Simonds Farsons Cisk plc - Interim Results

Turnover of the Farsons Group during the six months ended 31 July 2004 increased by 5.7% to Lm13.5 million. An analysis by business segment of the Group’s turnover reveals that revenue from the brewing, production and sale of beer and branded beverages dropped by 10.3% (Lm883,000) to Lm7.7 million. Turnover from the importation and sale of food and beverages increased by 71.3% or Lm1.7 million to a total of Lm4.2 million during the six month period under review.

This increase is mainly attributable to the acquisition of the food importation and distribution business of Law. Quintano on 29 April 2004. In the notes to the interim financial statements published, the Directors explain that the total consideration payable on the acquisition amounted to Lm2.2 million, of which Lm1.1 million related to the immovable property also acquired. The fair value of the acquired net identifiable assets as at the date of acquisition amounted to Lm1.9 million, resulting in goodwill of Lm247,000. Revenue from the operation of franchised food retailing establishments decreased by 5.5% to Lm1.5 million with revenue from property management at Lm106,000 (July 2003: Lm142,000).

The Farsons’ Group gross profit for the six months ended 31 July 2004 amounted to Lm3.2 million, 8.5% (Lm302,000) lower than the gross profit of July 2003. Meanwhile Group operating profit totalled Lm827,000 in July 2004, Lm341,000 lower than the operating profit of the previous interim period. The segmentation of the operating profit by line of business shows that this drop was solely attributable to a lower profit from the brewing, production and sale of beer and branded beverages.

In fact the operating profit from this business segment amounted to Lm919,000, a drop of 33.2% (Lm456,000) on the Lm1.4 million registered in July 2003. Profit from the importation and sale of food and beverages increased by 36.4% or Lm67,000 to Lm251,000. Improvements were registered in the other lines of business.

Group profit before tax for the six months ended 31 July 2004 totalled Lm462,000, 40% below the profits of July 2003. After accounting for taxation and minority interest, the profit for the period amounted to Lm504,000 (July 2003: Lm762,000). Earnings per share dropped from 3c to 2c.

The Group's total assets as at the end of July 2004 amounted to Lm38.4 million with total shareholders funds at Lm14.7 million giving a book value per share of 57c4.

The Farsons’ Directors attribute this lower level of profitability mainly to the following:

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