Simonds Farsons Cisk plc - Full-Year Results

On 4 May, Simonds Farsons Cisk plc (“Farsons” or the “Group”) published its preliminary results for the financial year ended 31 January 2017.

Performance Overview

During the period under review, Simonds Farsons Cisk plc registered a 2.4% increase in turnover to a record of €88.1 million (FY2015/16: €86 million) on the back of the continued positive performance of the local economy leading to increased consumer spending as well as record tourist arrivals. The Group explained that it continued to drive forward and implement a number of measures aimed at further improving productivity and overall efficiency along with higher quality standards. The beer segment continued to register positive results notwithstanding the increased depreciation following the commissioning of the new beer packaging facility. Similarly, the beverage importation arm also registered a positive performance across most of its diverse product categories, partly as a result of various marketing and sales activities targeting different market segments as well as the launch of new products. Notwithstanding the increased competition and a more challenging market, the food importation arm posted an encouraging performance for the year under review and registered a growth in turnover and contribution. The franchised food business also registered a significantly positive year, with increases in sales, guest count and profitability over the previous year across its three brands, namely Burger King, Pizza Hut and KFC. The full year performance of the new Burger King restaurant together with the first KFC drive-thru restaurant were instrumental in attaining this positive performance. On the other hand, Farsons noted that the continued emphasis on obesity and sugar consumption, coupled with the introduction of an excise duty, dampened the consumption of soft drinks. Furthermore, the intensive competition on water has impacted volumes in this business unit.

Despite the increased business activity of the Group, total costs (mainly comprising cost of sales, selling and distribution expenses, and administrative expenses) only increased by 1% to €75.3 million (FY2015/16: €74.6 million). Given the larger increase in revenues, operating profit jumped by 12% to €12.9 million (FY2015/16: €11.5 million) which translates into an operating profit margin of 14.6% (FY2015/16: 13.5%). Excluding depreciation, amortisation and net finance costs, earnings before interest, tax, depreciation and amortisation (“EBITDA”) amounted to €21 million – an increase of €2.5 million (or +12.4%) over the corresponding period last year.

During the financial year ended 31 January 2017, Farsons increased its borrowings by €9 million, mainly as a result of the significant investment in the new beer packaging facility. As a result of this, net finance costs increased by 7.5% to €1.47 million and the Group’s gearing ratio advanced to 22% compared to 18% as at 31 January 2016. Nonetheless, given the surge in EBITDA, interest cover still improved to 14.3 times from 13.6 times in the previous comparable period.

Overall, the Group registered a record pre-tax profit of €11.4 million (FY2015/16: €10.1 million). Accordingly, after taking into account a tax credit of €0.47 million and a profit of €0.27 million from discontinued operations (i.e. the Group’s property-related business which is the subject of a planned spin-off in 2017), Farsons posted yet another record net profit of €12.1 million, representing an improvement of 8.1% over the previous financial year’s corresponding figure. This translates into an earnings per share of €0.404 (FY2015/16: €0.374).

The condensed Statement of Financial Position shows that total assets grew by 12.5% to €182.9 million, mainly reflecting retained profits and certain property revaluations. Similarly, total liabilities increased by 12.3% to €59.7 million reflecting the higher level of borrowings of the Group. As a result, shareholders’ funds also increased to reach €123.3 million which translates into a net asset value per share of €4.11 (FY2015/16: €3.65).


The Directors recommended a final net dividend (out of tax exempt profits) of €0.08 per share, representing a 9.1% increase over the final net dividend paid out in respect of the previous financial year (€0.0733 per share). The dividend will be paid on 28 June 2017 to all shareholders as at close of trading on 24 May 2017 subject to shareholders’ approval at the upcoming Annual General Meeting (“AGM”) scheduled to be held on 28 June 2017.

Coupled with the interim dividend of €0.0333 per share, the total net dividend declared in respect of the financial year ended 31 January 2017 amounted to €0.1133 per share, representing a 6.3% increase over the total net dividend distributed in the previous comparable period (€0.1066 per share).

Property Interests & Trident Estates

The Group explained that at the forthcoming AGM scheduled to be held on 27 June 2017, a resolution to approve the spin-off of Trident Estates Limited shall be put forward for consideration and approval by shareholders. The spin-off is to be effected through the payment of a dividend in kind by way of a distribution of the Group’s shareholding in Trident to its shareholders. Following shareholders’ approval of the spin-off process, Trident Estates Limited intends to file an application with the Listing Authority for admission to listing of its shares on the Malta Stock Exchange. A circular explaining the details of the proposed spin-off and its financial implications, including the effect on the Group’s operating results and the effect on the Company’s financial position, shall be distributed to all shareholders.

Meanwhile, development plans for Trident Park have been submitted to the Planning Authority and a decision is expected to be taken in the near future.


Farsons also noted the commissioning of the new beer packaging facility which was inaugurated on 7 September 2016 and completed on schedule and within budget. The Group explained that it is now geared to pursue its growth ambitions given that it is better equipped to market its brands in new and innovative packaging, thereby in a position to compete in new and untapped export markets. Meanwhile, works on extending warehousing facilities are currently underway with new loading/unloading bays planned to be installed by July 2017. During the last quarter of 2017, the present kegging facilities will be replaced with a new and modern plant in order to improve the overall efficiency of the Group’s kegging operations. Moreover, a new office complex is currently being completed, allowing for a more contemporary and effective working environment in line with established international standards for such premises.


Looking ahead, Farsons noted that new and ongoing market trends, such as more consumption at home, continue to persist and this, in turn, presents Farsons with several challenges but also new market opportunities, with the growing popularity of speciality beers being a clear example in which Farsons is well positioned to respond.

In line with the ongoing investments within its operations, the Group shall continue to implement its internationalisation strategy. Within this vision, Farsons is renewing its prime focus on the Italian market, while also appointing well-established importers and distributors in other targeted international markets. Innovation remains high on the Group’s agenda and management will continue to prioritize the development of products which meet, and exceed, evolving and dynamic consumer expectations. In line with its commitment to both environmental and social responsibilities, the Group has also pledged to firmly contribute to the objective of reducing sugar consumption by 10% by 2020.

Farsons added that it faces a year with minimal organic growth amid challenging trends in consumption. For this reason, it continues to focus on innovation and on its exports strategy. More specifically, Farsons noted that the beverage importation arm continues to face a highly competitive environment with intensive pricing policies being encountered. Nonetheless, the Group is confident that the results of this business segment will remain steady as management continues to focus in growing its portfolio of brands. In the case of the food importation business, management continues to focus on business development, in particular by launching new brands and range extensions. The Food Chain business will face increased lease costs on a number of its outlets. This, coupled with the opening of new competing brands on the local market, is expected to continue to put pressure on its results. However, management still feels confident that despite this, there will not be a deterioration in its performance.

Overall, while competition remains fierce and growing, the Directors believe that the Group is adequately positioned to offer the required resilience while being able to respond effectively and proactively to an evolving and increasingly complex market, both locally and overseas.


Simonds Farsons Cisk plc – Preliminary Statement of Annual Results for the financial year ended 31 January 2017.