Simonds Farsons Cisk plc - Full-Year Results

On 25 May 2022, Simonds Farsons Cisk plc published its Annual Report & Financial Statements for the year ended 31 January 2022.

Performance Overview

Revenues rebounded by 25.7% to €91.8 million (FY2020/21: €73.0 million) which, in turn, is in line with the forecasted figure of €91.7 million as provided in the Financial Analysis Summary (‘FAS’) published on 21 July 2021. Furthermore, the amount of revenues generated in the 2021/22 financial year is 11.3% lower than the record of €103.5 million posted in the 2019/2020 financial year prior to the outbreak of the pandemic.

The Group recorded strong growth across all business segments. Revenue from ‘Brewing, production and sale of branded beers and beverages’ was 19.2% higher than the previous comparable period and amounted to €49.5 million (representing 54% of total revenues). Moreover, sales generated by the ‘Importation, wholesale and retail of food and beverages’ segment surged by 34.2% to €26.5 million while revenues at the ‘Operation of franchised food retailing establishments’ segment increased by 34.4% to €15.7 million.

On the expenditure side, total costs increased by 16.3% to €78.3 million reflecting the increased level of business. In this respect, Farsons explained that during the year, various operational and cost saving efficiencies that were implemented at the start of the pandemic were maintained.

Given the sharper increase in revenues than costs, operating profit more than doubled to €13.4 million (FY2020/21: €5.7 million). Similarly, the operating profit margin improved to 14.7% from 7.8% in the previous financial year. Excluding depreciation and amortisation charges, EBITDA increased by 52% to €22.7 million which, in turn, is 17.6% higher than the projected figure of €19.3 million as provided in the FAS.

Overall, Farsons reported a profit before tax of €12.2 million compared to €4.4 million in the 2020/21 financial year. After taking into account a tax credit of €0.26 million (FY2020/21: tax charge of €1.1 million), the Group posted a net profit of €12.4 million which, in turn, translates into a return on average equity of 10.0% (FY2020/21: 2.8%).

The Statement of Financial Position shows an increase of 7.4% in total assets to €201 million, largely reflecting the increases in plant, property and equipment (+ €5.0 million), trade and other receivables (+€3.3 million), right-of-use assets (+€2.7 million), and inventories (+€ 2.6 million) which offset the reduction in cash balances (-€3.0 million). Total liabilities increased by 6.5% to €71.7 million as the reduction of €7.1 million in total debt to €34.3 million (when including lease liabilities amounting to €8.3 million) was offset by the increase in trade and other payables (+€10.8 million). As a result, the equity base of Farsons expanded by 8.0% to €129.2 million. Meanwhile, given the reduction in debt and the further increase in the equity base, the Group’s net gearing ratio (calculated as net debt divided by net debt plus equity) improved to 12.6% from 16.8% as at 31 January 2021. Similarly, the net debt to EBITDA multiple improved to 0.8 times from 1.6 times in 2021.

Dividend & Bonus Share

Following the two interim dividends of €0.05 per share each distributed in October 2021 and December 2021, the Directors of Farsons resolved to recommend an additional final net dividend out of tax-exempt profits of €0.1333 per share. The dividend will be paid on 24 June 2022 to shareholders as at close of trading on Wednesday 1 June 2022, subject to approval at the upcoming AGM which will be held remotely on Thursday 23 June 2022.

Subject to regulatory approval, the Directors are also recommending a bonus share issue of one share for every five shares held to shareholders as at close of trading on Wednesday 1 June. The bonus issue will be funded by a capitalisation of reserves amounting to €1.8 million. Further details on the date of allotment and listing of the bonus shares will be announced at a later stage.

Outlook

In their commentary, the Directors explained that global economic repercussions of the pandemic and the war in Ukraine have presented a new set of challenges for the Group due to the surge in raw material and shipping costs, coupled with widespread labour shortages and salary pressures. Nonetheless, Farsons is actively seeking to mitigate these challenges through efficient procurement planning, higher inventory levels and forward price commitments when possible.

The Chairman also explained that the redevelopment of the old brewhouse has entered its final phase and all units of ‘The Brewhouse’ project will be opened over the course of 2022. The new complex will include a visitor centre, various food and beverage outlets and an area dedicated to office space for rental. Farsons noted that it anticipates this project to be profitable in the short to medium term.