Simonds Farsons Cisk plc - Interim Results
On 24 September, Simonds Farsons Cisk plc published its interim financial statements for the six-month period ended 31 July 2014.
Performance Overview
During the first six months of the 2014/15 financial year, the Farsons Group generated €41.1 million in revenues representing a 1.2% increase over the previous comparable figure. Once again, the major contributor to this growth was the ‘Brewing, production and sale of beer & branded beverages’ with a 1.9% growth in turnover to €23.1 million. The other two core operating segments only reported marginal improvements in revenue.
Cost of sales also marginally increased by 0.6% to €25.5 million leading to a record gross profit of €15.7 million representing a 2.1% increase over the previous comparable period. Similarly, the gross profit margin improved to 38.1% from 37.7% during the six months ended 31 Jul 2013.
Other operating expenses increased by 2.5% to €10.8 million leading to an operating profit of €4.9 million which still represents a 1.4% increase over the previous comparable period. Nonetheless, the operating profit margin was relatively unchanged at 11.9%.
After accounting for net finance costs of €0.72 million, 9% lower than the previous comparable period probably in line with further reductions in the Group’s borrowings, the Group’s pre-tax profit amounted to a record €4.2 million representing a 3.4% increase over the previous comparable period. The tax expense rose by 2.5% to €0.24 million leading to a net profit of just under €4 million compared to €3.8 million recorded during the six months ended 31 July 2013. This translates into an earnings per share of €0.132 (HY to Jul 13: €0.127).
The marginal improvement in the Group’s performance was obtained on the back of a good performance from a number of key brands, the introduction of new and innovative beer and beverage variants, FIFA World Cup related initiatives, record number of tourists visiting Malta coupled with an increased tourist spend, continued growth in the local economy as well as further consolidation of the Group’s beverage importation arm. On the other hand, the Group’s expansion plans were adversely impacted by the geo-political instability in Libya which is restricting exports to this country. Furthermore, the Group’s operation of franchised food outlets was impacted by pre-opening costs related to the new Burger King drive-through outlet in Qormi which opened at the end of July 2014. The Directors also noted that the Group’s food importation arm is facing various challenges although an action plan is in place in order to improve the business performance.
Outlook
Looking ahead, the Directors explained that the Group continues to operate in highly competitive markets with continual pressure on volumes and profit margins. As such, the Group will maintain its focus on efficiency improvements, innovation, cost containment and export growth.
The Directors also noted that construction works on the new state-of-the-art beer packaging facility are progressing according to schedule and should be completed in April 2016.
Potential Adjustments in financial statements as at 31 January 2015
The half-year report also indicates two possible events by the end of the financial year ending 31 January 2015 as follows:
(i) Revaluation of the Group’s property holdings;
(ii) Review of the extent to which all or part of the €15.5 million unrecognised deferred tax assets may be capable of utilisation in the foreseeable future.
Collectively, the two events are not expected to have a material impact on the Group’s equity.
Dividend
The Directors declared an unchanged interim dividend of €0.0333 per share to all shareholders as at close of trading on 30 September. The interim dividend will subsequently be paid on 17 October.
Download
Simonds Farsons Cisk plc – Half-Year Financial Report as at 31 July 2014.