News blog

Finsbury Food Group

BY: Andrew Hore |
POSTED: 25/03/2009 |

Finsbury Food Group has renegotiated its bank debt.

The debt was an enormous burden on the cakes maker and cash flow from the business was not making much of a dent in the figure. The company was unable to meet the repayments on the debt. The renegotiation will increase the effective interest rate by 1.1 percentage points. In the first half of 2008-09 the interest charge was covered more than three times by adjusted profits.

Net debt was £42.9m at the end of 2008 and there is £6m of deferred consideration payable.

HSBC is now providing facilities totalling £49m. The overdraft limit will fall from £12.5m to £2m and there will be a £16m invoice discounting facility. There is also an asset finance facility of £5.4m. The rest of the facility covers longer-term loans and mortgages. Finsbury feels that this will provide sufficient headroom.

Revenues grew from £82.8m to £92.1m in the six months to December 2008. Profits, adjusted for non-recurring balance sheet items, declined from £3.3m to £1.8m.

Profits from cakes fell while those from bread and Free From products increased

Raw material costs have stabilised with any price falls being offset by the weakening of sterling.

Revenue growth is 10% in the first eight weeks of 2009 – or 5% on a like-for-like basis. The fastest revenue grow is in the relatively small Free From business which grew 14% thanks to new products - although that was down on the 23% like-for-like growth in the first half.

At 14.25p a share, Finsbury is valued at £7.33m.

KBC Peel Hunt forecasts profits of £5m for the full year. That puts the shares on just over two times prospective 2008-09 earnings. The broker is still predicting a 2.2pashare final dividend but this could be cut further this year. Last year’s 2.2p a share dividend cost £655,000.

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