On 29 September 2021, Simonds Farsons Cisk plc published its condensed interim financial statements for the six-month period ended 31 July 2021.
During the first half of the 2021/22 financial year, Farsons generated revenues of €41.6 million representing an increase of just over 13% when compared to the previous corresponding period. The sharpest uplift took place in the ‘Franchised Food Retailing’ business as sales rebounded by 50% (or +€2.09 million) to €6.28 million which, however, is still 27.6% lower than the record of €8.67 million achieved in H1 2019/20. Similarly, although sales within the ‘Importation, Wholesale and Retail of Food and Beverages’ arm climbed by 11.1% (or +€1.2 million) to just under €12 million, this is 24% lower than the corresponding period pre-pandemic. On the other hand, revenues generated by the ‘Brewing, Production and Sale of Branded Beers and Beverages’ increased by 7.1% (or +€1.55 million) to €23.4 million which is 18.9% lower than the volume of sales generated in the first half of FY2019/20.
Despite the strong rebound in business, operating expenses only increased by 3.6% to €35.8 million reflecting the more efficient operating model adopted by the Group across all business segments which was maintained during the period under review. As a result, operating profit (‘EBIT’) more than doubled to €5.8 million compared to €2.22 million in H1 2020/21. Likewise, the EBIT margin climbed to 13.9% (compared to 6% in H1 2020/21) which is only 50 basis points lower than the record (at interim stage) of 14.4% posted in the first half of the 2019/20 financial year. In this respect, the segmental information provided in the Interim Report shows that the biggest contributor to the rebound in profitability was the ‘Brewing, Production and Sale of Branded Beers and Beverages’ as this segment posted an EBIT of €3.52 million compared to €1.91 million in H1 2020/21. On the other hand, the ‘Importation, Wholesale, and Retail of Food and Beverages’ arm recorded an EBIT of €1.39 million (+€1.11 million), whilst the ‘Franchised Food Retailing’ business generated an EBIT of €0.89 million compared to just €0.04 million in H1 2020/21.
After accounting for net finance costs of €0.61 million and tax charges of €0.3 million, Farsons reported a net profit of €4.88 million which, in turn, translates into an annualised return on average equity of 8.1% compared to 2.8% in the corresponding period last year, and 12.1% in H1 2019/20.
The condensed Statement of Financial Position as at 31 July 2021, when compared to the corresponding figures as at 31 January 2021, shows that total assets increased by 4.7% to €195.8 million whilst total liabilities climbed 5.7% higher to €71.2 million. As a result, the equity base of Farsons expanded by 4.1% to €124.6 million.
The Board of Directors resolved to distribute a record (at interim stage) net dividend of €0.05 per share which is payable on 20 October 2021 to all shareholders as at close of trading on 4 October 2021.
In addition, the Board noted that should business conditions continue improving, the Group will consider declaring another interim dividend before the end of the 2021 calendar year.
During the period under review, Farsons continued to monitor and curtail capital investments, retaining only those investments deemed essential for ongoing projects and product development that ensure the Group retains its innovative and competitive edge.
The major investment currently being undertaken by the Group is the restoration and rehabilitation of the ‘Old Brewhouse’. This landmark regeneration project is now set for completion by the end of 2021 with a gradual opening of the various facilities to the public at the start of 2022.
Commenting on the outlook, Farsons explained that notwithstanding the uncertainties related to the pandemic, the Group is cautiously optimistic that the gradual recovery of the food and beverage market for the local and tourism sectors currently being experienced will be sustained. In this respect, Farsons is well placed to achieve the financial targets as set out in the Financial Analysis Summary published on 21 July 2021. These include:
- Revenues of €91.7 million (+25.6%) which would be just 11.4% short of the record turnover figure of €103.5 million achieved in the 2019/20 financial year.
- EBITDA of €19.3 million (+29.1%) which would be 15.1% lower than the level of €22.7 million recorded pre-pandemic.
- Net profit of €9.38 million compared to €3.33 million in FY2020/21.
In conclusion, Farsons warned that a looming threat is the growing evidence of sustained inflationary pressures that are building up, with significant price increases being experienced across a wide range of raw materials, products and services, including particularly sharp increases in shipping costs.