Simonds Farsons Cisk plc - Interim Results

On 25 September 2019, Simonds Farsons Cisk plc published its condensed interim financial statements for the six-month period ended 31 July 2019.

Performance Overview

During the first half of the 2019/20 financial year, Farsons generated record revenues of €53.3 million, representing a 4% increase over the previous comparable figure and reflecting growth across all of the Group’s business segments. Revenue from ‘Brewing, production & sale of beer and branded beverages’ increased by 4.8% to €28.9 million – the major contributor to the Group’s growth in revenue in absolute terms. Similarly, revenues from the ‘Operation of franchised food retailing’ segment rose by 8.6% to €8.67 million whilst the ‘Importation, wholesale & retail of food and beverages’ segment registered a marginal growth of 0.2% to €15.8 million.

Given the increased level of business, cost of sales edged 5.4% higher to €31.8 million. On the other hand, operating expenses eased by 0.3% to €13.8 million, partly reflecting the impact of the new accounting rule ‘IFRS 16 – Leases’. In this respect, Farsons also explained that although EBITDA increased by around 11% to €12.3 million (H1 2018/19: €11.1 million), part of this increase was due to the impact of ‘IFRS 16 – Leases’ which boosted the reported EBITDA figure by 5%.

After accounting for net finance costs of €0.73 million, the Group’s pre-tax profits amounted to €6.92 million, representing an increase of 5.2% over the previous comparable period. The tax expense amounted to €0.52 million leading to a net profit figure of €6.4 million compared to €6.11 million during the first six months of the 2018/19 financial year. This translates into an annualised return on equity of 11.6% (H1 2018/19: 10.8%).

Investments

In their Interim Report, the Directors explained that during the first six months of this financial year, Farsons invested in a more environmentally friendly car and truck fleet, together with additional investments in energy efficient plant. However, the most significant investment currently being undertaken by Farsons is the restoration and rehabilitation of the iconic Farsons Old Brewhouse. This landmark regeneration project is well underway and on track for the targeted completion date of Q1 2021. The project will provide a Visitor Experience, a Microbrewery, a Brewpub, a Cisk bar, a food court and multiple indoor and outdoor event areas for both business and leisure activities.

Outlook

In their commentary, the Directors of Farsons noted that the Group remains focused on continuously improving its product offering and business operations. Despite the growing competitive environment and the unfavourable weather conditions in the earlier months of the year, the Directors stated that the interim financial results are encouraging.

The Directors also referred to the government’s commitment to implement the Beverage Container Refund Scheme (“BCRS”). This presents challenges for the beverage industry and Farsons, along with other interested parties, is taking a leading role to secure the most effective outcome following the introduction of the scheme. The Directors reaffirmed their commitment to focus on internationalising the business and remain cautiously optimistic of the growth potential in existing and new export markets. Changing trends in the tourist market and in consumer spending patterns will continue to be important challenges for the Group, as will the maintenance of equitable market conditions that ensure a level playing field for all operators in the sector. The Directors also recognised that the long-term investment strategy deployed over the years will continue to prove beneficial in providing the diversified high quality product mix sought by customers in an efficient, competitive and profitable manner.

Dividend 

The Directors declared an unchanged net interim dividend of €0.0333 per share to all shareholders as at close of trading on Monday 30 September 2019. The interim dividend will subsequently be paid on Wednesday 16 October 2019.

Download

Simonds Farsons Cisk plc – Condensed Interim Financial Statements as at 31 July 2019.