REG - Finsbury Food Group - Interim Results <Origin Href="QuoteRef">FIF.L</Origin> - Part 1
RNS Number : 8782ZFinsbury Food Group PLC20 March 2017
Date:
20 March 2017
On behalf of:
Finsbury Food Group Plc ('Finsbury', 'the Company' or 'the Group')
Embargoed until: 0700hrs
Finsbury Food Group Plc
Interim Results
Finsbury Food Group Plc (AIM: FIF), a leading UK speciality bakery manufacturer of cake, bread and morning goods for the retail and foodservice channels, is pleased to announce its unaudited interim results for the 26 weeks ended 31 December 2016.
Summary
Group revenue of 156.6m (H1 2015: 156.6m)
Operating profit of 8.3m up 4.0% (H1 2015: 8.0m)
Group operating profit margin of 5.3% (H1 2015: 5.1%)
Profit before tax of 7.9m up 5.3% (H1 2015: 7.5m)
Adjusted*1 diluted EPS, up 4.5% at 4.6p per share (H1 2015: 4.4p per share)
Interim dividend per share increased 7.5% to 1.00p (H1 2015: 0.93p per share)
Net debt of 21.0m equates to 0.8 (H1 2015: 0.9) times pro forma annualised EBITDA of the Group
Strategic highlights
New artisan bread facility opened, baking for retail and foodservice customers.
Continued investment in whole cake capacity and capability, plus new cupcake innovation.
6 out of 8 sites now supplying into the Foodservice channel providing a significantly broader speciality bakery range, from artisan and free from breads to snacking and sharing cakes.
Operational highlights
Employee engagement programme commences following on from successful roll out of vision and values throughout the Group.
Investment in exciting new cupcake capability to augment our licensed product range.
Mary Berry cake license secured with a range of cakes launching in the second half.
Winner of Celebration Cake Business of the year for 2016 at the Bakery Industry Awards.
Winner of Quality Food Awards for a number of products.
*1 adjusted diluted EPS has been calculated using earnings excluding the impact of amortisation of intangibles and significant non-recurring and other items as shown on the face of the Statement of Comprehensive Income. The adjusted diluted EPS has been given as in the opinion of the Board this will allow shareholders to gain a clearer understanding of the trading performance of the Group.
Commenting on the results, John Duffy, Chief Executive of Finsbury Food Group Plc, said:
"The latest set of results reflect a business that has transformed into a diverse, multi-channel speciality bakery group. We have delivered a strong first half performance and this demonstrates the benefits of the Group's investment and strategy implemented over prior years and reinforces our approach to innovation and diversification across our channels, customers and products. Our balance sheet remains solid, positioning the business well for future investment and the resulting benefits.
"Well documented market challenges persist, however the Group has prepared well and is continuing to work hard to mitigate against these. Furthermore, the Group's track record of exceptional growth and diversification over the prior years illustrates that it has the right strategy in place to continue to deliver growth and improved shareholder value over the coming years."
For further information:
Finsbury Food Group Plc
John Duffy (Chief Executive)
029 20 357 500
Stephen Boyd (Finance Director)
Cenkos Securities plc
Bobbie Hilliam (Corporate Finance)
Alex Aylen (Sales)
Redleaf Communications
Rebecca Sanders-Hewett
020 7382 4730
Sam Modlin
STRATEGY
Our strategic objective is to create sustainable value for our shareholders, customers and other stakeholders, through our vision to build the leading speciality bakery group in the UK. We produce a broad range of high-quality bread, cake and bakery snacking products targeted at growing channels and market niches. These deliver growth and differentiation for our major customers and fulfil the needs of end consumers.
Our strategy to achieve our vision is as follows:
Invest in our people and our manufacturing sites to form a strong foundation for us to deliver our strategy.
Create innovative, high-quality bakery products that anticipate key market trends.
Ensure customer and consumer needs are at the heart of our decision making.
Develop a strong licensed brand portfolio to complement our core retailer brand relationships.
Aim to succeed in both the retail grocery and out-of-home channels.
Grow through a combination of organic growth and targeted acquisitions.
Our growth strategy will continue to be delivered through a combination of organic growth and targeted acquisitions. Future acquisitions will typically consolidate our market share in existing product areas or introduce further diversification into additional specialist product areas, customers and channels. The acquisitions of Fletchers Bakeries in October 2014 and Johnstone's Food Service in June 2015 reflects the Board's acquisition experience and capabilities.
Net debt of 21.0 million at half year, equating to 0.8 times annualised EBITDA, results in a healthy balance sheet and considerable scope to invest further, develop site capabilities and participate in industry consolidation and appropriate M&A.
Our core strategy is centred on generating returns for shareholders. Adjusted diluted earnings per share are up year on year at 4.6p per share.
A final dividend for the year to 2 July 2016 of 1.87p per share was paid on 16 December 2016 to shareholders on the register at the close of business on 18 November 2016. This brought the total dividend for the year to 2 July 2016 to 2.80p per share.
The Board of Directors is announcing an interim dividend for the year ending 1 July 2017 of 1.00p per share (H1 2015: 0.93p per share), an increase of 7.5%. This increase is in line with trading performance. The interim dividend will be paid on 21 April 2017 to shareholders on the register at the close of business on 31 March 2017. The election deadline for participants in the Company's Dividend Re-investment Plan will be 31 March 2017.
OUTLOOK
The Group has delivered a strong first half performance and the business is demonstrating the benefits of the investment and strategy implemented over prior years. Our balance sheet remains strong allowing us to continue to invest in our businesses in order to deliver our stated growth strategy. The broader channel, customer and product diversification achieved has created a solid platform for the business and will continue to benefit us given our access to higher growth opportunities such as the faster growing foodservice channel.
The UK grocery market continues to be challenging even though the wider economic environment is improving slowly. As previously noted, increasing commodity prices, the adverse impact on USD and Euro exchange rates and the National Living wage means the Group is working hard to mitigate input cost inflation through continued operational efficiency, investment in automation and, inevitably, price increases; all of which are ongoing.
Whilst we are cognisant of the price recovery process, we expect the Group's steady performance to continue into the second half of the financial year.
OPERATING REVIEW
UK Bakery
H1 2016 m
H1 2015 m
Movement
Revenue
139.0
143.2
-2.9%
Operating profit
7.4
7.2
+2.2%
Operating margin
5.3%
5.0%
UK Bakery comprises the supply of cake, bread and morning goods in the Grocery and Foodservice channels. Revenue in the period has decreased by 2.9% to 139.0 million. Operating profit in the period has increased by 2.2% to 7.4 million.
The grocery cake and the bread and morning goods markets are both large mature markets. The grocery Cake market sees year on year volume decline of -4.8% and value decline of -1.5% (Source: IRI Infoscan for 26 weeks ending 31 December 2016) and the bread and morning goods grocery market sees year on year volume growth of +0.6% and value decline of -0.2% (source: Kantar Worldpanel bread and morning goods data 24 weeks ended w/e 01 January 2017). In Cake, Finsbury has followed the market.Celebration continues to perform but round cake has seen decline on the back of lower promotional activity, a common response to higher input prices. In bread our focus is on more niche style bakery products as opposed to traditional bread and therefore revenue exceeds market performance.
UK Bakery Operating profit margin has increased to 5.3% due to operational efficiencies within our factories and includes the benefit of significant capital expenditure over the last two years. The Group will continue to invest in automation and operational improvements to increase product capabilities and maintain margins.
Overseas
H1 2016 m
H1 2015 m
Growth
Revenue
17.6
13.4
31.7%
Operating profit
1.0
0.8
26.0%
Operating margin
5.5%
5.7%
The Overseas business comprises Lightbody Europe which trades primarily in France. The business specialises in the import and sale of premium UK manufactured food products. It is an important channel into Europe for Group UK manufactured licensed celebration cake and bite products.
The business is heavily exposed to the Euro which has had a favourable impact on translation of Euro denominated sales and profit. In Euro terms the business has performed well too and we are pleased with the operating profit performance of Overseas business.
FINANCIAL REVIEW
Revenue and Operating Profit
Group revenue in H1 2016 was flat year on year at 156.6 million. Profit from operations before interest, tax and significant non-recurring and other items was up by 4.0% or 0.3 million to 8.3 million.
Interest Payable
Interest payable and charges on related interest rate swaps on the Group's bank debt in H1 2016 was 433,000 (H1 2015: 517,000), a decrease of 84,000. The decrease in charges is a consequence of the lower average debt balance over the period.
Taxation
The Group's effective tax rate in H1 2016 was 21.2%, which compares to 21.9% in H1 2015. The effective rates represent a blend of the UK and French corporation tax rates. The reduction in the effective rates when comparing half years arises from a 0.25% reduction in the annual hybrid UK corporation tax rates offset slightly by a higher proportion of profits charged at the higher French corporation tax rate.
Earnings per share
The Group considers adjusted diluted earnings per share to be the most appropriate EPS measure. The adjusted diluted earnings per share were up 4.5% to 4.6p, (H1 2015: 4.4p).
Cash flow and net debt
Cash inflow from operating profit before changes in working capital is 12.0 million, which compares with 11.6 million in H1 2015. The increase arises from the organic growth in profit. Net debt at 31 December 2016 is 21.0 million which compares to 21.1 million at H1 2015, flat year on year. Growth in working capital is 3.8m (H1 2015: +3.8m) which is a cyclical trend driven primarily by higher stocks within our Bread Foodservice business. Capital expenditure of 5.3 million was incurred in H1 2016 which is 1.6 million higher than H1 2015.
Pensions
The Group has one defined benefit pension scheme within its Memory Lane Cake business in Cardiff. All remaining group companies have defined contribution schemes. The Memory Lane Cake pension scheme has been closed to future accruals and new members since 31 May 2010. The net pension deficit (before related deferred tax) is 6,463,000 at 2 July 2016, the next valuation update will be carried out at 1 July 2017. Annual cash contributions (including the PPF levy) were 366,000 in the year to 31 December 2016.
Principal risks and uncertainties
A number of risks and uncertainties have been identified that could potentially have a material impact on the financial position of the Group. These are set out on page 13 of the Annual Report for the year to 2 July 2016 and the Board considers these remain applicable.
Commodity price inflation and the National Living Wage legislation presents a challenge that the Group is preparing for through a number of initiatives. Adjusting and mitigating the impact will take time and will require ever-greater focus on efficiency improvements and cost reduction programmes and, ultimately, price recovery.
Forward looking statements
Throughout this report certain statements have been made which are forward looking. These statements have been made based on latest knowledge and expectations of the future. The Board considers the statements to be reasonable. Inevitably there are risks associated with these forward looking statements which are usually outside the control of the Group. Actual results or performance may therefore differ from the outcome implied by these forward looking statements.
Consolidated Statement of Comprehensive Income (unaudited)
Note
Unaudited
26 weeks
ended
31 December 2016
Unaudited
26 weeks
ended
26 December 2015
Audited
53 weeks
ended
2 July
2016
'000
'000
'000
Continuing operations
Revenue
156,619
156,586
319,680
Cost of sales
(108,401)
(106,461)
(217,092)
Gross profit
48,218
50,125
102,588
Administrative expenses
(39,899)
(42,123)
(85,490)
Results from operating activities
8,319
8,002
17,098
Finance expense
6
(433)
(517)
(1,058)
Share of losses of associates after tax
(15)
(10)
(14)
Profit before taxation
7,871
7,475
16,026
Taxation
(1,673)
(1,638)
(3,272)
Profit from continuing operations after tax before significant non-recurring and other items
6,198
5,837
12,754
Significant non-recurring and other items - finance income/(expense):
Defined benefit pension scheme - net finance expense
6
-
-
(148)
Movement in fair value swaps
6
461
98
219
Significant non-recurring and other items - net finance income/(expense)
461
98
71
Significant non-recurring and other items - other:
Impairment of goodwill
-
-
(4,290)
Movement in fair value of foreign exchange contracts
13
(58)
(134)
Defined benefit pension scheme -administration costs
-
-
117
Significant non-recurring and other items - other
13
(58)
(4,307)
Taxation relating to significant non-recurring and other items
(85)
(8)
(14)
Total significant non-recurring and other items
4
389
32
(4,250)
Profit after taxation
6,587
5,869
8,504
Other comprehensive income
Actuarial loss on defined benefit pension scheme net of deferred taxation
-
-
(2,205)
Foreign exchange translation differences
-
-
-
Other comprehensive income, net of income tax
-
-
(2,205)
Total comprehensive income
6,587
5,869
6,299
Profit attributable to:
Equity holders of the parent
6,145
5,550
7,791
Non-controlling interest
442
319
713
Profit for the financial period
6,587
5,869
8,504
Total comprehensive income attributable to:
Equity holders of the parent
6,145
5,550
5,586
Non-controlling interest
442
319
713
Total comprehensive income for the financial period
6,587
5,869
6,299
Consolidated Statement of Financial Position (unaudited)
Unaudited
Unaudited
Audited
31 December
26 December
2
July
2016
2015
2016
Note
000
000
000
Non-current assets
Intangibles
77,327
79,830
77,596
Property, plant and equipment
52,463
46,377
50,501
Investments in equity accounted investees
196
215
211
Other financial assets
28
28
28
Deferred tax assets
3,344
4,426
3,492
133,358
130,876
131,828
Current assets
Inventories
14,874
14,731
12,577
Trade and other receivables
50,387
50,263
50,332
Cash and cash equivalents
8
4,777
1,759
3,024
Other financial assets - fair value of foreign exchange contracts
321
59
-
70,359
66,812
65,933
Total assets
203,717
197,688
197,761
Current liabilities
Other interest bearing loans and borrowings
8
(18,394)
(12,416)
(13,829)
Trade and other payables
(62,972)
(64,256)
(64,357)
Provisions
(119)
(252)
(247)
Deferred purchase consideration
-
(50)
-
Other financial liabilities - interest rate swaps/ fair value of foreign exchange contracts
(5)
(261)
(157)
Current tax liabilities
(1,482)
(845)
(1,210)
(82,972)
(78,080)
(79,800)
Non-current liabilities
Other interest-bearing loans and borrowings
8
(7,271)
(10,213)
(8,740)
Provisions and other liabilities
(132)
(153)
(141)
Deferred tax liabilities
(1,557)
(91)
(1,547)
Pension fund liability
(6,463)
(3,837)
(6,463)
(15,423)
(14,294)
(16,891)
Total liabilities
(98,395)
(92,374)
(96,691)
Net assets
105,322
105,314
101,070
Equity attributable to equity holders of the parent
Share capital
9
1,304
1,280
1,304
Share premium account
64,956
64,952
64,956
Capital redemption reserve
578
578
578
Employee share reserve
(3,783)
(1,084)
(3,920)
Retained earnings
40,242
38,063
36,569
Total shareholders' equity
103,297
103,789
99,487
Non-controlling interest
2,025
1,525
1,583
Total equity
105,322
105,314
101,070
Consolidated Statement of Changes in Equity (unaudited)
Share
capital
000
Share
premium
000
Capital
redemption
reserve
000
Employee
share
reserve
000
Retained
earnings
000
Non-controlling
interest
000
Total
equity
000
Balance as at 28 June 2015
1,280
64,952
578
-
34,580
1,206
102,596
Profit for the 26 weeks ended 26 December 2015
-
-
-
-
5,550
319
5,869
Total other comprehensive income
-
-
-
-
-
-
-
Total comprehensive income for the period
-
-
-
-
5,550
319
5,869
Transactions with owners, recorded directly in equity:
Own shares acquired
-
-
-
(1,084)
-
-
(1,084)
Impact of share based payments
-
-
-
-
58
-
58
Dividends paid
-
-
-
-
(2,125)
-
(2,125)
Balance as at 26 December 2015
1,280
64,952
578
(1,084)
38,063
1,525
105,314
Profit for the 27 weeks ended 2 July 2016
-
-
-
-
2,241
394
2,635
Other comprehensive income/(expense):
Remeasurement on defined benefit pension
-
-
-
-
(2,595)
-
(2,595)
Deferred tax movement on pension scheme remeasurement
-
-
-
-
390
-
390
Total other comprehensive income
-
-
-
-
(2,205)
-
(2,205)
Total comprehensive income for the period
-
-
-
-
36
394
430
Transactions with owners, recorded directly in equity:
Own shares acquired
-
-
-
(2,836)
-
-
(2,836)
Shares issued during the year
24
4
-
-
(23)
-
5
Impact of share based payments
-
-
-
-
248
-
248
Deferred tax on share options
-
-
-
-
(575)
-
(575)
Dividends paid
-
-
-
-
(1,180)
(336)
(1,516)
Balance as at 2 July 2016
1,304
64,956
578
(3,920)
36,569
1,583
101,070
Profit for the 26 weeks ended 31 December 2016
-
-
-
-
6,145
442
6,587
Total other comprehensive income
-
-
-
-
-
-
-
Total comprehensive income for the period
-
-
-
-
6,145
442
6,587
Transactions with owners, recorded directly in equity:
Own shares issued/(acquired)
-
-
-
137
(137)
-
-
Foreign exchange translation differences
-
-
-
-
40
-
40
Dividends paid
-
-
-
-
(2,375)
-
(2,375)
Balance as at 31 December 2016
1,304
64,956
578
(3,783)
40,242
2,025
105,322
Consolidated Cash Flow Statement (unaudited)
Unaudited
26 weeks
ended
Unaudited
26 weeks
ended
Audited
52 weeks
ended
31 December
2016
26 December
2015
2 July
2016
Note
000
000
'000
Cash flows from operating activities
Profit after taxation for the period
6,587
5,869
8,504
Adjustments for:
Taxation
1,758
1,646
3,286
Finance expenses
6
(28)
419
987
Share of losses of associates after tax
15
10
14
Depreciation
3,363
3,372
7,090
Amortisation of intangibles
268
238
539
Non-cash impairment of goodwill
-
-
4,290
Movement in fair value foreign exchange contracts
(13)
58
134
Contributions by employer to pension scheme
-
-
(117)
Operating profit before changes in working capital
11,950
11,612
24,727
Changes in working capital
Increase in inventories
(2,273)
(3,419)
(1,091)
Increase in trade and other receivables
47
(2,283)
(2,253)
Increase in trade and other payables
(1,590)
1,888
1,711
Cash generated from operations
8,134
7,798
23,094
Interest paid
(439)
(524)
(1,180)
Corporation taxes paid
(1,336)
(757)
(1,603)
Net cash generated from operating activities
6,359
6,517
20,311
Cash flows from investing activities
Purchase of property, plant & equipment
(5,325)
(3,708)
(12,141)
Deferred consideration paid
-
-
(50)
Net cash used in investing activities
(5,325)
(3,708)
(12,191)
Cash flows from financing activities
Repayment of bank loans
(1,468)
(1,468)
(3,672)
Drawdown/(repayment) of revolving credit
5,000
-
(2,000)
Drawdown/(repayment) of invoice discounting
(373)
3,198
7,427
Repayment of asset finance facilities
(95)
(166)
(284)
Issue of ordinary share capital
-
-
5
Purchase of shares by employee benefit trust
-
(505)
(2,835)
Non-controlling interest dividend paid
-
-
(336)
Dividend paid to shareholder
(2,375)
(2,125)
(3,305)
Net cash from financing activities
689
(1,066)
(5,000)
Net increase/(decrease) in cash and cash equivalents
1,723
1,743
3,120
Opening cash and cash equivalents
3,024
61
61
Effect of exchange rate fluctuation
30
(45)
(157)
Cash and cash equivalents at end of the period
4,777
1,759
3,024
NOTES TO THE FINANCIAL STATEMENTS
1) BASIS OF PREPARATION
This interim report, which is unaudited, does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006. The comparative figures for the financial year ended 2 July 2016 have been extracted from the statutory accounts for that year. Those accounts, which were prepared in accordance with International Financial Reporting Standards as adopted by the EU ("adopted IFRSs"), have been reported on by the company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
It should be noted that current liabilities exceed current assets. Having reviewed the Group's short and medium term plans and available financial facilities, the Board has reasonable expectations that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group has stayed within its banking facilities during the year, meeting covenant requirements. The Group has the continued support of its banks with facilities of 50.9m. In addition, the Group has a strong asset backing and strong trade 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 Board as it is 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.
The UK Bakery segment manufactures and sells bakery products to the UK's multiple grocers and foodservice sectors. This segment primarily comprises the operations of Memory Lane Cakes Ltd, Lightbody Group Ltd, Campbells Cake Company Ltd, Johnstone's Food Service Ltd, Fletchers Bakeries 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 production process - the production processes have the same or similar characteristics
the economic characteristics - the average gross margins are expected to be similar
The core operation of the Overseas segment is the distribution of the Group's UK manufactured products 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 Group buyers, optimise the Group's procurement spend through leveraging its purchasing power.
This has resulted in Group Operations Segment showing a break even result for the current and prior half year periods.
The Group's finance income and costs cannot be meaningfully allocated to the individual operating segments.
3) SEGMENT INFORMATION (continued)
26 week period ended 31 December 2016
UK Bakery
000
Overseas
000
Group Operations
000
Total Group
000
Revenue
External
138,973
17,646
-
156,619
Total underlying operating profit
7,378
968
(27)
8,319
Significant non-recurring items
-
Fair value foreign exchange contracts
13
Share options charge
-
Results from operating activities
8,332
Finance income
461
Finance expense
(433)
Net financing expense
28
Share of losses of associates after tax
(15)
Profit before taxation
8,345
Taxation
(1,758)
Profit after taxation
6,587
Segment assets
190,327
7,221
847
198,395
Unallocated assets
5,322
Consolidated total assets
203,717
Segment liabilities
(59,351)
(5,637)
(7,737)
(72,725)
Unallocated liabilities
(25,670)
Consolidated total liabilities
(98,395)
Other segment information
Capital expenditure
5,291
34
-
5,325
Depreciation included in segment profit
3,347
16
-
3,363
Amortisation included in segment profit
268
-
-
268
Inter-segmental sale/(purchase)
4,743
(4,743)
-
-
Analysis of unallocated assets and liabilities:
Assets
Liabilities
'000
'000
Investments
224
Loans and borrowings
(25,665)
Financial instruments
321
Financial instruments
(5)
Cash and cash equivalents
4,777
Cash and cash equivalents
-
Unallocated assets
5,322
Unallocated liabilities
(25,670)
Certain operating costs have been incurred centrally and have been allocated to the reporting segments on an appropriate basis.
3) SEGMENT INFORMATION (continued)
26 week period ended 26 December 2015
UK Bakery
000
Overseas
000
Group Operations
000
Total Group
000
Revenue
External
143,186
13,400
-
156,586
Total underlying operating profit
7,219
768
15
8,002
Significant non-recurring items
-
Fair value foreign exchange contracts
(58)
Share options charge
-
Results from operating activities
7,944
Finance income
98
Finance expense
(517)
Net financing expense
(419)
Share of losses of associates after tax
(10)
Profit before taxation
7,515
Taxation
(1,646)
Profit after taxation
5,869
Segment assets
187,184
6,240
2,203
195,627
Unallocated assets
2,061
Consolidated total assets
197,688
Segment liabilities
(61,110)
(4,673)
(3,701)
(69,484)
Unallocated liabilities
(22,890)
Consolidated total liabilities
(92,374)
Other segment information
Capital expenditure
3,702
6
-
3,708
Depreciation included in segment profit
3,359
13
-
3,372
Inter-segmental sale/(purchase)
3,976
(3,976)
-
-
Analysis of unallocated assets and liabilities:
Assets
Liabilities
'000
'000
Investments
243
Loans and borrowings
(22,629)
Financial instruments
59
Financial instruments
(261)
Cash and cash equivalents
1,759
Cash and cash equivalents
-
Unallocated assets
2,061
Unallocated liabilities
(22,890)
Certain operating costs have been incurred centrally and have been allocated to the reporting segments on an appropriate basis.
3) SEGMENT INFORMATION (continued)
53 week period ended 2 July 2016
UK Bakery
000
Overseas
000
Group Operations
000
Total Group
000
Revenue
External
291,196
28,484
-
319,680
Underlying operating profit
15,887
1,511
(300)
17,098
Fair value foreign exchange contracts
(134)
Defined benefit pension scheme
117
Significant non-recurring
(4,290)
Results from operating activities
12,791
Finance income
221
Finance cost
(1,208)
Net financing expense
(987)
Share of losses of equity accounted investees after tax
(14)
Profit before taxation
11,790
Taxation
(3,286)
Profit after taxation
8,504
Segment assets
187,827
6,337
292
194,456
Unallocated assets
-
-
-
3,305
Consolidated total assets
197,761
Segment liabilities
(61,557)
(5,355)
(7,052)
(73,964)
Unallocated liabilities
(22,727)
Consolidated total liabilities
(96,691)
Other segment information
Capital expenditure
12,115
26
-
12,141
Depreciation included in segment profit
7,063
27
-
7,090
Amortisation
539
-
-
539
Impairment of goodwill
4,290
-
-
4,290
Inter-segmental sale/(purchase)
8,488
(8,488)
-
-
Analysis of unallocated assets and liabilities:
Assets
Liabilities
'000
'000
Investments
253
Loans and borrowings
(22,570)
Financial instruments
-
Financial instruments
(157)
Cash and cash equivalents
3,024
Cash and cash equivalents
-
Taxation balances
28
Taxation balances
-
Unallocated assets
3,305
Unallocated liabilities
(22,727)
Certain operating costs have been incurred centrally and have been allocated to the reporting segments on an appropriate basis.
Impairment loss relates to the Anthony Alan Foods Ltd acquisition in 2007 which falls under UK Bakery segment.
4) 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.5) SHARE BASED PAYMENTS
The Group operates both approved and unapproved share option schemes. Following the adoption of IFRS2 'Share-based payments' charges have been made to the Income Statement to reflect the calculated fair value of employee share options. The cost is calculated at the date of grant and is charged equally over the vesting period. The fair value is based on the best available estimate of the number of options expected to vest. The corresponding adjustment is made to reserves.
During the 26 weeks to 31 December 2016 1,462,095 options were granted (H1 2015: 1,624,126).
Administration costs include a charge in the first six months of 137,000 (H1 2015: 11,000) in relation to the fair value of share options.
6) FINANCE INCOME AND EXPENSES
Unaudited
26 weeks ended 31 December
2016
Unaudited
26 weeks ended 26 December
2015
Audited
53 weeks ended
2 July
2016
'000
'000
'000
Change in fair value of interest rate swaps
461
98
219
Bank interest receivable
-
-
2
Finance income
461
98
221
Net interest on net pension position
-
-
(148)
Net bank interest payable
(364)
(383)
(787)
Charge on interest rate swaps
(69)
(134)
(273)
Change in fair value of interest rate swaps
-
-
-
Interest on deferred consideration
-
-
-
Finance expense
(433)
(517)
(1,208)
Net finance income/(expense)
28
(419)
(987)
The Group has three interest rate swap arrangements to hedge its risks associated with interest rate fluctuations:
3.0 million for four years from 22 May 2013 at 1.7% maturing 22 May 2017
6.0 million for three years from 2 June 2014 at 1.9% maturing 1 June 2017
20.0 million for five years from 3 July 2017 at 0.455% maturing 3 July 2022
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 461,000 (H1 2015: credit 98,000).
7) EARNINGS PER ORDINARY SHARE
Basic earnings per share for the period is calculated on the basis of profit for the period after tax, divided by the weighted average number of shares in issue of 126,874,000 (26 December 2015: 127,090,000).
Basic diluted earnings per share for the period is calculated by adjusting the weighted average number of shares in issue to assume conversion of all potential dilutive ordinary shares, which for 31 December 2016 is 130,497,000 (26 December 2015: 132,285,000).
An adjusted earnings per share has also been calculated as, in the opinion of the Board, this will allow shareholders to gain a clearer understanding of the trading performance of the Group.
The adjusted earnings per share exclude amounts shown under significant and non-recurring items in the Consolidated Statement of Comprehensive Income and exclude amortisation of intangibles.
26 weeks to
31 Dec 2016
26 weeks to
26 Dec 2015
Profit
Profit attributable to equity holders of the Company (basic)
000
6,145
5,550
Significant non-recurring and other items
000
(389)
(32)
Amortisation of intangibles
000
268
238
Numerator for adjusted earnings per share calculation (adjusted basic)
000
6,024
5,756
Shares
Basic
Diluted
Basic
Diluted
Weighted average number of ordinary shares in issue during the period
'000
126,874
126,874
127,090
127,090
Dilutive effect of share options
'000
-
3,623
-
5,195
126,874
130,497
127,090
132,285
Earnings per share
Basic and diluted earnings per share
Pence
4.8
4.7
4.4
4.2
Adjusted basic and adjusted diluted earnings per share
Pence
4.7
4.6
4.5
4.4
8) ANALYSIS OF NET DEBT
Unaudited
26 weeks
ended
31 December
2016
Unaudited
26 weeks
ended
26 December
2015
Audited
53 weeks
ended
2 July
2016
'000
'000
'000
Net cash at bank
4,777
1,759
3,024
Loans within one year
(7,937)
(5,672)
(2,937)
Loans after more than one year
(7,325)
(10,262)
(8,794)
Invoice discounting within one year
(10,451)
(6,595)
(10,824)
Asset finance within one year
(71)
(214)
(133)
Asset finance after more than one year
(24)
(94)
(57)
Net bank debt excluding unamortised transaction costs
(21,031)
(21,078)
(19,721)
Unamortised transaction costs:
within one year
65
65
65
more than one year
78
143
111
Total unamortised transaction costs
143
208
176
Bank debt net of unamortised transaction costs within one year
(13,617)
(10,657)
(10,805)
Bank debt net of unamortised transaction costs more than one year
(7,271)
(10,213)
(8,740)
Bank debt net of unamortised transaction costs
(20,888)
(20,870)
(19,545)
Total net debt including deferred consideration
Net bank debt
(21,031)
(21,078)
(19,721)
Discounted deferred consideration payable
-
(50)
-
(21,031)
(21,128)
(19,721)
9) SHARE CAPITAL
No shares were issued during the period or the comparative prior year period.
At 31 December 2016 3,360,030 shares (2015: 1,275,817) were held by the Finsbury Food Group Plc Employee Benefit Trust.
Advisers
Secretary
Auditor
Melanie Cox
KPMG LLP
Finsbury Food Group Plc
Chartered Accountants
Maes-y-coed Road
Cardiff
CF14 4XR
Tel: 029 2035 7500
3 Assembly Square
Britannia Quay
Cardiff Bay
CF10 4AX
Registered Office
Maes-y-coed Road
Cardiff
CF14 4XR
Tel: 029 2035 7500
Registrars
Capita Registrars
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Nominated Adviser & Broker
Solicitors
Cenkos Securities plc
CMS Cameron McKenna LLP
6.7.8 Tokenhouse Yard
Cannon Place
London
78 Cannon Street
EC2R 7AS
London
EC4N 6AF
Registered Number
00204368
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR LLFFAVTIALID
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