REG - Finsbury Food Group - Preliminary Results <Origin Href="QuoteRef">FIF.L</Origin> - Part 2
29/10/2014 13:19
- Part 2: For the preceding part double click ID:nRSV1887Sa
Intangibles 52,968 53,133
Property, plant and equipment 21,541 18,209
Other financial assets - investments 28 28
Deferred tax assets 1,350 1,917
Deferred consideration receivable - 2,745
75,887 76,032
Current assets
Deferred consideration receivable 2,895 -
Inventories 4,530 4,400
Trade and other receivables 24,832 25,337
Cash and cash equivalents 592 1,310
32,849 31,047
Total assets 108,736 107,079
Current liabilities
Other interest-bearing loans and borrowings 8 (5,718) (3,921)
Trade and other payables (30,736) (33,054)
Provisions (237) (501)
Deferred purchase consideration - (216)
Other financial liabilities-fair value of interest rate swaps/foreign exchange (451) (1,240)
Current tax liabilities (28) (456)
(37,170) (39,388)
Non-current liabilities
Other interest-bearing loans and borrowings 8 (3,612) (4,342)
Provisions and other liabilities (199) (218)
Deferred tax liabilities (422) (405)
Pension fund liability (3,630) (2,843)
(7,863) (7,808)
Total liabilities (45,033) (47,196)
Net assets 63,703 59,883
Equity attributable to equity holders of the parent
Share capital 669 642
Share premium account 31,480 30,779
Capital redemption reserve 578 578
Retained earnings 29,849 26,865
62,576 58,864
Non-controllinginterest 1,127 1,019
Total equity 63,703 59,883
These financial statements were approved by the Board of Directors on 19
September 2014 and were signed on its behalf by:
Stephen Boyd (Director)
Registered Number 204368
Consolidated Statement of Changes in Equity
for the 52 weeks ended 28 June 2014 and 29 June 2013
ShareCapital Sharepremium Capital redemption reserve RetainedEarnings Non-controllinginterest Totalequity
£000 £000 £000 £000 £000 £000
Balance at 1 July 2012 535 27,052 578 19,389 886 48,440
Profit for the financial year - - - 7,788 464 8,252
Effect of change in accounting policy on adoption of IAS19 (Revised) - - - (443) - (443)
Profit for the financial year (restated) - - - 7,345 464 7,809
Other comprehensive income/(expense):
Remeasurement of defined benefit pension - - - (1,118) - (1,118)
Deferred tax movement on pension scheme remeasurement - - - 257 - 257
Foreign exchange translation differences - - - 69 - 69
Total other comprehensive expense - - - (792) - (792)
Effect of change in accounting policy on adoption of IAS19 (Revised) - - - 443 - 443
Total other comprehensive expense (restated) - - - (349) - (349)
Total comprehensive income for the period - - - 6,996 464 7,460
Transactions with owners, recorded directly in equity:
Shares issued during the year 107 3,727 - - - 3,834
Impact of share based payments - - - 134 - 134
Deferred tax on share options - - - 506 - 506
Dividend paid - - - (160) (331) (491)
Balance at 29 June 2013 642 30,779 578 26,865 1,019 59,883
Balance at 30 June 2013 642 30,779 578 26,865 1,019 59,883
Profit for the financial year 4,400 525 4,925
Other comprehensive (expense)/ income:
Remeasurement on defined benefit pension - - - (726) - (726)
Deferred tax movement on pension scheme remeasurement - - - 145 - 145
Foreign exchange translation differences - - - - - -
Total other comprehensive expense - - - (581) - (581)
Total comprehensive income for the period - - - 3,819 525 4,344
Transactions with owners, recorded directly in equity:
Shares issued during the year 27 701 - - - 728
Impact of share based payments - - - 9 - 9
Deferred tax on share options - - - (350) - (350)
Dividend paid - - - (494) (417) (911)
Balance at 28 June 2014 669 31,480 578 29,849 1,127 63,703
Consolidated Cash Flow Statement
for the 52 weeks ended 28 June 2014 and 29 June 2013
Restated
2014 2013
£000 £000
Cash flows from operating activities
Profit for the financial year 4,925 7,809
Adjustments for:
Taxation 1,651 1,523
Net finance costs 516 1,248
Depreciation 2,834 2,888
Amortisation of intangibles 165 164
Share options charge 9 134
Contributions by employer to pension scheme (71) (65)
Pension scheme past service costs - (850)
Fair value charge/(credit) for foreign exchange contracts (81) 179
Profit on disposal of business - (1,184)
Operating profit before changes in working capital 9,948 11,846
Changes in working capital:
(Increase)/decrease in inventories (197) 51
(Increase)/decrease in trade and other receivables (6) 1,243
(Decrease)/increase in trade and other payables (2,032) 884
Cash generated from operations 7,713 14,024
Interest paid (1,084) (2,022)
Tax paid (1,700) (1,776)
Net cash from operating activities 4,929 10,226
Cash flows from investing activities
Purchase of property, plant and equipment (6,167) (4,204)
Purchase of subsidiary companies (217) (1,055)
Disposal of operation - 17,072
Net cash (used in)/from investing activities (6,384) 11,813
Cash flows from financing activities
(Repayment)/drawdown of invoice discounting (300) (10,828)
Drawdown of revolving credit 2,000 -
Repayment of bank loans (338) (15,503)
Repayment of loan notes - (3)
Drawdown of asset finance facilities - 326
Repayment of asset finance liabilities (478) (1,928)
Issue of ordinary share capital 728 3,834
Dividend paid to non-controlling interest (417) (331)
Dividend paid to shareholder (494) (160)
Net cash from/(used in) financing activities 701 (24,593)
Net decrease in cash and cash equivalents (754) (2,554)
Opening cash and cash equivalents 1,310 3,793
Effect of exchange rate fluctuations on cash held 36 71
Cash and cash equivalents at end of period 592 1,310
Notes (forming part of the Financial Statements)
The financial information set out in this preliminary announcement does not
constitute Finsbury Food Group Plc's statutory accounts for the 52 week
periods ended 28 June 2014 and 29 June 2013. Statutory accounts for the 52
weeks ended 28 June 2014 will be delivered to the Registrar of companies
following the Company's Annual General Meeting. Statutory accounts for the 52
weeks ended 29 June 2013 have been delivered to the Registrar of Companies.
The Company's auditor has reported on those statutory accounts; their reports
were unqualified and did not contain a statement under section 498 (2) or (3)
of the Companies Act 2006.
This preliminary announcement has been prepared and approved by the Directors
in accordance with International Financial Reporting Standards (IFRS) and its
interpretations as adopted by the International Accounting Standards Board
(IASB) and by the EU (Adopted IFRS).
Change in accounting policy
The Group adopted IAS 19 (revised) Employee Benefits from January 2013. As a
result of IAS 19 (revised), the key change to these Statements is the "finance
cost" which was previously the difference between the interest on liabilities
and expected return on assets, the expected return on assets is effectively
based on the discount rate with no allowances made for any outperformance
expected from the Scheme's actual asset holding.
As a result of these amendments, the comparative financial information in the
Consolidated Statement of Profit and Loss and Other Comprehensive Income
(OCI) have been restated for the year ending 29 June 2013. The effect of the
above was to decrease finance income in the Consolidated Statement of Profit
and Loss by £575,000 from £1,401,000 to £826,000 and decrease the
remeasurements of the net defined benefit pension liability in OCI by £575,000
from £1,118,000 to £543,000.
As a result of the above, the tax expense in the Consolidated Statement of
Profit and Loss has decreased by £132,000 for the year ending 29 June 2013 and
the deferred tax credit in the OCI has decreased by £132,000. The effect on
the cashflow statement of the amended standard was an adjustment to profit
before tax and the operating reconciling items. There was no effect on the net
cash from operating activities. The effect on the statement of changes in
equity of the amended standard was an adjustment to retained earnings, as
explained above.
1 Discontinued operations
In the prior year comparatives on 27 February 2013 the Group sold its Free
From business for a total undiscounted value £21,257,000 and a pre-tax gain of
£1,184,000 was recorded.
The Free From business consisted of two subsidiaries, Livwell Limited
("Livwell") and United Bakeries (Holdings) Limited ("UBH") (the holding
company of United Central Bakeries Limited ("UCB")).
2013
£000
Results of the discontinued operation
Revenue 19,749
Expenses (17,676)
Profit before tax 2,073
Gain recognised on disposal 1,184
Profit before tax 3,257
Tax on profit * (223)
Profit for the year 3,034
Cash flows from (used in) discontinued operations
Net cash used in operating activities 884
Net cash used in investing activities (141)
Net cash from financing activities (1,089)
Net cash from (used in) discontinued operations (346)
Effect of the disposals on individual assets and liabilities
Intangibles (8,431)
Property, plant and equipment (8,648)
Inventories (984)
Trade receivables (4,345)
Other receivables (538)
Trade payables 4,378
Other payables (17)
Net identifiable assets and liabilities (18,585)
Consideration:
Cash consideration 18,257
Settlement of inter-company debt (401)
Disposal costs (583)
Cash and cash equivalents at completion date (201)
Cashflow on disposal of operation 17,072
Deferred consideration (discounted) 2,697
Net consideration 19,769
Profit on disposal 1,184
* Tax on profit relates to tax on discontinued operations.
2 Revenue and segment information
Operating segments are identified on the basis of internal reporting and
decision making. The Group's Chief Operating Decision Maker is considered to
be the Board as 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:
Ø net financing expense
Ø share option charges
Ø non-recurring significant items
Ø fair value adjustments relating to acquisitions
Ø pension charges or credits in relation to the difference between the
expected return on pension assets and interest cost on pension liabilities
and
Ø revaluation of interest rate swaps and forward foreign currency contracts.
The Board regularly reviews along with operating profit, the segmental revenue
from the sale of bakery products, direct and indirect costs, ebitda, and
return on capital employed.
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.
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 were aggregated into a single segment after
considering the following criteria:
Ø the nature of the products - products are similar in nature and are classed
as manufactured bakery products, the products sit side by side in the
retailers' bakery aisles
Ø the production process - the production processes have the same or similar
characteristics
Ø the economic characteristics - the average gross margins are expected to be
similar
Ø the customers - five customers account for approximately 70-75% of total
revenue, these customers are common throughout the subsidiaries
Ø 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 £0.5m (2013:
£0.8m) being presented within the Group Operations segment.
The Group's finance income and expenses cannot be meaningfully allocated to
the individual operating segments.
2 Revenue and segment information (continued)
52 week period ended 28 June 2014 UK Bakery £000 Overseas £000 Group Operations£000 Total Group £000
Continuing
Revenue
External 153,740 21,968 - 175,708
Underlying operating profit 6,094 1,139 475 7,708
Fair value foreign exchange contracts 81
Share options charge (9)
Defined benefit pension scheme 71
Significant non-recurring items (759)
Results from operating activities 7,092
Finance income 1,720
Finance cost (2,236)
Profit before taxation 6,576
Taxation (1,651)
Profit after taxation 4,925
At 28 June 2014
Segment assets 99,891 4,522 3,613 108,026
Unallocated assets 710
Consolidated total assets 108,736
Segment liabilities (30,588) (3,312) (1,352) (35,252)
Unallocated liabilities (9,781)
Consolidated total liabilities (45,033)
Other segment information
Capital expenditure 6,121 46 - 6,167
Depreciation included in segment profit 2,813 21 - 2,834
Amortisation 165 - - 165
Inter-segmental sale / (purchases) 6,039 (6,039) - -
Analysis of unallocated assets and liabilities:
Assets Liabilities
£'000 £'000
Investments 28 Loans and borrowings (9,330)
Financial instruments - Financial instruments (451)
Cash and cash equivalents 592 Cash and cash equivalents -
Taxation balances 90 Taxation balances -
Unallocated assets 710 Unallocated liabilities (9,781)
Certain operating costs have been incurred centrally, these costs have been
allocated to the reporting segments on an appropriate basis.
With regard to continuing revenue, five customers with sales of £35m, £35m,
£26m, £17m and £16m account for 73% of revenue, which is attributable to the
UK Bakery and Overseas segments above.
2 Revenue and segment information (continued)
52 week period ended 29 June 2013 Restated UK Bakery £000 Overseas £000 Group Operations£000 Total Group £000
Continuing
Revenue
External 154,364 22,231 - 176,595
Underlying operating profit 5,642 1,001 796 7,439
Fair value foreign exchange contracts (179)
Share options charge (134)
Defined benefit pension scheme 915
Significant non-recurring items (718)
Results from operating activities 7,323
Finance income 1,730
Finance cost (2,978)
Profit before taxation 6,075
Profit on sale of business 1,184
Results from discontinued operations 2,073
Taxation (1,523)
Profit after taxation 7,809
At 29 June 2013
Segment assets 96,170 4,987 4,299 105,456
Unallocated assets 1,623
Consolidated total assets 107,079
Segment liabilities (31,230) (3,864) (2,599) (37,693)
Unallocated liabilities (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
Amortisation 164 - - 164
Inter-segmental sales / (purchases) 5,999 (5,999) - -
Analysis of unallocated assets and liabilities:
Assets Liabilities
£'000 £'000
Investments 28 Loans and borrowings (8,263)
Financial instruments - Financial instruments (1,240)
Cash and cash equivalents 1,310 Cash and cash equivalents -
Taxation balances 285 Taxation balances -
Unallocated assets 1,623 Unallocated liabilities (9,503)
Certain operating costs have been incurred centrally, these costs have been
allocated to the reporting segments on an appropriate basis.
With regard to continuing revenue, 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.
2 Revenue and segment information (continued)
An analysis by geographical segment is shown below:
Geographical split of turnover by destination 2014 2013
£000 £000
Continuing:
United Kingdom 151,587 152,105
Europe 23,832 24,118
Rest of World 289 372
Total continuing 175,708 176,595
Discontinued - 19,749
Net asset and margin geographical split would not provide meaningful information owing to the necessity to allocate costs, assets and liabilities. Capital expenditure on segment assets is detailed in Note 2.
Geographical split by country of origin United Kingdom Europe Total
£000 £000 £000
2014
Continuing
Turnover 153,740 21,968 175,708
Operating profit 6,569 1,139 7,708
Total assets 104,214 4,522 108,736
Total liabilities (41,721) (3,312) (45,033)
Net assets 62,493 1,210 63,703
United Kingdom Europe Total
£000 £000 £000
2013
Continuing
Turnover 154,364 22,231 176,595
Operating profit 6,438 1,001 7,439
Discontinued
Turnover 19,749 - 19,749
Operating profit 2,073 - 2,073
Total assets 102,092 4,987 107,079
Total liabilities (43,332) (3,864) (47,196)
Net assets 58,760 1,123 59,883
3 Expenses and auditor's remuneration Included in profit are the following: 2014 2013 £000 £000 Depreciation of owned tangible assets 2,498 2,310 Depreciation on assets under finance leases and hire purchase contracts 336 578 Difference on
foreign exchange (132) (30) Hire of plant and machinery - operating leases 480 473 Hire of other assets - operating leases 803 718 Share option charges 9 134 Movement on fair value of interest rate swaps (708) (855) Movement on fair value of foreign
exchange contracts (81) 179 Research and development 1,759 1,793 Amortisation of intangibles 165 164 Amortisation of intangibles for the year was £165,000 (2013: £164,000) relating to the Goswell Enterprises Ltd acquisition during June 2009.Auditor's
remuneration: 2014 2013 £000 £000 Audit of these financial statements 25 24 Amounts receivable by auditors and their associates in respect of: Audit of the financial statements of subsidiaries of the Company 57 59 Taxation compliance services 13 15
Services related to corporate finance transactions - 121 Other services in relation to taxation 11 14 Other services 137 10 The auditor's remuneration is in respect of KPMG LLP. Fee for other services relates to pension advisory services, services relating
to information technology and services relating to remuneration. 4 Non-recurring significant 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 £643,000 relate to redundancy and restructuring (2013: £247,000) and £116,000 relates to due diligence and consultancy expenses
associated with an aborted acquisition. A further £471,000 in 2013 related to 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 non-recurring significant income under discontinued operations, this gain relates to the sale of the Free From business on 27 February 2013.
2014 2013
£000 £000
Depreciation of owned tangible assets 2,498 2,310
Depreciation on assets under finance leases and hire purchase contracts 336 578
Difference on foreign exchange (132) (30)
Hire of plant and machinery - operating leases 480 473
Hire of other assets - operating leases 803 718
Share option charges 9 134
Movement on fair value of interest rate swaps (708) (855)
Movement on fair value of foreign exchange contracts (81) 179
Research and development 1,759 1,793
Amortisation of intangibles 165 164
Amortisation of intangibles for the year was £165,000 (2013: £164,000)
relating to the Goswell Enterprises Ltd acquisition during June 2009.Auditor's
remuneration:
2014 2013
£000 £000
Audit of these financial statements 25 24
Amounts receivable by auditors and their associates in respect of:
Audit of the financial statements of subsidiaries of the Company 57 59
Taxation compliance services 13 15
Services related to corporate finance transactions - 121
Other services in relation to taxation 11 14
Other services 137 10
The auditor's remuneration is in respect of KPMG LLP. Fee for other services relates to pension advisory services, services relating to information technology and services relating to remuneration.
4 Non-recurring significant 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 £643,000 relate to redundancy and restructuring (2013: £247,000) and
£116,000 relates to due diligence and consultancy expenses associated with an
aborted acquisition. A further £471,000 in 2013 related to 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 non-recurring significant income under discontinued operations,
this gain relates to the sale of the Free From business on 27 February 2013.
5 Finance income and cost
Recognised in the Consolidated Statement of Profit and Loss
Restated
2014 2013
£000 £000
Finance income
Expected net return on defined benefit pension plan 862 826
Change in fair value of interest rate swaps 708 855
Tax related - 1
Unwinding of discount of deferred consideration receivable 150 48
Total finance income 1,720 1,730
Finance cost
Interest on defined benefit plan obligations (994) (966)
Bank interest payable (643) (1,115)
Interest on interest rate swap agreements (595) (812)
Interest on deferred consideration - (53)
Unwinding of discount on deferred consideration payable (4) (32)
Total finance cost (2,236) (2,978)
6 Taxation
Recognised in the Consolidated Statement of Profit and Loss
Restated
Continuing Continuing Discontinued Discontinued
2014 2013 2014 2013
£000 £000 £000 £000
Current tax
Current year 1,254 1,513 - 239
Adjustments for prior years 22 (217) - (16)
Total current tax 1,276 1,296 - 223
Deferred tax
Origination and reversal of temporary differences 309 (233) - -
Retirement benefit deferred tax charge 73 209 - -
Adjustments for prior years (7) 28 - -
Total deferred tax 375 4 - -
Total tax expense 1,651 1,300 - 223
Reconciliation of effective tax rate
The tax assessed for the period is higher (2013: lower) than the standard rate
of corporation tax in the UK of 21%, (2013: 23%). The hybrid corporation tax
rate is 22.50% (2013: 23.75%). The differences are explained below:
2014 2013
£000 £000
Profit before taxation from continuing operations 6,576 6,075
Tax using the UK corporation tax rate of 22.50% (2013: 23.75%) 1,480 1,443
Non-deductible expenses 36 10
Amortisation of intangible asset 34 34
Temporary differences* (179) (338)
Adjustment to restate opening deferred tax and differences in rates 107 (25)
Differences on depreciation on IBA's and allowances claimed 49 45
R&D uplift current year (97) (87)
Adjustments to tax charge in respect of prior periods 15 (189)
Overseas profits charged at different taxation rate 206 132
Group relief from discontinued - 275
Total tax expense 1,651 1,300
*Temporary differences in the current year relate to share based payments.
6 Taxation (continued)
Reductions in the corporation tax rate from 24% to 23% (effective from 1 April
2013) and to 21% (effective 1 April 2014) were substantially enacted on 3 July
2012 and 2 July 2013 respectively. Further reduction to 20% (effective from 1
April 2015) was substantially enacted on 2 July 2013. This will reduce the
company's future current tax charge accordingly. The deferred tax asset at 28
June 2014 has been calculated based on the 20% rate.
The impact of the reduction in the UK corporation tax rate from 23% to 21%
from April 2014 amounts to £82,000 lower charge in the financial year to 28
June 2014. The rate change on deferred tax has had an adverse impact on the
current year tax charge amounting to £197,000. The adjustment for prior year
in 2013 relates to additional tax relief on qualifying R&D expenditure for
prior periods.
The parent company has an unrecognised deferred tax asset of £191,300
- More to follow, for following part double click ID:nRSV1887ScRecent news on Finsbury Food
See all newsREG - Jefferies Int Ltd. Finsbury Food Group - Form 8.3 - Finsbury Food Group Plc
AnnouncementREG - AIM Finsbury Food Group - Cancellation - Finsbury Food Group Plc
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Finsbury Food Group - Scheme of Arrangement Becomes Effective
Announcement