30th Mar 2007 07:03
Finsbury Food Group PLC30 March 2007 Date: 30 March 2007 On behalf of: Finsbury Food Group plc ("Finsbury", the "Company" or the "Group") Embargoed: 0700hrs Finsbury Food Group plcInterim Results 2007 Highlights of six months to 31 December 2006 • Turnover up 32% to £43.43m (2005: £32.82m) • Strong like-for-like sales growth in operating subsidiaries • Gross margin remains strong at 39% • Operating profit (before exceptionals) up 48% to £1.75m (2005: £1.18m) • Profit before tax & exceptional items up 12% to £1.27m (2005: £1.13m) • Acquisition of Lightbody Group Ltd for up to £37.5m on 23 February 2007 Commenting on the results, Dave Brooks, Chief Executive of Finsbury Food Groupplc, said: "The first six months of our year to June 2007 have seen good progress in ourstrategy to lead the growth in the premium sectors of both the cake and breadmarkets. Trends show that consumers continue to increasingly demand premiumproducts. "The food sector is never easy, though we intend to continue driving ourprofitable growth by focusing in those areas where we can continue to be 'TheBest at What We Do'. Our Group is strongly positioned in the growing premiumsectors of its markets and in Lightbody we have now acquired the leading playerin the most value-added sector of the cake market - celebration cake. With agood track record over the last couple of years, successful experience ofintegrating acquisitions and excellent market positioning, the Board remainsoptimistic about our future prospects." For further information: Finsbury Food Group Plcwww.finsburyfoods.co.uk Dave Brooks (Chief Executive) 07831 787 382Lisa Morgan (Finance Director) 07771 712 720 Redleaf CommunicationsEmma Kane/Sanna Lehtinen/Susan Quigley 020 7822 0200 • Publication quality photographs are available via Redleaf Communications on the numbers shown above Chairman's Statement The first six months of our year to June 2007 have seen good progress in ourstrategy to lead the growth in the premium sectors of both the cake and breadmarkets. Sales in Memory Lane Cakes Ltd ("Memory Lane") were up 5% in the firstsix months, whilst Nicholas and Harris Ltd ("Nicholas") grew its bread sales by18% in the same period. For the comparable six weeks leading up to 31 December,the cake businesses of California Cakes Ltd ("California") and Campbells CakesLtd ("Campbells") moved sales forward by 25%. This sales growth together with the full half year impact of the acquisition ofCalifornia, Campbells and United Central Bakeries Ltd ("UCB"), all of whichjoined the Group in November 2005, saw the Group deliver total sales up 32% to£43.43m. This in turn led to a 48% improvement in operating profit to £1.75m anda 12% increase in profit before tax (excluding exceptional costs) to £1.27m. I am also pleased to report that gross margins have remained healthy at 39%.Against a background of some pressure on input costs (particularly in relationto energy prices), this performance is testament to the skills of our innovationteams in developing a range of products where consumers are prepared to pay forthe quality and still feel they have had great value for money. Whilst someselling price increases are expected in the second half, this innovation willprovide us with continued robustness in our earnings, as we manage the costpressures within the market. Trends show that consumers continue to increasingly demand premium products.Whilst UK consumers eat in a health-conscious manner for most of the week, thereis growing evidence that they are keen to indulge themselves from time to time.When they are in 'treat mode', the most important factor is that the productwhich they are treating themselves to tastes really good and is of the highestquality - this is where we as a Group are finding our growth opportunities. In September 2006, we relaunched the premium own label cake ranges of Tesco(Finest*) and Sainsbury (Taste the Difference) and achieved a substantial marketshare, based upon the number of products supplied. During the remainder of thisyear, we expect to lead the range relaunch with four other major retailers aswell as continue to develop the ranges of Tesco and Sainsbury. On the back of our strong position in premium cake, we are experiencingincreasing interest from our retail customers in premium breads and morninggoods from our Nicholas business. Along with our organic capability, I wouldexpect to see continued strong growth in this area as we develop and launchexciting new ranges. Our UCB bakery in Scotland suffered a major fire at the end of October 2006. Allthe damage and loss of income was covered by our insurers and we were delightedthat the gluten-free bakery was back in operation during December 2006.Furthermore, we are pleased to report that the rest of the bakery is stillexpected to be back up to full operation by the end of this financial year. Iwould like to take this opportunity to thank our customers for their continuedsupport, our insurers for their prompt attention and our management for theircontinued drive to rebuild the business as quickly as possible. Mostimportantly, thanks should go to our 140 staff who have been moved from bakeryto bakery since the fire to support our other businesses in Scotland and theoutsourcing operation. Many of the team have been asked to help out in fourdifferent bakeries and we have hardly had a single complaint - they should allbe as proud of their efforts and commitment as we are. With our strong management teams, solid operational efficiency and goodcommercial growth prospects, the Group has felt able to pursue its acquisitionpolicy. It was with great pleasure that we were able to complete the acquisitionof the Lightbody Group Ltd ("Lightbody") on 23 February, following our EGM on 22February 2007, for a maximum consideration of £37.5m. Lightbody is the UK'sleading supplier of celebration cakes, with a market share of over 40% in thisstrategically important sector. We were also delighted to welcome MartinLightbody and Crawford Currie (Lightbody's Managing Director and FinanceDirector respectively) to the Board and are confident their experience willgreatly assist our future development. This acquisition was supported by the issue of 22.5m new shares, with MartinLightbody and his family taking 10m new shares as part of their consideration,and the remaining 12.5m being issued to a range of institutional investors at85p. This has significantly increased our free float, enhanced our shareholderbase and continued our development as one of the leading players in the foodindustry. So we now look ahead to the rest of the year. In January, we reported stronggrowth on a like for like basis in all of our subsidiaries. I am pleased toreport that that trend is continuing with Memory Lane ahead by 8% after 38weeks, Nicholas growing by 19% for the same period and California and Campbellscombined up 28% on the comparable 18 weeks from mid November I am also pleased to report that the early signs on the Lightbody integrationplan are good. Our customers have reacted in a positive manner to thecombination and we foresee further opportunities for growth arising. Inaddition, plans to move the California business into Lightbody are progressingwell with the full co-operation of the California workforce. The food sector is never easy, though we intend to continue driving ourprofitable growth by focusing in those areas where we can continue to be "TheBest at What We Do". Our Group is strongly positioned in the growing premiumsectors of its markets and in Lightbody we have now acquired the leading playerin the most value-added sector of the cake market - celebration cake. With agood track record over the last couple of years, successful experience ofintegrating acquisitions and excellent market positioning, the Board and Iremain optimistic about our future prospects. Lord Saatchi Chairman 30 March 2007 Consolidated Profit and Loss Account Restated Restated Unaudited Unaudited Audited six months six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000 NotesTurnover 43,425 32,816 73,347Cost of sales (26,522) (19,828) (44,159) Gross profit 16,903 12,988 29,188Distribution expenses (2,283) (1,656) (3,871)Administrative expenses 2 (13,439) (10,149) (22,567)Other operating income 3 564 - - Operating Profit 1,745 1,183 2,750Exceptional item 4 - (267) (500)Profit on ordinary activities before interest 1,745 683 2,483and taxation Interest receivable 2 6 8Interest payable (478) (131) (572)Other income - 72 143 Profit before taxationPre-exceptional 1,269 1,130 2,329Exceptional - (500) (267) 1,269 630 2,062 Tax on profits on ordinary activities (388) (265) (711)Tax on profits on exceptional activities - 105 76 (388) (160) (635)Profit on ordinary activities after taxPre-exceptional 881 865 1,618Exceptional - (395) (191) 881 470 1,427 Earnings per shareBasic 5 3.67p 2.09p 6.26pExcluding exceptional items 5 3.67p 3.84p 7.10pBasic diluted 5 3.19p 1.79p 5.36pDiluted excluding exceptional items 5 3.19p 3.29p 6.08p Consolidated Balance Sheet Restated Restated Unaudited Unaudited Audited 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000 NotesFixed assetsGoodwill 13,833 14,224 14,031Negative goodwill (477) (508) (493) Total net goodwill 6 13,356 13,716 13,538Tangible assets 14,120 13,162 13,899 27,477 26,878 27,437Current assetsStocks 2,259 2,120 1,714Debtors 12,578 12,575 11,341Cash at bank 46 446 527 14,883 15,141 13,582 Creditors: amounts falling due within one year 4 (17,327) (20,770) (16,970) Net current liabilities (2,444) (5,629) (3,388) Total assets less current liabilities 25,033 21,249 24,049 Creditors: amounts falling due after more than 7 (12,004) (10,819) (12,484)one year Provisions for liabilitiesDeferred tax (327) (50) (327) Total net assets excluding pension scheme asset 12,702 10,380 11,238Defined benefit pension scheme asset 548 66 548 Total net assets including pension scheme 13,250 10,446 11,786 Capital and reservesCalled up share capital 263 229 231Share premium account 7,823 6,846 6,902Capital redemption reserve 578 578 578Option reserve 206 142 182Profit and loss account 8 4,380 2,651 3,893 Equity shareholders' funds 13,250 10,446 11,786 Consolidated Cash Flow Statement Notes Unaudited six Unaudited six Audited year months ended 31 months ended 31 ended 30 December 2006 December 2005 June 2006 £'000 £'000 £'000 £'000 £'000 £'000 Net cash inflow from operating 680 300 3,587activities Returns on investments and servicingof financeInterest received 2 7 8Interest paid on bank loans, (468) (47) (474)overdrafts and loan stock Net cash outflow from returns on (466) (40) (466)investments and servicing of finance Taxation paid (471) (60) (420) Capital expenditurePurchase of tangible fixed assets (1,299) (610) (2,032)Proceeds of insurance claim on 933 - -tangible fixed assets Proceeds on disposal of tangible - - 40fixed assets Net cash outflow from capital (366) (610) (1,992)expenditure Acquisitions and disposalsPurchase of subsidiary companies (500) (7,104) (10,110)Settlement of acquired debt - (5,380) (5,380)Cash received with acquisition - 40 40 Net cash outflow from acquisitions (500) (12,444) (15,450)and disposals Equity dividend paid 7 (394) (275) (275) Net cash outflow before use of (1,517) (13,129) (15,016)liquid resources and financing FinancingDrawdown of bank loans - 12,100 14,600Repayment of current bank loans (814) - (476)Repayment of former bank facility - (2,850) (2,850)Net proceeds/(repayment) of hire 897 (54) (128)purchase liabilitiesIssue of ordinary share capital 953 193 252 Net cash inflow from financing 1,036 9,389 11,398Decrease in cash in the period (481) (3,740) (3,618) Notes: 1. The interim report, which is unaudited, does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 (as amended). The comparative figures for the financial year ended 30 June 2006 have been extracted from the statutory accounts for that year. Those accounts have been reported on by the company's Auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. There is no difference between the profits reported and the profits on an historical cost basis. The interim report has been prepared on the basis of the accounting policies consistent with those set out in the report and accounts of the company for the financial year ended 30 June 2006 with the exception of the additional adoption of FRS 20 'Share based payments'. 2. Following the adoption of FRS 20 'Share based payments' administration costs included a charge of £24,000 for the six months to 31 December 2006. The comparative figures for the six months ended 31 December 2005 and for the year ended 30 June 2006 have been adjusted by £30,000 and £70,000 respectively. The cumulative prior year adjustment at the close of the year ended 30 June 2006 was £112,000. The company has applied the Black-Scholes option pricing model to value the options. 3. The other operating income relates to the reimbursement from our insurers of costs and loss of profits associated with the UCB bakery fire. 4. Exceptional costs to 31 December 2006 are nil, (2005: £500,000 relating to the disruption and reorganisation costs associated with major projects following acquisitions). 5. The earnings per share for the period are calculated on the weighted average number of shares in issue, 23,981,507 (December 2005: 22,520,707 and June 2006: 22,765,188). Fully diluted earnings per share are based on 27,640,071 shares (December 2005: 26,323,322 and June 2006: 26,585,774). During the period 3.0 million warrants were converted to Ordinary shares, raising £0.9 million. 6. Goodwill relating to the acquisition of Memory Lane Cakes & Nicholas & Harris is being amortised over 20 years. Goodwill relating to the recent acquisitions of California Cakes Ltd, Campbells Cakes Ltd and United Central Bakeries Ltd has not been amortised but is subject to an annual impairment review. 7. At the balance sheet date the outstanding financial liabilities of the Group consist of: O £5.5m mortgage (repayable in quarterly instalments to November 2020) O £4.4m term loan (repayable in monthly instalments to November 2011) O £2.5m term loan (repayable in monthly instalments to May 2011) O £1.2m equipment finance (repayable in quarterly instalments to November 2010) O £1.1m equipment finance (repayable in monthly instalments to October 2011) O £30,000 5% loan notes (repayable at the note holders' demand) The blended interest rate on this facility is 1.42% over the Bank of England base rate. The Group has two £5m interest rate swaps, one fixed for five years and the other amortising over five years. In addition to the above there was a £5.0m overdraft facility which was not utilised at the balance sheet date. 8. The final dividend for the year ended 30 June 2006 of 1.5p (2005: 1.2p) amounting to £394,000 (2005: £275,000) was paid on 8th December 2006. 9. Following the EGM on 22 February 2007, the Group acquired the Lightbody Group Ltd for a maximum consideration of £37.50m. 10. This interim report is being sent to shareholders and warrant holders and copies are available from the Company Secretaries, City Group Plc. at 30 City Road, London, EC1Y 2AG. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
FIF.L