Simonds Farsons Cisk plc - Interim Results

On 30 September, Simonds Farsons Cisk plc published its interim financial statements for the six-month period ended 31 July 2015.

Performance Overview

During the first six months of the 2015/16 financial year, the Farsons Group generated €44.2 million in revenues representing a 7.5% increase over the previous comparable figure. The major contributor to this growth, in absolute terms, came from the ‘Importation and sale of food and beverages including wines and spirits’ segment, with a €1.6 million growth (+12.9%) in turnover to €14.1 million. Moreover, the ‘Operation of franchised food retailing’ segment saw a jump of 16.2% (+€0.8 million)  in revenues to €6.3 million. The core ‘Brewing, production and sale of beer and branded beverages’ segment also performed positively with a 3.1% in revenues (+€0.7 million) to €23.8 million.

Cost of sales also increased by 6.5% to €27.1 million leading to a record gross profit of €17.1 million, representing a 9.1% increase over the previous comparable period. Similarly, the gross profit margin improved to 38.7% from 38.1% during the six months ended 31 Jul 2014.

Other operating expenses increased by 8.0% to €11.6 million leading to an operating profit of €5.5 million which represents an 11.7% increase over the previous comparable period. Nonetheless, the operating profit margin was relatively unchanged at 12.4%.

After accounting for net finance costs of €0.68 million, 5.6% lower than the previous comparable period, the Group’s pre-tax profit amounted to a record €4.8 million, representing a 14.6% increase over the previous comparable period. The tax expense eased by 8.2% to €0.22 million leading to a net profit figure of €4.6 million compared to €4.0 million recorded during the six months ended 31 July 2014. This translates into an earnings per share of €0.153 (HY to Jul 14: €0.134).

The Directors explained that the Group’s solid performance was obtained on the back of a buoyant performance of the local economy, further growth in tourist arrivals and expenditure, the successful marketing of the Group’s beer portfolio, volume growth in imported beverages, and improved performance from the franchised food business.

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.

Moreover, the Farsons Group is planning to expand its logistics operations and warehousing capabilities while also developing new office space above the current administration block. The estimated cost of these and related investments amount to €10 million and works are expected to commence in January 2016 and should be completed by the end of 2017.

Changes to taxation rules

In accordance with recent changes to the taxation rules on capital gains, the Group benefited from a reduction in the required deferred tax provision of €2.9 million. Of these, €1.8 million have been reflected in the consolidated income statement under discontinued operations whilst the balance of €1.1 million was adjusted through equity.

Property Spin-off

Further to the Company Announcement dated 29 May 2015 in which the Group explained that planning applications for the development of the Farsons Business Park were duly submitted to MEPA, the Directors noted that since then, further detailed designs, analysis and specifications have been undertaken. The property management division, which had been re-classified as ‘Discontinued operations’, registered a profit contribution of €1.8 million during the first half of the 2015/16 financial year following the changes in tax explained above.

The property spin-off is set for approval by the next Annual General Meeting. Funding options and details of the spin-off are currently being analysed by the Board.

Dividend 

The Directors declared an unchanged net interim dividend of €0.0333 per share to all shareholders as at close of trading on 2 October. The interim dividend will subsequently be paid on 20 October.

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Simonds Farsons Cisk plc – Interim Report for the 6 months ended 31 July 2015.