REG - Finsbury Food Group - Interim Results
21/02/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230221:nRSU5545Qa&default-theme=true
RNS Number : 5545Q Finsbury Food Group PLC 21 February 2023
Date: 21 February 2023
On behalf of: Finsbury Food Group Plc ('Finsbury', 'the Company' or 'the Group')
Embargoed until: 0700hrs+
Finsbury Food Group Plc
Interim Results
Encouraging H1 performance
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 six
months ended 31 December 2022.
H1 FINANCIAL HIGHLIGHTS
· Group revenue up 14.7% to £190.9 million (H1 2021: £166.5 million).
· Operating profit*(1) flat at £6.5 million with operating profit margin mainly
reflecting the impact of inflationary pressures.
· Group EBITDA*(1) £12.0 million (H1 2021: £11.9 million).
· Profit before tax £6.1 million (H1 2021: £5.7 million).
· Basic EPS (pence per share) 3.7p (H1 2021: 3.2p) and 0.87p per share interim
dividend proposed to be paid on 20 April 2023 (0.83p 21 April 2022).
· Net bank debt £22.8 million (excluding IFRS 16 debt), representing 0.8 times
annualised EBITDA of the Group (YE 22: £20.6 million). £120 million
facility: £60 million RCF and £60 million accordion since last year.
H1 Strategic Highlights
· Revenue growth driven by price recovery initiatives on broadly flat Group
volumes resulting in:
o UK foodservice, up 22.0%;
o UK retail up 10.9%; and
o Overseas division growth up 23.4%.
· Post-period acquisition of Lees Foods Limited on 30 January for a
consideration of £5.7 million, expected to be immediately earnings enhancing
and in line with our previously disclosed M&A strategy.
· Continue to enhance product capability and capacity with a new buns and rolls
line in our Sheffield factory completed during the period.
· Innovation in gluten-free recipes and product quality which is driving organic
growth in both the UK and in Europe.
· Sustainability Forum is now fully established to aid the governance of our
Sustainable Approach, driving continued improvement in energy and waste
management.
The Group uses certain Alternative Performance Measures (APMs) which are
non-IFRS measures to monitor performance of its operations and of the Group as
a whole. The reconciliation to IFRS measures is shown in the Consolidated
Statement of Comprehensive Income.
*(1) Operating Profit and EBITDA is before significant non-recurring and other
items (Note 1).
CURRENT TRADING AND OUTLOOK
Finsbury delivered an encouraging H1 performance and the Company is seeing
steady demand for its product range whilst also continuing to make good
progress on the Group's three strategic pillars of Excellence, Growth and
Responsibility.
As predicted, the macro-economic challenges that the Company has been faced
with recently continue to persist. The focus remains on managing these
challenges through commercial terms, operational improvements and other supply
chain and overhead initiatives.
Whilst the external environment remains challenging, Finsbury has a strong
market position, a carefully calibrated M&A strategy and a track record of
successfully navigating macro challenges as they arise, which positions the
Group well for the medium to long-term. The Group remains on track to meet
market expectations for FY23.
Commenting on the results, John Duffy, Chief Executive Officer of Finsbury
Food Group Plc, said:
"Finsbury has once again delivered a robust performance in the first half to
December 2022. We have seen a stable performance in UK retail, ongoing
recovery in UK foodservice and continued growth in our Overseas division
all despite the challenges of continued significant input cost inflation and
falling consumer confidence. I would like to thank the whole Finsbury team for
their hard work and dedication which underpins this resilient performance.
We have continued to make good progress against our objectives, based around
our three strategic pillars of Excellence, Growth and Responsibility and
underpinned by our Operating Principles. Post period, we were delighted to
announce the strategic acquisition of Lees Foods Limited, which enables us to
further develop our position in the sweet treats sector and grow our
manufacturing presence in Scotland.
Looking ahead, we expect to continue to navigate a challenging macro
environment as inflationary pressures look set to persist with the short-term
outlook remaining difficult to predict. However, Finsbury is now a nimble and
adaptable Group and I am confident that we remain well placed to continue
successfully executing on our strategy."
Contact:
Finsbury Food Group www.finsburyfoods.co.uk (http://www.finsburyfoods.co.uk) 029 20 357 500
John Duffy (Chief Executive Officer)
Steve Boyd (Finance Director)
Panmure Gordon (UK) Limited 020 7886 2500
Oliver Cardigan (Corporate Finance)
Atholl Tweedie
Rupert Dearden (Corporate Broking)
Alma finsbury@almapr.co.uk (mailto:finsbury@almapr.co.uk) 020 3405 0205
PR
Sam Modlin
David Ison
Matthew Young
Notes to Editors:
· Finsbury Food Group Plc (AIM: FIF) is a leading UK manufacturer
of cake and bread bakery goods, supplying a broad range of blue-chip customers
within both the grocery retail and 'out of home eating' foodservice sectors
including major multiples and leading foodservice providers.
· The Company is one of the largest speciality bakery groups in the
UK and, with its Overseas division, has sales in the financial year ending 2
July 2022 exceeding £356 million.
· The Company's bakery product range is comprehensive and includes:
· Large premium and celebration cakes.
· Small snacking cake formats such as cake slices and bites.
· Artisan, healthy lifestyle and organic breads through to rolls,
muffins (sweet and savoury) and morning pastries, all of which are available
both fresh and frozen dependent on customer channel requirements.
· Gluten-free bread, morning goods and cake ranges.
· The Company is one of the largest ambient cake manufacturers in
the UK, a market valued at £1.06 billion (source: IRI 52 w/e 31 Dec 2022).
The retail bread and morning goods market has a value of £5.7 billion
(source: Kantar Worldpanel 52 w/e 25 Dec 2022). The retail Free From cake
market is valued at £60.0 million (source: Kantar Worldpanel 52 w/e 25 Dec
2022). The retail Free From bread and morning goods market is valued at
£173.0 million (source: Kantar Worldpanel 52 w/e 25 Dec 2022).
· The Company comprises a core UK Bakery division and an Overseas
division:
· The UK Bakery division has manufacturing sites in Cardiff, East
Kilbride, Hamilton, Salisbury, Sheffield, Manchester, Pontypool and now
Coatbridge.
· The Overseas division comprises the Company's 85% owned company,
Lightbody-Stretz Limited, which supplies and distributes the Group's
UK-manufactured products and third-party products, in Europe, and the
Company's manufacturing facilities in Rybarzowice and Żywiec in Poland.
STRATEGIC REVIEW
Our Group
We continue to create and supply high-quality bread and cakes through a
variety of brands and channels, supplying major retailers and the foodservice
channel across the UK, and in Europe, with own brand and licensed brand bread
and cakes.
Our cake products are sold primarily in UK retail and are a combination of
both own label and licensed brands. Our bread products are sold in both the
retail and foodservice sectors, are both own label and branded with our Kara
foodservice brand representing a significant proportion of our total
foodservice business.
Our UK bakery segment supply supermarkets, discounters and convenience stores
within the retail sector and, within the UK foodservice sector, supply hotels,
pubs, restaurants, high street chains, fast food outlets and contract caterers
either directly or indirectly through the larger wholesalers.
Our overseas businesses supplies the retail sector in Europe, principally
France, Benelux and Scandinavia, with a smaller growing presence in many other
major European countries.
Our Strategy and Objectives
Our Purpose
"Baking brilliance makes every day special."
Our Vision
To be the leading speciality bakery group.
Our three Strategic Pillars help us create sustainable value for our
shareholders, customers and other stakeholders:
Excellence
We invest in our people and our operating sites to form a strong foundation to
underpin our strategy. We create innovative high-quality bakery products that
anticipate key market trends and ensure that customer and consumer needs are
at the heart of our decision making.
Growth
Our Group seeks to drive growth both organically and through acquisition,
targeting both the retail grocery and out-of-home channels in the UK and
Europe. We have developed a strong licensed brand portfolio to complement our
core retailer brand relationships.
Responsibility
Our commitment to building a sustainable operating model is built on a
holistic framework that puts our people's development, engagement and health
and wellbeing at the heart of our business. We strive to continually reduce
our impact on the planet by investing in technology, expertise and driving
shared ownership across our growth partners.
Our Operating Principles
To achieve baking brilliance, we have to constantly raise standards and work
effectively as a Group. The Finsbury Operating Principles are a set of
practical commitments and guidelines for how we run our business, and which
bring our strategy to life in our day-to-day work. Increasingly all
stakeholders in our business are looking to understand our Environmental,
Social and Governance (ESG) credentials. The Operating Principles by their
nature incorporate our ESG commitment.
Our Operating Principles supporting our Strategic Pillars
· Operating Excellence - We continually invest in our bakeries to
improve our efficiency and customer satisfaction.
· Sustainable Approach - We optimise our use of resources and focus
on reducing waste throughout our supply chain and in our bakeries.
· Quality and Innovations - Our innovative, high-quality bakery
products reflect changing customer needs and anticipate key market trends.
· Cost Effectiveness - We maintain strict cost controls without
compromising quality, streamlining our processes from sourcing to delivery.
· Growth With Our Partners - Through long-term relationships with
our customers and suppliers, and an understanding of their needs, we can all
enjoy profitable growth.
· People Who Care - We invest in our people, who take personal
pride in their contribution to our success and are strong advocates of our
business and products.
Sustainability Highlights
Our Sustainability Forum is now fully established to aid the governance of our
Responsibility Strategic Pillar. We have invested in our waste and recycling
facilities across the Group to create what we feel is an industry leading
approach to waste management with dedicated waste hubs, bespoke waste
communication materials and extensive waste data capture. This has resulted in
a 16% reduction in our non-recycled waste year on year.
In September we became signatories to the UK plastic pact which brings
together businesses from across the entire plastics value chain with UK
governments and NGOs to tackle plastic waste. We have committed to 2025
targets to ensure 100% of plastics packaging to be recyclable and to ensure an
average 30% recycled content across all plastic packaging. We are working with
sustainability experts at WRAP to help us achieve these targets.
We continue to leverage our energy monitoring system to achieve reductions in
electricity and gas usage across the business. Year to date we are seeing a
2.8% improvement in energy efficiency across the Group. We will soon start to
monitor our water usage and drive improvement in this area.
Market Review
An overview of the markets we operate in, and a summary of the key trends we
aim to take advantage of.
Our Markets
Food sector headwinds in the current financial year have exceeded those
experienced during FY22. To have delivered a robust H1 performance in that
context provides further validation of the Group's range of quality products,
the viability of our operational strategy and the long-term prospects of our
selected markets.
RETAIL
Grocery
Inflation continues to dominate headlines with increasing material prices
across all ingredients and with increased labour costs driven by the need to
attract and retain good employees (as well as the ongoing pressure from the
National Living Wage). Add to that the increased and sustained high cost of
energy. Take home grocery sales value grew by 7.6% (source: Kantar Worldpanel
12 weeks to 25 December 2022). Average price remains the key driver of this,
and although December 2022 set a record value sales month at £12.8bn, volumes
were down 1.4% in the same month, vs. 2021, meaning an average household spent
£48 more in December, and bought less for it (source: Kantar Worldpanel 4
weeks to 25 December 2022). With household budgets under pressure, shoppers
will continue to manage their spend, by buying less, trading down to a cheaper
product, or a cheaper retailer. Aldi and Lidl continue to outperform the
grocery market, and gain share. They are both growing from more shoppers
shopping more often with them (source: Kantar Worldpanel 12 weeks to 25
December), as they continue to open stores.
Cake
Finsbury continues to be one of the most significant manufacturers of cake in
the UK, with the market currently valued at £1.06 billion (source: IRI 52 w/e
31 Dec 2022). Value growth is now outstripping volume across the cake
category, as it is across the market. The average price was up 6.7% on the
prior year, and this has accelerated in more recent time periods. Looking to
shopper metrics in the Kantar data, in the comparable time period (52 weeks to
25 Dec 2022), the growth in average price, is being offset by declines in how
often cake is being purchased, and to a lesser extent how much is put in the
average basket. The number of households buying cake remains high, at 94%,
albeit this is down slightly on the prior year.
Bread
The retail bread and morning goods market has increased in value to £5.7
billion (source: Kantar Worldpanel 52 w/e 25 Dec 2022). We see a very similar
dynamic in the bread and morning goods category, with value growth
significantly ahead of volume, with the total category in volume decline of
-2.8% (source: Kantar Worldpanel 52 w/e 25 Dec 2022). Almost all households
buy the category, and this has remained static, bread and morning goods are
also bought frequently, 93 times a year on average, and again this has not
changed year on year. The drag on volume performance has been driven by
shoppers buying less per trip, as they look to manage their spend in the
category, and on that shopping trip.
Free From
The retail Free From cake market is valued at £60.0 million (source: Kantar
Worldpanel 52 w/e 25 Dec 2022) with Free From cake volume in growth, with
shoppers purchasing the category 10% more year on year (source: Kantar
Worldpanel 52 w/e 25 Dec 2022), 18.3% of households bought the category, which
is down vs. prior year. Price was up over 8%, and its average price is 16.4%
higher than the total cake category. In bread, volume growth is at 5.2% growth
year on year (source: Kantar Worldpanel 52 w/e 25 Dec 2022), price is up 6.9%
and the average price is over double that of total bread. Shoppers buying more
frequently have been the main driver of volume growth, it is bought by 12% of
households, which is static vs. the prior year.
OUT OF HOME
The UK out of home market spans many sub-sectors including coffee chains,
restaurants, pubs, hotels and the non-profit sector such as the prison service
or education. Each has a different route to market, which has grown in total
by +44% vs. 2021 (e.g. including alcohol), as Covid-19 restrictions, and
consumer sentiment limited demand in 2021. The most growth is coming from
hotels, pubs, and restaurants, as they suffered the most from the 2020 and
2021 impacts. The number of out of home outlets remains static. There are a
number of driving factors for growth, as consumers look to have experiences
they missed out on during Covid-19 restrictions. Tech and digitalisation,
diversification of formats, and growing omnichannel propositions are making
out of home more accessible than ever before. There are of course inhibitors
to the continued out-of-home growth, with the cost of living spiralling, and
price rises in the sector presenting a risk to ongoing volume.
OVERSEAS
Our overseas markets are primarily in Europe, principally France, Benelux and
Scandinavia, Poland and with a smaller presence in most other major European
countries. The size of these markets is significant, and their structure is
similar.
CONSUMER TRENDS
September 2022 witnessed a new record low for consumer confidence, at -49
(source GFK), as inflation, and the media coverage of further inflation to
come dominated. As the energy support came into force, and inflation eased
slightly this improved to -42 in December 2022; still at previously unseen
levels, but the first improvement in confidence since November 2021. We expect
to see this confidence remain low, in 2023, as consumers continue to struggle
with inflation across all aspects of their lives
The legislation, targeting a number of 'High Fat, Salt and Sugar' (HFSS)
categories including cake and morning goods is part of a wider government food
strategy, and the location restrictions across 15 food and drink categories,
is the start of an evolving landscape on health, rather than the end. These
restrictions are only live in England, and in stores over 2500 sq ft. It is
expected that similar restrictions will come into force, in both Wales, and
Scotland. It is too early, with Christmas, and now Easter in stores to find
meaningful data points to see results of these restrictions. On a recent
Nielsen webinar, they have seen unit decline in the 15 impacted categories, at
a slower rate than total store.
Long term social and demographic trends have a major bearing on the food
sector. These include the rise of smaller households, single-person mealtimes,
an ageing UK population, growing urbanisation, and an increasingly mobile
population (although this has stalled due to Covid-19) with less time to eat.
This growing fragmentation of consumers, channels, eating moments and needs is
translating into increasing demand for personalised products to meet
individual needs. As a result, single-serve and individually wrapped products
are becoming more prevalent and important. The latter may continue to gain
popularity as a consequence of the Covid-19 pandemic with food safety and
hygiene featuring higher on the list of consumer priorities. In store bakery
sales bear witness to this - since March 2020 sales have suffered, and even
with Covid-19 restrictions long gone, there is a latent change in how shoppers
want to shop for individual items. Clearly there is a conflict between this,
and the potential impact on additional packaging, and environmental concerns
that come with this.
OPERATING REVIEW
Revenue and Operating Profit
Group
H1 2022 H1 2021 Movement
Revenue £190.9m £166.5m +14.7%
Operating profit £6.5m £6.5m +0.4%
Operating profit margin 3.4% 3.9% -50bps
Group revenue increased in H1 2022 by 14.7% year on year to £190.9 million
(H1 2021: £166.5 million) reflecting price increases to recover input cost
inflation. Profit before interest, tax and significant non-recurring and other
items increased slightly to £6.5 million (H1 2021 £6.5 million). Operating
profit margin has decreased reflecting the impact of inflationary pressures.
UK Bakery
H1 2022 H1 2021 Movement
Revenue £161.0m £142.3m +13.2%
Operating profit £4.8m £4.7m +2.9%
Operating margin 3.0% 3.3%
UK Bakery comprises the supply of cake, bread, and morning goods in the
grocery and foodservice channels. Revenue in the period increased by 13.2% to
£161.0 million driven by pricing initiatives.
The operating profit of £4.8 million increased however the reduced operating
margin reflects the recovery of inflation challenge.
Overseas
H1 2022 H1 2021 Movement
Revenue £29.9m £24.2m +23.4%
Operating profit £1.7m £1.8m (6.3%)
Operating margin 5.6% 7.4%
The overseas business comprises Lightbody Europe in France and Ultraeuropa
based in Poland. Lightbody Europe specialises in the import and sale of
Finsbury manufactured food products being UK manufactured licensed celebration
cake and bite style products and Polish manufactured gluten-free products.
Ultraeuropa manufactures and supplies gluten free products to Poland, France,
Scandinavia, and the United States.
The operating margin decreased by 1.8% due largely to a change in product mix
and the recovery of inflationary pressures.
Acquisition
Post period end, the Company acquired Lees Foods Limited ("Lees"), a leading
manufacturer of meringues, teacakes and snowballs on 30 January 2023 for a
consideration of £5.7 million. Lees has a UK market-leading position in the
manufacture of meringues and has significant capability in the sweet treats
category, adjacent to Finsbury's existing markets. The acquisition is in line
with Finsbury's strategy to diversify its product capability into areas with
high growth potential through M&A. It will be immediately earnings
enhancing.
Lees has a broad customer base and holds strong supply relationships with the
leading UK supermarkets in addition to foodservice and export customers and
Finsbury believes that it will be able to leverage the scale and breadth of
the Finsbury commercial team and licensed brand portfolio to drive incremental
growth for the Group.
Significant non-recurring and other accounting items
The significant non-recurring and other accounting items primarily consist of
movements in the fair value of foreign exchange and interest rate swap
contracts. The fair value is deemed to be the market value, which is provided
by the counterparty at 31 December 2022, further information is given in Note
1.
Interest Payable
Interest payable (H1 2021: payable) on the Group's bank debt in H1 2022 and on
the related interest rate swaps was £673,000 (H1 2021: £312,000); an
increase of £361,000. The increase in charges is a consequence of the higher
average debt balance over the period and increase in SONIA and EURIBOR rates.
Taxation
The Group's effective tax rate in H1 2022 was 21.8%, which compares to 17.5%
in H1 2021. The effective rates represent a blend of the UK, French and Polish
Corporation Tax rates. An increase in the effective rate is driven by the
higher hybrid rate of UK tax due to the rate increase to 25% in April 2023,
the phasing of capital allowance super deductions, and a higher proportion of
overseas profit in the higher French tax jurisdictions.
Earnings Per Share
The Group considers adjusted diluted earnings per share to be the most
appropriate EPS measure. The adjusted earnings per share was in line with the
prior year at 3.4p. Further earnings per share information is given in Note
5.
Dividend
A final dividend for the year to 02 July 2022 of 1.67p per share was paid on
21 December 2022 to shareholders on the register at the close of business on
26 November 2022. The Board of Directors is proposing an interim dividend of
0.87p per share to be paid on 20 April 2023 to shareholders on the register at
the close of business on 24 March 2023 (H1 2021: 0.83p paid on 21 April 2022).
The election deadline for participants in the Company's Dividend Re-investment
Plan will be 28 March 2023.
Cash Flow and Net Debt
Net bank debt at 31 December 2022 was £22.8 million which compares to £20.6
million at 2 July 2022, an increase of £2.2 million.
H1 2022 £m
Net debt at 2 July 2022 -20.6
Cash inflow from operating profit before changes in working capital 12.0
Increase in working capital -4.6
Capital expenditure -3.6
Lease payments -1.0
Interest payments -0.5
Corporation Tax payments -1.4
Free cashflow 0.9
Purchase of companies -0.5
Purchase of shares by Employee Trust -0.5
Dividend paid -2.1
Net debt movement -2.2
Closing net debt -22.8
Six-month cash inflow from operating profit before changes in working capital
was £12.0 million. The free cash flow is £0.9 million after absorbing £4.6
million increased working capital, an increase driven primarily by macro
dynamics and the need to hold increasing levels of stock. The free cash flow
is before the final deferred consideration payments of £0.5 million, purchase
of shares by Employer Trust and dividends of £2.1 million, representing a
final dividend for the year ending 2 July 2022. Net debt (excluding IFRS 16
leases) of £22.8 million at half year, equating to 0.8 times annualised
EBITDA, reflecting low gearing alongside a strong balance sheet. The Group has
a £60.0 million revolving credit facility and an accordion of £60.0 million
available to it. The facility provides increased capacity for the Group to
explore future growth opportunities and support its long-term investment
strategy.
Pensions
The Group has one Defined Benefit Pension Scheme within its Memory Lane Cakes
business in Cardiff. All remaining Group companies have Defined Contribution
Schemes. The Memory Lane Cakes pension Scheme has been closed to future
accruals and new members since 31 May 2010. The net pension deficit (before
related deferred tax) was £6,582,000 at 2 July 2022. The Company entered into
an Asset Backed Contribution (ABC) arrangement on 18 May 2022 to improve the
funding of the Scheme. An investment of £16.0 million will be invested by the
Company to the Scheme, the trustees have purchased a loan note from the Group
via a Scottish Limited Partnership (SLP) structure, which will pay a defined
income return to the Scheme over 20 years. The fixed repayment plan amounts to
an income of £763,000 being paid to the Scheme annually. The estimated
duration of the liabilities is around 15 years.
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 in the Risk Report of the Annual Report for the year to 2
July 2022, and the Board considers these remain applicable.
Forward-looking Statements
Throughout this report certain statements have been made which are forward
looking. These statements have been made based on the 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)
Unaudited 26 weeks ended Unaudited 26 weeks ended
31 December 2022 25 December 2021
£000 £000
Significant non-recurring and other accounting items Significant non-recurring and other accounting items
(Note 1) (Note 1)
Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income
Adjusted operating performance Adjusted
operating performance
Revenue 190,934 - 190,934 166,525 - 166,525
Cost of sales (134,273) - (134,273) (113,938) - (113,938)
Gross profit 56,661 - 56,661 52,587 - 52,587
Administrative expenses
(50,180) (348) (50,528) (46,130) (422) (46,552)
Results from operating activities
6,481 (348) 6,133 6,457 (422) 6,035
Finance expense (Note 4)
(777) 751 (26) (445) 67 (378)
Profit before taxation
5,704 403 6,107 6,012 (355) 5,657
Taxation (1,260) (74) (1,334) (1,057) 67 (990)
Profit after tax and total comprehensive income
4,444 329 4,773 4,955 (288) 4,667
Profit attributable to:
Equity holders of the Parent 4,194 329 4,523 4,148 (151) 3,997
Non-controlling interest 250 - 250 807 (137) 670
Profit and total comprehensive income for the period
4,444 329 4,773 4,955 (288) 4,667
Earnings per share (pence)
Basic 3.6 3.7 3.6 3.2
Diluted 3.4 3.5 3.4 3.0
Consolidated Statement of Financial Position (unaudited)
Unaudited Unaudited Audited
31 December 25 December 02 July
2022 2021 2022
Note £000 £000 £000
Non-current assets
Intangibles 86,172 87,502 87,355
Property, plant and equipment 62,384 57,261 62,672
Deferred tax assets 4,151 5,951 4,072
152,707 150,714 154,099
Current assets
Inventories 27,754 19,405 23,281
Trade and other receivables 63,595 52,748 58,148
Cash and cash equivalents 6 11,501 8,697 7,381
Other financial assets - fair value of derivatives 612 - 20
103,462 80,850 88,830
Total assets 256,169 231,564 242,929
Current liabilities
Other interest-bearing loans and borrowings 6 (1,522) (2,452) (1,605)
Trade and other payables (79,946) (65,870) (74,284)
Provisions (709) (159) (697)
Deferred consideration - (977) (496)
Other financial liabilities - fair value of derivatives (764) (39) (575)
Current tax liabilities (660) (513) (731)
(83,601) (70,010) (78,388)
Non-current liabilities
Other interest-bearing loans and borrowings 6 (40,945) (30,207) (35,388)
Provisions and other liabilities - (160) (18)
Deferred tax liabilities (3,752) (2,791) (3,699)
Pension fund liability (6,582) (14,529) (6,582)
(51,279) (47,687) (45,687)
Total liabilities (134,880) (117,697) (124,075)
Net assets 121,289 113,867 118,854
Equity attributable to equity holders of the Parent
Share capital 7 1,304 1,304 1,304
Share premium account 64,956 64,956 64,956
Capital redemption reserve 578 578 578
Employee share reserve (6,196) (5,196) (5,696)
Retained earnings 60,141 49,854 57,456
Total shareholders' equity 120,783 111,496 118,598
Non-controlling interest 506 2,371 256
Total equity 121,289 113,867 118,854
Consolidated Statement of Changes in Equity (unaudited)
Capital Employee Non-controlling
Share Share redemption share Retained interest Total
capital premium reserve reserve earnings £000 equity
£000 £000 £000 £000 £000 £000
Balance at 27 June 2021 1,304 64,956 578 (5,374) 49,021 2,786 113,271
Profit for the 26 weeks ended 26 December 2021
- - - - 3,997 670 4,667
Other comprehensive income - - - - - - -
Total comprehensive income for the period
- - - - 3,997 670 4,667
Transactions with owners, recorded directly in equity:
Own shares issued/(acquired) - - - 178 - - 178
Foreign exchange translation differences
- - - - (179) - (179)
Dividend paid - - - - (2,985) (1,085) (4,070)
Balance at 25 December 2021 1,304 64,956 578 (5,196) 49,854 2,371 113,867
Profit for the 27 weeks ended 2 July 2022
- - - - 6,475 446 6,921
Other comprehensive income/(expense):
Remeasurement on Defined Benefit Pension
- - - - 7,815 - 7,815
Deferred tax movement on Pension Scheme remeasurement
- - - - (1,954) - (1,954)
Other comprehensive income - - - - 5,861 - 5,861
Total comprehensive income for the period
- - - - 12,336 446 12,782
Transactions with owners, recorded directly in equity:
Shares acquired during the period - - - (500) - (500)
Impact of share-based payments - - - - 1,524 - 1,524
Transactions with non-controlling interests -
- - - - (4,962) (1,121) (6,083)
Costs associated with transactions with non-controlling interests
- - - - (375) - (375)
Foreign exchange translation differences
- - - - 112 - 112
Dividend paid - - - - (1,033) (1,440) (2,473)
Balance at 2 July 2022 1,304 64,956 578 (5,696) 57,456 256 118,854
Profit for the 26 weeks ended 31 December 2022
- - - - 4,523 250 4,773
Other comprehensive income - - - - - - -
Total comprehensive income for the period
- - - - - - -
Transactions with owners, recorded directly in equity:
Own shares issued/(acquired) - - - (500) - - (500)
Foreign exchange translation differences
- - - - 230 - 230
Dividend paid - - - - (2,068) - (2,068)
Balance at 31 December 2022 1,304 64,956 578 (6,196) 60,141 506 121,289
Consolidated Cash Flow Statement (unaudited)
Unaudited Unaudited Audited
26 weeks 26 weeks 53 weeks
ended ended ended
31 25 2
December December July
2022 2021 2022
Note £000 £000 £000
Cash flows from operating activities
Profit after taxation for the period 4,773 4,667 11,588
Adjustments for:
Taxation 1,334 990 2,709
Net finance costs 4 26 378 1,208
Amortisation of intangibles 717 674 1,547
Depreciation 3,823 3,786 7,407
Depreciation right of use assets 984 998 1,986
Significant non-recurring expenses - - 1,898
Movement in fair value foreign exchange contracts 348 422 821
Contributions by employer to Pension Scheme - - (417)
Operating profit before changes in working capital 12,005 11,915 28,747
Changes in working capital
Increase in inventories (4,304) (4,451) (8,254)
Increase in trade and other receivables (5,446) (1,878) (7,847)
Increase in trade and other payables 5,147 3,708 13,589
Cash generated from operations 7,402 9,294 26,235
Significant non-recurring costs (254) (61) (2,254)
Interest paid (535) (447) (678)
Corporation Taxes paid (1,431) (1,319) (2,018)
Net cash generated from operating activities 5,182 7,467 21,285
Cash flows from investing activities
Purchase of property, plant, equipment and intangibles (3,558) (1,908) (12,545)
Purchase of companies (500) (500) (1,000)
Net cash used in investing activities (4,058) (2,408) (13,545)
Cash flows from financing activities
Lease payments (1,039) (910) (2,275)
Drawdown/(repayment) of revolving credit 6,334 (1,020) 5,444
Purchase of shares by Employee Trust (500) - (500)
Transactions with non-controlling interests - - (6,083)
Non-controlling interest dividend paid - (1,085) (2,525)
Dividend paid (2,068) (2,985) (4,018)
Net cash in/(out) from financing activities 2,727 (6,000) (9,957)
Net increase/(decrease) in cash and cash equivalents 3,851 (941) (2,217)
Opening cash and cash equivalents 7,381 9,523 9,523
Effect of exchange rate fluctuation 269 115 75
Cash and cash equivalents at end of the period 11,501 8,697 7,381
NOTES TO THE FINANCIAL STATEMENTS
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 53-week period ended 2 July 2022 have
been extracted from the statutory accounts for that year. Those accounts,
which were prepared in accordance with UK-adopted International Accounting
Standards 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.
GOING CONCERN
The Group has delivered an encouraging half year performance against a
continued backdrop of macro-economic and cost inflation challenges. Forecasts
have been built on a bottom-up basis and stress tested to prepare a forecast
to be used as a basis for reviewing going concern, forecast assumptions have
been critically assessed and have been compared against historical performance
to understand movements. The Board, having reviewed the Group's short and
medium-term plans and available financial facilities until June 2027, has
reasonable expectations that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Group has stayed
comfortably within its banking facilities during the period, meeting covenant
requirements. The Group has a £60 million revolving credit facility plus
scope for the facility to be increased by up to a further £60 million. In
addition, the Group has a strong trade debtor book and strong asset backing.
Having due consideration of the financial projections, the level of debt and
available facilities, it is the opinion of the Directors that the Group has
adequate resources to continue in operation for the foreseeable future and,
therefore, consider it appropriate to prepare the Financial Statements on the
going concern basis.
1) SIGNIFICANT NON-RECURRING ITEMS AND OTHER ACCOUNTING
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.
The amounts shown within significant non-recurring and other accounting items
on the face of the Consolidated Statement of Comprehensive Income are shown in
the table below:
Unaudited Unaudited
26 weeks ended 26 weeks ended
31 December 2022 25 December 2021
£000 £000
Movement in fair value of foreign exchange contracts (348) (422)
Shown under administrative expenses (348) (422)
Unwinding of discount on deferred consideration (4) (33)
Movement in fair value of swaps 755 100
Shown under finance expense 751 67
The fair value of contracts is deemed to be the market value, which is
provided by the counterparty at 31 December 2022. The movements in fair value
shown in the table above reflect the value of contracts held and the movements
in interest and foreign exchange rates since the year end date of 2 July 2022.
2) SEGMENT INFORMATION
Operating segments are identified on the basis of the internal reporting and
decision making. The Group's Chief Operating Decision Maker is deemed 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 assesses
profit performance principally through adjusted profit measures consistent
with those disclosed in the Annual Report and Accounts.
The UK bakery segment manufactures and sells bakery products to UK grocery and
food service sectors. It comprises six subsidiaries all of which manufacture
and supply food products through the channels described above. These
subsidiaries have been aggregated into one reportable segment as they share
similar economic characteristics. The economic indicators considered are the
nature of the products and production process, the type and class of customer,
the method of distribution and the regulatory environment.
The overseas segment procures and sells bakery products to European grocery
and food service sectors. The Ultraeuropa business manufactures Free From
bakery products in Poland and sells into the European markets.
Reportable Segments UK bakery Overseas Total Group
H1 2022 £000 H1 2021 £000 H1 2022 £000 H1 2021 £000 H1 2022 £000 H1 2021 £000
Revenue 161,005 142,274 29,929 24,251 190,934 166,525
Adjusted operating profit 4,809 4,673 1,672 1,784 6,481 6,457
Significant non-recurring and other items (Note 1) (348) (422)
Finance expense (Note 4) (26) (378)
Profit before taxation 6,107 5,657
The Group has three customers (2021: two) which individually account for more
than 10% of the Group's total revenue. These customers account for 22%, 11%
and 10%. In the prior year, the two customers accounted for 23% and 12% of the
revenue in the six months to 25 December 2021. In addition to the Europe sales
disclosed in Reportable Segments, the Group also made sales to European
markets through UK based organisations.
3) 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 2022, 2,429,984 options were granted (H1
2021: 1,636,005 options). Administration costs include a charge of £59,000
(H1 2021: £113,000) in relation to the fair value of the newly awarded share
options during that period.
4) FINANCE INCOME AND EXPENSES
Unaudited Unaudited Audited
26 weeks ended 31 December 26 weeks ended 25 December 53 weeks ended 2 July
2022 2021 2022
Note £000 £000 £000
Change in fair value of interest rate swaps 1 755 100 -
Bank interest income 18 - -
Finance income 773 100 -
Net interest on pension position - - (285)
Net bank interest payable (653) (252) (531)
Charge on interest rate swaps (24) (60) (43)
Unwinding of discount on deferred consideration 1 (4) (33) (54)
Change in fair value of interest rate swaps 1 - - (18)
Interest on deferred consideration (1) (12) (18)
Lease Interest IFRS 16 (117) (121) (259)
Finance expense (799) (478) (1,208)
Net finance expense (26) (378) (1,208)
The Group has one interest rate swap arrangement; £10.0 million fixed at
2.589% maturing 10 June 2027 to hedge its risks associated with interest rate
fluctuations.
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 an income of £755,000 (H1
2020: charge £100,000).
5) EARNINGS PER ORDINARY SHARE (EPS)
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 123,262,000 (25 December 2021: 124,252,000).
Basic diluted earnings per share for the period is calculated by adjusting the
weighted average number of ordinary shares in issue to assume conversion of
all potential dilutive ordinary shares, which for 31 December 2022 is
130,733,000 (25 December 2021: 132,183,000).
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 26 weeks to
31 Dec 2022 25 Dec 2021
£000 £000
Profit
Profit attributable to equity holders of the Company (basic)
4,523 3,997
Significant non-recurring and other items (329) 151
Amortisation of intangibles 266 287
Numerator for adjusted earnings per share calculation (adjusted basic)
4,460 4,435
Basic Diluted Basic Diluted
'000 '000 '000 '000
Shares
Weighted average number of ordinary shares in issue during the period
123,262 123,262 124,252 124,252
Dilutive effect of share options - 7,471 - 7,931
123,262 130,733 124,252 132,183
Basic Diluted Basic Diluted
Pence Pence Pence Pence
Earnings per share
Basic / basic and diluted 3.7 3.5 3.2 3.0
Adjusted basic/ adjusted basic and diluted 3.6 3.4 3.6 3.4
6) ANALYSIS OF NET DEBT
Unaudited Unaudited Audited
26 weeks 26 weeks 53 weeks
ended ended ended
31 December 25 December 2 July
2022 2021 2022
£000 £000 £000
Net cash at bank 11,501 8,697 7,381
Loans after more than one year (34,209) (21,411) (27,875)
Hire purchase obligations due within one year (56) (103) (76)
Hire purchase obligations due after more than one year (57) (73) (75)
Bank debt (34,322) (21,587) (28,026)
Unamortised transaction costs 1,020 73 799
Bank debt net of unamortised transaction costs within one year 143 (103) 124
Bank debt net of unamortised transaction costs more than one year (33,445) (21,411) (27,351)
Bank debt net of unamortised transaction costs excluding IFRS 16 lease
liabilities
(33,302) (21,514) (27,227)
Bank debt (before IFRS 16 debt) net of cash at bank (22,821) (12,890) (20,645)
Lease liabilities IFRS 16 within one year (1,665) (2,349) (1,729)
Lease liabilities IFRS 16 after more than one year (7,500) (8,796) (8,037)
Lease liabilities IFRS 16 (9,165) (11,145) (9,766)
Total Debt including IFRS 16 lease liabilities (30,966) (23,962) (29,612)
7) SHARE CAPITAL
No shares were issued during the period or the comparative prior year period.
At 31 December 2022, 6,319,299 shares (H1 2021: 5,988,987) were held by the
Finsbury Food Group Plc Employee Benefit Trust.
Advisers
Company Secretary Independent Auditor
ONE Advisory Limited PricewaterhouseCoopers LLP
201 Temple Chambers Chartered Accountants
3-7 Temple Avenue One Kingsway
London Cardiff
EC4Y 0DT CF10 3PW
Tel: 0207 583 8304
Registered Office Registrars
Maes-y-coed Road Capita Registrars
Cardiff 34 Beckenham Road
CF14 4XR Beckenham
Tel: 029 2035 7500 Kent
BR3 4TU
Nominated Adviser and Broker Solicitors
Panmure Gordon (UK) Limited CMS Cameron McKenna Nabarro Olswang LLP Cannon Place
40 Gracechurch Street 78 Cannon Street
London London
EC3V 0BT EC4N 6AF
Remuneration Committee Advisor
Deloitte LLP
Four Brindley Place,
Birmingham,
B1 2HZ
Registered Number
00204368
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR QFLBLXLLEBBXRecent 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