TIDMFIF
RNS Number : 9610Q
Finsbury Food Group PLC
18 September 2017
Date: 18 September 2017
On behalf Finsbury Food Group Plc ('Finsbury',
of: 'the Company' or 'the Group')
Embargoed until: 0700hrs
Finsbury Food Group Plc
Preliminary Results
Finsbury Food Group Plc (AIM: FIF), a leading UK speciality
bakery manufacturer of cake, bread and morning goods for both the
retail and foodservice channels, is pleased to announce its
preliminary results for the financial year ended 1 July 2017.
The Company has delivered resilient UK sales in a deflationary
market, with the impact of UK retail food market deflation in the
period offset by the impact of innovation in cake and growth in
speciality bakery ranges.
Highlights
Financial
-- Group revenue of GBP314.3m flat on a like for like basis,
(2016: GBP319.7m 53 weeks, GBP313.5m 52 weeks).
-- Adjusted operating profit of GBP17.4m up 4.2% on a like for
like basis, (2016: GBP17.1m 53 weeks, GBP16.7m 52 weeks), with
adjusted operating profit margin of 5.5% (2016: 5.3%).
-- Adjusted profit before tax of GBP16.6m up 5.6% on a like for
like basis (2016: GBP16.0m 53 weeks, GBP15.7m 52 weeks).
o Profit before tax of GBP13.0m (2016: GBP11.8m).
-- Adjusted EBITDA of GBP24.9m up 2.7% (2016: GBP24.7m 53 weeks, GBP24.3m 52 weeks).
o EBITDA of GBP21.0m (2016: GBP20.4m).
-- Record capital investment of GBP12.5m to drive efficiency and
innovation (181% of depreciation).
-- Adjusted EPS at 9.8p per share up 2% on a like for like
basis, (2016: 9.6p per share 52 weeks), adjusted diluted EPS 9.5p
per share (2016: 9.5p per share 52 weeks).
-- Final dividend per share of 2.0p taking total dividend for
the year to 3.0p up 7.1% (2016: 2.8p per share), giving a yield of
2.6% based on the year end share price of 116 pence per share.
-- Net debt of GBP17.5m equates to 0.7 times EBITDA of the Group.
Strategic
-- Capital investment including a new state of the art cake line
which will be fully operational in financial year 17/18, an
exciting new cupcake capability to augment the Group's licensed
product range and a range of packing automation investments.
-- New artisan bread facility opened, baking for retail and foodservice customers.
-- Sales to continental Europe up 15% to GBP38.1m.
-- Entered into consultation to close Grain D'Or, the loss
making site in North London which manufactures premium baked goods
in the UK pastry sector.
-- Employee engagement programme commences following on from
successful roll out of vision and values throughout the Group.
-- A new multiyear licensing agreement with Thorntons and new
brand licence engagements with Mary Berry and Mars, with a range of
Mary Berry cakes launched in the second half of the year.
-- Winner of Celebration Cake Business of the year for 2016 at
the Bakery Industry Awards and multiple food quality awards:
Quality food award, Café Quality food award, Grocer Own Label
innovation award and International Licensing award.
Unless stated otherwise stated the figures quoted for the prior
year are for 53 week period.
John Duffy, Chief Executive of Finsbury Food Group Plc,
commented:
"The FY2017 results show strong resilience to the current
challenges facing the industry and this strong performance, which
has seen sales increase and profit margins improve, is testament to
our long term focus on driving efficiency and scale across the
Group.
"Investment to date has paid off and the initiatives implemented
during the year will continue to ensure that we maintain our robust
position as a low cost and leading speciality baker in the UK over
the next 12 months and beyond.
"Our European growth has also been particularly pleasing. The
positive impact that these sales have had on the overall Group
performance demonstrates the advantages of having a geographically
diverse portfolio.
"Our management team has proven its ability to remain
competitive and nurture long term relationships with brands and
customers. Although the challenging market conditions seem set to
continue, we are confident that our focused and forward thinking
strategy will drive us through."
For further information:
Finsbury Food Group Plc www.finsburyfoods.co.uk
John Duffy (Chief Executive) 029 20 357 500
Stephen Boyd (Finance Director)
Cenkos Securities plc
Bobbie Hilliam (Corporate
Finance)
Redleaf Communications finsbury@redleafpr.com
Elisabeth Cowell 020 7382 4730
Ian Silvera
Fiona Norman
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 1 July 2017 exceeding GBP300m.
-- 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.
-- The Company is one of the largest ambient cake manufacturers
in the UK, a market valued at over GBP938 million (source: Symphony
IRI, 52 w/e 19(th) August 2017). The annual retail bread and
morning goods market has a value of GBP4.0 billion (source: Kantar
Worldpanel 52 weeks to 16(th) July 2017). The UK foodservice bread
and morning goods bakery sector is worth approximately GBP836
million per annum. The UK foodservice cake and sweet treat bakery
sector is worth approximately GBP494 million per annum (UK
foodservice data derived from NPD Crest 52 w/e 30(th) June
2017).
-- The Company comprises a UK Bakery division and an Overseas division:
- The UK Bakery division has manufacturing sites in Cardiff,
East Kilbride, Hamilton, Twechar, Salisbury, Sheffield, London and
Manchester.
- The Overseas division comprises the Company's 50% owned
company, Lightbody Stretz Ltd, which supplies and distributes the
Group's UK-manufactured products and third party products,
primarily to Europe.
These figures are for the 52 weeks ended 1 July 2017 and 53
weeks ended 2 July 2016 unless stated otherwise.
Adjusted Operating Profit
2017 2016
(52 weeks) (53 weeks)
GBP000 GBP000
------------------------------------- ------------- -------------
Results from operating activities 13,564 12,791
Significant non-recurring items
- SNR (refer to Note 3 for detail) 4,000 4,290
Difference between defined benefit
pension scheme charges and cash
cost (200) (117)
Movement in the fair value of
foreign exchange contracts 71 134
Adjustments SNR and other items 3,871 4,307
------------------------------------- ------------- -------------
Adjusted results from operating
activities 17,435 17,098
===================================== ============= =============
Impact of 53(rd) week - (371)
------------------------------------- ------------- -------------
Adjusted results from operating
activities for 52 weeks 17,435 16,727
===================================== ============= =============
Adjusted Profit Before Tax
2017 2016
(52 weeks) (53 weeks)
GBP000 GBP000
------------------------------------- ------------- -------------
Profit before tax 13,038 11,804
Significant non-recurring items
- SNR (refer to Note 3 for detail) 4,000 4,290
Difference between defined benefit
pension scheme charges and cash
cost 4 31
Movement in the fair value of
interest rate swaps (555) (219)
Movement in the fair value of
foreign exchange contracts 71 134
Adjustments SNR and other items 3,520 4,236
------------------------------------- ------------- -------------
Adjusted profit before tax 16,558 16,040
===================================== ============= =============
Impact of 53(rd) week - (358)
------------------------------------- ------------- -------------
Adjusted profit before tax for
52 weeks 16,558 15,682
===================================== ============= =============
Adjusted operating profit and profit before tax exclude
significant non-recurring and other items as shown in the tables
above and includes amortisation of intangibles. The adjusted
operating profit 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.
Like for like growth is calculated using financial data for the
prior year for a 52 week period. The 52 week period is calculated
by eliminating the result for the 53(rd) week in the financial year
ended 2 July 2016.
Adjusted diluted EPS has been calculated using earnings
excluding the 53(rd) week in the prior year, amortisation of
intangibles, significant non-recurring and other items as shown in
the tables below. 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.
The Financial Review section within the Strategic Report
provides further details on the adjusted profits.
Chairman's Statement
A year of consolidating and investing for the future
We continue to make good progress in line with our stated aim of
becoming a leading speciality bakery group in the UK. We have
delivered a resilient performance despite the changing consumer and
customer dynamics and the challenging economic environment for food
manufacturers across the industry which, has made the journey
somewhat slower and harder than expected.
The Board has reviewed the Group's strategy in the light of
these external changes and has concluded that there is no need for
any radical change of direction and we still firmly believe we are
set on the right path to achieve our goal. We will continue to work
hard to run our existing businesses as efficiently and effectively
as possible whilst investing for the future and keeping a solid
balance sheet that can be utilised, as and when the right
opportunities present themselves.
The Board welcomed Bob Beveridge as a Non Executive Director in
July and he will be joining the Audit Committee. The new Group
management structure has bedded in well and is delivering the scale
opportunities and benefits expected, whilst preserving our largely
decentralised site system.
The Results
The Group's revenue for the 52 weeks was GBP314.3m, up 0.3%, on
a like for like basis, compared to last year's adjusted 52 week
figure. Profit before tax at GBP13.0m is up from GBP11.8m in the
prior period, which on an adjusted and like for like basis is
GBP16.6m versus GBP15.7m, representing a 5.6% increase. Debt is at
0.7 times EBITDA.
This result delivers on our expectations and has been achieved
against a deflationary UK retail food market which is changing in
terms of channel balance, as consumers shop in less traditional
ways. This has led to an upswing in the discounter's market share
and online gains. Specific cost issues, that relate to the current
weakness of Sterling and increased costs of the new national living
wage have also had to be overcome through efficiency gains and
price adjustment. The European business has performed strongly this
year and has demonstrated the benefit of having a diversified
portfolio. A full financial review is available further on in the
report.
This outcome has not been easy to achieve and has only been
possible because of our Board's long-term focus on driving
efficiency and managing costs, as well as the hard work of
Finsbury's committed team. This was demonstrated when the Board was
presented with the results of the first Group employee engagement
survey. The participation was excellent and the results gratifying,
with only a few areas marked for improvement.
Investing for the future
The Group's capital investment of GBP12.5m means we have
completed, or are in the throes of completing, some very important
strategic projects. A new cake line is coming on stream in Cardiff
and there is a new IT system being rolled out which will give a
common platform for the whole business. The benefits of these and
other projects will help improve our overall productivity and
offset increases in our cost base.
In light of the current environment, we maintain a strong focus
on investing in our future. With this in mind we plan to invest in
new plant, equipment and systems to further improve efficiency,
product quality and our capability in sustainable and
environmentally-responsible manufacturing. We continually assess
our role within various product markets and are committed to
critically reviewing our presence in those that are less
successful. To this end the Company has entered into consultation
with the workforce of Grain D'Or, the Group's loss making pastry
factory in North London, to close the site. This consultation will
conclude mid-October.
Strategy for continued growth
The licensing of brands is an important part of the business and
we have worked hard to improve and strengthen our relationships
with existing licensees and we were delighted to launch a range of
Mary Berry cakes in the second half of the year.
We continue to win awards for our products and to add to our
capabilities, such as in a new cupcake line and an artisan bread
production facility, both meeting the needs of changing consumer
demands. In the same way, our new product development is
increasingly directed towards providing healthier and more
convenient products.
Development of the foodservice channel is also an ongoing target
for growth alongside any business acquisitions that meet our
criteria.
Finally, on behalf of the Board I would like to thank everyone
who works at Finsbury for delivering another successful year. Their
passion, energy and contribution continues to drive the business
forward.
Dividends
The final dividend per share of 2.0p will take the total
dividend for the year to 3.0p per share, up 7% from last year's
dividend of 2.8p per share.
Peter Baker
Non-Executive Chairman 15 September 2017
Chief Executive's Report
Solid delivery against expectations
Since joining the Company in 2009, our team has been keenly
focused on creating strong foundations and a competitive cost base
to ensure that we are in a solid position to weather industry-wide
challenges. Driving efficiency and scale has been a long term focus
for Finsbury and has represented the rationale behind a range of
initiatives we have implemented over recent years.
With this in mind, having been operating within a deflationary
UK grocery food market during the period under review, the
effectiveness of these initiatives has been tested. Therefore I am
pleased to report on the solid performance and trading resilience
the Group has demonstrated against the headwinds posed by sustained
Sterling devaluation and high input costs experienced during FY
2017. This performance, which includes growth in both Group sales
and profit in the year on a like for like basis, follows several
years of very strong organic and acquisition-led growth and
demonstrates the benefits of the investment and diversification
strategy implemented over recent years. Additionally, our strong
cashflow and robust balance sheet allowed us to both reduce debt
and increase our dividend whilst continuing to invest to strengthen
our business for the future.
The Group is now one of the largest speciality bakery groups in
the UK with a small but fast growing European business. The latter
performed particularly strongly as it benefited from improved
celebration cake and free from product ranges and was boosted by
the exchange rate tailwind from a weaker Sterling.
All food manufacturers and their customers have had to navigate
the transition from the deflationary food market of recent years to
the inflationary environment evident throughout the second half and
beyond. Sterling's structural decline amplified typically cyclical
commodity input cost increases for UK manufacturers importing many
of their ingredients. The National Living Wage has similarly
amplified annual labour cost inflation throughout the labour
intensive food and agriculture sector and indeed beyond. This trend
looks set to continue for some time with high profile butter price
hikes, driven by increased demand and a supply shortfall, the most
significant example in recent months.
This market transition has seen us work proactively with our
brand partners and customers to revise our product, pricing and
promotional portfolio to strike the right sustainable balance of
providing value for consumers whilst delivering on margin
requirements. These are difficult customer conversations and whilst
diminished promotional spend reduced sales growth in the short
term, operating margin was successfully maintained in FY17 in
conjunction with our internal efficiency improvement initiatives
and recent capital investment.
Strategic investment underpinning the future
Finsbury's goal is to ensure that the Group is well positioned
to maintain pricing for consumers and to remain a low cost producer
for customers. These resilient results are testament to the
importance of continually investing in our operations in order to
improve overall productivity and offset increases in the Group's
cost base.
FY17 saw the second consecutive year of record capital
investment at GBP12.5m, some 181% of depreciation, as we further
strengthen the Group's growth capacity, product capability,
efficiency and cost competitiveness.
This has seen the installation of a new automated whole cake
line in an upgraded bakery at our Cardiff site. This is currently
undergoing product commissioning for full production in FY18. We
have also opened a new artisan bread bakery at our Salisbury site.
Both of these will enable future growth aligned to changing
consumer demand for premium, healthy and authentic product ranges
across different market channels.
The second major investment area is focused on redesigning our
business processes to drive scale and efficiency across the Group
businesses. This standardisation of process across all sites in the
Group establishes agreed best practice and this is then embedded
within the roll out of our new ERP IT platform across the group
during the first half of FY18.
The third major investment area, largely non capital
expenditure, is our 'People' strategy. Having successfully rolled
out our vision and values last year, we completed our first group
employee engagement survey, with an engagement score of 68%, to
establish a base for future improvement. A new Group-wide talent
management system and an associated management development
programme were also successfully deployed during the year to
nurture the development of both today's and, importantly,
tomorrow's leaders.
Finally, we have entered into consultation for the closure of
Grain D'Or, the Group's loss-making pastry factory. Over the two
and a half year period since acquisition we have been working
closely with management of this site to stem the losses it
experienced. However, although improvements have been made, the
ongoing pressures from commodity and labour cost increases has made
it difficult to maintain customer contracts. The cost to close, if
seen as an investment, will be justified by the reduction in
losses. The Group will update the market following the completion
of the consultation process and, depending on the outcome, will
outline the financial consequences of any decision.
A consistent strategy for uncertain times
Our vision is to be a leading speciality bakery group which
produces a broad range of high quality products for growing
channels and market niches, delivers growth and differentiation for
our major customers, and fulfils end-consumer requirements. Our
focus is on the UK but increasingly we are extending our reach into
Europe.
We operate in competitive sectors and markets, supplying brand
partners and customers with innovative, safe and high quality
bakery products which anticipate and fulfil consumer trends, are
efficiently and sustainably made and offer great value. These
results show that this strategy has delivered results for the
Group.
Additional investment to better understand consumer needs and
category growth opportunities complements the product, business
process and people investment outlined previously. Our ability to
leverage scale and best practice intellectual property across the
group, whilst delivering for individual customers and brand
partners, is central to our continued competitiveness and underpins
our growth ambitions. It is rewarding to see Group businesses
winning a number of externally recognised industry and customer
food awards, whilst also extending and deepening our licensed brand
relationships with both existing partners such as Thorntons and
Mars, as well as new partners such as Mary Berry.
In line with our stated growth strategy the Group has continued
to explore acquisition opportunities that fit strategically and
meet our value criteria. However, none were successful in the year
as valuations remained unrealistic given known market headwinds.
More challenging market conditions may provide new acquisition
opportunities in the year ahead and we remain patient. Meanwhile
there are ample opportunities identified to further strengthen and
optimise our current group businesses.
I would like to thank my board, executive teams and the
thousands of colleagues across Finsbury for their continued
commitment and hard work in baking great food products every day
and in particular, to those individuals which drive the investment
and change programmes on top of their other day job
responsibilities.
The business environment isn't going to get any easier but I
remain confident that Finsbury has the right people, investment
approach and M&A strategy to deliver growth in the years ahead,
delivering value for employees, customers and shareholders
alike.
John Duffy
Chief Executive Officer 15 September 2017
STRATEGIC REPORT
Strategy
Our vision is to be a leading speciality bakery group producing
a broad range of high quality products targeted at growing channels
and market niches and which deliver growth and differentiation for
our customers whilst fulfilling the needs of end consumers. Our
focus is the UK but increasingly we are extending our reach into
Europe, particularly for Cake products.
Our growth strategy will be delivered by a combination of
organic growth and targeted acquisitions. We will invest to
consolidate and grow within existing areas, such as round cake and
artisan bread. We will also invest to expand our capabilities into
new product formats and capability. This investment will accompany
and facilitate the diversification of our product capability into
new channels such as foodservice cake and Gluten Free. Further
acquisitions will introduce new product, customer or channel
diversification or accelerate market consolidation in our core
product areas.
Our Markets
The total UK ambient cake market (including pre-packed cake and
in-store bakery (ISB)) is valued at over GBP938 million (source:
Symphony IRI, 52 w/e 19 August 2017). The annual retail bread and
morning goods market has a value of GBP4.0 billion (source: Kantar
Worldpanel 52 weeks to 16 July 2017). The UK foodservice bread and
morning goods bakery sector is worth approximately GBP836 million
per annum. The UK foodservice cake and sweet treat bakery sector is
worth approximately GBP494 million per annum (source: UK
foodservice data derived from NPD Crest w/e 30 June 2017).
Our Business
The Group consists of the UK Bakery and the Overseas sectors
businesses.
UK Bakery
UK Bakery has eight factories each with its own range of
products and manufacturing capabilities and employing in excess of
3,000 people across the following bakery companies.
-- Lightbody of Hamilton Ltd is based in Hamilton and is the
UK's largest supplier of celebration cakes.
-- Memory Lane Cakes Ltd is based in Cardiff and is the leading
manufacturer of the UK retailers own label sharing cake.
-- Fletchers Group of Bakeries has three factories located in
Sheffield, Manchester and London. It produces a wide range of fresh
and frozen bread and morning good products, which are distributed
to leading UK retailers and foodservice customers.
-- Johnstone's Foodservice Ltd is based in East Kilbride and
produces bite style cake products, including its renowned caramel
shortcake. It supplies foodservice customers, particularly national
coffee shop chains.
-- Nicholas & Harris Ltd is based in Salisbury and produces
a range of speciality bread and morning goods which are distributed
to UK retailers and foodservice customers.
-- Campbells Cake Company Ltd is based in Twechar near Glasgow
and produces cold set products such as caramel shortbread and
tiffin for retailers.
The Group'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 fresh and frozen dependent on customer channel
requirements.
Overseas
Our Overseas business is a 50% subsidiary, Lightbody Stretz,
based in France and run by Philippe and Valerie Stretz. The
Company's focus is primarily France and the Benelux nations, and
together, we are beginning to make in-roads into Austria,
Switzerland and Germany. Lightbody Stretz procures, supplies and
distributes a range of products to its customers. The product range
includes licensed celebration and bite style cakes manufactured in
the Group's UK Bakeries. The company has also developed an
expertise in Gluten Free Bakery which it resources in both the UK
and in Europe and sells under its brand 'Wiso' or as own label into
retailer in-store bakery.
Brands and Licences
The Group is proud to have a well balanced portfolio of retailer
own label business and a strong and evolving licensed branded
portfolio, all supported by collaborative and strategic
partnerships. We also have our own cake brand, Memory Lane, and the
Kara foodservice brand.
- Kara
Kara is the innovative foodservice brand of the Finsbury Food
Group, distributing to more than 300 wholesalers and end users such
as UK pubs, hotels and restaurant chains, as well as exporting to
countries including Germany, France, Denmark, Portugal, Spain and
Holland. The Kara brand is 100% dedicated to Foodservice. Kara
began its journey in 1985 with its famous floured baps, and today
the range includes new premium additions such as artisan breads,
brioche buns, traybakes and large premium cakes. Kara has
successfully built an ever-growing portfolio of sweet and savoury
baked goods; continuing to focus on the latest consumer trends, and
developing new and innovative products that enable Foodservice
customers to stay ahead.
The year to 1 July 2017 was one of consolidation for the
Foodservice business after several consecutive years of growth.
Revenues marginally ahead of the prior year in a challenging
Foodservice market. New business was secured on the new cake ranges
with the two major UK Foodservice wholesalers, as well as major
cafes and pub groups. Market leading Kara brioche buns continue to
grow in line with demand for more premium product, traditional
doughnuts continued their renaissance, and artisan bread products
continued to grow in both sales and outlet penetration. There was
strong growth in the top four customers, somewhat offset by reduced
trading in export markets, particularly France, and also in some
smaller customer business closures. The Foodservice business also
continued to grow its Kara branded sales, whilst still being a key
supplier of retailer own brand to core customers.
- Thorntons
The Group has recently completed the renewal of its successful,
long standing partnership with Thorntons which will extend this
collaboration over two decades. The agreement will see the Group
continue to produce and market cakes under the much loved Thorntons
brand. Thorntons is still one of the fastest growing premium brands
within cakes where continued success has come through strong
product innovation across both celebration and snacking cakes.
- Mary Berry
We are delighted to announce the partnership and launch of the
new Mary Berry range in the Spring of this year. The full product
range extends to loaf, sharing and celebration cakes which have all
been developed in partnership to stay true to Mary Berry's original
recipes. The range brings a new dynamic to the cake category by
providing a branded solution that appeals to a broader age
demographic.
- Character Licensed Portfolio
Our character licences portfolio is a key focal point to the
business which allows us to develop and produce products that meet
consumer trends and occasions. We have a long standing relationship
within the licensed industry which we are very proud of. Every
licensed partnership is dear to our business and we take pride in
being able to work together to bring popular characters to life
across different cake formats. Successful licences for the Group
this year have included Batman v's Superman, Minions, Star Wars and
Emoji which have been linked to big movie releases, together with
well established evergreen properties such as Me to You, Peppa Pig
and Paw Patrol.
- Disney
As a long-term partner of the Disney brand, we have taken a
leading role in supporting Disney's strategy to inspire healthier
choices for families and we have recently relaunched our
celebration cake range with an innovative reduced sugar recipe. Our
new range is the first in the UK to launch with Disney Kitchen
branding and we continue to drive innovation and consumer enjoyment
of the Disney brand in cake.
- Mars
Mars has a wide portfolio of confectionery brands and we have
worked in collaboration to develop an innovative cake range. The
Galaxy and M&M cakes are built around key elements of these
classic brands which provide the consumer cakes that meets most
consumer occasions.
- Vogel's
Vogel's range of 'clean label' breads are crammed to bursting
with seeds and grains. Alfred Vogel was a pioneering Swiss
nutritionist who created the first Vogel's recipe in the 1950's. He
passionately championed natural ingredients, which is why Vogel's
loaves are baked without added sugar, emulsifiers, enzymes, or
artificial preservatives or flavourings. To this day we share his
commitment to tasty food and healthy living inspired by nature. The
unique way we bake Vogel's means it's tremendously tasty
toasted.
- Village Bakery
The range of organic fresh rye bread brands are perfect, if you
are looking to avoid wheat. We keep it simple, only using the best
organic natural ingredients: The Loyal range of rossisky and seeded
rye breads will have the addition of a new Village Bakery
pumpernickel rye loaf, made with molasses and a blend of kibbled
ryes to give a distinct sweet and sour flavour. Keeping to minimal
ingredients of organic flours, water, a little sea salt with the
benefit that they are all made with no added yeast, emulsifiers or
enzymes.
- Cranks
Cranks aspires to wholesome, simple, nutritious food. Our
organic wholemeal loaf with organic stoneground flour is fermented
for longer. Baked using specific baking processes that produces a
loaf with great flavour through its fermentation process is made
without any additives such as emulsifiers and enzymes. The popular
stoneground wholemeal loaf will be joined by the new Cranks organic
wholemeal seeded loaf.
Consumer Trends
Differentiation for our customers whilst fulfilling the needs of
the end consumers is key to the Group's success, it follows that
innovation and product development is an essential part of the
Group's strategy. We have worked under the four broad banners to be
able to focus on the macro consumer trends. The continuing
challenge for the Group is to match the consumer trends with our
dynamic product portfolio. The Group's new product development team
reinforces Finsbury's expertise as a leading speciality bakery and
provides increased differentiation from our competitors.
Broad Consumer Trends:
Better for On the Go Indulgence Artisan
you
------------------- -------------------- -------------------- -----------------
Ongoing work Portability, Small portions Organic and
in cake to individually of indulgent premium niche
meet sugar wrapped and cakery treats bread products.
reduction ready made such as Thorntons
targets and on the go caramel shortcake,
also butter solutions seasonal treats
(fat) mitigation, are all areas such as Yule
evidenced of focus including log and Costa
by the Group's the Group's cake and the
work on a focus on sharing new Mary Berry
reduced sugar formats such range.
Disney range as bites and
of cakes. tubs, in store
Low carb and bakery brownies
protein rich and crispies
bread products and Kara brand
fall into and Johnstone's
this category. Foodservice
cakes.
------------------- -------------------- -------------------- -----------------
Principal Risks and Uncertainties
The Board recognises the need for a robust system of internal
controls and risk management. The assessment of risks and the
development of strategies for dealing with these risks are achieved
on an ongoing basis through the way in which the Group is
controlled and managed internally. A formal review of these risks
is carried out by the Group on an annual basis. The review process
involves the identification of risks, assessment to determine the
relative likelihood of them impacting the business and the
potential severity of the impact and determination of what needs to
be done to manage them effectively. Risk management is integral to
the ability of the Group to deliver on its strategic
objectives.
The Directors have identified the following as the principal
risks and uncertainties that face the Group:
Economic Environment
The market place remains challenging and there is an uncertain
macro-economic outlook following the vote to leave the EU. Currency
hedging and long term contracts give the Group time to plan and
formulate strategies to face future challenges. The Group will
continue to focus on quality and value and will explore new
channels, new products and new formats to gain competitive
advantage. Forging strong customer relationships and aligning
strategic business plans through innovation and category management
helps create mutual growth opportunities.
The Impact of Brexit
Brexit brings uncertainty in the following areas:
Labour: The food industry employs many non-UK nationals, the
sector in general could see a shortfall in workers. Increasing
reliance on UK workers which may push up wage costs may prompt a
change in business model.
Material: The weakening of the pound post Brexit has had an
impact on ingredient prices.
Regulations: All current regulations on food safety, labelling
or health and safety will continue to apply to UK businesses.
Product standards will need to be observed by UK companies when
trading with the EU.
The Group will respond to the challenges that Brexit brings once
negotiations are advanced.
Competitive Environment and Customer Requirements
The environment remains competitive within the Bakery sector.
The monitoring of key performance indicators at customer level such
as service levels and customer complaints is part of the risk
management process associated with this specific risk. Providing
quality products, investing in innovation and competing on value
helps to strengthen customer relations and support growth
initiatives. The Group invests heavily in category management, new
product development and marketing skills. This investment has
helped create an insight into customers and consumer demands.
Product Quality
Product quality is a key strength of the Group and failure to
maintain a high standard of safety and food quality would have a
severe impact on service levels and customer relationships. The
Group's technical function is responsible for the implementation
and maintenance of high standards for food safety striving for best
practice. Quality assurance procedures are managed at site level
and are reviewed continuously with improvements made as
appropriate. The operating subsidiaries are subject to regular
internal and independent food safety and quality control audits
including those carried out by, or on behalf of, our customers. The
Group maintains product recall insurance cover to mitigate the
potential impact of such an occurrence.
Commodity and labour pressures
Bakery entails the use of commodities whose price is determined
by worldwide demand and macro-economic factors. Commodity pressures
have increased as a consequence of a number of factors; 1) A step
change in the value of Sterling against both the Euro and Dollar
following the Brexit vote. 2) The commodity cycle which, in the
recent past, has been relatively low. The cycle has seen
significant increases in the price of a number of commodities which
are over and above any exchange rate deterioration. Finally, 3)
European policies particularly in the areas of butter and
sugar.
The Group maintains a high level of expertise in its buying team
and will consider long term contracts where appropriate to reduce
uncertainty in input prices. The team also cultivates strong
relationships with major suppliers to ensure continuity of supply
at competitive prices. Regular renovation and innovation in our
product range can help to manage margin pressures in an effective
manner as far as the competitive environment allows. The Group also
purchases forward foreign currency in order to minimise the
fluctuation of input costs linked to future currency conversion
rates.
The National Living Wage is driving forward the cost of labour
ahead of inflation and demand related adjustments. More recently
the future availability of labour has become a concern. Ongoing
capital investment and improvements in operational efficiency help
reduce the impacts of both labour availability and cost as well as
material inflation.
Pension fund deficit
The Group has one defined benefit pension scheme within its
Memory Lane Cakes Limited business in Cardiff. The Scheme was
closed to new members in 2010 to reduce the funding risk to Memory
Lane Cakes. The valuation of the Scheme on a technical provision
basis as well as the underlying performance of the invested assets
can cause large fluctuations in valuations. There is an agreed
deficit recovery plan fixed until September 2023 or until a new
schedule is agreed based on the next valuation which will be at 31
December 2018.
Cyber security
The Group is exposed to random and malicious attacks from Cyber
criminals. The maintenance of protections software is one tool in
the fight to protect our data. In addition, the Group is investing
to implement common Information systems across all companies with
standardised protection, operating requirements and security
protection. Finally, real time back-up, training and regular
communication pulls the Group's defences together.
Group systems
The Group will during the next financial year complete the
upgrade of its business systems across UK Bakery. The ERP system is
the latest version of the existing system within the Fletchers
business acquired in 2014. Recognising the inherent risks to a
systems upgrade, an appropriate Corporate Governance structure has
been put in place, a Steering Committee comprising senior
operational management from both businesses and chaired by an
independent implementation specialist with KPMG engaged to
independently assess and advise the Board on progress and risks to
the business associated with the program. The fact that the new ERP
system is the latest version of the existing system in operation
within the Fletcher's business is also a significant risk reduction
factor.
Dividend
Subject to shareholder approval at the Company's AGM on 22nd
November 2017, the final dividend of 2.0 pence per share will be
paid on 22 December 2017 to all shareholders on the register at 24
November 2017 and will be recognised in the financial year ending
30 June 2018.
Financial review
Continuing Group revenue for the 52 week period to 1 July 2017
was up 0.3% to GBP314.3 million (2016: GBP313.5 million 52 weeks,
GBP319.7 million 53 weeks). Operating Profit margins were 5.5%
(2016: 5.3%). Capital investment, improvement in operational
efficiency and product mix are the main drivers for the improvement
in margin. Administrative expenses have decreased despite
inflationary pressures. This decrease is driven by continued focus
on overhead control, operational improvements and efficiencies from
record levels of capital investment. The prior year also included a
charge of GBP2.8 million for the cancellation of legacy share
options.
Grain D'Or Business
The Group's Grain D'Or business was acquired as part of the
Fletchers acquisition in October 2014, it is a producer of premium
baked products for the UK pastry sector and based in London. The
business has been historically loss making and despite the
implementation of a range of initiatives to improve the business
including strict cost control and new working practices the site
remained loss making in the year to 1 July 2017. The Company now
proposes to close the site. A formal consultation with
representatives of the workforce commenced on 1 September 2017. The
consultation is expected to conclude mid October 2017. Until this
consultation period concludes uncertainty remains over the use of
the assets. In light of this, a decision has been taken to impair
the assets used in the business by GBP4.0 million in the year to 1
July 2017.
The tables below show what the Directors consider to be the
underlying performance of the Group, the adjustments eliminate the
impact of significant non-recurring items and other accounting
items.
52 week period ended 1 July 2017
Fair value
of interest As per
Defined rate swaps/ Consolidated
Significant benefit foreign Statement
Operating non-recurring pension exchange of Comp-rehensive
performance items scheme contracts Income
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------------- --------------- --------- ------------- -------------------
Revenue 314,296 - - - 314,296
Cost of sales (216,493) - - - (216,493)
------------------------- ------------- --------------- --------- ------------- -------------------
Gross profit 97,803 - - - 97,803
Other costs
excluding depreciation
& amortisation (72,883) (4,000) 200 (71) (76,754)
EBITDA 24,920 (4,000) 200 (71) 21,049
Depreciation
& amortisation (7,485) - - - (7,485)
------------------------- ------------- --------------- --------- ------------- -------------------
Results from
operating activities 17,435 (4,000) 200 (71) 13,564
------------------------- ------------- --------------- --------- ------------- -------------------
Finance income - - - 555 555
Finance costs (877) - (204) - (1,081)
------------------------- ------------- --------------- --------- ------------- -------------------
Profit before
tax 16,558 (4,000) (4) 484 13,038
------------------------- ------------- --------------- --------- ------------- -------------------
Share of losses
of equity accounted
investees after
tax (22) - - - (22)
------------------------- ------------- --------------- --------- ------------- -------------------
Taxation (3,578) 680 1 (62) (2,959)
------------------------- ------------- --------------- --------- ------------- -------------------
Profit for the
year 12,958 (3,320) (3) 422 10,057
------------------------- ------------- --------------- --------- ------------- -------------------
53 week period ended 2 July 2016
Fair value
of interest As per
Defined rate swaps/ Consolidated
Significant benefit foreign Statement
Operating non-recurring pension exchange of Comp-rehensive
performance items scheme contracts Income
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------------- --------------- --------- ------------- -------------------
Revenue 319,680 - - - 319,680
Cost of sales (217,092) - - - (217,092)
------------------------- ------------- --------------- --------- ------------- -------------------
Gross profit 102,588 - - - 102,588
Other costs
excluding depreciation
& amortisation (77,861) (4,290) 117 (134) (82,168)
EBITDA 24,727 (4,290) 117 (134) 20,420
Depreciation
& amortisation (7,629) - - - (7,629)
------------------------- ------------- --------------- --------- ------------- -------------------
Results from
operating activities 17,098 (4,290) 117 (134) 12,791
------------------------- ------------- --------------- --------- ------------- -------------------
Finance income 2 - - 219 221
Finance costs (1,060) - (148) - (1,208)
------------------------- ------------- --------------- --------- ------------- -------------------
Profit before
tax 16,040 (4,290) (31) 85 11,804
------------------------- ------------- --------------- --------- ------------- -------------------
Share of losses
of equity accounted
investees after
tax (14) - - - (14)
------------------------- ------------- --------------- --------- ------------- -------------------
Taxation (3,272) - 6 (20) (3,286)
------------------------- ------------- --------------- --------- ------------- -------------------
Profit for the
year 12,754 (4,290) (25) 65 8,504
------------------------- ------------- --------------- --------- ------------- -------------------
Details of significant non-recurring items are detailed in Note
3.
Earnings per Share (EPS)
EPS comparatives to the prior year can be distorted by
significant non-recurring items and other items highlighted above,
as well as the impact of the 53(rd) week for the previous financial
year. The Board is focused on growing adjusted diluted EPS, which
is calculated by eliminating the impact of the items highlighted
above as well as amortisation of intangibles and incorporates the
dilutive effect of share options. Adjusted diluted EPS is 9.5p
(2016: 9.5p for the 52 week period).
52 week 52 week 52 week
2017 2016 2015
--------------------- -------- -------- --------
Basic EPS 7.1p 5.9p 5.8p
--------------------- -------- -------- --------
Adjusted basic EPS 9.8p 9.6p 8.3p
--------------------- -------- -------- --------
Diluted basic EPS 6.9p 5.8p 5.6p
--------------------- -------- -------- --------
Adjusted* diluted**
EPS 9.5p 9.5p 8.0p
--------------------- -------- -------- --------
Further details can be found in Note 6.
Diluted EPS takes basic EPS and incorporates the dilutive effect
of share options.
The prior year to 2 July 2016 was a 53 week period. Like for
like figures have been calculated using financial data by excluding
the 53(rd) week.
Cash Flow
There was an increase in our working capital requirement of
GBP2.5 million (2016: GBP1.6 million) in the financial year,
corporation tax payments made in the financial year totalled GBP2.7
million (2016: GBP1.6 million), the payments in the current and
prior year took account of the research and development tax relief
due to the Group and tax losses being utilised. Capital expenditure
in the year amounted to GBP12.5 million (2016: GBP12.1
million).
Debt and Bank Facilities
The Group's total net debt is GBP17.5 million (2016: GBP19.7
million) down GBP2.2 million from the prior year. Within this
total, GBP11.6 million is due within one year, including cash at
bank and invoice finance (2016: GBP10.9 million).
The Group's debt facility is a bilateral facility with HSBC Bank
Plc and Lloyds Bank Plc totalling GBP50.9m, the key features of the
facility are as follows:
-- Overdraft (GBP2.0m)
-- Term loan (GBP13.4m)
-- Confidential invoice discounting facility (GBP22.0m)
-- Mortgage facility (GBP3.5m)
-- Rolling asset finance facility (GBP2.0m)
-- Revolving credit facility (GBP8.0m)
Note 8 gives details of the amounts drawn on these facilities
and maturity dates.
The Group is able to offer strong asset backing to secure its
borrowings. The Group owns freehold sites at Memory Lane in
Cardiff, Fletchers' site at Sheffield and Lightbody and Campbells
in Scotland. In addition, the Group has a strong trade debtor book
to support the invoice discounting facility, made up primarily of
the UK's major multiple retailers. This debtor book stood at
GBP45.2 million (2016: GBP44.9 million) at the period end date.
The Group recognises the inherent risk from interest rate rises,
to mitigate these risks the Group uses interest rate swaps. There
was no interest rate swap coverage in place at the year end, (2016:
coverage of GBP9.0 million, equivalent to 46% of total net bank
debt). The Group has one forward dated interest rate swap for five
years from 3 July 2017 with a coverage of GBP20 million (2016: GBP9
million), the forward dated swap has a rate of 0.455% (2016:
weighted average rate 1.8%).
The effective interest rate for the Group at the year end,
taking account of the interest rate swap in place with base rate at
0.25% and LIBOR at 0.42%, was 2.15% (2016: 3.0%). A GBP3.0 million
swap fixed at 1.65% expired on 22 May 2017 and a GBP6.0 million
swap fixed at 1.89% expired on 2 June 2017.
Financial Covenants
The Board reviews the Group's cash flow forecasts and key
covenants on a regular basis to ensure that it has adequate
facilities to cover its trading and banking requirements with an
appropriate level of headroom. The forecasts are based on
management's best estimates of future trading. There has been no
breach of covenants during the year.
Interest cover (based on adjusted earnings before interest, tax,
depreciation and amortisation - EBITDA) for the 52 weeks to 1 July
2017 was 28.4 (2016: 23.4). Net bank debt to EBITDA (based on
adjusted EBITDA) for the year to 1 July 2017 was 0.7 (2016:
0.8).
Taxation
The Group taxation charge for the year was GBP3.0 million (2016:
GBP3.3 million). This represents an effective rate of 21.4% on
profits before significant non-recurring items (2016: 20.4%).
Further details on the tax charge can be found in Note 5 to the
Group's Financial Statements.
Non-Financial Key Performance Indicators
A range of non-financial key performance indicators are
monitored at site level covering, amongst others, customer service,
quality and health and safety. The Group board receives an overview
of these on a regular basis.
Environmental Matters
As part of the environmental activities, site wide LED
replacement programs are ongoing along with continued focus on
energy usage such as oven burner efficiencies and insulated
traywash facilities. Trade effluent reduction initiatives are
ongoing with investment in a new effluent treatment plant completed
at one of our larger bakeries.
Employee Social and Community Issues
With the successful roll out of the Groups vision and values the
Group holds various family fun days as part of the employee
engagement program. We have links with employment agencies and
continue to participate in employability work placements that help
provide work placements for individuals who find it difficult to
get back to full time employment. Various charities are supported
and in some instances the site's employee forum decides on the
local charity. In an attempt to promote health and wellbeing
fitness and running clubs have been established at a local
basis.
Technical Matters
All sites hold grade A, or the highest AA rating under the
British Retail Consortium version 7 standard. As a Group, all
technical functions have come together to establish a Group
Technical Strategy which is a dynamic three year plan covering all
aspects of people, food safety, legal compliance and the
establishment of a quality culture underpinned by consistent
process control. Major investment has also taken place in the form
of upgrading team member facilities to a best in standard and we
have continued to invest in a strong visual good manufacturing
programme on site.
Health continues to be a major focus for the business. Dedicated
resource continues to work on sugar and salt reduction targets as
part of the Government Obesity Strategy and Public Health England
recommendations. In conjunction with a major brand owner the Group
were first to market providing a range of licensed products which
were 18 months in development and which exceed these
requirements.
The Strategic Report was approved by the Board of Directors on
15 September 2017 and was signed on its behalf by:
Stephen Boyd (Director)
Financial Statements
Consolidated Statement of Profit and Loss and Other
Comprehensive Income
for the 52 weeks ended 1 July 2017 and 53 weeks ended 2 July
2016
2017 2016
Note GBP000 GBP000
Revenue 1 314,296 319,680
Cost of sales (216,493) (217,092)
-------------------------------------- --------- ---------
Gross profit 97,803 102,588
Administrative expenses 2 (84,239) (89,797)
-------------------------------------- --------- ---------
Results from operating
activities 13,564 12,791
-------------------------------------- --------- ---------
Finance income 4 555 221
Finance cost 4 (1,081) (1,208)
--------- ---------
Net finance cost (526) (987)
-------------------------------------- --------- ---------
Profit before tax and
share of losses of equity-accounted
investees 13,038 11,804
Share of losses of equity
accounted investees (22) (14)
Profit before tax 13,016 11,790
Taxation 5 (2,959) (3,286)
-------------------------------------- --------- ---------
Profit for the financial
year 10,057 8,504
-------------------------------------- --------- ---------
Other comprehensive
(expense)/income
Items that will not
be reclassified to profit
and loss
Remeasurement on defined
benefit pension scheme (4,031) (2,595)
Movement in deferred
taxation on pension
scheme liability 621 390
Other comprehensive
expense for the financial
year, net of tax (3,410) (2,205)
-------------------------------------- --------- ---------
Total comprehensive
income for the financial
year 6,647 6,299
====================================== ========= =========
Profit attributable
to:
Equity holders of the
parent 9,048 7,791
Non-controlling interest 1,009 713
-------------------------------------- --------- ---------
Profit for the financial
year 10,057 8,504
====================================== ========= =========
Total comprehensive
income attributable
to:
Equity holders of the
parent 5,638 5,586
Non-controlling interest 1,009 713
-------------------------------------- --------- ---------
Total comprehensive
income for the financial
year 6,647 6,299
====================================== ========= =========
Earnings per ordinary
shares
Basic 6 7.1 6.1
Diluted 6 6.9 6.0
The Notes on pages 22 to 32 form an integral
part of these Financial Statements
Consolidated Statement of Financial Position
at 1 July 2017 and 2 July 2016
Note 2017 2016
GBP000 GBP000
Non-current assets
Intangibles 7 80,302 77,596
Property, plant and equipment 48,857 50,501
Investments in equity accounted
investees 269 211
Other financial assets 28 28
Deferred tax assets 4,063 3,492
133,519 131,828
------------------------------------ -------- --------
Current assets
Inventories 12,684 12,577
Trade and other receivables 50,018 50,332
Cash and cash equivalents 3,024 3,024
Other financial assets - fair
value of derivatives 560 -
66,286 65,933
------------------------------------ -------- --------
Total assets 199,805 197,761
------------------------------------ -------- --------
Current liabilities
Other interest-bearing loans
and borrowings 8 (14,586) (13,829)
Trade and other payables (60,461) (64,357)
Provisions (18) (247)
Other financial liabilities -
fair value of derivatives (234) (157)
Current tax liabilities (1,650) (1,210)
------------------------------------ -------- --------
(76,949) (79,800)
------------------------------------ -------- --------
Non-current liabilities
Other interest-bearing loans
and borrowings 8 (5,800) (8,740)
Provisions and other liabilities (221) (141)
Deferred tax liabilities (1,335) (1,547)
Pension fund liability (10,498) (6,463)
------------------------------------ -------- --------
(17,854) (16,891)
------------------------------------ -------- --------
Total liabilities (94,803) (96,691)
------------------------------------ -------- --------
Net assets 105,002 101,070
==================================== ======== ========
Equity attributable to equity
holders of the parent
Share capital 1,304 1,304
Share premium account 64,956 64,956
Capital redemption reserve 578 578
Employee share reserve (3,585) (3,920)
Retained earnings 39,862 36,569
------------------------------------ -------- --------
103,115 99,487
Non-controlling interest 1,887 1,583
------------------------------------ -------- --------
Total equity 105,002 101,070
------------------------------------ -------- --------
These Financial Statements were approved by the Board of
Directors on 15 September 2017 and were signed on its behalf
by:
Stephen Boyd (Director)
Registered Number 00204368
The Notes on pages 22 to 32 form an integral part of these
Financial Statements
Consolidated Statement of Changes in Equity
for the 52 weeks ended 1 July 2017 and 53 weeks ended 2 July
2016
Capital Employee
Share Share redemption share Retained Non-controlling Total
Capital premium reserve reserve Earnings interest equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- --------------- ------------- ------------- -------- --------- --------------- -------------
Balance at 28
June 2015 1,280 64,952 578 - 34,580 1,206 102,596
Profit for the
financial year - - - - 7,791 713 8,504
Other
comprehensive
(expense)/
income:
Remeasurement
on defined
benefit
pension - - - - (2,595) - (2,595)
Deferred tax
movement on
pension
scheme
remeasurement - - - - 390 - 390
Total other
comprehensive
expense - - - - (2,205) - (2,205)
--------------- --------------- ------------- ------------- -------- --------- --------------- -------------
Total
comprehensive
income for the
period - - - - 5,586 713 6,299
--------------- --------------- ------------- ------------- -------- --------- --------------- -------------
Transactions
with owners,
recorded
directly
in equity:
Own shares
acquired - - - (3,920) - - (3,920)
Shares issued
during the
year 24 4 - - (23) - 5
Impact of share
based payments - - - - 306 - 306
Deferred tax
on share
options - - - - (575) - (575)
Dividend paid - - - - (3,305) (336) (3,641)
--------------- --------------- ------------- ------------- -------- --------- --------------- -------------
Balance at 2
July 2016 1,304 64,956 578 (3,920) 36,569 1,583 101,070
--------------- --------------- ------------- ------------- -------- --------- --------------- -------------
Balance at 2
July 2016 1,304 64,956 578 (3,920) 36,569 1,583 101,070
Profit for the
financial year - - - - 9,048 1,009 10,057
Other
comprehensive
(expense)/
income:
Remeasurement
on defined
benefit
pension - - - - (4,031) - (4,031)
Deferred tax
movement on
pension
scheme
remeasurement - - - - 621 - 621
Total other
comprehensive
expense - - - - (3,410) - (3,410)
--------------- --------------- ------------- ------------- -------- --------- --------------- -------------
Total
comprehensive
income for the
period - - - - 5,638 1,009 6,647
--------------- --------------- ------------- ------------- -------- --------- --------------- -------------
Transactions
with owners,
recorded
directly
in equity:
Own shares
acquired - - - 335 (158) - 177
Shares issued - - - - - - -
during the year
Impact of share
based payments - - - - 1,240 - 1,240
Deferred tax
on share
options - - - - 47 - 47
Foreign
exchange
translation -
differences - - - - 171 - 171
Dividend paid - - - - (3,645) (705) (4,350)
--------------- --------------- ------------- ------------- -------- --------- --------------- -------------
Balance at 1
July 2017 1,304 64,956 578 (3,585) 39,862 1,887 105,002
=============== =============== ============= ============= ======== ========= =============== =============
The notes on pages 22 to 32 form an integral part of these
Financial Statements.
Consolidated Cash Flow Statement
for the 52 weeks ended 1 July 2017 and 53 weeks ended 2 July
2016
Note 2017 2016
GBP000 GBP000
Cash flows from operating activities
Profit for the financial year 10,057 8,504
Adjustments for:
Taxation 5 2,959 3,286
Net finance costs 4 526 987
Depreciation 6,948 7,090
Amortisation of intangibles 7 537 539
Non-cash Impairment of assets
& goodwill 7 4,000 4,290
Share of losses of equity accounted
investees after tax 22 14
Contributions by employer to
pension scheme (200) (117)
Change in fair value of foreign
exchange contracts 71 134
Operating profit before changes
in working capital 24,920 24,727
Changes in working capital:
Decrease/(increase) in inventories (39) (1,091)
Decrease/(increase) in trade
and other receivables 153 (2,253)
(Decrease)/Increase in trade
and other payables (2,566) 1,711
------------------------------------------ -------- --------
Cash generated from operations 22,468 23,094
Interest paid (892) (1,180)
Tax paid (2,650) (1,603)
-------- --------
Net cash from operating activities 18,926 20,311
------------------------------------------ -------- --------
Cash flows from investing activities
Purchase of property, plant and
equipment (12,542) (12,141)
Purchase of companies/investments (80) -
Deferred consideration paid - (50)
Net cash used in investing activities (12,622) (12,191)
------------------------------------------ -------- --------
Cash flows from financing activities
Net drawdown of invoice discounting 9 822 7,427
Repayment of revolving credit 9 - (2,000)
Repayment of mortgage and bank
loans 9 (2,937) (3,672)
Repayment of asset finance liabilities 9 (133) (284)
Issue of ordinary share capital - 5
Options exercised/(purchase)
of shares by employee benefit
trust 177 (2,835)
Dividend paid to non-controlling
interest (705) (336)
Dividend paid to shareholders (3,645) (3,305)
------------------------------------------ -------- --------
Net cash from financing activities (6,421) (5,000)
------------------------------------------ -------- --------
Net (decrease)/increase in cash
and cash equivalents (117) 3,120
Opening cash and cash equivalents 3,024 61
Effect of exchange rate fluctuations
on cash held 117 (157)
------------------------------------------ -------- --------
Cash and cash equivalents at
end of period 3,024 3,024
------------------------------------------ -------- --------
The Notes on pages 22 to 32 form an integral part
of these Financial Statements.
Notes to the Consolidated Financial Statements
(forming part of the Financial Statements)
Presentation of Financial Statements
Basis of Preparation
The financial information set out above does not constitute the
company's statutory accounts for the 52 week period ended 1 July
2017 or the 53 week period ended 2 July 2016, but is derived from
those accounts. Statutory accounts for 2016 have been delivered to
the registrar of companies, and those for 2017 will be delivered in
due course. The auditor has reported on those accounts; their
reports were (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.
1. 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 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:
Ø Net financing expense
Ø Significant non-recurring items
Ø Pension charges or credits in relation to the net pension
position
Ø 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 as they
share similar economic characteristics. The characteristics
considered are:
Ø The nature of the products - products are similar in nature
and are classed as manufactured bakery products
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
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
A purchasing premium of 2% is charged from Group operations, and
is calculated on materials and packaging spend 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 loss from continuing operations of
GBP0.2m (2016: GBP0.3m loss) being presented within the Group
Operations segment.
The Group's finance income and expenses cannot be meaningfully
allocated to the individual operating segments.
1 Revenue and Segment Information (continued)
52 week period ended UK Bakery Overseas Group Total
1 July 2017 GBP000 GBP000 Operations Group
GBP000 GBP000
---------------------------------- ---------- --------- ------------ ---------
External revenue
continuing 281,580 32,716 - 314,296
---------------------------------- ---------- --------- ------------ ---------
Adjusted operating
profit 15,369 2,219 (153) 17,435
---------------------------------- ---------- --------- ------------ ---------
Fair value foreign
exchange contracts (71)
Defined benefit pension
scheme 200
Significant non-recurring
items (4,000)
Results from operating
activities 13,564
---------------------------------- ---------- --------- ------------ ---------
Finance income 555
Finance cost (1,081)
---------------------------------- ---------- --------- ------------ ---------
Net finance cost (526)
---------------------------------- ---------- --------- ------------ ---------
Share of losses of
equity accounted
investees after tax (22)
---------------------------------- ---------- --------- ------------ ---------
Profit before taxation 13,016
---------------------------------- ---------- --------- ------------ ---------
Taxation (2,959)
---------------------------------- ---------- --------- ------------ ---------
Profit for the financial
year 10,057
---------------------------------- ---------- --------- ------------ ---------
At 1 July 2017
---------------------------------- ---------- --------- ------------ ---------
Segment assets 188,628 6,543 712 195,883
Unallocated assets 3,922
---------------------------------- ---------- --------- ------------ ---------
Consolidated total
assets 199,805
---------------------------------- ---------- --------- ------------ ---------
Segment liabilities (62,483) (5,041) (6,564) (74,088)
Unallocated liabilities (20,715)
---------------------------------- ---------- --------- ------------ ---------
Consolidated total
liabilities (94,803)
---------------------------------- ---------- --------- ------------ ---------
Other segment information
Capital expenditure 12,430 112 - 12,542
Depreciation included
in segment profit 6,906 42 - 6,948
Amortisation 537 - - 537
Impairment of assets 4,000 - - 4,000
Inter-segmental sale
/ (purchases) 8,710 (8,710) - -
---------------------------------- ---------- --------- ------------ ---------
Analysis of unallocated assets and liabilities:
Assets Liabilities
GBP000 GBP000
Investments 297 Loans and borrowings (20,386)
Financial
instruments 560 Financial instruments (234)
Cash and cash 3,024 Cash and cash -
equivalents equivalents
Taxation balances 41 Taxation balances (95)
Unallocated
assets 3,922 Unallocated liabilities (20,715)
------------------- ------- ------------------------ ------------
With regard to revenue, five customers with sales of GBP64m,
GBP39m, GBP31m, GBP22m and GBP22m account for 57% of revenue, which
is attributable to the UK Bakery and Overseas segments above.
Impairment relates to the assets held in Grain D'Or, which fall
under the UK Bakery segment.
1. Revenue and Segment Information (continued)
53 week period ended UK Bakery Overseas Group Total
2 July 2016 GBP000 GBP000 Operations Group
GBP000 GBP000
---------------------------------- ---------- --------- ------------ ---------
External revenue
continuing 291,196 28,484 - 319,680
Adjusted operating
profit 15,887 1,511 (300) 17,098
---------------------------------- ---------- --------- ------------ ---------
Fair value foreign
exchange contracts (134)
Defined benefit pension
scheme 117
Significant non-recurring
items (4,290)
Results from operating
activities 12,791
---------------------------------- ---------- --------- ------------ ---------
Finance income 221
Finance cost (1,208)
---------------------------------- ---------- --------- ------------ ---------
Net finance cost (987)
---------------------------------- ---------- --------- ------------ ---------
Share of losses of
equity accounted
investees after tax (14)
---------------------------------- ---------- --------- ------------ ---------
Profit before taxation 11,790
---------------------------------- ---------- --------- ------------ ---------
Taxation (3,286)
---------------------------------- ---------- --------- ------------ ---------
Profit for the financial
year 8,504
---------------------------------- ---------- --------- ------------ ---------
At 2 July 2016
---------------------------------- ---------- --------- ------------ ---------
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
/ (purchases) 8,488 (8,488) - -
---------------------------------- ---------- --------- ------------ ---------
Analysis of unallocated assets and liabilities:
Assets Liabilities
GBP000 GBP000
Investments 253 Loans and borrowings (22,570)
Financial
instruments - Financial instruments (157)
Cash and cash 3,024 Cash and cash -
equivalents equivalents
Taxation balances 28 Taxation balances -
Unallocated
assets 3,305 Unallocated liabilities (22,727)
------------------- ------- ------------------------ ------------
With regard to revenue, five customers with sales of GBP66m,
GBP39m, GBP29m, GBP24m and GBP23m account for 57% of revenue, which
is attributable to the UK Bakery and Overseas segments above.
Impairment loss relates to the Anthony Alan Foods Ltd
acquisition in 2007 which falls under the UK Bakery segment.
1. Revenue and Segment Information (continued)
An analysis by geographical segment is shown below:
Geographical split of revenue 2017 2016
by destination
GBP000 GBP000
Continuing:
United
Kingdom 276,177 286,562
Europe 38,119 33,118
Rest of - -
World
------------------------------ ---- --------- ------- --------
Total continuing 314,296 319,680
===================================== ========= ======= ========
Capital expenditure on segment assets is detailed
in Note 1.
Geographical split United Europe Total
by country of origin Kingdom
GBP000 GBP000 GBP000
2017
Continuing
Revenue 281,580 32,716 314,296
Operating profit 15,216 2,219 17,435
Total assets 193,262 6,543 199,805
Total liabilities (89,762) (5,041) (94,803)
-------------------------------- --------- ------- --------
Net assets 103,500 1,502 105,002
===================================== ========= ======= ========
United Europe Total
Kingdom
GBP000 GBP000 GBP000
2016
Continuing
Revenue 291,196 28,484 319,680
Operating
profit 15,587 1,511 17,098
Total assets 191,424 6,337 197,761
Total liabilities (91,336) (5,355) (96,691)
------------------------------- --- --------- ------- --------
Net assets 100,088 982 101,070
===================================== ========= ======= ========
The net assets shown under Europe comprises Lightbody
Stretz Ltd, being the 50% owned parent company
of Lightbody Europe SAS, the French based selling
and distribution business.
2. Expenses and Auditor's Remuneration
Included in profit are the following:
2017 2016
GBP000 GBP000
---------------------------------------- ------ ------
Amortisation of intangibles 537 539
Depreciation of owned tangible assets 6,715 6,770
Depreciation on assets under finance
leases and hire purchase contracts 233 320
Impairment of assets & goodwill
(note 3) 4,000 4,290
Loss on foreign exchange 1,360 326
Hire of plant and machinery - operating
leases 1,006 810
Hire of other assets - operating
leases 1,833 1,877
Movement on fair value of foreign
exchange contracts 71 134
Research and development 2,328 2,287
Share option charges 1,240 739
Amortisation of intangibles for the year was GBP537,000 (2016:
GBP539,000) relating to the Fletchers acquisition in October
2014.
Auditor's remuneration:
2017 2016
GBP000 GBP000
------------------------------------------ ------- -------
Audit of these Financial Statements 50 47
Amounts receivable by the auditor
and its associates in respect of:
Audit of the Financial Statements
of subsidiaries of the Company 123 122
Taxation compliance services 35 22
Other tax advisory 7 -
Other services 100 104
------------------------------------------ ------- -------
The auditor's remuneration is in respect of KPMG
LLP. Fees for other services relates to pension
advisory services and services relating to information
technology.
3. Significant Non-Recurring Items
The Group presents certain items as significant and
non-recurring. These relates 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 Grain D'Or business has been historically loss making and
despite the implementation of a range of initiatives to improve the
business including strict cost control and new working practices
the site remained loss making in the year to 1 July 2017. The
Company now proposes to close the site. A formal consultation with
representatives of the workforce commenced on 1 September 2017. The
consultation is expected to conclude mid October 2017. Until this
consultation period concludes uncertainty remains over the use of
the assets. In light of this, a decision has been taken to impair
the assets used in the business by GBP4.0 million in the year to 1
July 2017.
A charge of GBP4.3 million in the previous year relates to
impairment of goodwill acquired in 2007. This is included in
administrative expenses in the Consolidated Statement of Profit and
Loss and Other Comprehensive Income.
4. Finance Income and Cost
Recognised in the Consolidated Statement of Profit and Loss
2017 2016
GBP000 GBP000
Finance income
Change in fair value of interest
rate swaps 555 219
Bank interest receivable - 2
Total finance income 555 221
------------------------------------------ ------- -------
Finance cost
Interest on net pension position (204) (148)
Bank interest payable (752) (787)
Interest on interest rate swap agreements (125) (273)
------------------------------------------ ------- -------
Total finance cost (1,081) (1,208)
------------------------------------------ ------- -------
5. Taxation
Recognised in the Consolidated Statement of Profit and Loss
2017 2016
GBP000 GBP000
Current tax
Current year 3,270 2,745
Adjustments for prior
years (196) 82
------------------------------ -------- --------
Total current tax 3,074 2,827
------------------------------ -------- --------
Deferred tax
Origination and reversal
of temporary differences (222) 928
Retirement benefit deferred
tax charge 1 (6)
Adjustments for prior
years 106 (463)
------------------------------ -------- --------
Total deferred tax (115) 459
------------------------------ -------- --------
Total tax expense 2,959 3,286
------------------------------ -------- --------
Reconciliation of effective tax rate
The weighted average hybrid rate of UK and French tax is 22.2%
(2016: 21.8%). The tax assessed for the period is lower (2016:
lower) than the hybrid rate of UK and French tax. The UK
corporation tax rate for the period is 20% reducing to 19% from 1
April 2017, (2016: 20.00 %). The differences are explained
below:
2017 2016
GBP000 GBP000
Profit before taxation before losses
from equity accounted investees 13,038 11,804
---------------------------------------- ------ ------
Tax using the UK corporation tax
rate of 19.76%, (2016: 20.00%) 2,577 2,361
Overseas profits charged at different
taxation rate 344 207
Non-deductible expenses 160 99
Temporary differences - 7
Restatement of opening net deferred
tax due to rate change and differences
in rates 68 275
R&D uplift current year (100) (140)
Adjustments to tax charge in respect
of prior periods (90) (381)
Tax expense (excluding prior year
disallowable impairment) 2,959 2,428
======================================== ====== ======
Tax rate for the period (excluding
prior year disallowable impairment) 21.4% 20.6%
Disallowable intangible impairment - 858
Total tax expense 2,959 3,286
======================================== ====== ======
The UK corporation tax rate reductions from 20% to 19% from 1
April 2017 and 18% from 1 April 2020 were substantively enacted on
26 October 2015. An additional reduction to 17% from 1 April 2020
was substantively enacted on 6 September 2016. The deferred tax
assets and liabilities at 1 July 2017 have been calculated based on
these rates.
The adjustment of GBP90,000 for prior year includes, ineligible
capital spends offset partially by additional tax relief on
qualifying R&D expenditure for prior periods.
The Company has an unrecognised deferred tax asset of GBP162,605
(2016: GBP172,170) relating to capital losses carried forward. This
asset has not been recognised in the financial statements as it is
not expected that suitable gains will arise in the future in order
to utilise the underlying capital losses.
6. Earnings Per Ordinary Share
Basic earnings per share for the period is calculated on the
basis of profit for the year after tax, divided by the weighted
average number of shares in issue being 126,979,000 (2016:
126,938,000).
Basic diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares in issue to assume
conversion of all potential dilutive ordinary shares. At 1 July
2017, the diluted weighted average number of shares in issue was
130,992,000, (2016: 129,206,000).
An adjusted earnings per share and an adjusted diluted earnings
per share have also been calculated for a 52 week period as in the
opinion of the Board this will allow shareholders to gain a clearer
understanding of the trading performance of the Group and year on
year comparisons. These adjusted earnings per share exclude:
-- Reorganisation and other significant non-recurring items
-- IAS 39 'Financial Instruments: Recognition and Measurement'
fair value adjustment relating to the Group's interest rate swaps
and foreign exchange contracts
-- IAS 19 (revised) 'Accounting for retirement benefits' relating to net income
-- The taxation effect at the appropriate rate on adjustments
-- Amortisation of intangible assets
52 weeks 53 weeks 52 weeks
to to to
1 Jul 2017 2 Jul 2016 2 Jul 2016
--------------------------- -------------------- -------------------- --------------------
Profit GBP000 GBP000 GBP000
Profit attributable
to equity holders
of Company (basic) 9,048 7,791 7,528
Significant non-recurring
and other items
as per strategic
Report 2,901 4,250 4,250
Intangible amortisation
net of deferred
tax 446 442 442
Numerator for
adjusted earnings
per share calculation
(adjusted basic) 12,395 12,483 12,220
Shares Basic Diluted Basic Diluted Basic Diluted
--------------------------- --------- --------- --------- --------- --------- ---------
Weighted average '000 '000 '000 '000 '000 '000
number of ordinary
shares in issue
during the period
126,979 126,979 126,938 126,938 126,938 126,938
Dilutive effect
of share options - 4,013 - 2,268 - 2,268
--------------------------- --------- --------- --------- --------- --------- ---------
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 (GBP3,320,000), Defined benefit pension scheme (GBP3,000) and
fair value of interest rate swaps and foreign exchange contracts
GBP422,000.
7. Intangibles
Intangible assets comprise customer relationships, brands and
goodwill.
Goodwill Business Brands Customer Total
systems and licences relationships
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ---------- --------- -------------- --------------- ----------
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 2016
GBP000 GBP000
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.
Frequency Non-Current
of Year Facility Drawn Current GBP000
2017 Margin Repayments of maturity GBP000 GBP000 GBP000
-------------------- ------------ ------------ ------------- ---------- -------- --------- -----------
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
-----------
Frequency Non-Current
of Year Facility Drawn Current GBP000
2016 Margin Repayments of maturity GBP000 GBP000 GBP000
-------------------- ------------ ------------ ------------- ---------- -------- --------- -----------
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 Minimum
lease lease
payments Interest Principal payments Interest Principal
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- --------- -------- --------- --------- -------- ---------
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 GBP48.9 million (2016: GBP48.9 million). At the period end
date, the facility utilised was GBP20.5 million (2016: GBP22.7
million), giving GBP28.4 million (2016: GBP26.2 million)
headroom.
9. Analysis of Net Debt
At year At year
ended ended
2 July Cash flow 1 July
Note 2016 GBP000 2017
GBP000 GBP000
--------------------------- ------- --------- ------------ ---------
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 Exchange
END
FR GGUBUBUPMGPQ
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September 18, 2017 02:00 ET (06:00 GMT)
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