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Finsbury Food Group (FIF)

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Monday 19 March, 2018

Finsbury Food Group

Interim Results

RNS Number : 0520I
Finsbury Food Group PLC
19 March 2018
 

Date:

19 March 2018

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 30 December 2017.

 

Summary

·      Group revenue of £157.8m up 0.7% (H1 2016: £156.6m) like for like*1 up 2.5% to £144.8m.

·      Group operating profit of £8.7m up 4.7% (H1 2016: £8.3m).

·      Group operating profit margin of 5.5% (H1 2016: 5.3%).

·      Profit*2 before tax of £8.4m up 6.3% (H1 2016: £7.9m)

·      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 £16.6m reduced to 0.6 times annualised EBITDA of the Group (H1 2016: £21.0m, 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 £45m RCF plus £45m accordion.

·      Purchase of the freehold property at Lightbody bakery for £2.6m.

 

 

*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

[email protected]

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 £16.6 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 £45m 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 £45m. 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 £m

H1 2016 £m

Movement

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 £140.5 million. Operating profit has decreased by 0.7% to £7.3 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 £13.0m (H1 2016: £15.4m) 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 £m

H1 2016 £m

Growth

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 £157.8 million.  Profit before interest, tax and significant non-recurring and other items was up 4.7% to £8.7 million.

Interest Payable

Interest payable and charges on related interest rate swaps on the Group's bank debt in H1 2017 was £331,000 (H1 2016: £433,000), a decrease of £102,000. 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 £12.7 million, which compares with £12.0 million in H1 2016. The increase arises from some upside from organic growth in profit. Net debt at 30 December 2017 is £16.6 million which compares to £21.0 million at H1 2016 a reduction of £4.4 million. Working capital remained steady in H1 2017 (H1 2016: growth +£3.8m). The year on year improvement is driven by the exit of the loss- making business. Capital expenditure of £4.9 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 £0.5 million lower than H1 2016. The cash out-flow relating to restructuring and reorganisation costs were £2.4 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 £10,498,000 at 1 July 2017, the next accounting valuation update will be carried out at 30 June 2018. Cash contributions (including the PPF levy) were £199,000 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)

                               


 

 

 

 

 

Note


 

Unaudited

26 weeks

ended

 30 December 2017


 

Unaudited

26 weeks

ended

31 December 2016


 

Audited

52 weeks

ended

 1 July

2017




£'000


£'000


£'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

£000


£000


£000

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)

 

 


 

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 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

26 weeks

ended


Unaudited

26 weeks

ended


Audited

52 weeks

ended




30 December

2017


31 December

2016


1 July

2017


Note


£000


£000


£'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 £45m revolving credit facility plus scope for the facility to be increased by up to a further £45m. 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 £12,995,000 in H1 2017, (H1 2016: £15,360,000), the Company has included in its half year results costs of £9,683,000 relating to restructuring and re-organisation resulting from the closures.  The net cash out-flow relating to these costs was £2,425,000 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 £4,000,000 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 2017

£000

Total

26 weeks to 31 December 2016

£000

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 £122,000 (H1 2016: £137,000) in relation to the fair value of share options.



 

5)            FINANCE INCOME AND EXPENSES

 



Unaudited

26 weeks ended 30 December

2017


Unaudited

26 weeks ended 31 December

2016


Audited

52 weeks ended

1 July

2017



£'000


£'000


£'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 £20.0 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 £11,000 (H1 2016: credit £461,000).

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

30 Dec 2017

26 weeks to

31 Dec 2016

Profit




(Loss)/Profit attributable to equity holders of the Company (basic)

 

£000

 

(1,810)

 

6,145

Significant non-recurring and other items

£000

7,893

(389)

Amortisation of intangibles

£000

269

268

Numerator for adjusted earnings per share calculation (adjusted basic)

 

£000

 

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

26 weeks

 ended

30 December

2017

Unaudited

26 weeks

 ended

31 December

2016

Audited

52 weeks

ended

1 July

2017


£'000

£'000

£'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 than one year

-

(24)

-

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

3-7 Temple Avenue

London

EC4Y 0DT

Tel: 0207 583 8304

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

 

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
 
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