Simonds Farsons Cisk plc - Full-Year Results
On 30 April, Simonds Farsons Cisk plc published its annual results for the financial year ended 31 January 2014.
Performance Overview
During the financial year under review, the Farsons Group registered a 1.9% increase in revenue to a record €78.6 million on the back of a stable economic environment, another record year of tourist arrivals and the campaigning activities in the beginning of the financial year in the run-up to the March 2013 general election. The preliminary statement of results further explained that revenues from beer and water exceeded the previous year’s figures whereas soft drink volumes were flat. Exports of locally produced beverages increased further and now represent 6% of local production. Importation of beers, wines, spirits and non-alcoholic beverages registered further impressive results. The food importation business faced another challenging year as market dynamics, including the presence of private labels, prompt the need for new strategies. The franchised food business registered another successful year with improved turnover and profitability as the performance of the Burger King and KFC outlets surpassed expectations.
However, the growth in turnover was offset by a 2.9% increase in cost of sales to €50.95 million which led to a practically unchanged gross profit of €27.67 million. Furthermore, the gross profit margin eased marginally to 35.2% from 35.8% in the previous financial year. Meanwhile, selling and distribution costs as well as administrative expenses collectively dropped by 2% to €19.3 million leading to an operating profit of €8.4 million, representing a 5.2% increase over the previous year’s comparable figure.
Net finance costs remained relatively unchanged at the €1.5 million level. The combined growth in revenue and the cost savings achieved led to a 5.7% increase in pre-tax profits to €6.85 million. After accounting for a tax charge of €0.53 million (2013: €0.51 million), the Group’s net profit for the financial year ended 31 January 2014 amounted to €6.33 million representing an increase of almost 6% over the previous year’s profitability figure. This translates into an earnings per share figure of €0.211 (2013: €0.199).
The condensed statement of financial position shows a 0.7% drop in total assets to €150.5 million and a 7.3% reduction in total liabilities to €55.26 million. This resulted in a 3.6% growth in shareholders’ funds to €95.27 million which translates into a net asset value per share of €3.176. The return on average equity of the Farsons Group is 6.8% and the return on average assets is 4.2%.
Dividend
The Directors recommended a final tax-exempt dividend of €0.05 per share to all shareholders as at the close of trading on 14 May subject to shareholder approval at the upcoming Annual General Meeting scheduled to be held on 18 June 2014. The final dividend will subsequently be paid on 19 June 2014.
Coupled with the interim tax-exempt dividend of €0.0333 per share paid out on 13 October 2013, the total tax-exempt dividend with respect to the financial year ended 31 January 2014 amounts to €0.08333 per share, unchanged from the dividend paid out in respect of the previous financial year.
Outlook
Looking ahead, the Directors noted that the market environment in which the Group operates remains extremely competitive. Nonetheless, the Directors believe that sustainable growth can be achieved through continued investments including the €27 million new beer packaging hall. This project will allow the Group to further develop its export business and become a regional beverage producer supplying external markets such as Italy and North Africa. The excavation and construction works for this project have now commenced and the new beer packaging hall is expected to be completed by April 2016. The Board also believes that there is further room for growth in the Group’s beverage importation arm as well as the food importation business although this line of business still faces considerable challenges. The franchised food outlets are also experiencing growth, and it is believed that the local market can absorb an additional number of outlets in strategically located positions. In this respect, the Farsons Group will be opening its first Burger King drive thru outlet this summer which will further strengthen the brand’s standing in the local market.
Commenting on the current financial year ending 31 January 2015, the Directors explained that positive local consumer confidence, growing tourism numbers, and the summer World Cup event should positively influence the Group’s business performance.
The Directors also noted that a considerable amount of preparatory work, including detailed studies on the ‘Farsons Business Park’ project, have been carried out and an international firm of architects has been appointed to propose a masterplan. Once this plan is complete, the Board will, in due course, be presenting the options available to the shareholders for their consideration.
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Simonds Farsons Cisk plc – Preliminary Statement of results for financial year ended 31 January 2014