year. Growth in working capital is £3.8m (H1 2015: +£3.8m) which is a cyclical trend driven primarily by higher stocks within our Bread Foodservice business. Capital expenditure of £5.3 million was incurred in H1 2016 which is £1.6 million higher than H1 2015.

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 £6,463,000 at 2 July 2016, the next valuation update will be carried out at 1 July 2017. Annual cash contributions (including the PPF levy) were £366,000 in the year to 31 December 2016.

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 on page 13 of the Annual Report for the year to 2 July 2016 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)

                               


 

 

 

 

 

Note


 

Unaudited

26 weeks

ended

 31 December 2016


 

Unaudited

26 weeks

ended

26 December 2015


 

Audited

53 weeks

ended

 2 July

2016




£'000


£'000


£'000

Continuing operations








Revenue



156,619


156,586


319,680

Cost of sales



(108,401)


(106,461)


(217,092)

Gross profit



48,218


50,125


102,588 

Administrative expenses



(39,899)


(42,123)


(85,490)

Results from operating activities



8,319


8,002


17,098

Finance expense

6


(433)


(517)


(1,058)

Share of losses of associates after tax



(15)


(10)


(14)

Profit before taxation



7,871


7,475


16,026

Taxation



(1,673)


(1,638)


(3,272)

Profit from continuing operations after tax before significant non-recurring and other items



 

6,198


 

5,837


 

12,754









Significant non-recurring and other items - finance income/(expense):

 

 







Defined benefit pension scheme - net finance expense

6


-


-


(148)

Movement in fair value swaps

6


461


98


219

Significant non-recurring and other items - net finance income/(expense)



 

461


 

98


 

71






Significant non-recurring and other items - other:








Impairment of goodwill



-


-


(4,290)

Movement in fair value of foreign exchange contracts



13


(58)


(134)

Defined benefit pension scheme -administration costs



-


-


117

Significant non-recurring and other items - other



13


(58)


(4,307)

Taxation relating to significant non-recurring and other items



(85)


(8)


(14)

Total significant non-recurring and other items

4


389


32


(4,250)









Profit after taxation



6,587


5,869


8,504









Other comprehensive income








Actuarial loss on defined benefit pension scheme net of deferred taxation



 

-


 

-


 

(2,205)

Foreign exchange translation differences



-


-


-

Other comprehensive income, net of income tax



-


-


(2,205)

Total comprehensive income



6,587


5,869


6,299









Profit attributable to:








Equity holders of the parent



6,145


5,550


7,791

Non-controlling interest



442


319


713

Profit for the financial period



6,587


5,869


8,504









Total comprehensive income attributable to:








Equity holders of the parent



6,145


5,550


5,586

Non-controlling interest



442


319


713

Total comprehensive income for the financial period



6,587


5,869


6,299



 

Consolidated Statement of Financial Position (unaudited)

 



 

Unaudited


 

Unaudited


 

Audited



31 December


26 December


2

July



2016


2015


2016


Note

£000


£000


£000

Non-current assets







Intangibles


77,327


79,830


77,596

Property, plant and equipment


52,463


46,377


50,501

Investments in equity accounted investees


196


215


211

Other financial assets


28


28


28

Deferred tax assets


3,344


4,426


3,492


133,358


130,876


131,828








Current assets







Inventories


14,874


14,731


12,577

Trade and other receivables                            


50,387


50,263


50,332

Cash and cash equivalents

8

4,777


1,759


3,024

Other financial assets - fair value of foreign exchange contracts


321


59


-



70,359


66,812


65,933








Total assets


203,717


197,688


197,761















Current liabilities







Other interest bearing loans and borrowings

8

(18,394)


(12,416)


(13,829)

Trade and other payables


(62,972)


(64,256)


(64,357)

Provisions


(119)


(252)


(247)

Deferred purchase consideration


-


(50)


-

Other financial liabilities - interest rate swaps/ fair value of foreign exchange contracts


 

(5)


 

(261)


 

(157)

Current tax liabilities


(1,482)


(845)


(1,210)


(82,972)


(78,080)


(79,800)








Non-current liabilities







Other interest-bearing loans and borrowings

8

(7,271)


(10,213)


(8,740)

Provisions and other liabilities


(132)


(153)


(141)

Deferred tax liabilities


(1,557)


(91)


(1,547)

Pension fund liability


(6,463)


(3,837)


(6,463)



(15,423)


(14,294)


(16,891)

 







Total liabilities


(98,395)


(92,374)


(96,691)















Net assets


105,322


105,314


101,070








Equity attributable to equity holders of the parent

Share capital

9

1,304


1,280


1,304

Share premium account


64,956


64,952


64,956

Capital redemption reserve


578


578


578

Employee share reserve


(3,783)


(1,084)


(3,920)

Retained earnings


40,242


38,063


36,569

Total shareholders' equity


103,297


103,789


99,487

Non-controlling interest


2,025


1,525


1,583

Total equity


105,322


105,314


101,070

 

Consolidated Statement of Changes in Equity (unaudited)

 

 


 

Share

capital

£000

 

Share

premium

£000

Capital

redemption

reserve

£000

Employee

share

reserve

£000

 

Retained

earnings

£000

Non-controlling

interest

£000

 

Total

equity

£000

Balance as at 28 June 2015

1,280

64,952

578

-

34,580

1,206

102,596

Profit for the 26 weeks ended 26 December 2015

 

-

 

-

 

-

 

-

 

5,550

 

319

 

5,869

Total other comprehensive income

-

-

-

-

-

-

-

Total comprehensive income for the period

 

-

 

-

 

-

 

-

 

5,550

 

319

 

5,869









Transactions with owners, recorded directly in equity:








Own shares acquired

-

-

-

(1,084)

-

-

(1,084)

Impact of share based payments

-

-

-

-

58

-

58

Dividends paid

-

-

-

-

(2,125)

-

(2,125)

Balance as at 26 December 2015

1,280

64,952

578

(1,084)

38,063

1,525

105,314









Profit for the 27 weeks ended 2 July 2016

 

-

 

-

 

-

 

-

 

2,241

 

394

 

2,635









Other comprehensive income/(expense):








Remeasurement on defined benefit pension

 

-

 

-

 

-

 

-

 

(2,595)

 

-

 

(2,595)

Deferred tax movement on pension scheme remeasurement

 

-

 

-

 

-

 

-

 

390

 

-

 

390

Total other comprehensive income

 

-

 

-

 

-

 

-

 

(2,205)

 

-

 

(2,205)









Total comprehensive income for the period

 

-

 

-

 

-

 

-

 

36

 

394

 

430









Transactions with owners, recorded directly in equity:








Own shares acquired

-

-

-

(2,836)

-

-

(2,836)

Shares issued during the year

24

4

-

-

(23)

-

5

Impact of share based payments

-

-

-

-

248

-

248

Deferred tax on share options

-

-

-

-

(575)

-

(575)

Dividends paid

-

-

-

-

(1,180)

(336)

(1,516)

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

Total other comprehensive income

-

-

-

-

-

-

-

Total comprehensive income for the period

 

-

 

-

 

-

 

-

 

6,145

 

442

 

6,587









Transactions with owners, recorded directly in equity:








Own shares issued/(acquired)

-

-

-

137

(137)

-

-

Foreign exchange translation 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









 

 

 

 

Consolidated Cash Flow Statement (unaudited)

 




Unaudited

26 weeks

ended


Unaudited

26 weeks

ended


Audited

52 weeks

ended




31 December

2016


26 December

2015


2 July

2016


Note


£000


£000


£'000

Cash flows from operating activities








Profit after taxation for the period



6,587


5,869


8,504

Adjustments for:








Taxation



1,758


1,646


3,286

Finance expenses

6


(28)


419


987

Share of losses of associates after tax



15


10


14

Depreciation



3,363


3,372


7,090

Amortisation of intangibles



268


238


539

Non-cash impairment of goodwill



-


-


4,290

Movement in fair value foreign exchange contracts



(13)


58


134

Contributions by employer to pension scheme



-


-


(117)

Operating profit before changes in working capital



11,950


11,612


24,727









Changes in working capital








Increase in inventories



(2,273)


(3,419)


(1,091)

Increase in trade and other receivables



47


(2,283)


(2,253)

Increase in trade and other payables



(1,590)


1,888


1,711

Cash generated from operations



8,134


7,798


23,094









Interest paid



(439)


(524)


(1,180)

Corporation taxes paid



(1,336)


(757)


(1,603)

Net cash generated from operating activities



6,359


6,517


20,311









Cash flows from investing activities








Purchase of property, plant & equipment



(5,325)


(3,708)


(12,141)

Deferred consideration paid



-


-


(50)

Net cash used in investing activities



(5,325)


(3,708)


(12,191)









Cash flows from financing activities








Repayment of bank loans



(1,468)


(1,468)


(3,672)

Drawdown/(repayment) of revolving credit



5,000


-


(2,000)

Drawdown/(repayment) of invoice discounting



(373)


3,198


7,427

Repayment of asset finance facilities



(95)


(166)


(284)

Issue of ordinary share capital



-


-


5

Purchase of shares by employee benefit trust



-


(505)


(2,835)

Non-controlling interest dividend paid



-


-


(336)

Dividend paid to shareholder



(2,375)


(2,125)


(3,305)

Net cash from financing activities



689


(1,066)


(5,000)









Net increase/(decrease) in cash and cash equivalents



1,723


1,743


3,120

Opening cash and cash equivalents



3,024


61


61

Effect of exchange rate fluctuation



30


(45)


(157)

Cash and cash equivalents at end of the period



4,777


1,759


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 2 July 2016 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 year, meeting covenant requirements. The Group has the continued support of its banks with facilities of £50.9m. In addition, the Group has a strong asset backing and strong trade debtor book. Accordingly, the Board continues to adopt the going concern basis in preparing the Financial Statements.



 

 

2)            SEGMENT INFORMATION

 

Operating segments are identified on the basis of internal reporting and decision making. The Group's Chief Operating Decision Maker is considered 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 uses adjusted operating profit, reviewed on a regular basis, as the key measure of the segments' performance.  Operating profit in this instance is defined as profit before the following:

 

Ø net financing expense

Ø share option charges

Ø significant non-recurring items

Ø fair value adjustments relating to acquisitions

Ø pension charges or credits in relation to the difference between the expected return on pension assets and interest cost on    pension liabilities and

Ø revaluation of interest rate swaps and forward foreign currency contracts.

 

The UK Bakery segment manufactures and sells bakery products to the UK's multiple grocers and foodservice sectors. This segment primarily comprises the operations of Memory Lane Cakes Ltd, Lightbody Group Ltd, Campbells Cake Company Ltd, Johnstone's Food Service Ltd, Fletchers Bakeries Ltd and Nicholas & Harris Ltd. These subsidiaries are aggregated into a single segment after considering the following criteria:

 

Ø the nature of the products - products are similar in nature and are classed as manufactured bakery products

Ø the production process - the production processes have the same or similar characteristics

Ø the economic characteristics - the average gross margins are expected to be similar

 

The core operation of the Overseas segment is the distribution of the Group's UK manufactured products along with the sale of third party products primarily to Europe.

 

Costs of Group operations plus a 10% premium have been allocated across the segments on the basis of their operating profit. The premium has been charged to reflect the synergies achieved from obtaining resources centrally giving benefits across the operating segments. Operating profit levels have been chosen as the basis, as this reflects the underlying performance of the segment and is also the return the Group expects from those segments.

 

A purchasing premium of 2% is charged from Group operations, and is calculated on materials and packaging spends at segmental level. This charge is based on the rationale that Group operations, through Group buyers, optimise the Group's procurement spend through leveraging its purchasing power.

 

This has resulted in Group Operations Segment showing a break even result for the current and prior half year periods.

 

The Group's finance income and costs cannot be meaningfully allocated to the individual operating segments.

 



 

3)             SEGMENT INFORMATION (continued)

 

 

 


26 week period ended 31 December 2016


 

UK Bakery

£000

 

Overseas

£000

 

Group Operations

£000

 

Total Group

£000

Revenue





External

138,973

17,646

-

156,619

Total underlying operating profit

7,378

968

(27)

8,319

Significant non-recurring items




-

Fair value foreign exchange contracts




13

Share options charge




-

Results from operating activities




8,332

Finance income




461

Finance expense




(433)

Net financing expense




28

Share of losses of associates after tax




(15)

Profit before taxation




8,345

Taxation




(1,758)

Profit after taxation




6,587






Segment assets

190,327

7,221

847

198,395

Unallocated assets




5,322

Consolidated total assets




203,717






Segment liabilities

(59,351)

(5,637)

(7,737)

(72,725)

Unallocated liabilities




(25,670)

Consolidated total liabilities




(98,395)






Other segment information





Capital expenditure

5,291

34

-

5,325

Depreciation included in segment profit

3,347

16

-

3,363

Amortisation included in segment profit

268

-

-

268

Inter-segmental sale/(purchase)

4,743

(4,743)

-

-

 

Analysis of unallocated assets and liabilities:


Assets


Liabilities


£'000


£'000

Investments

224

Loans and borrowings

(25,665)

Financial instruments

321

Financial instruments

(5)

Cash and cash equivalents

4,777

Cash and cash equivalents

-

Unallocated assets

5,322

Unallocated liabilities

(25,670)

 

Certain operating costs have been incurred centrally and have been allocated to the reporting segments on an appropriate basis.

3)            SEGMENT INFORMATION (continued)

 

 

 


26 week period ended 26 December 2015


 

UK Bakery

£000

 

Overseas

£000

 

Group Operations

£000

 

Total Group

£000

Revenue





External

143,186

13,400

-

156,586

Total underlying operating profit

7,219

768

15

8,002

Significant non-recurring items




-

Fair value foreign exchange contracts




(58)

Share options charge




-

Results from operating activities




7,944

Finance income




98

Finance expense




(517)

Net financing expense




(419)

Share of losses of associates after tax




(10)

Profit before taxation




7,515

Taxation




(1,646)

Profit after taxation




5,869






Segment assets

187,184

6,240

2,203

195,627

Unallocated assets




2,061

Consolidated total assets




197,688






Segment liabilities

(61,110)

(4,673)

(3,701)

(69,484)

Unallocated liabilities




(22,890)

Consolidated total liabilities




(92,374)






Other segment information





Capital expenditure

3,702

6

-

3,708

Depreciation included in segment profit

3,359

13

-

3,372

Inter-segmental sale/(purchase)

3,976

(3,976)

-

-

 

Analysis of unallocated assets and liabilities:


Assets


Liabilities


£'000


£'000

Investments

243

Loans and borrowings

(22,629)

Financial instruments

59

Financial instruments

(261)

Cash and cash equivalents

1,759

Cash and cash equivalents

-

Unallocated assets

2,061

Unallocated liabilities

(22,890)

 

Certain operating costs have been incurred centrally and have been allocated to the reporting segments on an appropriate basis.

 

3)            SEGMENT INFORMATION (continued)

 

 

 


53 week period ended 2 July 2016


 

UK Bakery

£000

 

Overseas

£000

 

Group Operations

£000

 

Total Group

£000

Revenue





External

291,196

28,484

-

319,680

Underlying operating profit

15,887

1,511

(300)

17,098

Fair value foreign exchange contracts




(134)

Defined benefit pension scheme




117

Significant non-recurring




(4,290)

Results from operating activities




12,791

Finance income




221

Finance cost




(1,208)

Net financing expense




(987)

Share of losses of equity accounted investees after tax




 

(14)

Profit before taxation




11,790

Taxation




(3,286)

Profit after taxation




8,504






Segment assets

187,827

6,337

292

194,456

Unallocated assets

-

-

-

3,305

Consolidated total assets




197,761






Segment liabilities

(61,557)

(5,355)

(7,052)

(73,964)

Unallocated liabilities




(22,727)

Consolidated total liabilities




(96,691)






Other segment information





Capital expenditure

12,115

26

-

12,141

Depreciation included in segment profit

7,063

27

-

7,090

Amortisation

539

-

-

539

Impairment of goodwill

4,290

-

-

4,290

Inter-segmental sale/(purchase)

8,488

(8,488)

-

-

 

Analysis of unallocated assets and liabilities:


Assets


Liabilities


£'000


£'000

Investments

253

Loans and borrowings

(22,570)

Financial instruments

-

Financial instruments

(157)

Cash and cash equivalents

3,024

Cash and cash equivalents

-

Taxation balances

28

Taxation balances

-

Unallocated assets

3,305

Unallocated liabilities

(22,727)

 

Certain operating costs have been incurred centrally and have been allocated to the reporting segments on an appropriate basis.

 

Impairment loss relates to the Anthony Alan Foods Ltd acquisition in 2007 which falls under UK Bakery segment.



 

4)            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.

 

5)            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 31 December 2016 1,462,095 options were granted (H1 2015: 1,624,126).

 

Administration costs include a charge in the first six months of £137,000 (H1 2015: £11,000) in relation to the fair value of share options.

 

6)            FINANCE INCOME AND EXPENSES

 



Unaudited

26 weeks ended 31 December

2016


Unaudited

26 weeks ended 26 December

2015


Audited

53 weeks ended

2 July

2016



£'000


£'000


£'000

Change in fair value of interest rate swaps


461


98


219

Bank interest receivable


-


-


2

Finance income


461


98


221

Net interest on net pension position


-


-


(148)

Net bank interest payable


(364)


(383)


(787)

Charge on interest rate swaps


(69)


(134)


(273)

Change in fair value of interest rate swaps


-


-


-

Interest on deferred consideration


-


-


-

Finance expense


(433)


(517)


(1,208)

Net finance income/(expense)


28


(419)


(987)

 

The Group has three interest rate swap arrangements to hedge its risks associated with interest rate fluctuations:

£3.0 million for four years from 22 May 2013 at 1.7% maturing 22 May 2017

£6.0 million for three years from 2 June 2014 at 1.9% maturing 1 June 2017

£20.0 million for five years from 3 July 2017 at 0.455% maturing 3 July 2022

 

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 £461,000 (H1 2015: credit £98,000).

7)            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 126,874,000 (26 December 2015: 127,090,000). 

 

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 31 December 2016 is 130,497,000 (26 December 2015: 132,285,000). 

 

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

31 Dec 2016

26 weeks to

26 Dec 2015

Profit




Profit attributable to equity holders of the Company (basic)

 

£000

 

6,145

 

5,550

Significant non-recurring and other items

£000

(389)

(32)

Amortisation of intangibles

£000

268

238

Numerator for adjusted earnings per share calculation (adjusted basic)

 

£000

 

6,024

 

5,756













Shares


Basic

Diluted

Basic

Diluted

Weighted average number of ordinary shares in issue during the period

 

'000

 

126,874

 

126,874

 

127,090

 

127,090

Dilutive effect of share options

'000

-

3,623

-

5,195



126,874

130,497

127,090

132,285







Earnings per share






Basic and diluted earnings per share

Pence

4.8

4.7

4.4

4.2

Adjusted basic and adjusted diluted earnings per share

 

Pence

 

4.7

 

4.6

 

4.5

 

4.4

 

 



 

8)     ANALYSIS OF NET DEBT

 

 


Unaudited

26 weeks

 ended

31 December

2016

Unaudited

26 weeks

 ended

26 December

2015

Audited

53 weeks

ended

2 July

2016


£'000

£'000

£'000

Net cash at bank

4,777

1,759

3,024

Loans within one year

(7,937)

(5,672)

(2,937)

Loans after more than one year

(7,325)

(10,262)

(8,794)

Invoice discounting within one year

(10,451)

(6,595)

(10,824)

Asset finance within one year

(71)

(214)

(133)

Asset finance after more than one year

(24)

(94)

(57)

Net bank debt excluding unamortised transaction costs

(21,031)

(21,078)

(19,721)

Unamortised transaction costs:




within one year

65

65

65

more than one year

78

143

111

Total unamortised transaction costs

143

208

176

Bank debt net of unamortised transaction costs within one year

(13,617)

(10,657)

(10,805)

Bank debt net of unamortised transaction costs more than one year

(7,271)

(10,213)

(8,740)

Bank debt net of unamortised transaction costs

(20,888)

(20,870)

(19,545)









Total net debt including deferred consideration




Net bank debt

(21,031)

(21,078)

(19,721)

Discounted deferred consideration payable

-

(50)

-


(21,031)

(21,128)

(19,721)

 

9)     SHARE CAPITAL

No shares were issued during the period or the comparative prior year period.

 

At 31 December 2016 3,360,030 shares (2015: 1,275,817) were held by the Finsbury Food Group Plc Employee Benefit Trust.

 



 

 

Advisers

 

 

 

Secretary

Auditor

 

Melanie Cox

KPMG LLP

 

Finsbury Food Group Plc

Chartered Accountants

 

Maes-y-coed Road

Cardiff

CF14 4XR

Tel: 029 2035 7500

3 Assembly Square

Britannia Quay

Cardiff Bay

CF10 4AX

 

 

Registered Office

Maes-y-coed Road

Cardiff

CF14 4XR

Tel: 029 2035 7500

                                       Registrars

                                       Capita Registrars

34 Beckenham Road

Beckenham

Kent

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

 

Registered Number


 

00204368


 



 



 



 



 


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