FIF INTERIM RESULTS STATEMENT FINAL
Date: 24 March 2014 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 manufacturer of cake and speciality bread, is pleased to announce its interim results for the six months ended 28 December 2013. Summary Operating profit up 5% to £2.6m (H1 2012: £2.5m) Group revenue from continuing operations down 1.8% to £86.6m (H1 2012: £88.2m) Profit before tax from continuing operations up 50.6% to £2.1m (H1 2012: £1.4m) Net debt down 57% to £11.8m (H1 2012: £27.4m) Proposed interim dividend of 0.25p per share (H1 2012: 0.25p per share) Operational highlights New cake slice ‘snap pack’ packaging format launched Snacking cake automation investment program on track for year end completion Nicholas & Harris bread facility expansion has been commissioned in January New Livlife Low Carb Bread progressing well Commenting on the results, John Duffy, Chief Executive of Finsbury Food Group plc, said: "I am pleased with the progress made in what has been a transitional year for the Group. The sale of the Free From division, consequent group restructuring and capital investment have transformed the balance sheet and provided the Group with the strong foundation on which it is operating. “Whilst the trading environment remains tough in the short term, our low level of debt and interest costs allow us to make significant investment in our factories and businesses for the future, in line with our stated strategy. We believe that although the consumer markets remain challenging, an improvement in consumer behaviour lies ahead, and the Group is in a strong position to mitigate against these wider market challenges and focus on its strategy for growth.”
For further information: Finsbury Food Group plc John Duffy (Chief Executive) Stephen Boyd (Finance Director) Cenkos Securities plc Bobbie Hilliam (Corporate Finance) Alex Aylen (Sales) Redleaf Polhill Rebecca Sanders-Hewett/ Jenny Bahr/ Rachael Brown
www.finsburyfoods.co.uk 029 20 357 500 020 7397 8900 [email protected] 020 7382 4730
Publication quality photographs are available via Redleaf Polhill on the numbers shown above Notes to Editors: Finsbury Food Group plc (AIM: FIF), is a leading manufacturer of cake, bread and bakery goods. The Group's focus is premium and celebration cakes plus low fat cake slices, artisan and organic bread and also morning goods. Finsbury Food Group is the second largest manufacturer of Ambient Packaged Cake (excluding In Store Bakery) in the UK, a market valued at £939m (Source: Kantar Worldpanel Total UK Coverage, January 2014). The Group's strategy is to generate returns for shareholders by building a crafted bakery group focused on premium, celebration and wellbeing that delivers for customers and consumers. Finsbury continues to develop its licensed brand portfolio to complement its core retailer brand relationships and improve its understanding of and response to changing consumer needs. Whilst the Company sees exciting organic growth opportunities in all its businesses and its short-term focus is on integrating and growing its existing businesses, the aim is to take advantage of the appropriate bolt on acquisitions to drive longer term value as opportunities and circumstance allow.
Development Highlights The Group has demonstrated resilient growth and efficiency improvements in the first half year, and despite a challenging marketplace, we maintained our position as the second largest manufacturer of ambient cake in the UK. We continued to add to our licenced portfolio to ensure an up to date and relevant consumer offer. Alongside the strongly performing Spiderman, Moshi Monsters and One Direction celebration cakes, the much loved Me to You range recently added to our portfolio is performing strongly. Nicholas & Harris launched Livlife seriously seeded low-carb bread in June 2013. Livlife has half the carbohydrate content of regular bread, and accesses the market of the 40% of adults trying to reduce carbohydrate content. Nicholas & Harris is focused on growing distribution and further development of the brand in 2014. Within our UK Bakery sector the planned capital investment programme is progressing well with the new cake slice 'snap pack' packaging format was launched and further snacking cake automation investment on track for year end completion. Similarly the Nicolas and Harris bread facility expansion was commissioned in January 2014. These and future capital investments will underpin further internal efficiency and capacity improvements to support sales growth in the coming years. All sites continue to make good technical progress and maintain their BRC A grade status against an improved and tougher standard. Trading Results The Group sold its Free From business in the prior financial year, on 27 February 2013 for a total value of approximately £21 million to focus on its core bakery business. The prior year comparatives have been restated to report on continuing operations. Group revenue for the 26 weeks to 28 December 2013 was down 1.8% to £86.6 million (26 weeks to 29 December 2012: £88.2 million), a decrease of £1.6 million on the corresponding period last year. The UK Bakery business saw a decline of 2% whilst sales in the Overseas business Lightbody Europe (LBE), the Group’s 50% owned subsidiary export business, remained stable year on year. Cost inflation in key ingredients such as butter and chocolate combined with general cost inflation continues to put pressure on margins. The Company has however mitigated this pressure with internal efficiency investment and a cost reduction focus. Profit from continuing operations before tax and significant non-recurring and other items was up 50.6% to £2.1 million (2012: £1.4 million). This was achieved after net finance expense of £0.5 million (2012: £1.1 million). The sale of the Free From business on 27 February 2013 for £17.1 million has transformed the balance sheet with bank debt of £27.9 million being repaid during the previous year. Finance expenses have decreased year on year accordingly. A further £3 million of deferred consideration is payable by the second anniversary of completion of the sale. The tax charge for the period is based on the estimated effective tax rates on profits for the full year of 23% for UK, 33% for overseas. Adjusted earnings per share on continuing operations were 2.0p (2012: 1.5p). The adjusted diluted earnings per share on continuing operations were 1.8p (2012: 1.3p). Debt and Bank Facilities The Group’s total net debt as at 28 December 2013 was £11.8 million (29 December 2012: £27.4 million) including net borrowings from HSBC Bank Plc and deferred consideration. The total included cash of £0.7 million (2012: £1.9m). The Group’s debt facility with HSBC Bank Plc totals £32.0m. The effective rate of interest on the debt at 28 December 2013, taking account of interest rate swaps in place and with the base rate at 0.5%, was 5.8% (2012: 6.0%). Dividend On 9 July 2013, the Board approved a final dividend for the year to 29 June 2013 of 0.5p per share which was paid on 11 December 2013 to shareholders on the register at the close of business on 22 November 2013. This brings the total dividend for the year to 29 June 2013 to 0.75p per share. It is the Company’s intention to continue paying dividends at an affordable rate so that the Company can continue to invest in the business in order to grow profits. An interim dividend of 0.25p per share (H1 2012: 0.25p per share) has been proposed. Outlook The Board remains confident of reporting a year on year improvement in profit before tax but believes general cost inflation will impact the Group's performance during the second half of the financial year. In reaction to the current trading environment, the Group plans to increase investment in promotional activities to develop volumes and undertake an overhead reduction programme which will be completed in the second half. The full year benefit of the overhead reduction will be seen in the next financial year.
Consolidated Statement of Comprehensive Income (unaudited)
Note Continuing operations Revenue Cost of sales Gross profit Administrative expenses Results from operating activities Net financing expense Profit before taxation Taxation Profit from continuing operations after tax before significant non-recurring and other items Profit from discontinued operations net of tax Profit for the period Significant non-recurring and other items: Profit from the sale of the business Administrative expenses Share option charge Defined benefit pension scheme – administration costs Defined benefit pension scheme – financial income net of expenses Movement in fair value swaps Movement in fair value foreign exchange contracts Fair value adjustments relating to acquisitions Taxation relating to above items Total significant non-recurring and other items Profit after taxation
5
3 3 4
5 5 5
Unaudited 26 weeks ended 28 December 2013 £’000
Unaudited 26 weeks ended 29 December 2012 £’000
Audited 52 weeks ended 29 June 2013 £’000
86,643 (64,426) 22,217
88,223 (66,511) 21,712
176,595 (130,150) 46,445
(19,621) 2,596 (512) 2,084 (553)
(19,240) 2,472 (1,088) 1,384 (382)
(39,006) 7,439 (1,979) 5,460 (1,110)
1,531 1,531
1,002 1,196 2,198
4,350 1,850 6,200
(297) (11)
(260) (68)
1,184 (718) (134)
-
-
915
396
292
435 855
75 70 (77) 156
89 (23) (7) 23
(179) 16 (322) 2,052
1,687
2,221
8,252
Other comprehensive income Actuarial loss on defined benefit pension scheme net of deferred taxation Foreign exchange translation differences Other comprehensive income, net of income tax Total comprehensive income
(40)
27
(861) 69
(40) 1,647
27 2,248
(792) 7,460
Profit attributable to: Equity holders of the parent Non-controlling interest Profit for the financial period
1,454 233 1,687
2,028 193 2,221
7,788 464 8,252
1,414 233
2,055 193
6,996 464
1,647
2,248
7,460
Total comprehensive income attributable to: Equity holders of the parent Non-controlling interest Total comprehensive income for the financial period
Consolidated Statement of Financial Position (unaudited)
Note Non-current assets Goodwill Property, plant and equipment Other financial assets Deferred tax assets Deferred consideration receivable
Current assets Inventories Trade and other receivables Cash and cash equivalents Other financial assets – fair value of foreign exchange contracts
7
Total assets
Current liabilities Trade and other payables Deferred purchase consideration Other interest bearing loans and borrowings Other financial liabilities – interest rate swaps Current tax liabilities Provisions
Non-current liabilities Deferred purchase consideration Other interest-bearing loans and borrowings Deferred tax liabilities Provisions and other liabilities Pension fund liability
7
7
Total liabilities
Net assets Equity attributable to equity holders of the parent Share capital Share premium account Capital redemption reserve Retained earnings Total shareholders’ equity Non-controlling interest Total equity
8
Unaudited 28 December 2013 £000
Unaudited 29 December 2012 £000
Audited 29 June 2013 £000
53,133 20,602 28 1,774 2,819 78,356
61,728 24,987 28 1,198 87,941
53,133 18,209 28 1,917 2,745 76,032
5,692 28,567 700
6,694 33,467 1,930
4,400 25,337 1,310
34,959
124 42,215
31,047
113,315
130,156
107,079
(34,791) (20) (8,334) (769) (113) (238) (44,265)
(39,308) (388) (11,767) (1,658) (569) (399) (54,089)
(33,054) (216) (3,921) (1,240) (456) (501) (39,388)
(3,975) (405) (209) (2,843) (7,432)
(19) (16,804) (1,397) (227) (3,075) (21,522)
(4,342) (405) (218) (2,843) (7,808)
(51,697)
(75,611)
(47,196)
61,618
54,545
59,883
656 31,170 578 27,962 60,366 1,252 61,618
639 30,737 578 21,512 53,466 1,079 54,545
642 30,779 578 26,865 58,864 1,019 59,883
Consolidated Statement of Changes in Equity (unaudited) Retained earnings £000
Noncontrolling interest £000
Total equity £000
578
19,389
886
48,440
-
-
2,028 27 27 2,055
193 193
2,221 27 27 2,248
104 639
3,685 30,737
578
68 21,512
1,079
3,789 68 54,545
639
30,737
578
21,512
1,079
54,545
-
-
-
5,760
271
6,031
-
-
-
(1,118)
-
-
-
257 42
-
-
-
(819) 4,941
271
(819) 5,212
Transactions with owners, recorded directly in equity: Shares issued during the period Impact of share based payments Deferred tax on share options Dividend paid Balance at 29 June 2013
3 642
42 30,779
578
66 506 (160) 26,865
(331) 1,019
45 66 506 (491) 59,883
Balance at 30 June 2013
642
30,779
578
26,865
1,019
59,883
Profit for the 26 weeks ended 28 December 2013 Foreign exchange translation differences
-
-
-
1,454 (40)
233 -
1,687 (40)
Total other comprehensive expense Total comprehensive income for the period
-
-
-
(40) 1,414
233
(40) 1,647
14 656
391 31,170
578
11 (328) 27,962
1,252
405 11 (328) 61,618
Note
Balance at 1 July 2012 Profit for the 26 weeks ended 29 December 2012 Foreign exchange translation differences Total other comprehensive expense Total comprehensive income for the period Transactions with owners, recorded directly in equity: Shares issued during the period Impact of share based payments Balance at 29 December 2012
8 4
Balance at 30 December 2012 Profit for the 26 weeks ended 29 June 2013 Other comprehensive income/(expense): Actuarial loss on defined benefit pension plan Deferred tax movement on pension scheme actuarial loss Foreign exchange translation differences Total other comprehensive expense Total comprehensive income for the period
Transactions with owners, recorded directly in equity: Shares issued during the period Impact of share based payments Dividend paid Balance at 28 December 2013
8 4
Share Capital £000
Share premium £000
535
27,052
-
Capital redemption reserve £000
-
(1,118) 257 42
Consolidated Cash Flow Statement (unaudited) Unaudited 26 weeks ended 28 December 2013 £000
Unaudited 26 weeks ended 29 December 2012 £000
Audited 52 weeks ended 29 June 2013 £’000
1,687
2,221
8,252
630 46 1,347 (75) 11 3,646
761 819 1,602 (89) 68 5,382
1,655 673 2,888 164 179 134 (850) (65) (1,184) 11,846
(1,319) (3,476) 1,795 646
(1,298) (2,518) 3,937 5,503
51 1,243 884 14,024
(492) (826) (672)
(941) (845) 3,717
(2,022) (1,776) 10,226
(3,740) (200) (3,940)
(1,050) (855) (1,905)
(4,204) (1,055) 17,072 11,813
Cash flows from financing activities Drawdown/(repayment) of invoice discounting Drawdown/(repayment) of loans Repayment of loan notes Repayment of asset finance facilities Issue of ordinary share capital Non-controlling interest dividend paid Dividend paid to shareholder Net cash from/(used by) financing activities
370 3,846 (274) 405 (328) 4,019
(6,061) (751) (3) (664) 3,789 (3,690)
(10,828) (15,503) (3) (1,602) 3,834 (331) (160) (24,593)
Net decrease in cash and cash equivalents Opening cash and cash equivalents Effect of exchange rate fluctuation Cash and cash equivalents at end of the period
(593) 1,310 (17) 700
(1,878) 3,793 15 1,930
(2,554) 3.793 71 1,310
Note Cash flows from operating activities Profit for the period Adjustments for: Taxation Finance expenses Depreciation Amortisation of intangibles Movement in fair value foreign exchange contracts Share options charge Pension scheme past service costs Contributions by employer to pension scheme Profit on disposal of business Operating profit before changes in working capital Changes in working capital (Increase)/decrease in inventories (Increase)/decrease in trade and other receivables Increase in trade and other payables Cash generated from operations Interest paid Corporation taxes paid Net cash generated from operating activities Cash flows from investing activities Purchase of property, plant & equipment Purchase of subsidiary companies Disposal of operation Net cash used in investing activities
5
4
NOTES TO THE FINANCIAL STATEMENTS
1)
BASIS OF PREPARATION
The 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 29 June 2013 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 continue to exceed current assets. Having reviewed the Group’s plans the Board has reasonable expectations that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group has strong asset backing and strong 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 Group Finance Director and Group Chief Executive Officer who have been delegated decision making responsibility from the PLC Board of Directors as they are 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: net financing expense share option charges significant non-recurring items fair value adjustments relating to acquisitions pension charges or credits in relation to the difference between the expected return on pension assets and interest cost on pension liabilities and revaluation of interest rate swaps and forward foreign currency contracts. On 27 February 2013 the Group sold its Free From business. This sale has created a shift in the way in which the business is reviewed. The UK cake and bread business is viewed as one segment - UK Bakery, whilst the 50% owned business Lightbody Stretz Limited is viewed as a separate segment - Overseas. Prior year comparatives have been restated accordingly. The UK Bakery segment manufactures and sells bakery products to the UK’s multiple grocers. This segment primarily comprises the operations of Memory Lane Cakes Ltd, Lightbody Group Ltd, Campbells Cake Company Ltd and Nicholas & Harris Ltd. These subsidiaries are aggregated into a single segment after considering the following criteria: the nature of the products – products are similar in nature and are classed as manufactured bakery products, the products sit side by side in the retailers’ bakery aisles the production process – the production processes have the same or similar characteristics the economic characteristics - the average gross margins are expected to be similar the customers – five customers account for approximately 70-75% of total revenue, these customers are common throughout the subsidiaries the distribution methods – the same methods of distribution apply to all subsidiaries. The core operation of the Overseas segment is the distribution of the Group’s UK manufactured product 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 its Group buyers, optimises the Group’s procurement spend through leveraging its purchasing power. This has resulted in a profit from continuing operations of £0.2m (2012: £0.3m) being presented within the Group operations segment. The Group’s finance income and costs cannot be meaningfully allocated to the individual operating segments.
2)
SEGMENT INFORMATION continued
26 week period ended 28 December 2013 UK Bakery Overseas Group Total Group £000 Operations £000 £000 £000 Revenue External Underlying operating profit
75,408
11,235
-
86,643
1,951
462
183
2,596
Significant non-recurring items
(297)
Fair value foreign exchange contracts
75
Share options charge
(11)
Results from operating activities
2,363
Net financing expense
(46)
Profit before taxation
2,317
Taxation
(630)
Profit after taxation
1,687
Segment assets
102,406
6,109
3,910
Unallocated assets
890
Consolidated total assets Segment liabilities
112,425 113,315
(32,799)
(4,229)
(1,591)
(38,619)
Unallocated liabilities
(13,078)
Consolidated total liabilities
(51,697)
Other segment information Capital expenditure
3,709
31
-
3,740
Depreciation included in segment profit
1,336
11
-
1,347
Inter-segmental sale/(purchase)
3,029
(3,029)
-
-
Analysis of unallocated assets and liabilities: Investments Financial instruments Cash and cash equivalents Taxation balances Unallocated assets
Assets £’000 28 700 162 890
Loans and borrowings Financial instruments Cash and cash equivalents Taxation balances Unallocated liabilities
Liabilities £’000 (12,309) (769) (13,078)
Certain operating costs have been incurred centrally, these costs have been allocated to the reporting segments on an appropriate basis.
2)
SEGMENT INFORMATION continued
26 week period ended 29 December 2012 (Restated) UK Bakery Overseas Group Total Group £000 Operations £000 £000 £000 Revenue External Underlying operating profit
76,997
11,226
-
88,223
1,800
395
277
2,472
Significant non-recurring items
(260) 89
Fair value foreign exchange contracts Share options charge
(68)
Results from operating activities
2,233
Net financing expense
(819)
Profit before taxation
1,414
Results from discontinued operations
1,568
Taxation
(761)
Profit after taxation
2,221
Segment assets
120,882
6,625
169
Unallocated assets
2,480
Consolidated total assets Segment liabilities
127,676 130,156
(37,171)
(5,427)
(2,755)
(45,353)
Unallocated liabilities
(30,258)
Consolidated total liabilities
(75,611)
Other segment information Capital expenditure
1,050
-
-
1,050
Depreciation included in segment profit
1,591
11
-
1,602
Inter-segmental sale/(purchase)
3,084
(3,084)
-
-
Analysis of unallocated assets and liabilities: Investments Financial instruments Cash and cash equivalents Taxation balances Unallocated assets
Assets £’000 28 124 1,930 398 2,480
Loans and borrowings Financial instruments Cash and cash equivalents Taxation balances Unallocated liabilities
Liabilities £’000 (28,571) (1,658) (29) (30,258)
Certain operating costs have been incurred centrally, these costs have been allocated to the reporting segments on an appropriate basis.
2)
SEGMENT INFORMATION continued
52 week period ended 29 June 2013 Overseas Group £000 Operations £000 £000
UK Bakery
Total Group £000
Revenue External Underlying operating profit
154,364
22,231
-
176,595
5,642
1,001
796
7,439
Significant non-recurring items
(718)
Fair value foreign exchange contracts
(179)
Share options charge
(134)
Defined benefit pension scheme
915
Results from operating activities
7,323
Net financing expense
(673)
Profit before taxation
6,650
Profit on sale of business
1,184
Results from discontinued operations
2,073
Taxation
(1,655)
Profit after taxation Segment assets
8,252 96,170
4,987
4,299
Unallocated assets
1,623
Consolidated total assets Segment liabilities
105,456 107,079
(31,230)
(3,864)
(2,599)
Unallocated liabilities
(37,693) (9,503)
Consolidated total liabilities
(47,196)
Other segment information Capital expenditure
4,201
3
-
4,204
Depreciation included in segment profit
2,872
16
-
2,888
164
-
-
164
5,999
(5,999)
-
-
Amortisation Inter-segmental sale/(purchase) Analysis of unallocated assets and liabilities: Investments Financial instruments Cash and cash equivalents Taxation balances Unallocated assets
Assets £’000 28 1,310 285 1,623
Loans and borrowings Financial instruments Cash and cash equivalents Taxation balances Unallocated liabilities
Liabilities £’000 (8,263) (1,240) (9,503)
Five customers with sales of £36m, £34m, £24m, £18m and £16m account for 73% of revenue, which is attributable to the ‘UK Bakery’ and ‘Overseas’ segments above.
3)
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. Costs of £297,000 relate to restructuring and reorganisation costs during the period. In the 26 weeks to 29 December 2012 £260,000 relates to due diligence and consultancy expenses associated with an aborted acquisition. In the 52 weeks to 29 June 2013 £247,000 relates to due diligence and consultancy expenses and £471,000 relates to the costs associated with the cancellation of unapproved share options and the issue of ordinary shares in exchange for this cancellation. A pre-tax gain of £1,184,000 was recorded as significant non-recurring income, this gain relates to the sale of the Free From business on 27 February 2013.
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 corresponding adjustment is made to reserves. During the 26 weeks to 28 December 2013 no options were granted (2012: 250,000). The estimated fair values of options granted for the 26 weeks to 29 December 2012 and for the year ended 29 June 2013 was £14,000. Significant non-recurring and other items include a charge of £11,000 in relation to the fair value of share options for the 26 weeks ended 28 December 2013. The comparative charges for the 26 weeks to 29 December 2012 and for the year ended 29 June 2013 were £68,000 and £134,000 respectively.
.
5)
FINANCE INCOME AND EXPENSES Unaudited 26 weeks ended 28 December 2013 £’000
Unaudited 26 weeks ended 29 December 2012 £’000
Audited 52 weeks ended 29 June 2013 £’000
396 -
292 -
1,401 855 1
74 470 (194) (315) (3) (4) (516) (46)
292 (594) (417) (77) (23) (1,111) (819)
48 2,305 (966) (1,115) (812) (53) (32) (2,978) (673)
Expected return on defined benefit pension plan assets Change in fair value of interest rate swaps Tax related Unwinding of discount of deferred consideration receivable Finance income Interest on defined benefit pension plan liabilities Net bank interest payable Charge on interest rate swaps Interest on deferred consideration Unwinding of discount on deferred consideration Finance expense Net finance expense
The Group has entered into three interest rate swap arrangements to hedge its risks associated with interest rate fluctuations: £10.0m for four years from 1 June 2010 (fixed) at 4.9% maturing 31 May 2014 £5.0m for five years from 1 July 2011 (fixed) at 3.6% maturing 30 June 2016 £3.0m for four years from 22 May 2013 at 1.7% maturing 24 May 2017 On 21 February 2012 the Group entered into a forward dated swap: £6.0m for three years from 2 June 2014 at 1.9% maturing 1 June 2017 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 £396,000 (2012: credit £292,000).
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 64,967,000 (29 December 2012: 55,747,000 and 29 June 2013: 59,904,000). 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. These adjusted earnings per share exclude amounts shown under significant and non-recurring items in the Consolidated Statement of Comprehensive Income. 26 weeks ended 28 December 2013
Earnings
Adjusted Discontinued Continuing Significant non-recurring and other items Basic non adjusted Discontinued Continued
Basic non adjusted diluted Discontinued Continued
Weighted average number of shares
Per share amount
Earnings
52 weeks ended 29 June 2013
Weighted average number of shares
Per share amount
Earnings
Weighted average number of shares
Per share amount
£’000
000’s
Pence
£’000
000’s
Pence
£’000
000’s
Pence
1,298 1,298
64,967
2.0 2.0
2,005 1,196 809
55,747
3.6 2.1 1.5
5,736 1,850 3,886
59,904 -
9.6 3.1 6.5
156 1,454 1,454
64,967
0.2 2.2 2.2
23 2,028 1,196 832
55,747
3.6 2.1 1.5
2,052 7,788 3,034 4,754
Dilutive effect of share options Diluted weighted average number of shares Adjusted diluted Discontinued diluted Continuing adjusted diluted
26 weeks ended 29 December 2012
1,298 -
5,721
4,769
5,749
70,688
60,516
65,653
70,668
1,298 1,454 1,454
59,904
70,668
1.8 -
2,005 1,196
1.8
809
2.1 2.1
2,028 1,196 832
60,516
60,516
3.3 2.0
5,736 1,850
1.3
3,886
3.3 1.9 1.4
7,788 3,034 4,754
65,653
3.4 13.0 5.1 7.9
8.7 2.8 5.9
65,653
11.9 4.6 7.3
. 7)
ANALYSIS OF NET DEBT
Net cash at bank Loans within one year Loans after more than one year Invoice discounting within one year Asset finance within one year Asset finance after more than one year Net bank debt Unamortised transaction costs within one year Unamortised transaction costs more than one year Total unamortised transaction costs Bank debt net of unamortised transaction costs within one year Bank debt net of unamortised transaction costs more than one year Bank debt net of unamortised transaction costs
Total net debt including deferred consideration Net bank debt Discounted deferred consideration
Unaudited 26 weeks ended 28 December 2013 £’000 700 (4,399) (3,379) (3,614) (396) (662) (11,750)
Unaudited 26 weeks ended 29 December 2012 £’000 1,930 (3,059) (15,625) (7,994) (951) (1,320) (27,019)
Audited 52 weeks ended 29 June 2013 £’000 1,310 (369) (3,563) (3,259) (476) (856) (7,213)
75
237
183
66 141
141 378
77 260
(7,634)
(9,837)
(2,611)
(3,975)
(16,804)
(4,342)
(11,609)
(26,641)
(6,953)
(11,750) (20) (11,770)
(27,019) (407) (27,426)
(7,213) (216) (7,429)
The sale of the Free From business on 27 February 2013 has transformed Finsbury’s balance sheet as a result of the cash payment of approximately £17.7 million reducing the Group’s debt. A further £3 million is payable by the second anniversary of completion. 8)
SHARE CAPITAL
There were 1,428,626 shares issued during the period (2012: 10,434,202 shares).
Advisers
Secretaries City Group Plc 6 Middle Street London EC1A 7JA
Registered Office Maes-y-coed Road Cardiff CF14 4XR Tel: 029 2035 7500
Nominated Adviser & Broker Cenkos Securities Plc 6.7.8 Tokenhouse Yard London EC2R 7AS
Auditor KPMG LLP Chartered Accountants 3 Assembly Square Britannia Quay Cardiff Bay CF10 4AX Registrars Capita Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Registered Number 204368
Finsbury Food Group plc Interim Results Finsbury Food Group plc (AIM: FIF), a leading manufacturer of cake and speciality bread, is pleased to announce its interim results for the six months ended 28 December 2013. Summary Operating profit up 5% to £2.6m (H1 2012: £2.5m) Group revenue from continuing operations down 1.8% to £86.6m (H1 2012: £88.2m) Profit before tax from continuing operations up 50.6% to £2.1m (H1 2012: £1.4m) Net debt down 57% to £11.8m (H1 2012: £27.4m) Proposed interim dividend of 0.25p per share (H1 2012: 0.25p per share) Operational highlights New cake slice ‘snap pack’ packaging format launched Snacking cake automation investment program on track for year end completion Nicholas & Harris bread facility expansion has been commissioned in January New Livlife Low Carb Bread progressing well Commenting on the results, John Duffy, Chief Executive of Finsbury Food Group plc, said: "I am pleased with the progress made in what has been a transitional year for the Group. The sale of the Free From division, consequent group restructuring and capital investment have transformed the balance sheet and provided the Group with the strong foundation on which it is operating. “Whilst the trading environment remains tough in the short term, our low level of debt and interest costs allow us to make significant investment in our factories and businesses for the future, in line with our stated strategy. We believe that although the consumer markets remain challenging, an improvement in consumer behaviour lies ahead, and the Group is in a strong position to mitigate against these wider market challenges and focus on its strategy for growth.”
For further information: Finsbury Food Group plc John Duffy (Chief Executive) Stephen Boyd (Finance Director) Cenkos Securities plc Bobbie Hilliam (Corporate Finance) Alex Aylen (Sales) Redleaf Polhill Rebecca Sanders-Hewett/ Jenny Bahr/ Rachael Brown
www.finsburyfoods.co.uk 029 20 357 500 020 7397 8900 [email protected] 020 7382 4730
Publication quality photographs are available via Redleaf Polhill on the numbers shown above Notes to Editors: Finsbury Food Group plc (AIM: FIF), is a leading manufacturer of cake, bread and bakery goods. The Group's focus is premium and celebration cakes plus low fat cake slices, artisan and organic bread and also morning goods. Finsbury Food Group is the second largest manufacturer of Ambient Packaged Cake (excluding In Store Bakery) in the UK, a market valued at £939m (Source: Kantar Worldpanel Total UK Coverage, January 2014). The Group's strategy is to generate returns for shareholders by building a crafted bakery group focused on premium, celebration and wellbeing that delivers for customers and consumers. Finsbury continues to develop its licensed brand portfolio to complement its core retailer brand relationships and improve its understanding of and response to changing consumer needs. Whilst the Company sees exciting organic growth opportunities in all its businesses and its short-term focus is on integrating and growing its existing businesses, the aim is to take advantage of the appropriate bolt on acquisitions to drive longer term value as opportunities and circumstance allow.
Development Highlights The Group has demonstrated resilient growth and efficiency improvements in the first half year, and despite a challenging marketplace, we maintained our position as the second largest manufacturer of ambient cake in the UK. We continued to add to our licenced portfolio to ensure an up to date and relevant consumer offer. Alongside the strongly performing Spiderman, Moshi Monsters and One Direction celebration cakes, the much loved Me to You range recently added to our portfolio is performing strongly. Nicholas & Harris launched Livlife seriously seeded low-carb bread in June 2013. Livlife has half the carbohydrate content of regular bread, and accesses the market of the 40% of adults trying to reduce carbohydrate content. Nicholas & Harris is focused on growing distribution and further development of the brand in 2014. Within our UK Bakery sector the planned capital investment programme is progressing well with the new cake slice 'snap pack' packaging format was launched and further snacking cake automation investment on track for year end completion. Similarly the Nicolas and Harris bread facility expansion was commissioned in January 2014. These and future capital investments will underpin further internal efficiency and capacity improvements to support sales growth in the coming years. All sites continue to make good technical progress and maintain their BRC A grade status against an improved and tougher standard. Trading Results The Group sold its Free From business in the prior financial year, on 27 February 2013 for a total value of approximately £21 million to focus on its core bakery business. The prior year comparatives have been restated to report on continuing operations. Group revenue for the 26 weeks to 28 December 2013 was down 1.8% to £86.6 million (26 weeks to 29 December 2012: £88.2 million), a decrease of £1.6 million on the corresponding period last year. The UK Bakery business saw a decline of 2% whilst sales in the Overseas business Lightbody Europe (LBE), the Group’s 50% owned subsidiary export business, remained stable year on year. Cost inflation in key ingredients such as butter and chocolate combined with general cost inflation continues to put pressure on margins. The Company has however mitigated this pressure with internal efficiency investment and a cost reduction focus. Profit from continuing operations before tax and significant non-recurring and other items was up 50.6% to £2.1 million (2012: £1.4 million). This was achieved after net finance expense of £0.5 million (2012: £1.1 million). The sale of the Free From business on 27 February 2013 for £17.1 million has transformed the balance sheet with bank debt of £27.9 million being repaid during the previous year. Finance expenses have decreased year on year accordingly. A further £3 million of deferred consideration is payable by the second anniversary of completion of the sale. The tax charge for the period is based on the estimated effective tax rates on profits for the full year of 23% for UK, 33% for overseas. Adjusted earnings per share on continuing operations were 2.0p (2012: 1.5p). The adjusted diluted earnings per share on continuing operations were 1.8p (2012: 1.3p). Debt and Bank Facilities The Group’s total net debt as at 28 December 2013 was £11.8 million (29 December 2012: £27.4 million) including net borrowings from HSBC Bank Plc and deferred consideration. The total included cash of £0.7 million (2012: £1.9m). The Group’s debt facility with HSBC Bank Plc totals £32.0m. The effective rate of interest on the debt at 28 December 2013, taking account of interest rate swaps in place and with the base rate at 0.5%, was 5.8% (2012: 6.0%). Dividend On 9 July 2013, the Board approved a final dividend for the year to 29 June 2013 of 0.5p per share which was paid on 11 December 2013 to shareholders on the register at the close of business on 22 November 2013. This brings the total dividend for the year to 29 June 2013 to 0.75p per share. It is the Company’s intention to continue paying dividends at an affordable rate so that the Company can continue to invest in the business in order to grow profits. An interim dividend of 0.25p per share (H1 2012: 0.25p per share) has been proposed. Outlook The Board remains confident of reporting a year on year improvement in profit before tax but believes general cost inflation will impact the Group's performance during the second half of the financial year. In reaction to the current trading environment, the Group plans to increase investment in promotional activities to develop volumes and undertake an overhead reduction programme which will be completed in the second half. The full year benefit of the overhead reduction will be seen in the next financial year.
Consolidated Statement of Comprehensive Income (unaudited)
Note Continuing operations Revenue Cost of sales Gross profit Administrative expenses Results from operating activities Net financing expense Profit before taxation Taxation Profit from continuing operations after tax before significant non-recurring and other items Profit from discontinued operations net of tax Profit for the period Significant non-recurring and other items: Profit from the sale of the business Administrative expenses Share option charge Defined benefit pension scheme – administration costs Defined benefit pension scheme – financial income net of expenses Movement in fair value swaps Movement in fair value foreign exchange contracts Fair value adjustments relating to acquisitions Taxation relating to above items Total significant non-recurring and other items Profit after taxation
5
3 3 4
5 5 5
Unaudited 26 weeks ended 28 December 2013 £’000
Unaudited 26 weeks ended 29 December 2012 £’000
Audited 52 weeks ended 29 June 2013 £’000
86,643 (64,426) 22,217
88,223 (66,511) 21,712
176,595 (130,150) 46,445
(19,621) 2,596 (512) 2,084 (553)
(19,240) 2,472 (1,088) 1,384 (382)
(39,006) 7,439 (1,979) 5,460 (1,110)
1,531 1,531
1,002 1,196 2,198
4,350 1,850 6,200
(297) (11)
(260) (68)
1,184 (718) (134)
-
-
915
396
292
435 855
75 70 (77) 156
89 (23) (7) 23
(179) 16 (322) 2,052
1,687
2,221
8,252
Other comprehensive income Actuarial loss on defined benefit pension scheme net of deferred taxation Foreign exchange translation differences Other comprehensive income, net of income tax Total comprehensive income
(40)
27
(861) 69
(40) 1,647
27 2,248
(792) 7,460
Profit attributable to: Equity holders of the parent Non-controlling interest Profit for the financial period
1,454 233 1,687
2,028 193 2,221
7,788 464 8,252
1,414 233
2,055 193
6,996 464
1,647
2,248
7,460
Total comprehensive income attributable to: Equity holders of the parent Non-controlling interest Total comprehensive income for the financial period
Consolidated Statement of Financial Position (unaudited)
Note Non-current assets Goodwill Property, plant and equipment Other financial assets Deferred tax assets Deferred consideration receivable
Current assets Inventories Trade and other receivables Cash and cash equivalents Other financial assets – fair value of foreign exchange contracts
7
Total assets
Current liabilities Trade and other payables Deferred purchase consideration Other interest bearing loans and borrowings Other financial liabilities – interest rate swaps Current tax liabilities Provisions
Non-current liabilities Deferred purchase consideration Other interest-bearing loans and borrowings Deferred tax liabilities Provisions and other liabilities Pension fund liability
7
7
Total liabilities
Net assets Equity attributable to equity holders of the parent Share capital Share premium account Capital redemption reserve Retained earnings Total shareholders’ equity Non-controlling interest Total equity
8
Unaudited 28 December 2013 £000
Unaudited 29 December 2012 £000
Audited 29 June 2013 £000
53,133 20,602 28 1,774 2,819 78,356
61,728 24,987 28 1,198 87,941
53,133 18,209 28 1,917 2,745 76,032
5,692 28,567 700
6,694 33,467 1,930
4,400 25,337 1,310
34,959
124 42,215
31,047
113,315
130,156
107,079
(34,791) (20) (8,334) (769) (113) (238) (44,265)
(39,308) (388) (11,767) (1,658) (569) (399) (54,089)
(33,054) (216) (3,921) (1,240) (456) (501) (39,388)
(3,975) (405) (209) (2,843) (7,432)
(19) (16,804) (1,397) (227) (3,075) (21,522)
(4,342) (405) (218) (2,843) (7,808)
(51,697)
(75,611)
(47,196)
61,618
54,545
59,883
656 31,170 578 27,962 60,366 1,252 61,618
639 30,737 578 21,512 53,466 1,079 54,545
642 30,779 578 26,865 58,864 1,019 59,883
Consolidated Statement of Changes in Equity (unaudited) Retained earnings £000
Noncontrolling interest £000
Total equity £000
578
19,389
886
48,440
-
-
2,028 27 27 2,055
193 193
2,221 27 27 2,248
104 639
3,685 30,737
578
68 21,512
1,079
3,789 68 54,545
639
30,737
578
21,512
1,079
54,545
-
-
-
5,760
271
6,031
-
-
-
(1,118)
-
-
-
257 42
-
-
-
(819) 4,941
271
(819) 5,212
Transactions with owners, recorded directly in equity: Shares issued during the period Impact of share based payments Deferred tax on share options Dividend paid Balance at 29 June 2013
3 642
42 30,779
578
66 506 (160) 26,865
(331) 1,019
45 66 506 (491) 59,883
Balance at 30 June 2013
642
30,779
578
26,865
1,019
59,883
Profit for the 26 weeks ended 28 December 2013 Foreign exchange translation differences
-
-
-
1,454 (40)
233 -
1,687 (40)
Total other comprehensive expense Total comprehensive income for the period
-
-
-
(40) 1,414
233
(40) 1,647
14 656
391 31,170
578
11 (328) 27,962
1,252
405 11 (328) 61,618
Note
Balance at 1 July 2012 Profit for the 26 weeks ended 29 December 2012 Foreign exchange translation differences Total other comprehensive expense Total comprehensive income for the period Transactions with owners, recorded directly in equity: Shares issued during the period Impact of share based payments Balance at 29 December 2012
8 4
Balance at 30 December 2012 Profit for the 26 weeks ended 29 June 2013 Other comprehensive income/(expense): Actuarial loss on defined benefit pension plan Deferred tax movement on pension scheme actuarial loss Foreign exchange translation differences Total other comprehensive expense Total comprehensive income for the period
Transactions with owners, recorded directly in equity: Shares issued during the period Impact of share based payments Dividend paid Balance at 28 December 2013
8 4
Share Capital £000
Share premium £000
535
27,052
-
Capital redemption reserve £000
-
(1,118) 257 42
Consolidated Cash Flow Statement (unaudited) Unaudited 26 weeks ended 28 December 2013 £000
Unaudited 26 weeks ended 29 December 2012 £000
Audited 52 weeks ended 29 June 2013 £’000
1,687
2,221
8,252
630 46 1,347 (75) 11 3,646
761 819 1,602 (89) 68 5,382
1,655 673 2,888 164 179 134 (850) (65) (1,184) 11,846
(1,319) (3,476) 1,795 646
(1,298) (2,518) 3,937 5,503
51 1,243 884 14,024
(492) (826) (672)
(941) (845) 3,717
(2,022) (1,776) 10,226
(3,740) (200) (3,940)
(1,050) (855) (1,905)
(4,204) (1,055) 17,072 11,813
Cash flows from financing activities Drawdown/(repayment) of invoice discounting Drawdown/(repayment) of loans Repayment of loan notes Repayment of asset finance facilities Issue of ordinary share capital Non-controlling interest dividend paid Dividend paid to shareholder Net cash from/(used by) financing activities
370 3,846 (274) 405 (328) 4,019
(6,061) (751) (3) (664) 3,789 (3,690)
(10,828) (15,503) (3) (1,602) 3,834 (331) (160) (24,593)
Net decrease in cash and cash equivalents Opening cash and cash equivalents Effect of exchange rate fluctuation Cash and cash equivalents at end of the period
(593) 1,310 (17) 700
(1,878) 3,793 15 1,930
(2,554) 3.793 71 1,310
Note Cash flows from operating activities Profit for the period Adjustments for: Taxation Finance expenses Depreciation Amortisation of intangibles Movement in fair value foreign exchange contracts Share options charge Pension scheme past service costs Contributions by employer to pension scheme Profit on disposal of business Operating profit before changes in working capital Changes in working capital (Increase)/decrease in inventories (Increase)/decrease in trade and other receivables Increase in trade and other payables Cash generated from operations Interest paid Corporation taxes paid Net cash generated from operating activities Cash flows from investing activities Purchase of property, plant & equipment Purchase of subsidiary companies Disposal of operation Net cash used in investing activities
5
4
NOTES TO THE FINANCIAL STATEMENTS
1)
BASIS OF PREPARATION
The 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 29 June 2013 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 continue to exceed current assets. Having reviewed the Group’s plans the Board has reasonable expectations that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group has strong asset backing and strong 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 Group Finance Director and Group Chief Executive Officer who have been delegated decision making responsibility from the PLC Board of Directors as they are 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: net financing expense share option charges significant non-recurring items fair value adjustments relating to acquisitions pension charges or credits in relation to the difference between the expected return on pension assets and interest cost on pension liabilities and revaluation of interest rate swaps and forward foreign currency contracts. On 27 February 2013 the Group sold its Free From business. This sale has created a shift in the way in which the business is reviewed. The UK cake and bread business is viewed as one segment - UK Bakery, whilst the 50% owned business Lightbody Stretz Limited is viewed as a separate segment - Overseas. Prior year comparatives have been restated accordingly. The UK Bakery segment manufactures and sells bakery products to the UK’s multiple grocers. This segment primarily comprises the operations of Memory Lane Cakes Ltd, Lightbody Group Ltd, Campbells Cake Company Ltd and Nicholas & Harris Ltd. These subsidiaries are aggregated into a single segment after considering the following criteria: the nature of the products – products are similar in nature and are classed as manufactured bakery products, the products sit side by side in the retailers’ bakery aisles the production process – the production processes have the same or similar characteristics the economic characteristics - the average gross margins are expected to be similar the customers – five customers account for approximately 70-75% of total revenue, these customers are common throughout the subsidiaries the distribution methods – the same methods of distribution apply to all subsidiaries. The core operation of the Overseas segment is the distribution of the Group’s UK manufactured product 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 its Group buyers, optimises the Group’s procurement spend through leveraging its purchasing power. This has resulted in a profit from continuing operations of £0.2m (2012: £0.3m) being presented within the Group operations segment. The Group’s finance income and costs cannot be meaningfully allocated to the individual operating segments.
2)
SEGMENT INFORMATION continued
26 week period ended 28 December 2013 UK Bakery Overseas Group Total Group £000 Operations £000 £000 £000 Revenue External Underlying operating profit
75,408
11,235
-
86,643
1,951
462
183
2,596
Significant non-recurring items
(297)
Fair value foreign exchange contracts
75
Share options charge
(11)
Results from operating activities
2,363
Net financing expense
(46)
Profit before taxation
2,317
Taxation
(630)
Profit after taxation
1,687
Segment assets
102,406
6,109
3,910
Unallocated assets
890
Consolidated total assets Segment liabilities
112,425 113,315
(32,799)
(4,229)
(1,591)
(38,619)
Unallocated liabilities
(13,078)
Consolidated total liabilities
(51,697)
Other segment information Capital expenditure
3,709
31
-
3,740
Depreciation included in segment profit
1,336
11
-
1,347
Inter-segmental sale/(purchase)
3,029
(3,029)
-
-
Analysis of unallocated assets and liabilities: Investments Financial instruments Cash and cash equivalents Taxation balances Unallocated assets
Assets £’000 28 700 162 890
Loans and borrowings Financial instruments Cash and cash equivalents Taxation balances Unallocated liabilities
Liabilities £’000 (12,309) (769) (13,078)
Certain operating costs have been incurred centrally, these costs have been allocated to the reporting segments on an appropriate basis.
2)
SEGMENT INFORMATION continued
26 week period ended 29 December 2012 (Restated) UK Bakery Overseas Group Total Group £000 Operations £000 £000 £000 Revenue External Underlying operating profit
76,997
11,226
-
88,223
1,800
395
277
2,472
Significant non-recurring items
(260) 89
Fair value foreign exchange contracts Share options charge
(68)
Results from operating activities
2,233
Net financing expense
(819)
Profit before taxation
1,414
Results from discontinued operations
1,568
Taxation
(761)
Profit after taxation
2,221
Segment assets
120,882
6,625
169
Unallocated assets
2,480
Consolidated total assets Segment liabilities
127,676 130,156
(37,171)
(5,427)
(2,755)
(45,353)
Unallocated liabilities
(30,258)
Consolidated total liabilities
(75,611)
Other segment information Capital expenditure
1,050
-
-
1,050
Depreciation included in segment profit
1,591
11
-
1,602
Inter-segmental sale/(purchase)
3,084
(3,084)
-
-
Analysis of unallocated assets and liabilities: Investments Financial instruments Cash and cash equivalents Taxation balances Unallocated assets
Assets £’000 28 124 1,930 398 2,480
Loans and borrowings Financial instruments Cash and cash equivalents Taxation balances Unallocated liabilities
Liabilities £’000 (28,571) (1,658) (29) (30,258)
Certain operating costs have been incurred centrally, these costs have been allocated to the reporting segments on an appropriate basis.
2)
SEGMENT INFORMATION continued
52 week period ended 29 June 2013 Overseas Group £000 Operations £000 £000
UK Bakery
Total Group £000
Revenue External Underlying operating profit
154,364
22,231
-
176,595
5,642
1,001
796
7,439
Significant non-recurring items
(718)
Fair value foreign exchange contracts
(179)
Share options charge
(134)
Defined benefit pension scheme
915
Results from operating activities
7,323
Net financing expense
(673)
Profit before taxation
6,650
Profit on sale of business
1,184
Results from discontinued operations
2,073
Taxation
(1,655)
Profit after taxation Segment assets
8,252 96,170
4,987
4,299
Unallocated assets
1,623
Consolidated total assets Segment liabilities
105,456 107,079
(31,230)
(3,864)
(2,599)
Unallocated liabilities
(37,693) (9,503)
Consolidated total liabilities
(47,196)
Other segment information Capital expenditure
4,201
3
-
4,204
Depreciation included in segment profit
2,872
16
-
2,888
164
-
-
164
5,999
(5,999)
-
-
Amortisation Inter-segmental sale/(purchase) Analysis of unallocated assets and liabilities: Investments Financial instruments Cash and cash equivalents Taxation balances Unallocated assets
Assets £’000 28 1,310 285 1,623
Loans and borrowings Financial instruments Cash and cash equivalents Taxation balances Unallocated liabilities
Liabilities £’000 (8,263) (1,240) (9,503)
Five customers with sales of £36m, £34m, £24m, £18m and £16m account for 73% of revenue, which is attributable to the ‘UK Bakery’ and ‘Overseas’ segments above.
3)
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. Costs of £297,000 relate to restructuring and reorganisation costs during the period. In the 26 weeks to 29 December 2012 £260,000 relates to due diligence and consultancy expenses associated with an aborted acquisition. In the 52 weeks to 29 June 2013 £247,000 relates to due diligence and consultancy expenses and £471,000 relates to the costs associated with the cancellation of unapproved share options and the issue of ordinary shares in exchange for this cancellation. A pre-tax gain of £1,184,000 was recorded as significant non-recurring income, this gain relates to the sale of the Free From business on 27 February 2013.
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 corresponding adjustment is made to reserves. During the 26 weeks to 28 December 2013 no options were granted (2012: 250,000). The estimated fair values of options granted for the 26 weeks to 29 December 2012 and for the year ended 29 June 2013 was £14,000. Significant non-recurring and other items include a charge of £11,000 in relation to the fair value of share options for the 26 weeks ended 28 December 2013. The comparative charges for the 26 weeks to 29 December 2012 and for the year ended 29 June 2013 were £68,000 and £134,000 respectively.
.
5)
FINANCE INCOME AND EXPENSES Unaudited 26 weeks ended 28 December 2013 £’000
Unaudited 26 weeks ended 29 December 2012 £’000
Audited 52 weeks ended 29 June 2013 £’000
396 -
292 -
1,401 855 1
74 470 (194) (315) (3) (4) (516) (46)
292 (594) (417) (77) (23) (1,111) (819)
48 2,305 (966) (1,115) (812) (53) (32) (2,978) (673)
Expected return on defined benefit pension plan assets Change in fair value of interest rate swaps Tax related Unwinding of discount of deferred consideration receivable Finance income Interest on defined benefit pension plan liabilities Net bank interest payable Charge on interest rate swaps Interest on deferred consideration Unwinding of discount on deferred consideration Finance expense Net finance expense
The Group has entered into three interest rate swap arrangements to hedge its risks associated with interest rate fluctuations: £10.0m for four years from 1 June 2010 (fixed) at 4.9% maturing 31 May 2014 £5.0m for five years from 1 July 2011 (fixed) at 3.6% maturing 30 June 2016 £3.0m for four years from 22 May 2013 at 1.7% maturing 24 May 2017 On 21 February 2012 the Group entered into a forward dated swap: £6.0m for three years from 2 June 2014 at 1.9% maturing 1 June 2017 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 £396,000 (2012: credit £292,000).
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 64,967,000 (29 December 2012: 55,747,000 and 29 June 2013: 59,904,000). 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. These adjusted earnings per share exclude amounts shown under significant and non-recurring items in the Consolidated Statement of Comprehensive Income. 26 weeks ended 28 December 2013
Earnings
Adjusted Discontinued Continuing Significant non-recurring and other items Basic non adjusted Discontinued Continued
Basic non adjusted diluted Discontinued Continued
Weighted average number of shares
Per share amount
Earnings
52 weeks ended 29 June 2013
Weighted average number of shares
Per share amount
Earnings
Weighted average number of shares
Per share amount
£’000
000’s
Pence
£’000
000’s
Pence
£’000
000’s
Pence
1,298 1,298
64,967
2.0 2.0
2,005 1,196 809
55,747
3.6 2.1 1.5
5,736 1,850 3,886
59,904 -
9.6 3.1 6.5
156 1,454 1,454
64,967
0.2 2.2 2.2
23 2,028 1,196 832
55,747
3.6 2.1 1.5
2,052 7,788 3,034 4,754
Dilutive effect of share options Diluted weighted average number of shares Adjusted diluted Discontinued diluted Continuing adjusted diluted
26 weeks ended 29 December 2012
1,298 -
5,721
4,769
5,749
70,688
60,516
65,653
70,668
1,298 1,454 1,454
59,904
70,668
1.8 -
2,005 1,196
1.8
809
2.1 2.1
2,028 1,196 832
60,516
60,516
3.3 2.0
5,736 1,850
1.3
3,886
3.3 1.9 1.4
7,788 3,034 4,754
65,653
3.4 13.0 5.1 7.9
8.7 2.8 5.9
65,653
11.9 4.6 7.3
. 7)
ANALYSIS OF NET DEBT
Net cash at bank Loans within one year Loans after more than one year Invoice discounting within one year Asset finance within one year Asset finance after more than one year Net bank debt Unamortised transaction costs within one year Unamortised transaction costs more than one year Total unamortised transaction costs Bank debt net of unamortised transaction costs within one year Bank debt net of unamortised transaction costs more than one year Bank debt net of unamortised transaction costs
Total net debt including deferred consideration Net bank debt Discounted deferred consideration
Unaudited 26 weeks ended 28 December 2013 £’000 700 (4,399) (3,379) (3,614) (396) (662) (11,750)
Unaudited 26 weeks ended 29 December 2012 £’000 1,930 (3,059) (15,625) (7,994) (951) (1,320) (27,019)
Audited 52 weeks ended 29 June 2013 £’000 1,310 (369) (3,563) (3,259) (476) (856) (7,213)
75
237
183
66 141
141 378
77 260
(7,634)
(9,837)
(2,611)
(3,975)
(16,804)
(4,342)
(11,609)
(26,641)
(6,953)
(11,750) (20) (11,770)
(27,019) (407) (27,426)
(7,213) (216) (7,429)
The sale of the Free From business on 27 February 2013 has transformed Finsbury’s balance sheet as a result of the cash payment of approximately £17.7 million reducing the Group’s debt. A further £3 million is payable by the second anniversary of completion. 8)
SHARE CAPITAL
There were 1,428,626 shares issued during the period (2012: 10,434,202 shares).
Advisers
Secretaries City Group Plc 6 Middle Street London EC1A 7JA
Registered Office Maes-y-coed Road Cardiff CF14 4XR Tel: 029 2035 7500
Nominated Adviser & Broker Cenkos Securities Plc 6.7.8 Tokenhouse Yard London EC2R 7AS
Auditor KPMG LLP Chartered Accountants 3 Assembly Square Britannia Quay Cardiff Bay CF10 4AX Registrars Capita Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Registered Number 204368
