TIDMFIF
RNS Number : 8103P
Finsbury Food Group PLC
22 February 2021
Date: 22 February 2021
On behalf Finsbury Food Group Plc ('Finsbury', 'the Company'
of: or 'the Group')
Embargoed until: 0700hrs+
Finsbury Food Group Plc
Interim Results
Finsbury Food Group Plc (AIM: FIF), a leading UK speciality
bakery manufacturer of cake, bread and morning goods for the retail
and foodservice channels, is pleased to announce its unaudited
interim results for the six months ended 26 December 2020.
Summary
The half year figures reflect a period impacted by Covid-19 and
compare with a 6-month period of strong growth which pre-dates the
pandemic.
-- Group revenue down 4.1% to GBP152.9m.
-- Group EBITDA * (1) down 9.8% to GBP13.1m.
-- Profit before tax down 16.1% to GBP7.4m.
-- Basic EPS (pence per share) 4.1p (H1 2019: 4.9p).
-- Net bank debt of GBP21.5m (excluding IFRS 16 debt), decreased
by GBP11.1m (H1 2019: GBP32.6m) at 0.9 times annualised EBITDA of
the Group (H1 2019: 1.3 times).
Strategic highlights
-- Resilient trading performance against a continued challenging
Covid-19 backdrop and against a period of strong growth in the
prior year.
-- Strong progressive improvement since the initial lockdown
with retail up +1.7% and foodservice down -27.4% for the six months
to 26 December 2020 against -8.8% and -61.0% down respectively for
the quarter following the initial lockdown.
-- Recovery of foodservice adversely impacted by tightening of
government restrictions towards the end of the half
-- Gross margin increased to 33.1% driven by improvement in
factory operational efficiency accompanied by significant reduction
in waste, in line with our Operating Brilliance Programme.
-- Continued strong cash generation reflecting prudent capital
investment and rigorous financial management.
-- A new frozen dough ball facility commissioned in Manchester.
-- Further innovation in line with consumer trends with
o Award-winning Free From and vegan cakes; and
o Launch of vegan doughnuts and a range of artisan gluten-free
breads
-- Continued double-digit growth in artisan sourdough breads.
-- Product excellence illustrated by the winning of several Quality Food and Drink 'Q' Awards.
-- Continued investment in development, engagement and health and well-being of employees.
-- The avoidance of a no deal Brexit and the associated trade
tariffs removes a significant strategic risk for the Group, whilst
recognising that there are some additional border supply chain
consequences to address .
The Group uses certain Alternative Performance Measures (APMs)
which are non-IFRS measures to monitor performance of its
operations and of the Group as a whole. The reconciliation to IFRS
measures is shown in the Consolidated Statement of Comprehensive
Income.
* (1) EBITDA is before significant non-recurring, other items
(Note 1) and after including the impact of IFRS 16 which was first
adopted in the prior year.
Commenting on the results, John Duffy, Chief Executive of
Finsbury Food Group Plc, said:
"The first half was a period in which Finsbury again
demonstrated its resilience and ability to manage and adapt to the
effects of the pandemic. Through careful management of resources,
anticipating and responding quickly and effectively to changes in
consumer demand, and maximising the benefits of operational
initiatives both new and historical, we were able to deliver a
robust performance.
Retail performed very well and was up versus a strong
corresponding six-month period in 2019, and while the trajectory of
an overall recovery continues to be tempered by the adverse impact
of tighter government restrictions on foodservice, we are confident
the division will bounce back when trading conditions normalise,
particularly when the public sector reopens.
As we move into the second half, we maintain our focus on
delivering organic growth, capitalising on the emerging trends in
areas such as artisan and Free From and continuing to leverage our
leading position in more established areas such as cake bites and
buns & rolls.
The current operating environment continues to be characterised
by near-term uncertainty and a challenging economic backdrop that
is likely to remain for some time, but a combination of progress in
the roll-out of the vaccine and the avoidance of a 'no deal' Brexit
provides comfort around the Group's medium-term prospects.
Longer-term, our growth ambitions remain unchanged, and with the
progress that is being made behind the scenes to make Finsbury a
more efficient and joined-up business, focused on driving synergies
and scale benefits across the Group and its supply chain, we are
confident we are building the right platform to achieve them.
I would like to again thank our teams around the UK, whose
dedication and hard work since the onset of the pandemic has been
exemplary."
Contact:
Finsbury Food Group
John Duffy (Chief
Executive)
Steve Boyd (Finance
Director) www.finsburyfoods.co.uk 029 20 357 500
Panmure Gordon (UK)
Limited
Oliver Cardigan (Corporate
Finance)
Atholl Tweedie
Joanna Langley
Erik Anderson (Corporate
Broking) 020 7886 2500
Alma PR
Sam Modlin
David Ison
Molly Gretton finsbury@almapr.co.uk 020 3405 0205
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 27 June 2020 exceeding GBP306m.
-- The Company's bakery product range is comprehensive and includes:
-- Large premium and celebration cakes.
-- Small snacking cake formats such as cake slices and bites.
-- Artisan, healthy lifestyle and organic breads through to
rolls, muffins (sweet and savoury) and morning pastries, all of
which are available both fresh and frozen dependent on customer
channel requirements.
-- Gluten Free bread, morning goods and cake ranges.
-- The Company is one of the largest ambient cake manufacturers
in the UK, a market valued at over GBP963 million (source: IRI 52
w/e 2(nd) January 2021). The retail bread and morning goods market
has a value of GBP5 billion (source: Kantar Worldpanel 52 w/e 27th
December 2020). The retail Free From cake market is valued at GBP52
million (source: Kantar Worldpanel 52 w/e 27th December 2020). The
retail Free From bread & morning goods market is valued at
GBP146 million (source: Kantar Worldpanel 52 w/e 27th December
2020). The UK Out of Home Foodservice Bakery sector is worth
approximately GBP740 million per annum (source: UK foodservice data
derived from MCA data for 52 weeks to 31st March 2020). The Company
comprises a core UK Bakery division and an Overseas division:
-- The UK Bakery division has manufacturing sites in Cardiff,
East Kilbride, Hamilton, Salisbury, Sheffield, Manchester, and
Pontypool.
-- 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, and the Company's manufacturing facilities in
Rybarzowice and Zywiec in Poland.
OPERATING REVIEW
Revenue and Operating Profit
Group revenue decreased in H1 2020 by 4.1% year on year to
GBP152.9 million. Profit before interest, tax and significant
non-recurring and other items decreased by GBP1.2 million to GBP7.7
million, against a continued challenging backdrop and against a
strong comparative period of growth in 2019. Gross margin has
improved by 1.9% to 33.1% with significant improvement in
operational performance.
UK Bakery
H1 2020 GBPm H1 2019 Movement
GBPm
Revenue 134.6 141.2 -4.7%
------------- -------- ---------
Operating profit 6.4 7.7 -16.6%
------------- -------- ---------
Operating margin 4.8% 5.4%
------------- --------
UK Bakery comprises the supply of cake, bread and morning goods
in the Grocery and Foodservice channels. Revenue in the period
decreased by 4.7% to GBP134.6 million largely driven by the weaker
trading in UK foodservice, which continues to be impacted by
Government restrictions. Partially offsetting the reduction in the
foodservice channel is a strong retail channel performance. The
operating profit of GBP6.4 million decreased by 16.6% year on
year.
The UK Bakery operating profit margin decreased from 5.4% to
4.8%. The reduction in the operating profit margin can be
attributed to the relatively fixed nature of overhead partially
offset by improved gross margin leaving UK Bakery in a healthy
position once restrictions are released.
Overseas
H1 2020 GBPm H1 2019 GBPm Movement
Revenue 18.3 18.2 +0.6%
------------- ------------- ---------
Operating profit 1.3 1.2 +4.5%
------------- ------------- ---------
Operating margin 6.9% 6.6%
------------- -------------
The Overseas business comprises Lightbody Europe in France and
Ultraeuropa based in Poland. Lightbody Europe specialises in the
import and sale of premium UK manufactured food products and is an
important channel into Europe for Group UK manufactured licensed
celebration cake and bite style products. Ultraeuropa manufactures
and supplies gluten free products to Europe.
The operating margin increased by 0.3% due largely to the
operational improvements in Poland and favourable foreign exchange
movements.
GROUP FINANCIAL REVIEW
Interest Payable
Interest payable (H1 2019: payable and credits) on the Group's
bank debt in H1 2020 and on the related interest rate swaps was
GBP347,000 (H1 2019: GBP491,000), a decrease of GBP144,000. The
decrease in charges is a consequence of the lower average debt
balance over the period.
Taxation
The Group's effective tax rate in H1 2020 was 19.5%, which
compares to 20.0% in H1 2019. The effective rates represent a blend
of the UK, French and Polish corporation tax rates.
Earnings per share
The Group considers both adjusted and adjusted diluted earnings
per share to be the most appropriate EPS measure. The adjusted
earnings per share were down 12.0% to 4.4p, (H1 2019: 5.0p) and
adjusted diluted earnings per share were down 12.5% to 4.2p, (H1
2019: 4.8p), the reduction being driven by lower profits after tax.
Further earnings per share information is given in Note 5.
Dividend
The payment of a dividend was suspended during the year to 27
June 2020 to ensure that the business remained on a sound footing
to deliver on its longer-term, growth ambitions, which included a
number of cash and costs-conserving actions.
The Board of Directors will be reviewing the dividend for the
year ending 26 June 2021 over the coming months.
Cash flow and net debt
Net bank debt at 26 December 2020 was GBP21.5 million which
compares to GBP32.6 million at H1 2019 a decrease of GBP11.1
million. Six month cash inflow from operating profit before changes
in working capital was GBP13.1 million. Against this cash inflow is
an increase in working capital of GBP0.1 million, capital
expenditure of GBP2.4 million, IFRS 16 right of use lease payments
of GBP1.3 million and Interest and tax payments of GBP0.5 million
and GBP2.0 million respectively resulting in a six month free cash
flow of GBP6.6 million. There was no dividend payment in the
period.
Net debt (excluding IFRS 16 leases) of GBP21.5 million at half
year, equating to 0.9 times annualised EBITDA; which results in
comfortable gearing alongside a strong balance sheet. The Group has
a GBP55.0 million revolving credit facility and an accordion of
GBP35.0 million available to it. The facility and the potential for
it to be increased further provides increased capacity for the
Group to explore future growth opportunities and support its
long-term investment strategy.
Pensions
The Group has one defined benefit pension scheme within its
Memory Lane Cakes business in Cardiff. All remaining Group
companies have defined contribution schemes. The Memory Lane Cakes
pension scheme has been closed to future accruals and new members
since 31 May 2010. The net pension deficit (before related deferred
tax) was GBP15,174,000 at 27 June 2020, the next accounting
valuation update will be carried out at 26 June 2021. Cash
contributions (including the PPF levy) were GBP332,000 in the six
months to 26 December 2020 (H1 2019: GBP186,000, an increase due to
the implementation of a new contributions schedule from 1 July
2020.
OUTLOOK
The macroeconomic environment looks set to remain uncertain for
the year ahead driven by the Government's fast-changing responses
to Covid-19 and a likely recessionary environment thereafter. The
strategic investments made historically across the Group to improve
channel and product diversification as well as more recent steps to
minimise cash outflows, maximise productivity and improve
operational efficiency, ensure Finsbury enters the second half in a
position of relative strength.
The Group's focus in the second half will be broadly consistent
with the first. We will continue to drive organic growth,
leveraging our leading blend of higher-growth emerging consumer
niches such as artisan and Free From, while continuing to take
advantage of our scale in more mature product areas such as cake
bites and buns & rolls and in both retail and the foodservice
channels. The foodservice channel inclusive of the education sector
has been negatively impacted by the new national lockdown, however,
should bounce back strongly as restrictions are eased in line with
vaccination programme achievements. We will continue to consider
options to grow by acquisition where there is a clear strategic
fit.
We will also continue to work to unlock the benefits of prior
years of investment, while implementing new ways to drive further
productivity and efficiency gains.
While remaining cognisant of industry-wide headwinds, we believe
Finsbury is on a strong footing and are confident it is well
positioned for long-term, sustainable growth.
The Board anticipates another resilient performance in the
second half
Principal risks and uncertainties
A number of risks and uncertainties have been identified that
could potentially have a material impact on the financial position
of the Group. These are set out in the Risk Report Section of the
Annual Report for the year to 27 June 2020 and the Board considers
these remain applicable.
Forward looking statements
Throughout this report certain statements have been made which
are forward looking. These statements have been made based on
latest knowledge and expectations of the future. The Board
considers the statements to be reasonable. Inevitably there are
risks associated with these forward-looking statements which are
usually outside the control of the Group. Actual results or
performance may therefore differ from the outcome implied by these
forward-looking statements.
Consolidated Statement of Comprehensive Income (unaudited)
Unaudited 26 weeks ended Unaudited 26 weeks ended
26 December 2020 28 December 2019
GBP000 GBP000
-------------- ----------------------------------------------------- -----------------------------------------------
Significant Significant
non-recurring non-recurring
and other Consolidated and other Consolidated
Adjusted accounting Statement Adjusted accounting Statement
Operating items of Operating items of
Performance (Note Comprehensive Performance (Note Comprehensive
1) Income 1) Income
--------------------- ------------- -------------- --------------- -------------- -------------- -----------------
Revenue 152,945 - 152,945 159,448 - 159,448
Cost of sales (102,345) - (102,345) (109,712) - (109,712)
--------------------- ------------- -------------- --------------- -------------- -------------- -----------------
Gross profit 50,600 - 50,600 49,736 - 49,736
Administrative
expenses (42,930) 259 (42,671) (40,848) 696 (40,152)
--------------------- ------------- -------------- --------------- -------------- -------------- -----------------
Results from
operating
activities 7,670 259 7,929 8,888 696 9,584
Finance expense
(Note 4) (452) (71) (523) (649) (108) (757)
Profit before
taxation 7,218 188 7,406 8,239 588 8,827
Taxation (1,410) (36) (1,446) (1,664) (100) (1,764)
--------------------- ------------- -------------- --------------- -------------- -------------- -----------------
Profit after
tax and total
comprehensive
income 5,808 152 5,960 6,575 488 7,063
--------------------- ------------- -------------- --------------- -------------- -------------- -----------------
Profit attributable
to:
--------------------- ------------- -------------- --------------- -------------- -------------- -----------------
Equity holders
of the parent 5,244 (58) 5,186 6,074 188 6,262
Non-controlling
interest 564 210 774 501 300 801
--------------------- ------------- -------------- --------------- -------------- -------------- -----------------
Profit and
total comprehensive
income for
the period 5,808 152 5,960 6,575 488 7,063
--------------------- ------------- -------------- --------------- -------------- -------------- -----------------
Earnings per
share (pence)
--------------------- ------------- -------------- --------------- -------------- -------------- -----------------
Basic 4.4 4.1 5.0 4.9
Diluted basic 4.2 3.9 4.8 4.7
--------------------- ------------- -------------- --------------- -------------- -------------- -----------------
Consolidated Statement of Financial Position (unaudited)
Unaudited Unaudited Audited
26 December 28 December 27
June
2020 2019 2020
Note GBP000 GBP000 GBP000
Non-current assets
Intangibles 87,673 97,004 88,626
Property, plant and equipment 61,178 63,772 61,736
Other financial assets - 28 -
Deferred tax assets 4,577 3,495 4,623
153,428 164,299 154,985
---------------------------------------- ----- ------------ ------------ ----------
Current assets
Inventories 17,061 17,524 14,618
Trade and other receivables 50,477 55,008 40,003
Cash and cash equivalents 6 9,563 12,093 10,173
Other financial assets - fair value - 859 -
of foreign exchange contracts
---------------------------------------- ----- ------------ ------------ ----------
77,101 85,484 64,794
---------------------------------------- ----- ------------ ------------ ----------
Total assets 230,529 249,783 219,779
---------------------------------------- ----- ------------ ------------ ----------
Current liabilities
Other interest-bearing loans and
borrowings 6 (2,665) (303) (3,191)
Trade and other payables (61,723) (62,521) (48,861)
Provisions (451) (359) (471)
Deferred consideration (977) (970) (481)
Other financial liabilities - interest
rate swaps/ fair value of foreign
exchange contracts (256) - (501)
Current tax liabilities (815) (1,381) (1,375)
(66,887) (65,534) (54,880)
---------------------------------------- ----- ------------ ------------ ----------
Non-current liabilities
Other interest-bearing loans and
borrowings 6 (40,375) (56,160) (45,113)
Provisions and other liabilities (507) (714) (550)
Deferred consideration (918) (912) (1,357)
Deferred tax liabilities (2,040) (1,846) (2,117)
Pension fund liability (15,174) (11,312) (15,174)
---------------------------------------- ----- ------------ ------------ ----------
(59,014) (70,944) (64,311)
---------------------------------------- ----- ------------ ------------ ----------
Total liabilities (125,901) (136,478) (119,191)
---------------------------------------- ----- ------------ ------------ ----------
Net assets 104,628 113,305 100,588
---------------------------------------- ----- ------------ ------------ ----------
Equity attributable to equity holders of the parent
Share capital 7 1,304 1,304 1,304
Share premium account 64,956 64,956 64,956
Capital redemption reserve 578 578 578
Employee share reserve (4,376) (3,616) (3,378)
Retained earnings 39,904 47,094 34,918
---------------------------------------- ----- ------------ ------------ ----------
Total shareholders' equity 102,366 110,316 98,378
Non-controlling interest 2,262 2,989 2,210
---------------------------------------- ----- ------------ ------------ ----------
Total equity 104,628 113,305 100,588
---------------------------------------- ----- ------------ ------------ ----------
Consolidated Statement of Changes in Equity (unaudited)
Capital Employee Non-controlling
Share Share redemption share Retained interest Total
capital premium reserve reserve earnings GBP000 equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Balance as at 29
June 2019 1,304 64,956 578 (3,616) 44,207 2,188 109,617
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Profit for the
26 weeks ended
28 December 2019 - - - - 6,262 801 7,063
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Other comprehensive - - - - - - -
income
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Total comprehensive
income for the
period - - - - 6,262 801 7,063
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Transactions with
owners, recorded
directly in equity:
Own shares - - - - - - -
issued/(acquired)
Foreign exchange
differences - - - - (400) - (400)
Dividends paid - - - - (2,975) - (2,975)
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Balance as at 28
December 2019 1,304 64,956 578 (3,616) 47,094 2,989 113,305
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
(Loss)/Profit for
the 26 weeks ended
27 June 2020 - - - - (7,021) 65 (6,956)
Other comprehensive
income/(expense):
Remeasurement on
defined benefit
pension - - - - (3,806) - (3,806)
Deferred tax movement
on pension scheme
remeasurement - - - - 723 - 723
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Other comprehensive
income - - - - (3,083) - (3,083)
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Total comprehensive
income for the
period - - - - (10,104) 65 (10,039)
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Transactions with
owners, recorded
directly in equity:
Shares purchased
through the EBT - - - 1,207 (1,207) - -
Shares issued from
the EBT - - - (969) - - (969)
Impact of share-based
payments - - - - (1,066) - (1,066)
Deferred tax on
share options - - - - (182) - (182)
Foreign exchange
differences - - - - 383 - 383
Dividends paid - - - - - (844) (844)
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Balance as at 27
June 2020 1,304 64,956 578 (3,378) 34,918 2,210 100,588
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Profit for the
26 weeks ended
26 December 2020 - - - - 5,186 774 5,960
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Other comprehensive - - - - - - -
income
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Total comprehensive
income for the
period - - - - 5,186 774 5,960
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Transactions with
owners, recorded
directly in equity:
Own shares
issued/(acquired) - - - (998) - - (998)
Foreign exchange
differences - - - - (200) - (199)
Dividends paid - - - - - (722) (722)
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Balance as at 26
December 2020 1,304 64,956 578 (4,376) 39,904 2,262 104,628
------------------------- ---------- ---------- ------------ --------- ----------- ---------------- -----------
Consolidated Cash Flow Statement (unaudited)
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended Ended ended
26 28 December 27
December 2019 June
2020 2020
Note GBP000 GBP000 GBP000
-------------------------------------------------------------- ----- ---------- ------------ ----------
Cash flows from operating activities
Profit after taxation for the period 5,960 7,063 107
Adjustments for:
Taxation 1,446 1,764 2,761
Net finance costs 4 523 757 1,867
Amortisation of intangibles 796 354 1,734
Depreciation 3,790 4,384 7,656
Depreciation right of use assets 861 914 1,919
Impairment of goodwill - - 7,500
Impairment of fixed assets - - 1,237
Significant non-recurring expenses - 257 1,594
Movement in fair value foreign exchange contracts (259) (953) 73
Contributions by employer to pension scheme - - (200)
Operating profit before changes in working capital 13,117 14,540 26,248
Changes in working capital
Increase in inventories (2,463) (2,840) 210
Increase in trade and other receivables (10,474) (5,617) 9,949
Increase/(decrease) in trade and other payables 12,832 7,299 (9,192)
Cash generated from operations 13,012 13,382 27,215
Costs associated with closure of operations and acquisitions (62) (1,257) (1,887)
Lease payments (1,445) (2,532) (3,362)
Interest paid (459) (468) (1,088)
Corporation taxes paid (2,035) (482) (1,822)
-------------------------------------------------------------- ----- ---------- ------------ ----------
Net cash generated from operating activities 9,011 8,643 19,056
-------------------------------------------------------------- ----- ---------- ------------ ----------
Cash flows from investing activities
Purchase of property, plant & equipment (2,375) (1,954) (4,703)
Purchase of subsidiary companies - (1,000) (1,000)
Net cash used in investing activities (2,375) (2,954) (5,703)
-------------------------------------------------------------- ----- ---------- ------------ ----------
Cash flows from financing activities
(Repayment)/drawdown of revolving credit (5,474) (3,036) (10,960)
Purchase of shares by employee trust (998) - (969)
Non-controlling interest dividend paid (722) - (844)
Dividend paid - (2,975) (2,975)
-------------------------------------------------------------- ----- ---------- ------------ ----------
Net cash in/(out) from financing activities (7,194) (6,011) (15,748)
-------------------------------------------------------------- ----- ---------- ------------ ----------
Net (decrease)/ increase in cash and cash equivalents (558) (322) (2,395)
Opening cash and cash equivalents 10,173 12,358 12,358
Effect of exchange rate fluctuation (52) 57 210
-------------------------------------------------------------- ----- ---------- ------------ ----------
Cash and cash equivalents at end of the period 9,563 12,093 10,173
-------------------------------------------------------------- ----- ---------- ------------ ----------
NOTES TO THE FINANCIAL STATEMENTS
BASIS OF PREPARATION
This interim report, which is unaudited, does not constitute
statutory accounts within the meaning of section 434(3) of the
Companies Act 2006. The comparative figures for the financial year
ended 27 June 2020 have been extracted from the statutory accounts
for that year. Those accounts, which were prepared in accordance
with International Financial Reporting Standards as adopted by the
EU ("adopted IFRSs"), have been reported on by the company's
auditor and delivered to the registrar of companies. The report of
the auditor was (i) unqualified, (ii) did not include a reference
to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, and (iii) did not contain
a statement under section 498(2) or (3) of the Companies Act
2006.
GOING CONCERN AND IMPACT OF COVID-19
The Group has delivered a resilient trading performance against
a continued challenging backdrop. The impact of the pandemic has
varied considerably between businesses with some continuing to be
impacted by the Government restrictions. Forecasts have been built
on a bottom-up basis and stress tested to prepare a forecast to be
used as a basis for reviewing going concern. The Board, having
reviewed the Group's short and medium-term plans and available
financial facilities, has reasonable expectations that the Group
has adequate resources to continue in operational existence for the
foreseeable future. The Group has stayed comfortably within its
banking facilities during the period, meeting covenant
requirements. The Group has a GBP55m revolving credit facility plus
scope for the facility to be increased by up to a further GBP35m,
which are committed until February 2023. In addition, the Group has
a strong trade debtor book and strong asset backing. Accordingly,
the Board continues to adopt the going concern basis in preparing
the Financial Statements.
1) SIGNIFICANT NON-RECURRING ITEMS AND OTHER ACCOUNTING ITEMS
The Group presents certain items as non-recurring and
significant. These relate to items which, in management's
judgement, need to be disclosed by virtue of their size or
incidence in order to obtain a more meaningful understanding of the
financial information.
The amounts shown within significant non-recurring and other
accounting items on the face of the Consolidated Statement of
Comprehensive Income are shown in the table below:
Unaudited Unaudited
26 weeks ended 26 weeks ended
26 December 2020 28 December 2019
GBP000 GBP000
------------------------------------- ------------------ ------------------
Commissioning costs - (257)
Movement in fair value of foreign
exchange contracts 259 953
------------------------------------- ------------------ ------------------
Shown under Administrative expenses 259 696
------------------------------------- ------------------ ------------------
Unwinding of discount on deferred
consideration (57) (57)
Movement in fair value of swaps (14) (51)
Shown under Finance expense (71) (108)
------------------------------------- ------------------ ------------------
Commissioning costs in the prior year relate to the exceptional
waste and labour costs of bringing the new bakery on line in
Poland.
2) SEGMENT INFORMATION
Operating segments are identified on the basis of the internal
reporting and decision making. The Group's Chief Operating Decision
Maker is deemed to be the Board as it is primarily responsible for
the allocation of resources to segments and the assessment of
performance by segment. The Board assesses profit performance
principally through adjusted profit measures consistent with those
disclosed in the Annual Report and Accounts.
The UK Bakery segment manufactures and sells bakery products to
UK grocery and food service sectors. It comprises six subsidiaries
all of which manufacture and supply food products through the
channels described above. These subsidiaries have been aggregated
into one reportable segment as they share similar economic
characteristics. The economic indicators considered are the nature
of the products and production process, the type and class of
customer, the method of distribution and the regulatory
environment.
The Overseas segment procures and sells bakery products to
European grocery and food service sectors. The Ultraeuropa business
manufactures Free From bakery products in Poland and sells into the
European markets.
UK Bakery Overseas Total Group
Revenue H1 2019 H1 2019 H1 2019 H1 2019 H1 2019 H1 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------- -------- -------- -------- -------- --------
Total 134,621 141,234 18,324 18,215 152,945 159,449
-------- -------- -------- -------- -------- --------
Reportable Segments 26 weeks to 26 weeks to
26 December 2020 28 December 2019
GBP000 GBP000
Total Total
------------------------------------ ------------------ ------------------
Revenue UK Bakery 134,621 141,234
Revenue Overseas 18,324 18,215
------------------------------------ ------------------ ------------------
Total revenue 152,945 159,449
------------------------------------ ------------------ ------------------
Adjusted operating profit UK
Bakery 6,404 7,677
Adjusted operating profit Overseas 1,266 1,211
Total adjusted operating profit 7,670 8,888
------------------------------------ ------------------ ------------------
Significant non-recurring and
other items (Note 1) 259 696
Finance expense (Note 4) (523) (757)
Profit before taxation 7,406 8,827
------------------------------------ ------------------ ------------------
The Group has three customers (2019: two) which individually
account for more than 10 per cent of the Group's total revenue.
These customers account for 23 per cent, and two at 12 per cent. In
the prior year two of the customers accounted for 19 per cent and
12 per cent respectively of the revenue in the six months to 28
December 2019. In addition to the Europe sales disclosed in
Reportable Segments, the Group also made sales to European markets
through UK based organisations.
3) SHARE BASED PAYMENTS
The Group operates both approved and unapproved share option
schemes. Following the adoption of IFRS2 'Share-based payments'
charges have been made to the Income Statement to reflect the
calculated fair value of employee share options. The cost is
calculated at the date of grant and is charged equally over the
vesting period. The fair value is based on the best available
estimate of the number of options expected to vest. The
corresponding adjustment is made to reserves.
During the 26 weeks to 26 December 2020 2,192,275 options were
granted (H1 2019: 4,863,708 options). Administration costs include
a charge of GBP118,000 (H1 2019: GBP136,000) in relation to the
fair value of the newly awarded share options during that
period.
4) FINANCE INCOME AND EXPENSES
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
26 December 28 December 27 June
2020 2019 2020
Note GBP000 GBP000 GBP000
----------------------------------- ----- ------------- ------------- ----------
Interest on interest rate
swap agreements - 25 44
Bank interest receivable - 10 17
Finance income - 35 61
----------------------------------- ----- ------------- ------------- ----------
Net interest on net pension
position - - (256)
Net bank interest payable (289) (526) (999)
Charge on interest rate swaps (58) - -
Lease Interest IFRS 16 (105) (158) (273)
Unwinding of discount on deferred
consideration 1 (57) (57) (14)
Change in fair value of interest
rate swaps 1 (14) (51) (386)
Finance expense (523) (792) (1,794)
----------------------------------- ----- ------------- ------------- ----------
Net finance expense (523) (757) (1,928)
----------------------------------- ----- ------------- ------------- ----------
The Group has two interest rate swap arrangements, GBP20.0
million for five years from 3 July 2017 at 0.455% maturing 3 July
2022 and GBP5.0 million for three years from 28 March 2019 at
1.002% maturing 28 March 2022 to hedge its risks associated with
interest rate fluctuations.
These arrangements do not meet the conditions necessary for
hedge accounting to be applied and, therefore, changes in their
fair value are recognised immediately in the income statement
resulting in a charge of GBP14,000 (H1 2019: charge GBP51,000).
5) EARNINGS PER ORDINARY SHARE (EPS)
Basic earnings per share for the period is calculated on the
basis of profit for the period after tax, divided by the weighted
average number of shares in issue of 126,605,000 (28 December 2019:
127,121,000).
Basic diluted earnings per share for the period is calculated by
adjusting the weighted average number of shares in issue to assume
conversion of all potential dilutive ordinary shares, which for 26
December 2020 is 132,393,000 (28 December 2019: 132,382,000).
An adjusted earnings per share has also been calculated as, in
the opinion of the Board, this will allow shareholders to gain a
clearer understanding of the trading performance of the Group.
The adjusted earnings per share exclude amounts shown under
significant and non-recurring items in the Consolidated Statement
of Comprehensive Income and exclude amortisation of
intangibles.
26 weeks to 26 weeks to
26 Dec 2020 28 Dec 2019
---------------------------------- ---------- ------------------------------ ---------------------
Profit
---------------------------------- ---------- ------------------------------ ---------------------
Profit/(loss) attributable
to equity holders of the
Company (basic) GBP000 5,186 6,262
Significant non-recurring
and other items GBP000 58 (188)
Amortisation of intangibles GBP000 287 294
---------------------------------- ---------- ------------------------------ ---------------------
Numerator for adjusted earnings
per share calculation (adjusted
basic) GBP000 5,531 6,368
Shares Basic Diluted Basic Diluted
---------------------------------- ---------- ---------- ---------- ------------ ---------------
Weighted average number of
ordinary shares in issue
during the period '000 126,605 126,605 127,121 127,121
Dilutive effect of share
options '000 - 5,788 - 5,261
---------------------------------- ---------- ---------- ---------- ------------ ---------------
126,605 132,393 127,121 132,382
--------------------------------------------- ---------- ---------- ------------ ---------------
Earnings per share
---------------------------------- ---------- ---------- ---------- ------------ ---------------
Basic / basic and diluted Pence 4.1 3.9 4.9 4.7
---------------------------------- ---------- ---------- ---------- ------------ ---------------
Adjusted basic/ adjusted
basic and diluted Pence 4.4 4.2 5.0 4.8
---------------------------------- ---------- ---------- ---------- ------------ ---------------
6) ANALYSIS OF NET DEBT
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
26 December 28 December 27 June
2020 2019 2020
GBP000 GBP000 GBP000
-------------------------------------------- -------------- -------------- -----------
Net cash at bank 9,563 12,093 10,173
Loans after more than one year (30,711) (44,108) (36,184)
Hire purchase obligations due within
one year (170) (163) (247)
Hire purchase obligations due after
one year (158) (416) (225)
Bank debt (31,039) (44,687) (36,656)
-------------------------------------------- -------------- -------------- -----------
Unamortised transaction costs 141 219 175
-------------------------------------------- -------------- -------------- -----------
Bank debt net of unamortised transaction
costs within one year (170) (163) (247)
Bank debt net of unamortised transaction
costs more than one year (30,728) (44,305) (36,234)
-------------------------------------------- -------------- -------------- -----------
Bank debt net of unamortised transaction
costs excluding IFRS 16 lease liabilities (30,898) (44,468) (36,481)
-------------------------------------------- -------------- -------------- -----------
Bank debt (before IFRS 16 debt) net
of cash at bank (21,476) (32,594) (26,483)
-------------------------------------------- -------------- -------------- -----------
Lease liabilities IFRS 16 within
one year (2,495) (140) (2,944)
Lease liabilities IFRS 16 after more
than one year (9,647) (11,855) (8,879)
-------------------------------------------- -------------- -------------- -----------
Lease liabilities IFRS 16 (12,142) (11,995) (11,823)
-------------------------------------------- -------------- -------------- -----------
Total Debt including IFRS 16 lease
liabilities (33,477) (44,370) (38,131)
-------------------------------------------- -------------- -------------- -----------
7) SHARE CAPITAL
No shares were issued during the period or the comparative prior
year period.
At 26 December 2020 5,046,554 shares (H1 2019: 3,261,925) were
held by the Finsbury Food Group Plc Employee Benefit Trust.
Advisers
Secretary Auditor
ONE Advisory Limited PricewaterhouseCoopers LLP
201 Temple Chambers 1 Kingsway
3-7 Temple Avenue Cardiff
London CF10 3PW
EC4Y 0DT
Tel: 0207 583 8304
Registered Office Registrars
Maes-y-coed Road Capita Registrars
Cardiff 34 Beckenham Road
CF14 4XR Beckenham
Tel: 029 2035 7500 Kent
BR3 4TU
Nominated Adviser & Broker Solicitors
Panmure Gordon (UK) Limited CMS Cameron McKenna LLP
1 New Change, Cannon Place
London 78 Cannon Street
EC4M 9AF London
EC4N 6AF
Remuneration Committee Advisor
Deloitte LLP
Four Brindleyplace,
Birmingham,
B1 2HZ
Registered Number
00204368
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END
IR FLFIDFSILFIL
(END) Dow Jones Newswires
February 22, 2021 02:00 ET (07:00 GMT)
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