Simonds Farsons Cisk plc - Interim Results & Dividend Announcement

During a meeting held on 26 September 2007, the Board of Directors of Simonds Farsons Cisk plc approved the financial statements for the six-month period ended 31 July 2007. The Directors declared a net interim dividend of Lm100,000 (0c3889 per share), an increase of 33% over last year’s interim dividend. The dividend will be paid on 19 October 2007 to shareholders as at close of trading on Tuesday 2 October 2007.

During the first half of the year ended on 31 July 2007, the Farsons Group’s turnover increased by 3.8% to Lm14.5 million mainly as a result of a 4.7% rise in the ‘brewing, production and sale of beer and branded beverages’ to Lm8.9 million. The Directors attribute this increase in sales of beers and branded beverages to new product launches (Cisk Excel and Kinnie Zest), an improvement in the number of tourism arrivals and a better economic environment. The segmental information included in the Interim Report detailing the breakdown of the Group’s revenue from the different areas of activity, also reveals that revenue from ‘importation and sale of food and beverages’ was unchanged at Lm3.9 million despite an increase in sales of Quintano Foods. Meanwhile, a 10.3% rise was registered in the ‘operation of franchised food retailing’ to Lm1.7 million.

Cost of sales during the six months to 31 July 2007 amounted to Lm10.7 million resulting in a gross profit of Lm3.8 million, an increase of 11.3% from the gross profit of Lm3.4 million generated in the first half of last year. The gross profit margin improved to 26.2% from 24.5% in July 2006. Operating expenses made up of selling and distribution costs and administrative expenses increased by only 1.6% to Lm2.6 million. Group operating profit during the first half of the financial year increased by 38.4% to Lm1.2 million resulting in an operating profit margin of 8.6% (July 2006: 6.5%).

The Group recognised a profit of Lm0.46 million from the sale of two properties which the Directors considered to be surplus to the Group’s requirements. The construction of the logistics centre in Mriehel which is expected to be completed in the coming months will enable Farsons to centralize its distribution activities and transfer the operations of Wands Limited from Qormi to the logistics centre. Moreover the Group will also be able to vacate the various distribution depots located in Gudja, San Gwann and Tal-Balal. While the Group has already secured the sale of the Gudja depot, it is also expected to pursue the disposal of the other two properties in due course.

Interest payable on the Group’s outstanding borrowings during the six months ended 31 July 2007 dropped by 14.2% to Lm0.3 million.

The Farsons Group registered a profit before taxation of Lm1.4 million (July 2006: Lm0.59 million) during the first half of the year. After deducting the tax expense of Lm0.18 million, profit attributable to shareholders amounted to Lm1.2 million. During the first half of last year the Group had generated a profit of Lm0.47 million which was negatively impacted by a loss of Lm64,000 related to the disposal of the Galleria Complex.

As at 31 July 2007 total assets of the Farsons Group amounted to Lm42.7 million with shareholders’ funds of Lm16.8 million. Annualised return on equity climbed to 15.3% with a similar improvement in the annualised return on assets of 7.1%.

In the Interim Report, the Directors confirmed that as announced during the Company’s 60th Annual General Meeting held on 27 June 2007, a valuation of all the Group’s properties has been commissioned. This is expected to positively impact the Group’s balance sheet given the strong capital appreciation within the property market during recent years and given that a large part of this property is shown at cost in the Company’s books.

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