18 Finsbury Food Group Annual Report & Accounts 2017
Earnings Per Share (EPS)
EPS comparatives to the prior year can be distorted by significant non-recurring items and other items highlighted on the previous page, as well as the impact of the 53rd week for the previous financial year. The Board is focused on growing adjusted diluted EPS, which is calculated by eliminating the impact of the items highlighted on the previous page as well as amortisation of intangibles and incorporates the dilutive effect of share options. Adjusted diluted EPS is 9.5p (2016: 9.5p for the 52 week period).
52 week 2017
Basic EPS Adjusted basic EPS Diluted basic EPS Adjusted* diluted** EPS
* Further details can be found in Note 9. ** Diluted EPS takes basic EPS and incorporates the dilution effect of share options.
The prior year to 2 July 2016 was a 53 week period. Like for like figures have been calculated using financial data by excluding the 53rd week. Cash Flow
There was an increase in our working capital requirement of £2.5 million (2016: £1.6 million) in the financial year, corporation tax payments made in the financial year totalled £2.7 million (2016: £1.6 million), the payments in the current and prior year took account of the research and development tax relief due to the Group and tax losses being utilised. Capital expenditure in the year amounted to £12.5 million (2016: £12.1 million).
Debt and Bank Facilities
The Group’s total net debt is £17.5 million (2016: £19.7 million) down £2.2 million from the prior year. Within this total, £11.6 million is due within one year, including cash at bank and invoice finance (2016: £10.9 million).
The Group’s debt facility is a bilateral facility with HSBC Bank Plc and Lloyds Bank Plc totalling £50.9m, the key features of the facility are as follows:
• Overdraft (£2.0m) • Term loan (£13.4m)
• Confidential invoice discounting facility (£22.0m)
•Mortgage facility (£3.5m) • Rolling asset finance facility (£2.0m) • Revolving credit facility (£8.0m)
Note 18 gives details of the amounts drawn on these facilities and maturity dates.
The Group is able to offer strong asset backing to secure its borrowings. The Group owns freehold sites at Memory Lane in Cardiff, Fletchers’ site at Sheffield and Lightbody and Campbells in Scotland. In addition, the Group has a strong trade debtor book to support the invoice discounting facility, made up primarily of the UK’s major multiple retailers. This debtor book stood at £45.2 million (2016: £44.9 million) at the period end date.
The Group recognises the inherent risk from interest rate rises, to mitigate these risks the Group uses interest rate swaps. There was no interest rate swap coverage in place at the year end, (2016: coverage of £9.0 million, equivalent to 46% of total net bank debt). The Group has one forward dated interest rate swap for five years from 3 July 2017 with a coverage of £20 million (2016: £9 million), the forward dated swap has a rate of 0.455% (2016: weighted average rate 1.8%).
The effective interest rate for the Group at the year end, taking account of the interest rate swap in place with base rate at 0.25% and LIBOR at 0.42%, was 2.15% (2016: 3.0%). A £3.0 million swap fixed at 1.65% expired on 22 May 2017 and a £6.0 million swap fixed at 1.89% expired on 2 June 2017.
Financial Covenants
The Board reviews the Group’s cash flow forecasts and key covenants on a regular basis to ensure that it has adequate facilities to cover its trading and banking requirements with an appropriate level of headroom. The forecasts are based on management’s best estimates of future trading. There has been no breach of covenants during the year.
Interest cover (based on adjusted earnings before interest, tax, depreciation and amortisation – EBITDA) for the 52 weeks to 1 July 2017 was 28.4 (2016: 23.4). Net bank debt to EBITDA (based on adjusted EBITDA) for the year to 1 July 2017 was 0.7 (2016: 0.8).
Taxation
The Group taxation charge for the year was £3.0 million (2016: £3.3 million). This represents an effective rate of 21.4% on profits before significant non-recurring items (2016: 20.4%). Further details on the tax charge can be found in Note 8 to the Group’s Financial Statements.
Non-Financial Key Performance Indicators
A range of non-financial key performance indicators are monitored at site level covering, amongst others, customer service, quality and health and safety. The Group Board receives an overview of these on a regular basis.
7.1p 9.8p 6.9p 9.5p
52 week 2016
5.9p 9.6p 5.8p 9.5p
52 week 2015
5.8p 8.3p 5.6p 8.0p
During the next financial year the Group will complete the upgrade of its business systems across UK bakery.
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