REG - Finsbury Food Group - Preliminary Results <Origin Href="QuoteRef">FIF.L</Origin> - Part 3
18/09/2017 07:37
- Part 3: For the preceding part double click ID:nRSR9610Qb
126,979 130,992 126,938 129,206 126,938 129,206
Earnings per share (pence per share)
Basic and diluted 7.1 6.9 6.1 6.0 5.9 5.8
Adjusted basic and adjusted diluted 9.8 9.5 9.8 9.7 9.6 9.5
Significant non-recurring and other items are tabled in the Strategic Report
on page 14 and comprise: significant non recurring items (£3,320,000), Defined
benefit pension scheme (£3,000) and fair value of interest rate swaps and
foreign exchange contracts £422,000.
7. Intangibles
Intangible assets comprise customer relationships, brands and goodwill.
Goodwill Business systems Brands and licences Customer relationships Total
£000 £000 £000 £000 £000
Cost at 27 June 2015 71,704 - 3,683 5,909 81,296
Adjustment in respect of prior year acquisition 1,754 - - - 1,754
Additions - 600 - - 600
Cost at 2 July 2016 73,458 600 3,683 5,909 83,650
Transfer from tangible assets - 548 - - 548
Additions - 2,695 - - 2,695
Cost at 1 July 2017 73,458 3,843 3,683 5,909 86,893
Amortisation at 27 June 2015 - - (929) (296) (1,225)
Charge for the year 2 July 2016 (4,290) - (144) (395) (4,829)
Amortisation/impairment at 2 July 2016 (4,290) - (1,073) (691) (6,054)
Charge for the year 1 July 2017 - - (143) (394) (537)
Amortisation/impairment at 1 July 2017 (4,290) - (1,216) (1,085) (6,591)
Net book value at 27 June 2015 71,704 - 2,754 5,613 80,071
Net book value at 2 July 2016 69,168 600 2,610 5,218 77,596
Net book value at 1 July 2017 69,168 3,843 2,467 4,824 80,302
The brand and customer relationships recognised were purchased as part of the
acquisition of Fletchers Group of Bakeries in October 2014. They are
considered to have finite useful lives and are amortised on a straight line
basis over their estimated useful lives of twenty years for brands and fifteen
years for customer relationships. The intangibles were valued using an income
approach, using Multi-Period excess earnings Method for customer relationships
and Relief from Royalty Method for brand valuation. The amortisation of
intangibles has been charged to administrative expenses in the Income
Statement. There is no amortisation on business systems during the year as the
systems are yet to be brought into use.
Goodwill has arisen on acquisitions and reflects the future economic benefits
arising from assets that are not capable of being identified individually and
recognised as separate assets. The goodwill reflects the anticipated
profitability and synergistic benefits arising from the enlarged Group
structure. The goodwill is the balance of the total consideration less fair
value of assets acquired and identified. The carrying value of the goodwill is
reviewed annually for impairment. The carrying value of all goodwill has been
assessed during the year. A non-cash impairment of goodwill arising from an
acquisition in 2007 was made during the previous year.
The Group tests goodwill for impairment on an annual basis, or more frequently
if there are indications that the goodwill may be impaired. The recoverable
amounts of the cash generating units are determined from value in use
calculations. The key assumptions for the value in use calculations are the
discount rate used for future cash flows and the anticipated future changes in
revenue, direct costs and indirect costs. The assumptions used reflect the
past experience of management and future expectations.
The Group prepares cash flow forecasts covering a five year period based on
the detailed financial forecasts approved by management for the next three
years with estimated growth and inflation of 3% (2016: 3%) and 3% (2016: 3%)
respectively thereafter. The cashflows beyond this forecast are extrapolated
to perpetuity using a nil growth rate on a prudent basis, to reflect the
uncertainties of forecasting further than five years. Changes in revenue and
direct costs are based on past experience and expectations of future changes
in the market.
The revenue growth rate combines volume, mix and price of products. An
inflation factor has been applied to costs of sales, variable costs and
indirect costs and takes into consideration the general rate of inflation,
movements in commodities, improvement in efficiencies from capital investment
and operations and purchasing initiatives.
A pre-tax discount rate of 10% (2016: 10%) has been used in these
calculations. The Group has considered the economic environment and higher
level of return expected by equity holders due to the perceived risk in equity
markets when selecting the discount rate. The discount rate used for each cash
generating unit has been kept constant as the market risk is deemed not to be
materially different between the different segments of the bakery sector, nor
over time.
A non-cash impairment of the goodwill arising from the acquisition of Anthony
Alan Foods Ltd in 2007 was made during the previous year. The impairment
reflects the challenging market and changing dynamics of the 'healthier'
grocery market. The related goodwill has been fully impaired and reflected in
both the Lightbody of Hamilton and Memory Lane Cakes cash generating units
accordingly. The impairment is shown as a significant non-recurring item
within administrative expenses.
Sensitivity analyses have been carried out by the Directors on the carrying
value of all remaining goodwill using discount rates ranging between 3.5% and
15.0% which would not result in an impairment of any cash generating units.
Management believe any increase in discount rates above 15% to be remote.
The carrying amount of goodwill has been allocated to cash generating units or
groups of cash generating units as follows:
2017£000 2016£000
Nicholas & Harris 2,980 2,980
Lightbody of Hamilton 45,698 45,698
Memory Lane Cakes - -
Fletchers Bakery 20,118 20,118
Johnstone's Food Service 372 372
69,168 69,168
8. Other Interest-Bearing Loans and Borrowings
This note provides information about the contractual terms and repayment terms
of the Group's interest-bearing loans and borrowings, which are measured at
amortised cost, using the effective interest rate method.
2017 Margin Frequency ofRepayments Year of maturity Facility£000 Drawn£000 Current£000 Non-Current£000
Invoice Discounting 1.50%/base On demand Revolving* 22,000 11,646 11,646 -
Term loan 2.00%/LIBOR Quarterly 2019 13,400 6,337 2,568 3,769
Revolving credit 2.00%/LIBOR Varies 2019 8,000 - - -
Mortgage 1.75%/LIBOR Quarterly 2022 3,470 2,457 369 2,088
Finance lease liabilities 1.76%/base Monthly various 2,000 57 57 -
Overdraft 2.00%/base On demand - 2,000 - - -
50,870 20,497 14,640 5,857
Unamortised transaction costs (111) (54) (57)
20,386 14,586 5,800
Secured bank loans and mortgages over one year 5,857
Unamortised transaction costs (57)
5,800
Repayments are as follows:
Between one and two years 2,894
Between two and five years 2,292
Between five and ten years 614
5,800
2016 Margin Frequency ofRepayments Year of maturity Facility£000 Drawn£000 Current£000 Non-Current£000
Invoice Discounting 1.50%/base On demand Revolving* 22,000 10,824 10,824 -
Term loan 2.00%/LIBOR Quarterly 2019 13,400 8,905 2,568 6,337
Revolving credit 2.00%/LIBOR Varies 2019 8,000 - - -
Mortgage 1.75%/LIBOR Quarterly 2022 3,470 2,826 369 2,457
Finance lease liabilities 1.76%/base Monthly various 2,000 190 133 57
Overdraft 2.00%/base On demand - 2,000 - - -
50,870 22,745 13,894 8,851
Unamortised transaction costs (176) (65) (111)
22,569 13,829 8,740
Secured bank loans and mortgages over one year 8,851
Unamortised transaction costs (111)
8,740
Repayments are as follows:
Between one and two years 2,940
Between two and five years 4,817
Between five and ten years 983
8,740
* Revolving maturity above relates to the payment terms on the invoice
discounting which is up to 90 days from the date of invoice. The invoice
discounting facility renewal date is October 2019.
8. Other Interest-Bearing Loans and Borrowings
Finance lease liabilities are payable as follows:
2017 2016
Minimum lease payments Interest Principal Minimum lease payments Interest Principal
£000 £000 £000 £000 £000 £000
Less than one year 58 1 57 136 3 133
Between one and five years - - - 58 1 57
58 1 57 194 4 190
All of the above loans are denoted in pounds Sterling, with various interest
rates and maturity dates. The main purpose of the above facilities is to
finance the Group's operations.
As part of the bank borrowing facility the Group needs to meet certain
covenants every six months. There were no breaches of covenants during the
year. The covenant tests required are Net bank debt: EBITDA, Interest cover,
debt service cover and capital expenditure.
The bank facilities (excluding overdraft) available for drawdown are £48.9
million (2016: £48.9 million). At the period end date, the facility utilised
was £20.5 million (2016: £22.7 million), giving £28.4 million (2016: £26.2
million) headroom.
9. Analysis of Net Debt
Note At year ended2 July 2016£000 Cash flow £000 At year ended1 July 2017£000
Cash at bank 3,024 - 3,024
Debt due within one year (2,937) - (2,937)
Debt due after one year (8,794) 2,937 (5,857)
Invoice discounting due within one year (10,824) (822) (11,646)
Hire purchase obligations due within one year (133) 76 (57)
Hire purchase obligations due after one year (57) 57 -
Total net bank debt (19,721) 2,248 (17,473)
Debt 8 (22,569) 2,183 (20,386)
Cash at bank 3,024 - 3,024
Unamortised transaction costs (176) 65 (111)
Total net bank debt (19,721) 2,248 (17,473)
Cash at bank 3,024 - 3,024
Total debt payable excluding cash (22,745) 2,248 (20,497)
This information is provided by RNS
The company news service from the London Stock ExchangeRecent 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