4 Finsbury Food Group Annual Report & Accounts 2017
We continue to make good progress in line with our stated aim of becoming a leading speciality bakery group in the UK.
We have delivered a resilient performance despite the changing consumer and customer dynamics and the challenging economic environment for food manufacturers across the industry, which has made the journey somewhat slower and harder than expected. The Board has reviewed the Group’s strategy in the light of these external changes and has concluded that there is no need for any radical change of direction and we still firmly believe we are set on the right path to achieve our goal. We will continue to work hard to run our existing businesses as efficiently and effectively as possible whilst investing for the future and keeping a solid balance sheet that can be utilised, as and when the right opportunities present themselves.
The Board welcomed Bob Beveridge as a Non-Executive Director in July and he will be joining the Audit Committee. The new Group management structure has bedded in well and is delivering the scale opportunities and benefits expected, whilst preserving our largely decentralised site system.
The Results
The Group’s revenue for the 52 weeks was £314.3m, up 0.3%, on a like for like basis, compared to last year’s adjusted 52 week figure. Profit before tax at £13.0m is up from £11.8m in the prior period, which on an adjusted and like for like basis is £16.6m versus £15.7m, representing a 5.6% increase. Debt is at 0.7 times EBITDA.
This result delivers on our expectations and has been achieved against a deflationary UK retail food market which is changing in terms of channel balance, as consumers shop in less traditional ways. This has led to an upswing in the discounter’s market share and online gains. Specific cost issues, that relate to the current weakness of Sterling and increased costs of the new national living wage have also had to be overcome through efficiency gains and price adjustment. The European business has performed strongly this year and has demonstrated the benefit of having a diversified portfolio. A full financial review is available further on in the Report.
This outcome has not been easy to achieve and has only been possible because of our Board’s long-term focus on driving efficiency and managing costs, as well as the hard work of Finsbury’s committed team. This was demonstrated when the Board was presented with the results of the first Group employee engagement survey. The participation was excellent and the results gratifying, with only a few areas marked for improvement.
Investing for the Future
The Group’s capital investment of £12.5m means we have completed, or are in the throes of completing, some very important strategic projects. A new cake line is coming on stream in Cardiff and there is a new IT system being rolled out which will give a common platform for the whole business. The benefits of these and other projects will help improve our overall productivity and offset increases in our cost base.
In light of the current environment, we maintain a strong focus on investing in our future. With this in mind we plan to invest in new plant, equipment and systems to further improve efficiency, product quality and our capability in sustainable and environmentally-responsible manufacturing. We continually assess our role within various product markets and are committed to critically reviewing our presence in those that are less successful. To this end the Company has entered into consultation with the workforce of Grain D’Or, the Group’s loss making pastry factory in North London, to close the site. This consultation will conclude mid-October.
Strategy for Continued Growth
The licensing of brands is an important part of the business and we have worked hard to improve and strengthen our relationships with existing licensees and we were delighted to launch a range of Mary Berry cakes in the second half of the year.
We continue to win awards for our products and to add to our capabilities, such as in a new cupcake line and an artisan bread production facility, both meeting the needs of changing consumer demands. In the same way, our new product development is increasingly directed towards providing healthier and more convenient products.
Development of the foodservice channel is also an ongoing target for growth alongside any business acquisitions that meet our criteria.
Finally, on behalf of the Board I would like to thank everyone who works at Finsbury for delivering another successful year. Their passion, energy and contribution continues to drive the business forward.
Dividends
The final dividend per share of 2.0p will take the total dividend for the year to 3.0p per share, up 7% from last year’s dividend of 2.8p per share.
£314.3m
The Group's revenue for the 52 weeks was £314.3m, up 0.3%, on a like for like basis, compared to last year's adjusted 52 week figure.
£16.6m
Adjusted profit before tax is £16.6m, up 5.6% from £15.7m in 2016 on a like for like basis.
£17.5m 3.0p
Total net debt is £17.5m, down £2.2m from £19.7m reported in the prior year.
The total dividend for the year is 3.0p per share, up 7% from last year's dividend of 2.8p per share.
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