TIDMFIF
RNS Number : 5545Q
Finsbury Food Group PLC
21 February 2023
Date: 21 February 2023
On behalf Finsbury Food Group Plc ('Finsbury', 'the Company'
of: or 'the Group')
Embargoed until: 0700hrs+
Finsbury Food Group Plc
Interim Results
Encouraging H1 performance
Finsbury Food Group Plc (AIM: FIF), a leading UK speciality
bakery manufacturer of cake, bread and morning goods for the retail
and foodservice channels, is pleased to announce its unaudited
interim results for the six months ended 31 December 2022.
H1 FINANCIAL HIGHLIGHTS
-- Group revenue up 14.7% to GBP190.9 million (H1 2021: GBP166.5
million).
-- Operating profit * (1) flat at GBP6.5 million with operating
profit margin mainly reflecting the impact of inflationary pressures.
-- Group EBITDA * (1) GBP12.0 million (H1 2021: GBP11.9 million).
-- Profit before tax GBP6.1 million (H1 2021: GBP5.7 million).
-- Basic EPS (pence per share) 3.7p (H1 2021: 3.2p) and 0.87p per
share interim dividend proposed to be paid on 20 April 2023
(0.83p 21 April 2022).
-- Net bank debt GBP22.8 million (excluding IFRS 16 debt), representing
0.8 times annualised EBITDA of the Group (YE 22: GBP20.6 million).
GBP120 million facility: GBP60 million RCF and GBP60 million
accordion since last year.
H1 Strategic Highlights
-- Revenue growth driven by price recovery initiatives on broadly
flat Group volumes resulting in:
o UK foodservice, up 22.0%;
o UK retail up 10.9%; and
o Overseas division growth up 23.4%.
-- Post-period acquisition of Lees Foods Limited on 30 January
for a consideration of GBP5.7 million, expected to be immediately
earnings enhancing and in line with our previously disclosed
M&A strategy.
-- Continue to enhance product capability and capacity with a new
buns and rolls line in our Sheffield factory completed during
the period.
-- Innovation in gluten-free recipes and product quality which
is driving organic growth in both the UK and in Europe.
-- Sustainability Forum is now fully established to aid the governance
of our Sustainable Approach, driving continued improvement in
energy and waste management.
The Group uses certain Alternative Performance Measures (APMs)
which are non-IFRS measures to monitor performance of its
operations and of the Group as a whole. The reconciliation to IFRS
measures is shown in the Consolidated Statement of Comprehensive
Income.
* (1) Operating Profit and EBITDA is before significant
non-recurring and other items (Note 1).
CURRENT TRADING AND OUTLOOK
Finsbury delivered an encouraging H1 performance and the Company
is seeing steady demand for its product range whilst also
continuing to make good progress on the Group's three strategic
pillars of Excellence, Growth and Responsibility.
As predicted, the macro-economic challenges that the Company has
been faced with recently continue to persist. The focus remains on
managing these challenges through commercial terms, operational
improvements and other supply chain and overhead initiatives.
Whilst the external environment remains challenging, Finsbury
has a strong market position, a carefully calibrated M&A
strategy and a track record of successfully navigating macro
challenges as they arise, which positions the Group well for the
medium to long-term. The Group remains on track to meet market
expectations for FY23.
Commenting on the results, John Duffy, Chief Executive Officer
of Finsbury Food Group Plc, said:
"Finsbury has once again delivered a robust performance in the
first half to December 2022. We have seen a stable performance in
UK retail, ongoing recovery in UK foodservice and continued growth
in our Overseas division all despite the challenges of continued
significant input cost inflation and falling consumer confidence. I
would like to thank the whole Finsbury team for their hard work and
dedication which underpins this resilient performance.
We have continued to make good progress against our objectives,
based around our three strategic pillars of Excellence, Growth and
Responsibility and underpinned by our Operating Principles. Post
period, we were delighted to announce the strategic acquisition of
Lees Foods Limited, which enables us to further develop our
position in the sweet treats sector and grow our manufacturing
presence in Scotland.
Looking ahead, we expect to continue to navigate a challenging
macro environment as inflationary pressures look set to persist
with the short-term outlook remaining difficult to predict.
However, Finsbury is now a nimble and adaptable Group and I am
confident that we remain well placed to continue successfully
executing on our strategy."
Contact:
Finsbury Food Group
John Duffy (Chief
Executive Officer)
Steve Boyd (Finance
Director) www.finsburyfoods.co.uk 029 20 357 500
Panmure Gordon (UK)
Limited
Oliver Cardigan (Corporate
Finance)
Atholl Tweedie
Rupert Dearden (Corporate
Broking) 020 7886 2500
Alma PR
Sam Modlin
David Ison
Matthew Young 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 2 July 2022 exceeding GBP356 million.
-- The Company's bakery product range is comprehensive and includes:
-- Large premium and celebration cakes.
-- Small snacking cake formats such as cake slices and bites.
-- Artisan, healthy lifestyle and organic breads through to
rolls, muffins (sweet and savoury) and morning pastries, all of
which are available both fresh and frozen dependent on customer
channel requirements.
-- Gluten-free bread, morning goods and cake ranges.
-- The Company is one of the largest ambient cake manufacturers
in the UK, a market valued at GBP1.06 billion (source: IRI 52 w/e
31 Dec 2022). The retail bread and morning goods market has a value
of GBP5.7 billion (source: Kantar Worldpanel 52 w/e 25 Dec 2022).
The retail Free From cake market is valued at GBP60.0 million
(source: Kantar Worldpanel 52 w/e 25 Dec 2022). The retail Free
From bread and morning goods market is valued at GBP173.0 million
(source: Kantar Worldpanel 52 w/e 25 Dec 2022).
-- The Company comprises a core UK Bakery division and an Overseas division:
-- The UK Bakery division has manufacturing sites in Cardiff,
East Kilbride, Hamilton, Salisbury, Sheffield, Manchester,
Pontypool and now Coatbridge.
-- The Overseas division comprises the Company's 85% owned
company, Lightbody-Stretz Limited, which supplies and distributes
the Group's UK-manufactured products and third-party products, in
Europe, and the Company's manufacturing facilities in Rybarzowice
and ywiec in Poland.
STRATEGIC REVIEW
Our Group
We continue to create and supply high-quality bread and cakes
through a variety of brands and channels, supplying major retailers
and the foodservice channel across the UK, and in Europe, with own
brand and licensed brand bread and cakes.
Our cake products are sold primarily in UK retail and are a
combination of both own label and licensed brands. Our bread
products are sold in both the retail and foodservice sectors, are
both own label and branded with our Kara foodservice brand
representing a significant proportion of our total foodservice
business.
Our UK bakery segment supply supermarkets, discounters and
convenience stores within the retail sector and, within the UK
foodservice sector, supply hotels, pubs, restaurants, high street
chains, fast food outlets and contract caterers either directly or
indirectly through the larger wholesalers.
Our overseas businesses supplies the retail sector in Europe,
principally France, Benelux and Scandinavia, with a smaller growing
presence in many other major European countries.
Our Strategy and Objectives
Our Purpose
"Baking brilliance makes every day special."
Our Vision
To be the leading speciality bakery group.
Our three Strategic Pillars help us create sustainable value for
our shareholders, customers and other stakeholders:
Excellence
We invest in our people and our operating sites to form a strong
foundation to underpin our strategy. We create innovative
high-quality bakery products that anticipate key market trends and
ensure that customer and consumer needs are at the heart of our
decision making.
Growth
Our Group seeks to drive growth both organically and through
acquisition, targeting both the retail grocery and out-of-home
channels in the UK and Europe. We have developed a strong licensed
brand portfolio to complement our core retailer brand
relationships.
Responsibility
Our commitment to building a sustainable operating model is
built on a holistic framework that puts our people's development,
engagement and health and wellbeing at the heart of our business.
We strive to continually reduce our impact on the planet by
investing in technology, expertise and driving shared ownership
across our growth partners.
Our Operating Principles
To achieve baking brilliance, we have to constantly raise
standards and work effectively as a Group. The Finsbury Operating
Principles are a set of practical commitments and guidelines for
how we run our business, and which bring our strategy to life in
our day-to-day work. Increasingly all stakeholders in our business
are looking to understand our Environmental, Social and Governance
(ESG) credentials. The Operating Principles by their nature
incorporate our ESG commitment.
Our Operating Principles supporting our Strategic Pillars
-- Operating Excellence - We continually invest in our bakeries
to improve our efficiency and customer satisfaction.
-- Sustainable Approach - We optimise our use of resources and
focus on reducing waste throughout our supply chain and in our
bakeries.
-- Quality and Innovations - Our innovative, high-quality bakery
products reflect changing customer needs and anticipate key market
trends.
-- Cost Effectiveness - We maintain strict cost controls without
compromising quality, streamlining our processes from sourcing to
delivery.
-- Growth With Our Partners - Through long-term relationships
with our customers and suppliers, and an understanding of their
needs, we can all enjoy profitable growth.
-- People Who Care - We invest in our people, who take personal
pride in their contribution to our success and are strong advocates
of our business and products.
Sustainability Highlights
Our Sustainability Forum is now fully established to aid the
governance of our Responsibility Strategic Pillar. We have invested
in our waste and recycling facilities across the Group to create
what we feel is an industry leading approach to waste management
with dedicated waste hubs, bespoke waste communication materials
and extensive waste data capture. This has resulted in a 16%
reduction in our non-recycled waste year on year.
In September we became signatories to the UK plastic pact which
brings together businesses from across the entire plastics value
chain with UK governments and NGOs to tackle plastic waste. We have
committed to 2025 targets to ensure 100% of plastics packaging to
be recyclable and to ensure an average 30% recycled content across
all plastic packaging. We are working with sustainability experts
at WRAP to help us achieve these targets.
We continue to leverage our energy monitoring system to achieve
reductions in electricity and gas usage across the business. Year
to date we are seeing a 2.8% improvement in energy efficiency
across the Group. We will soon start to monitor our water usage and
drive improvement in this area.
Market Review
An overview of the markets we operate in, and a summary of the
key trends we aim to take advantage of.
Our Markets
Food sector headwinds in the current financial year have
exceeded those experienced during FY22. To have delivered a robust
H1 performance in that context provides further validation of the
Group's range of quality products, the viability of our operational
strategy and the long-term prospects of our selected markets.
RETAIL
Grocery
Inflation continues to dominate headlines with increasing
material prices across all ingredients and with increased labour
costs driven by the need to attract and retain good employees (as
well as the ongoing pressure from the National Living Wage). Add to
that the increased and sustained high cost of energy. Take home
grocery sales value grew by 7.6% (source: Kantar Worldpanel 12
weeks to 25 December 2022). Average price remains the key driver of
this, and although December 2022 set a record value sales month at
GBP12.8bn, volumes were down 1.4% in the same month, vs. 2021,
meaning an average household spent GBP48 more in December, and
bought less for it (source: Kantar Worldpanel 4 weeks to 25
December 2022). With household budgets under pressure, shoppers
will continue to manage their spend, by buying less, trading down
to a cheaper product, or a cheaper retailer. Aldi and Lidl continue
to outperform the grocery market, and gain share. They are both
growing from more shoppers shopping more often with them (source:
Kantar Worldpanel 12 weeks to 25 December), as they continue to
open stores.
Cake
Finsbury continues to be one of the most significant
manufacturers of cake in the UK, with the market currently valued
at GBP1.06 billion (source: IRI 52 w/e 31 Dec 2022). Value growth
is now outstripping volume across the cake category, as it is
across the market. The average price was up 6.7% on the prior year,
and this has accelerated in more recent time periods. Looking to
shopper metrics in the Kantar data, in the comparable time period
(52 weeks to 25 Dec 2022), the growth in average price, is being
offset by declines in how often cake is being purchased, and to a
lesser extent how much is put in the average basket. The number of
households buying cake remains high, at 94%, albeit this is down
slightly on the prior year.
Bread
The retail bread and morning goods market has increased in value
to GBP5.7 billion (source: Kantar Worldpanel 52 w/e 25 Dec 2022).
We see a very similar dynamic in the bread and morning goods
category, with value growth significantly ahead of volume, with the
total category in volume decline of -2.8% (source: Kantar
Worldpanel 52 w/e 25 Dec 2022). Almost all households buy the
category, and this has remained static, bread and morning goods are
also bought frequently, 93 times a year on average, and again this
has not changed year on year. The drag on volume performance has
been driven by shoppers buying less per trip, as they look to
manage their spend in the category, and on that shopping trip.
Free From
The retail Free From cake market is valued at GBP60.0 million
(source: Kantar Worldpanel 52 w/e 25 Dec 2022) with Free From cake
volume in growth, with shoppers purchasing the category 10% more
year on year (source: Kantar Worldpanel 52 w/e 25 Dec 2022), 18.3%
of households bought the category, which is down vs. prior year.
Price was up over 8%, and its average price is 16.4% higher than
the total cake category. In bread, volume growth is at 5.2% growth
year on year (source: Kantar Worldpanel 52 w/e 25 Dec 2022), price
is up 6.9% and the average price is over double that of total
bread. Shoppers buying more frequently have been the main driver of
volume growth, it is bought by 12% of households, which is static
vs. the prior year.
OUT OF HOME
The UK out of home market spans many sub-sectors including
coffee chains, restaurants, pubs, hotels and the non-profit sector
such as the prison service or education. Each has a different route
to market, which has grown in total by +44% vs. 2021 (e.g.
including alcohol), as Covid-19 restrictions, and consumer
sentiment limited demand in 2021. The most growth is coming from
hotels, pubs, and restaurants, as they suffered the most from the
2020 and 2021 impacts. The number of out of home outlets remains
static. There are a number of driving factors for growth, as
consumers look to have experiences they missed out on during
Covid-19 restrictions. Tech and digitalisation, diversification of
formats, and growing omnichannel propositions are making out of
home more accessible than ever before. There are of course
inhibitors to the continued out-of-home growth, with the cost of
living spiralling, and price rises in the sector presenting a risk
to ongoing volume.
OVERSEAS
Our overseas markets are primarily in Europe, principally
France, Benelux and Scandinavia, Poland and with a smaller presence
in most other major European countries. The size of these markets
is significant, and their structure is similar.
CONSUMER TRS
September 2022 witnessed a new record low for consumer
confidence, at -49 (source GFK), as inflation, and the media
coverage of further inflation to come dominated. As the energy
support came into force, and inflation eased slightly this improved
to -42 in December 2022; still at previously unseen levels, but the
first improvement in confidence since November 2021. We expect to
see this confidence remain low, in 2023, as consumers continue to
struggle with inflation across all aspects of their lives
The legislation, targeting a number of 'High Fat, Salt and
Sugar' (HFSS) categories including cake and morning goods is part
of a wider government food strategy, and the location restrictions
across 15 food and drink categories, is the start of an evolving
landscape on health, rather than the end. These restrictions are
only live in England, and in stores over 2500 sq ft. It is expected
that similar restrictions will come into force, in both Wales, and
Scotland. It is too early, with Christmas, and now Easter in stores
to find meaningful data points to see results of these
restrictions. On a recent Nielsen webinar, they have seen unit
decline in the 15 impacted categories, at a slower rate than total
store.
Long term social and demographic trends have a major bearing on
the food sector. These include the rise of smaller households,
single-person mealtimes, an ageing UK population, growing
urbanisation, and an increasingly mobile population (although this
has stalled due to Covid-19) with less time to eat. This growing
fragmentation of consumers, channels, eating moments and needs is
translating into increasing demand for personalised products to
meet individual needs. As a result, single-serve and individually
wrapped products are becoming more prevalent and important. The
latter may continue to gain popularity as a consequence of the
Covid-19 pandemic with food safety and hygiene featuring higher on
the list of consumer priorities. In store bakery sales bear witness
to this - since March 2020 sales have suffered, and even with
Covid-19 restrictions long gone, there is a latent change in how
shoppers want to shop for individual items. Clearly there is a
conflict between this, and the potential impact on additional
packaging, and environmental concerns that come with this.
OPERATING REVIEW
Revenue and Operating Profit
Group
H1 2022 H1 2021 Movement
Revenue GBP190.9m GBP166.5m +14.7%
---------- ---------- ---------
Operating profit GBP6.5m GBP6.5m +0.4%
---------- ---------- ---------
Operating profit margin 3.4% 3.9% -50bps
---------- ---------- ---------
Group revenue increased in H1 2022 by 14.7% year on year to
GBP190.9 million (H1 2021: GBP166.5 million) reflecting price
increases to recover input cost inflation. Profit before interest,
tax and significant non-recurring and other items increased
slightly to GBP6.5 million (H1 2021 GBP6.5 million). Operating
profit margin has decreased reflecting the impact of inflationary
pressures.
UK Bakery
H1 2022 H1 2021 Movement
Revenue GBP161.0m GBP142.3m +13.2%
---------- ---------- ---------
Operating profit GBP4.8m GBP4.7m +2.9%
---------- ---------- ---------
Operating margin 3.0% 3.3%
---------- ----------
UK Bakery comprises the supply of cake, bread, and morning goods
in the grocery and foodservice channels. Revenue in the period
increased by 13.2% to GBP161.0 million driven by pricing
initiatives.
The operating profit of GBP4.8 million increased however the
reduced operating margin reflects the recovery of inflation
challenge.
Overseas
H1 2022 H1 2021 Movement
Revenue GBP29.9m GBP24.2m +23.4%
--------- --------- ---------
Operating profit GBP1.7m GBP1.8m (6.3%)
--------- --------- ---------
Operating margin 5.6% 7.4%
--------- ---------
The overseas business comprises Lightbody Europe in France and
Ultraeuropa based in Poland. Lightbody Europe specialises in the
import and sale of Finsbury manufactured food products being UK
manufactured licensed celebration cake and bite style products and
Polish manufactured gluten-free products. Ultraeuropa manufactures
and supplies gluten free products to Poland, France, Scandinavia,
and the United States.
The operating margin decreased by 1.8% due largely to a change
in product mix and the recovery of inflationary pressures.
Acquisition
Post period end, the Company acquired Lees Foods Limited
("Lees"), a leading manufacturer of meringues, teacakes and
snowballs on 30 January 2023 for a consideration of GBP5.7 million.
Lees has a UK market-leading position in the manufacture of
meringues and has significant capability in the sweet treats
category, adjacent to Finsbury's existing markets. The acquisition
is in line with Finsbury's strategy to diversify its product
capability into areas with high growth potential through M&A.
It will be immediately earnings enhancing.
Lees has a broad customer base and holds strong supply
relationships with the leading UK supermarkets in addition to
foodservice and export customers and Finsbury believes that it will
be able to leverage the scale and breadth of the Finsbury
commercial team and licensed brand portfolio to drive incremental
growth for the Group.
Significant non-recurring and other accounting items
The significant non-recurring and other accounting items
primarily consist of movements in the fair value of foreign
exchange and interest rate swap contracts. The fair value is deemed
to be the market value, which is provided by the counterparty at 31
December 2022, further information is given in Note 1.
Interest Payable
Interest payable (H1 2021: payable) on the Group's bank debt in
H1 2022 and on the related interest rate swaps was GBP673,000 (H1
2021: GBP312,000); an increase of GBP361,000. The increase in
charges is a consequence of the higher average debt balance over
the period and increase in SONIA and EURIBOR rates.
Taxation
The Group's effective tax rate in H1 2022 was 21.8%, which
compares to 17.5% in H1 2021. The effective rates represent a blend
of the UK, French and Polish Corporation Tax rates. An increase in
the effective rate is driven by the higher hybrid rate of UK tax
due to the rate increase to 25% in April 2023, the phasing of
capital allowance super deductions, and a higher proportion of
overseas profit in the higher French tax jurisdictions.
Earnings Per Share
The Group considers adjusted diluted earnings per share to be
the most appropriate EPS measure. The adjusted earnings per share
was in line with the prior year at 3.4p. Further earnings per share
information is given in Note 5.
Dividend
A final dividend for the year to 02 July 2022 of 1.67p per share
was paid on 21 December 2022 to shareholders on the register at the
close of business on 26 November 2022. The Board of Directors is
proposing an interim dividend of 0.87p per share to be paid on 20
April 2023 to shareholders on the register at the close of business
on 24 March 2023 (H1 2021: 0.83p paid on 21 April 2022). The
election deadline for participants in the Company's Dividend
Re-investment Plan will be 28 March 2023.
Cash Flow and Net Debt
Net bank debt at 31 December 2022 was GBP22.8 million which
compares to GBP20.6 million at 2 July 2022, an increase of GBP2.2
million.
H1 2022
GBPm
Net debt at 2 July 2022 -20.6
--------
Cash inflow from operating profit before changes in working
capital 12.0
Increase in working capital -4.6
Capital expenditure -3.6
Lease payments -1.0
Interest payments -0.5
Corporation Tax payments -1.4
--------
Free cashflow 0.9
Purchase of companies -0.5
Purchase of shares by Employee Trust -0.5
Dividend paid -2.1
--------
Net debt movement -2.2
--------
Closing net debt -22.8
--------
Six-month cash inflow from operating profit before changes in
working capital was GBP12.0 million. The free cash flow is GBP0.9
million after absorbing GBP4.6 million increased working capital,
an increase driven primarily by macro dynamics and the need to hold
increasing levels of stock. The free cash flow is before the final
deferred consideration payments of GBP0.5 million, purchase of
shares by Employer Trust and dividends of GBP2.1 million,
representing a final dividend for the year ending 2 July 2022. Net
debt (excluding IFRS 16 leases) of GBP22.8 million at half year,
equating to 0.8 times annualised EBITDA, reflecting low gearing
alongside a strong balance sheet. The Group has a GBP60.0 million
revolving credit facility and an accordion of GBP60.0 million
available to it. The facility provides increased capacity for the
Group to explore future growth opportunities and support its
long-term investment strategy.
Pensions
The Group has one Defined Benefit Pension Scheme within its
Memory Lane Cakes business in Cardiff. All remaining Group
companies have Defined Contribution Schemes. The Memory Lane Cakes
pension Scheme has been closed to future accruals and new members
since 31 May 2010. The net pension deficit (before related deferred
tax) was GBP6,582,000 at 2 July 2022. The Company entered into an
Asset Backed Contribution (ABC) arrangement on 18 May 2022 to
improve the funding of the Scheme. An investment of GBP16.0 million
will be invested by the Company to the Scheme, the trustees have
purchased a loan note from the Group via a Scottish Limited
Partnership (SLP) structure, which will pay a defined income return
to the Scheme over 20 years. The fixed repayment plan amounts to an
income of GBP763,000 being paid to the Scheme annually. The
estimated duration of the liabilities is around 15 years.
Principal Risks and Uncertainties
A number of risks and uncertainties have been identified that
could potentially have a material impact on the financial position
of the Group. These are set out in the Risk Report of the Annual
Report for the year to 2 July 2022, and the Board considers these
remain applicable.
Forward-looking Statements
Throughout this report certain statements have been made which
are forward looking. These statements have been made based on the
latest knowledge and expectations of the future. The Board
considers the statements to be reasonable. Inevitably there are
risks associated with these forward-looking statements which are
usually outside the control of the Group. Actual results or
performance may therefore differ from the outcome implied by these
forward-looking statements.
Consolidated Statement of Comprehensive Income (unaudited)
Unaudited 26 weeks ended Unaudited 26 weeks ended
31 December 2022 25 December 2021
GBP000 GBP000
------------- ----------------------------------------------------- ------------------------------------------- ----
Significant Significant
non-recurring non-recurring
and other and other
accounting Consolidated accounting Consolidated
Adjusted items Statement Adjusted items Statement
operating (Note of operating (Note of Comprehensive
performance 1) Comprehensive performance 1) Income
Income
-------------------- ------------- -------------- --------------- ------------- -------------- ------------------
Revenue 190,934 - 190,934 166,525 - 166,525
Cost of sales (134,273) - (134,273) (113,938) - (113,938)
-------------------- ------------- -------------- --------------- ------------- -------------- ------------------
Gross profit 56,661 - 56,661 52,587 - 52,587
Administrative
expenses (50,180) (348) (50,528) (46,130) (422) (46,552)
-------------------- ------------- -------------- --------------- ------------- -------------- ------------------
Results from
operating
activities 6,481 (348) 6,133 6,457 (422) 6,035
Finance expense
(Note 4) (777) 751 (26) (445) 67 (378)
Profit before
taxation 5,704 403 6,107 6,012 (355) 5,657
Taxation (1,260) (74) (1,334) (1,057) 67 (990)
-------------------- ------------- -------------- --------------- ------------- -------------- ------------------
Profit after
tax and total
comprehensive
income 4,444 329 4,773 4,955 (288) 4,667
-------------------- ------------- -------------- --------------- ------------- -------------- ------------------
Profit attributable to:
Equity holders
of the Parent 4,194 329 4,523 4,148 (151) 3,997
Non-controlling
interest 250 - 250 807 (137) 670
-------------------- ------------- -------------- --------------- ------------- -------------- ------------------
Profit and
total
comprehensive
income for
the period 4,444 329 4,773 4,955 (288) 4,667
-------------------- ------------- -------------- --------------- ------------- -------------- ------------------
Earnings per share (pence)
Basic 3.6 3.7 3.6 3.2
Diluted 3.4 3.5 3.4 3.0
-------------------- ------------- -------------- --------------- ------------- -------------- ------------------
Consolidated Statement of Financial Position (unaudited)
Unaudited Unaudited Audited
31 December 25 December 02 July
2022 2021 2022
Note GBP000 GBP000 GBP000
Non-current assets
Intangibles 86,172 87,502 87,355
Property, plant and equipment 62,384 57,261 62,672
Deferred tax assets 4,151 5,951 4,072
152,707 150,714 154,099
------------------------------------- ----- ------------ ------------ ----------
Current assets
Inventories 27,754 19,405 23,281
Trade and other receivables 63,595 52,748 58,148
Cash and cash equivalents 6 11,501 8,697 7,381
Other financial assets - fair value
of derivatives 612 - 20
------------------------------------- ----- ------------ ------------ ----------
103,462 80,850 88,830
------------------------------------- ----- ------------ ------------ ----------
Total assets 256,169 231,564 242,929
------------------------------------- ----- ------------ ------------ ----------
Current liabilities
Other interest-bearing loans and
borrowings 6 (1,522) (2,452) (1,605)
Trade and other payables (79,946) (65,870) (74,284)
Provisions (709) (159) (697)
Deferred consideration - (977) (496)
Other financial liabilities - fair
value of derivatives (764) (39) (575)
Current tax liabilities (660) (513) (731)
(83,601) (70,010) (78,388)
------------------------------------- ----- ------------ ------------ ----------
Non-current liabilities
Other interest-bearing loans and
borrowings 6 (40,945) (30,207) (35,388)
Provisions and other liabilities - (160) (18)
Deferred tax liabilities (3,752) (2,791) (3,699)
Pension fund liability (6,582) (14,529) (6,582)
------------------------------------- ----- ------------ ------------ ----------
(51,279) (47,687) (45,687)
------------------------------------- ----- ------------ ------------ ----------
Total liabilities (134,880) (117,697) (124,075)
------------------------------------- ----- ------------ ------------ ----------
Net assets 121,289 113,867 118,854
------------------------------------- ----- ------------ ------------ ----------
Equity attributable to equity holders of the Parent
Share capital 7 1,304 1,304 1,304
Share premium account 64,956 64,956 64,956
Capital redemption reserve 578 578 578
Employee share reserve (6,196) (5,196) (5,696)
Retained earnings 60,141 49,854 57,456
------------------------------------- ----- ------------ ------------ ----------
Total shareholders' equity 120,783 111,496 118,598
Non-controlling interest 506 2,371 256
------------------------------------- ----- ------------ ------------ ----------
Total equity 121,289 113,867 118,854
------------------------------------- ----- ------------ ------------ ----------
Consolidated Statement of Changes in Equity (unaudited)
Capital Employee Non-controlling
Share Share redemption share Retained interest Total
capital premium reserve reserve earnings GBP000 equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Balance at 27
June 2021 1,304 64,956 578 (5,374) 49,021 2,786 113,271
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Profit for the
26 weeks ended
26 December 2021 - - - - 3,997 670 4,667
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Other comprehensive - - - - - - -
income
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Total comprehensive
income for the
period - - - - 3,997 670 4,667
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Transactions with
owners, recorded
directly in equity:
Own shares
issued/(acquired) - - - 178 - - 178
Foreign exchange
translation differences - - - - (179) - (179)
Dividend paid - - - - (2,985) (1,085) (4,070)
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Balance at 25
December 2021 1,304 64,956 578 (5,196) 49,854 2,371 113,867
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Profit for the
27 weeks ended
2 July 2022 - - - - 6,475 446 6,921
Other comprehensive
income/(expense):
Remeasurement on
Defined Benefit
Pension - - - - 7,815 - 7,815
Deferred tax movement
on Pension Scheme
remeasurement - - - - (1,954) - (1,954)
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Other comprehensive
income - - - - 5,861 - 5,861
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Total comprehensive
income for the
period - - - - 12,336 446 12,782
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Transactions with
owners, recorded
directly in equity:
Shares acquired
during the period - - - (500) - (500)
Impact of share-based
payments - - - - 1,524 - 1,524
Transactions with
non-controlling -
interests - - - - (4,962) (1,121) (6,083)
Costs associated
with transactions
with non-controlling
interests - - - - (375) - (375)
Foreign exchange
translation differences - - - - 112 - 112
Dividend paid - - - - (1,033) (1,440) (2,473)
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Balance at 2 July
2022 1,304 64,956 578 (5,696) 57,456 256 118,854
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Profit for the
26 weeks ended
31 December 2022 - - - - 4,523 250 4,773
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Other comprehensive - - - - - - -
income
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Total comprehensive
income for the - - - - - - -
period
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Transactions with
owners, recorded
directly in equity:
Own shares
issued/(acquired) - - - (500) - - (500)
Foreign exchange
translation differences - - - - 230 - 230
Dividend paid - - - - (2,068) - (2,068)
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Balance at 31
December 2022 1,304 64,956 578 (6,196) 60,141 506 121,289
-------------------------- ---------- ---------- ------------ --------- ----------- ---------------- ----------
Consolidated Cash Flow Statement (unaudited)
Unaudited Unaudited Audited
26 weeks 26 weeks 53 weeks
ended ended ended
31 25 2
December December July
2022 2021 2022
Note GBP000 GBP000 GBP000
-------------------------------------------------------- ----- ---------- ---------- ----------
Cash flows from operating activities
Profit after taxation for the period 4,773 4,667 11,588
Adjustments for:
Taxation 1,334 990 2,709
Net finance costs 4 26 378 1,208
Amortisation of intangibles 717 674 1,547
Depreciation 3,823 3,786 7,407
Depreciation right of use assets 984 998 1,986
Significant non-recurring expenses - - 1,898
Movement in fair value foreign exchange contracts 348 422 821
Contributions by employer to Pension Scheme - - (417)
Operating profit before changes in working capital 12,005 11,915 28,747
Changes in working capital
Increase in inventories (4,304) (4,451) (8,254)
Increase in trade and other receivables (5,446) (1,878) (7,847)
Increase in trade and other payables 5,147 3,708 13,589
Cash generated from operations 7,402 9,294 26,235
Significant non-recurring costs (254) (61) (2,254)
Interest paid (535) (447) (678)
Corporation Taxes paid (1,431) (1,319) (2,018)
-------------------------------------------------------- ----- ---------- ---------- ----------
Net cash generated from operating activities 5,182 7,467 21,285
-------------------------------------------------------- ----- ---------- ---------- ----------
Cash flows from investing activities
Purchase of property, plant, equipment and intangibles (3,558) (1,908) (12,545)
Purchase of companies (500) (500) (1,000)
Net cash used in investing activities (4,058) (2,408) (13,545)
-------------------------------------------------------- ----- ---------- ---------- ----------
Cash flows from financing activities
Lease payments (1,039) (910) (2,275)
Drawdown/(repayment) of revolving credit 6,334 (1,020) 5,444
Purchase of shares by Employee Trust (500) - (500)
Transactions with non-controlling interests - - (6,083)
Non-controlling interest dividend paid - (1,085) (2,525)
Dividend paid (2,068) (2,985) (4,018)
-------------------------------------------------------- ----- ---------- ---------- ----------
Net cash in/(out) from financing activities 2,727 (6,000) (9,957)
-------------------------------------------------------- ----- ---------- ---------- ----------
Net increase/(decrease) in cash and cash equivalents 3,851 (941) (2,217)
Opening cash and cash equivalents 7,381 9,523 9,523
Effect of exchange rate fluctuation 269 115 75
-------------------------------------------------------- ----- ---------- ---------- ----------
Cash and cash equivalents at end of the period 11,501 8,697 7,381
-------------------------------------------------------- ----- ---------- ---------- ----------
NOTES TO THE FINANCIAL STATEMENTS
BASIS OF PREPARATION
This Interim Report, which is unaudited, does not constitute
statutory accounts within the meaning of section 434(3) of the
Companies Act 2006. The comparative figures for the financial
53-week period ended 2 July 2022 have been extracted from the
statutory accounts for that year. Those accounts, which were
prepared in accordance with UK-adopted International Accounting
Standards reported on by the Company's auditor and delivered to the
registrar of companies. The report of the auditor was (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
GOING CONCERN
The Group has delivered an encouraging half year performance
against a continued backdrop of macro-economic and cost inflation
challenges. Forecasts have been built on a bottom-up basis and
stress tested to prepare a forecast to be used as a basis for
reviewing going concern, forecast assumptions have been critically
assessed and have been compared against historical performance to
understand movements. The Board, having reviewed the Group's short
and medium-term plans and available financial facilities until June
2027, has reasonable expectations that the Group has adequate
resources to continue in operational existence for the foreseeable
future. The Group has stayed comfortably within its banking
facilities during the period, meeting covenant requirements. The
Group has a GBP60 million revolving credit facility plus scope for
the facility to be increased by up to a further GBP60 million. In
addition, the Group has a strong trade debtor book and strong asset
backing.
Having due consideration of the financial projections, the level
of debt and available facilities, it is the opinion of the
Directors that the Group has adequate resources to continue in
operation for the foreseeable future and, therefore, consider it
appropriate to prepare the Financial Statements on the going
concern basis.
1) SIGNIFICANT NON-RECURRING ITEMS AND OTHER ACCOUNTING ITEMS
The Group presents certain items as non-recurring and
significant. These relate to items which, in management's
judgement, need to be disclosed by virtue of their size or
incidence in order to obtain a more meaningful understanding of the
financial information.
The amounts shown within significant non-recurring and other
accounting items on the face of the Consolidated Statement of
Comprehensive Income are shown in the table below:
Unaudited Unaudited
26 weeks ended 26 weeks ended
31 December 2022 25 December 2021
GBP000 GBP000
------------------------------------- ------------------ ------------------
Movement in fair value of foreign
exchange contracts (348) (422)
------------------------------------- ------------------ ------------------
Shown under administrative expenses (348) (422)
------------------------------------- ------------------ ------------------
Unwinding of discount on deferred
consideration (4) (33)
Movement in fair value of swaps 755 100
Shown under finance expense 751 67
------------------------------------- ------------------ ------------------
The fair value of contracts is deemed to be the market value,
which is provided by the counterparty at 31 December 2022. The
movements in fair value shown in the table above reflect the value
of contracts held and the movements in interest and foreign
exchange rates since the year end date of 2 July 2022.
2) SEGMENT INFORMATION
Operating segments are identified on the basis of the internal
reporting and decision making. The Group's Chief Operating Decision
Maker is deemed to be the Board as it is primarily responsible for
the allocation of resources to segments and the assessment of
performance by segment. The Board assesses profit performance
principally through adjusted profit measures consistent with those
disclosed in the Annual Report and Accounts.
The UK bakery segment manufactures and sells bakery products to
UK grocery and food service sectors. It comprises six subsidiaries
all of which manufacture and supply food products through the
channels described above. These subsidiaries have been aggregated
into one reportable segment as they share similar economic
characteristics. The economic indicators considered are the nature
of the products and production process, the type and class of
customer, the method of distribution and the regulatory
environment.
The overseas segment procures and sells bakery products to
European grocery and food service sectors. The Ultraeuropa business
manufactures Free From bakery products in Poland and sells into the
European markets.
Reportable Segments UK bakery Overseas Total Group
H1 2022 H1 2021 H1 2022 H1 2021 H1 2022 H1 2021
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------- -------- -------- -------- -------- --------
Revenue 161,005 142,274 29,929 24,251 190,934 166,525
-------- -------- -------- -------- -------- --------
Adjusted operating profit 4,809 4,673 1,672 1,784 6,481 6,457
-------- -------- -------- -------- -------- --------
Significant non-recurring
and other items (Note 1) (348) (422)
-------------------------------------- -------- --------
Finance expense (Note 4) (26) (378)
-------------------------------------- -------- --------
Profit before taxation 6,107 5,657
-------------------------------------- -------- --------
The Group has three customers (2021: two) which individually
account for more than 10% of the Group's total revenue. These
customers account for 22%, 11% and 10%. In the prior year, the two
customers accounted for 23% and 12% of the revenue in the six
months to 25 December 2021. In addition to the Europe sales
disclosed in Reportable Segments, the Group also made sales to
European markets through UK based organisations.
3) SHARE BASED PAYMENTS
The Group operates both approved and unapproved share option
schemes. Following the adoption of IFRS2 'Share-based payments'
charges have been made to the Income Statement to reflect the
calculated fair value of employee share options. The cost is
calculated at the date of grant and is charged equally over the
vesting period. The fair value is based on the best available
estimate of the number of options expected to vest. The
corresponding adjustment is made to reserves.
During the 26 weeks to 31 December 2022, 2,429,984 options were
granted (H1 2021: 1,636,005 options). Administration costs include
a charge of GBP59,000 (H1 2021: GBP113,000) 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 53 weeks
ended 31 ended 25 ended 2
December December July
2022 2021 2022
Note GBP000 GBP000 GBP000
------------------------------------ ----- ---------- ---------- ----------
Change in fair value of interest
rate swaps 1 755 100 -
Bank interest income 18 - -
Finance income 773 100 -
Net interest on pension position - - (285)
Net bank interest payable (653) (252) (531)
Charge on interest rate swaps (24) (60) (43)
Unwinding of discount on deferred
consideration 1 (4) (33) (54)
Change in fair value of interest
rate swaps 1 - - (18)
Interest on deferred consideration (1) (12) (18)
Lease Interest IFRS 16 (117) (121) (259)
Finance expense (799) (478) (1,208)
------------------------------------ ----- ---------- ---------- ----------
Net finance expense (26) (378) (1,208)
------------------------------------ ----- ---------- ---------- ----------
The Group has one interest rate swap arrangement; GBP10.0
million fixed at 2.589% maturing 10 June 2027 to hedge its risks
associated with interest rate fluctuations.
These arrangements do not meet the conditions necessary for
hedge accounting to be applied and, therefore, changes in their
fair value are recognised immediately in the Income Statement
resulting in an income of GBP755,000 (H1 2020: charge
GBP100,000).
5) EARNINGS PER ORDINARY SHARE (EPS)
Basic earnings per share for the period is calculated on the
basis of profit for the period after tax, divided by the weighted
average number of shares in issue of 123,262,000 (25 December 2021:
124,252,000).
Basic diluted earnings per share for the period is calculated by
adjusting the weighted average number of ordinary shares in issue
to assume conversion of all potential dilutive ordinary shares,
which for 31 December 2022 is 130,733,000 (25 December 2021:
132,183,000).
An adjusted earnings per share has also been calculated as, in
the opinion of the Board, this will allow shareholders to gain a
clearer understanding of the trading performance of the Group.
The adjusted earnings per share exclude amounts shown under
significant and non-recurring items in the Consolidated Statement
of Comprehensive Income and exclude amortisation of
intangibles.
26 weeks to 26 weeks to
31 Dec 2022 25 Dec 2021
GBP000 GBP000
---------------------------------- -------------------------------- ------------------
Profit
Profit attributable to equity
holders of the Company (basic) 4,523 3,997
---------------------------------- -------------------------------- ------------------
Significant non-recurring
and other items (329) 151
Amortisation of intangibles 266 287
---------------------------------- -------------------------------- ------------------
Numerator for adjusted earnings
per share calculation (adjusted
basic) 4,460 4,435
---------------------------------- -------------------------------- ------------------
Basic Diluted Basic Diluted
'000 '000 '000 '000
---------------------------------- ---------- ----------- ------------ -------------
Shares
Weighted average number of
ordinary shares in issue
during the period 123,262 123,262 124,252 124,252
Dilutive effect of share
options - 7,471 - 7,931
---------------------------------- ---------- ----------- ------------ -------------
123,262 130,733 124,252 132,183
---------------------------------- ---------- ----------- ------------ -------------
Basic Diluted Basic Diluted
Pence Pence Pence Pence
---------------------------------- ---------- ----------- ------------ -------------
Earnings per share
Basic / basic and diluted 3.7 3.5 3.2 3.0
Adjusted basic/ adjusted
basic and diluted 3.6 3.4 3.6 3.4
---------------------------------- ---------- ----------- ------------ -------------
6) ANALYSIS OF NET DEBT
Unaudited Unaudited Audited
26 weeks 26 weeks 53 weeks
ended ended ended
31 December 25 December 2 July
2022 2021 2022
GBP000 GBP000 GBP000
-------------------------------------------- ------------- ------------- -----------
Net cash at bank 11,501 8,697 7,381
Loans after more than one year (34,209) (21,411) (27,875)
Hire purchase obligations due within
one year (56) (103) (76)
Hire purchase obligations due after
more than one year (57) (73) (75)
Bank debt (34,322) (21,587) (28,026)
-------------------------------------------- ------------- ------------- -----------
Unamortised transaction costs 1,020 73 799
-------------------------------------------- ------------- ------------- -----------
Bank debt net of unamortised transaction
costs within one year 143 (103) 124
Bank debt net of unamortised transaction
costs more than one year (33,445) (21,411) (27,351)
-------------------------------------------- ------------- ------------- -----------
Bank debt net of unamortised transaction
costs excluding IFRS 16 lease liabilities (33,302) (21,514) (27,227)
-------------------------------------------- ------------- ------------- -----------
Bank debt (before IFRS 16 debt)
net of cash at bank (22,821) (12,890) (20,645)
-------------------------------------------- ------------- ------------- -----------
Lease liabilities IFRS 16 within
one year (1,665) (2,349) (1,729)
Lease liabilities IFRS 16 after more
than one year (7,500) (8,796) (8,037)
-------------------------------------------- ------------- ------------- -----------
Lease liabilities IFRS 16 (9,165) (11,145) (9,766)
-------------------------------------------- ------------- ------------- -----------
Total Debt including IFRS 16 lease
liabilities (30,966) (23,962) (29,612)
-------------------------------------------- ------------- ------------- -----------
7) SHARE CAPITAL
No shares were issued during the period or the comparative prior
year period.
At 31 December 2022, 6,319,299 shares (H1 2021: 5,988,987) were
held by the Finsbury Food Group Plc Employee Benefit Trust.
Advisers
Company Secretary Independent Auditor
ONE Advisory Limited PricewaterhouseCoopers LLP
201 Temple Chambers Chartered Accountants
3-7 Temple Avenue One Kingsway
London Cardiff
EC4Y 0DT CF10 3PW
Tel: 0207 583 8304
Registered Office Registrars
Maes-y-coed Road Capita Registrars
Cardiff 34 Beckenham Road
CF14 4XR Beckenham
Tel: 029 2035 7500 Kent
BR3 4TU
Nominated Adviser and Broker Solicitors
Panmure Gordon (UK) Limited CMS Cameron McKenna Nabarro Olswang
40 Gracechurch Street LLP Cannon Place
London 78 Cannon Street
EC3V 0BT London
EC4N 6AF
Remuneration Committee Advisor
Deloitte LLP
Four Brindley Place,
Birmingham,
B1 2HZ
Registered Number
00204368
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END
IR QFLBLXLLEBBX
(END) Dow Jones Newswires
February 21, 2023 02:00 ET (07:00 GMT)
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