28th Mar 2006 07:01
Finsbury Food Group PLC28 March 2006 Date: 28 March 2006On behalf of: Finsbury Food Group plcEmbargoed: 0700hrs Finsbury Food Group plc Half Year to 31st December 2005 - Highlights • Turnover up 12% to £ 32.8m (2004 : £ 29.2m ) • Profit before tax, & exceptional items up 70% to £ 1.2m (2004 : £ 0.7m) • Improvement in gross margin up to 39.6% (2004 : 36.1%) • Earnings per share (excluding exceptionals) up 81% to 3.94p (2004: 2.18p) • Integration of Scottish acquisitions progressing well • Capital investment program proceeding to plan in Memory Lane Cakes • Record Easter expected for Nicholas & Harris Ltd Finsbury Food Group plc Interim Report 31 December 2005 Chairman's Statement Dear Shareholder After a busy and successful first half to the year, I am pleased to announce asolid set of results for the Group. The interim results include six weekstrading from the three businesses acquired in November, plus a full half yearfrom the original group of companies. Having built a strong foundation, we havenow been able to pursue our acquisition strategy, as well as grow the corebusiness. The Group generated a profit before tax of £1.2m in the six months to December2005, which constituted a 70% rise over the corresponding period in 2004. Afterstripping out the effect of the acquisitions, profits were up 36% at £0.9m. Sales growth over the period was 12%. On a like-for-like basis, sales increasedby 2%. This like-for-like growth reflects the fact that Memory Lane Cakes Ltd("Memory Lane") re-modelled its product range during the calendar year 2004,with a number of low margin retailer brand contracts exited at the end of 2004.Adjusting for these sales, under-lying growth of 9% was achieved. Thisre-modelling of the Memory Lane product range is the major factor in the grossmargin increase from 36% to nearly 40%. The newly acquired businesses havemargins broadly in line with the original subsidiaries. Trading for Christmas 2005 went according to plan, with sales across the Groupof some £2.0m. The majority of these sales were from Memory Lane, but the threenew businesses contributed around 25% of the total. All sites achieved theirplan, and we feel this will stand us in good stead to grow our seasonal businessfor 2006. During the period we purchased California Cakes Ltd ("California"), CampbellsCakes Ltd ("Campbells"), and United Central Bakeries Ltd ("UCB") in November2005, for a combined consideration of approximately £ 10m. These businesses arealready making a positive contribution to the Group, both in terms ofprofitability, and in increasing the range of products which we can offer ourcustomers. As planned at the time of acquisition, Archy Cunningham has now assumed fullresponsibility for all three operations in Scotland. He was previously ManagingDirector of UCB, and will be supported in developing these businesses byindependent management teams at each site. The Group will also be looking togenerate additional sales momentum by leveraging existing retailerrelationships. The capital projects highlighted in November 2005 at the time of theacquisitions are underway. The Gluten Free area of UCB has now been fullysegregated to give us a market-leading facility in this fast expanding nichemarket. At California, the first phase of process automation has commenced. Dueto phased implementation, completion of this project will now be in the Autumn. Memory Lane is now in the middle of two large capital installations, whichinvolve the investment of £1.50m. The first is the automation of the spongeprocessing line, whilst the second is a new production line set up to producemini versions of our premium boxed round cakes. Listings have already beensecured with three retailers, and sales will begin in April. Developmentcontinues with other customers with a view to launching in late Summer. Thiswidens the range of products we can offer our customers in their premium brands. Nicholas & Harris Ltd ("Nicholas") continues to develop its customer base, withits core bread and morning goods products. Listings have now been secured withthe four largest multiple grocers and further development work is continuing,with more launches expected in the Summer. In addition, Nicholas is producingthe full range of Waitrose Hot Cross Buns for Easter 2006 - the first time wehave achieved sole supply status. Nestle continues to perform in line with expectations. Growth has slowedslightly in the last few months due to aggressive activity by other brands inthe cake sector. We have refined our offering, and now have a portfolio ofexcellent products to push hard in the months ahead. As with most companies, utility prices are causing some concern with the effectshardest felt in our bread businesses. Prices are starting to ease a little, butthe outlook remains uncertain. Our Group Buying team has been working hard oncreating savings on raw materials and packaging items to minimise the impact. In summary, we have made good progress to date. Our markets are highlycompetitive, and the competition amongst our retail customers is intense.However, all the consumer trends are moving towards more premium products, withtop quality ingredients. We believe this places the Group, with our core missionto be "The Best at What We Do", operating in the right market segments. Lord SaatchiChairman 28th March, 2006 Consolidated Profit and Loss Account Unaudited Unaudited Audited six months six months year ended ended ended 31 December 31 December 30 June 2005 2004 2005 £000 £000 £000 NotesTurnoverContinuing 29,686 29,249 59,338Acquisition 3,130 - -Total 32,816 29,249 59,338Cost of sales (19,828) (18,697) (37,073)Gross profit 12,988 10,552 22,265Distribution expenses (1,656) (1,475) (2,989)Administrative expenses (10,054) (8,202) (17,540)Other operating income - 13 20Operating profit and profit on ordinaryactivities before interest and taxationContinuing 953 888 1,756Acquisition 325 - -Total 1,278 888 1,756Interest receivable 6 - 6Interest payable (131) (211) (225)Profit on ordinary activities before 1,153 677 1,537taxation and exceptional itemsExceptional item 2 (500) 1,815 1,865Profit before taxation 653 2,492 3,402Taxation (160) (216) (495)Profit after taxation 493 2,276 2,907Proposed dividend - - (267)Profit retained for the period 493 2,276 2,640Earnings per shareBasic 3 2.19p 10.77p 13.56pExcluding exceptional items 3 3.94p 2.18p 4.86pDiluted 3 1.87p 9.79p 12.01pDiluted excluding exceptional items 3 3.37p 1.98p 4.31pDividend per share Nil Nil 1.20p Consolidated Balance Sheet Unaudited Unaudited Audited 31 December 31 December 30 June 2005 2004 2005 £000 £000 £000 NotesFixed assetsGoodwill 14,224 2,099 2,041Negative goodwill (508) (538) (523)Total net goodwill 4 13,716 1,561 1,518Tangible assets 13,162 7,735 9,422 26,878 9,296 10,940Current assetsStocks 2,120 2,012 1,588Debtors 12,575 10,667 8,591Cash at bank 6 446 252 4,202 15,141 12,931 14,381Creditors: amounts falling due within one 2 (20,770) (10,419) (12,978)yearNet current assets/(liabilities) (5,629) 2,512 (1,403)Total assets less current liabilities 21,249 11,808 12,343Creditors: amounts falling due after more 6 (10,819) (2,700) (2,550)than one yearProvisions for liabilities and chargesPension scheme (498) (498) (498)Deferred Tax (50) - (100) (548) (498) (598)Total Net assets 9,882 8,610 9,195 Capital and reservesCalled up share capital 229 212 222Share premium account 6,846 6,447 6,658Capital redemption reserve 578 578 578Profit and loss account 2,229 (1,373) 1,737Equity shareholders' funds 9,882 8,610 9,195 Consolidated Cash Flow Statement Unaudited Six Unaudited Six Audited Year months ended 31 months ended 31 ended 30 June December 2005 December 2004 2005 £000 £000 £000 £000 £000 £000 NotesNet cash inflow from operating activities 5 300 1,112 4,787Returns on investments and servicing offinanceInterest received 7 - 6Interest paid on bank loans, overdraft andloan stock (47) (212) (225)Net cash outflow from returns on (40) (212) (219)investments and servicing of financeTaxation (paid) / recovered (60) 143 138Capital expenditure & financial investmentsPurchase of tangible fixed assets (610) (536) (2,671)Purchase of subsidiaries (7,104) - -Settlement of acquired debt (5,380) - -Proceeds on disposal of tangible fixed - - 2,350assetsNet cash outflow from capital expenditure (13,094) (536) (321)and financial investmentsAcquisitions and DisposalsCash received with acquisition 40 - -Equity dividend paid (275) (211) (211)Net cash (outflow)/inflow before use of (13,129) 296 4,174liquid resources and financingFinancingIssue of ordinary share capital 193 8 229Loan notes repaid (15) (9) -(Repayment) of bank loans 6 (2,850) - -Drawdown of bank loans 6 12,100 600 450Hire purchase (54) - -Net cash inflow/(outflow) from financing 9,374 599 679(Decrease)/Increase in cash in the period (3,755) 895 4,853 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 2004 are not the company's statutory accounts for that financial year but are derived from them. 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 2005. 2. The accrued exceptional costs of £500,000 relates to the disruption and reorganisation costs associated with major projects following the acquisitions. (2004 - exceptional profit relates to the sale of surplus land at Cardiff). Also included within creditors falling due within one year is the deferred consideration of £3,500,000 relating to the recent acquisitions. 3. The earnings per share for the period are calculated on the weighted average number of shares in issue, 22,520,707 (2004 - 21,140,220 and 2005 - 21,435,207). Fully diluted earnings per share are based on 26,323,322 shares (2004 - 23,239,158 and 2005 - 24,204,177). 4. 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. 5. Working capital in California Cake Company Limited at the time of acquisition was low due to its previous intercompany funding arrangements. As anticipated this has led to a one off increase in working capital in that business of £748,000 over the period. 6. At the balance sheet date the Group had drawn down a mortgage of £5,600,000, a term loan of £5,000,000 and asset finance of £1,500,000. The Group also has a further asset finance facility of £1,500,000, an undrawn term loan of £3,500,000 and an overdraft facility of £5,000,000. 7. This interim report is being sent to shareholders and warrant holders and copies are available from the Company Secretaries, City Group P.L.C. at the Registered Office at 30 City Road, London EC1Y 2AG. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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