Strategic Report
Corporate Governance
Financial Statements
Finsbury Food Group Annual Report and Accounts 2020
37 Earnings Per Share (EPS)
EPS comparatives to the prior year can be distorted by significant non-recurring items and other items highlighted above. The Board is focused on growing adjusted diluted EPS which is calculated by eliminating the impact of the items highlighted above as well as amortisation of intangibles and incorporates the dilutive effect of share options. Adjusted diluted EPS is 7.7p (2019: 9.0p).
52 week 2020
Basic EPS
Adjusted basic EPS Diluted** basic EPS
Adjusted* diluted** EPS * Further details on adjustments can be found in Note 9.
** Diluted EPS takes basic EPS and incorporates the dilutive effect of share options.
(0.6)p 7.9p
(0.6)p 7.7p
52 week 2019
7.3p 9.3p 7.0p 9.0p
Cash Flow
There was a decrease in our working capital of £1.0 million (2019: £5.6 million increase) in the financial year driven by the downturn in trading as a result of the pandemic. Corporation Tax payments made in the financial year totalled £1.8 million (2019: £2.0 million). The payments in the current and prior year took account of the research and development tax relief due to the Group, tax losses being utilised, and a higher tax rate charged on overseas profits. Capital expenditure in the year amounted to £4.7 million (2019: £11.0 million).
Debt and Bank Facilities The Group’s total net debt is £26.5 million (2019: £35.6 million), down £9.1 million from the prior year. Responding to the Covid-19 pandemic, the Board immediately took a number of cash and cost-conserving actions to ensure the business remained on a sound footing to deliver on its longer-term growth ambitions. These included:
• The freezing of all discretionary expenditure and capital investment;
• Careful management of cash resources; and • The suspension of the interim dividend.
In addition to these measures, the Board and Executive team took a 30% salary reduction between April and June whilst other senior executives took a 20% reduction.
Throughout the year which includes the Covid-19 affected final 3 months the Group has remained profitable and has generated cash which has resulted in a reduction in net debt of £9.1 million. It has remained comfortably within its credit facility of £55.0 million. Furthermore, the Group has not looked to utilise any of the Government Loan schemes.
The Group recognises the inherent risk from interest rate rises, and uses interest rate swaps to mitigate these risks. The Group has two swaps, one for £20.0 million for five years from 3 July 2017 (fixed) at 0.455% and one for £5.0 million for three years from 28 March 2019 (fixed) at 1.002%. The total balance of swaps at 27 June 2020 is £25.0 million (2019: £25.0 million). The counterparty to these transactions is HSBC Bank Plc. The effective interest rate for the Group at the year end, taking account of the interest rate swap in place with base rate at 0.10% and LIBOR at 0.691%, was 2.2% (2019: base rate 0.500% and LIBOR 0.501% effective interest rate 2.0%.
Financial Covenants The Board reviews the Group’s cash flow forecasts and key covenants regularly, to ensure 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. As noted earlier, there has been no breach of covenants during the year and the Board does not expect any in the forecast periods.
Interest cover (based on adjusted earnings before interest, tax, depreciation and amortisation – EBITDA) for the 52 weeks to 27 June 2020 was 25.3 (2019: 28.0). Net bank debt to EBITDA (based on adjusted EBITDA) for the year to 27 June 2020 was 1.1 (2019: 1.4).
Taxation The Group taxation charge for the year was £2.8 million (2019: £3.3 million). The effective rate of tax on profits before significant and non-recurring and other items is 24.8% (2019: 22.6%). You can find further details on the tax charge in Note 8 to the Group’s Financial Statements.
Financial and Non-Financial Key Performance Indicators We monitor a range of financial and non-financial KPIs at site level covering, amongst others, productivity, quality and health and safety.
The Group Board receives a regular overview of all KPIs. We discuss these KPIs in further detail on pages 26 and 27.
The Strategic Report was approved by the Board of Directors on 18 September 2020 and was signed on its behalf by:
Stephen Boyd Director
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112
