LONDON (Alliance News) - Bakkavor Group PLC on Thursday reported a sharp jump in first half profit and said it has acquired for GBP12 million a bakery business serving major UK grocery chains.
The FTSE 250 company - which provides fresh meals such salads, desserts and pizza & bread - has bought Haydens Bakery Ltd from Real Good Food PLC for GBP12 million. Haydens bakes premium tarts, pies and crumbles, Danish pastries, sweet buns, yum yums and doughnuts and sells principally to major retail customers, and operates from two sites in Wiltshire, England.
Bakkavor said the Haydens acquisition will help to expand and extend its Desserts business. Total consideration of the deal includes GBP9.6 million in cash and GBP2.4 million of existing finance leases.
Separately, AIM-listed Real Good Food termed the sale as the next step in restructuring and improving performance of the company. It plans to use the disposal proceeds to reduce debts.
Bakkavor Group recorded pretax profit of GBP47.1 million for the six months to June-end, up from GBP8.2 million in the year-ago period, on revenue of GBP910.4 million and GBP903.3 million, respectively.
The sharp rise in interim profit was attributed to the rise in revenue, reduction in losses arising from redemption of notes, and lower finance costs.
First half finance costs decreased to GBP6.7 million from GBP27.0 million. Exceptional losses were cut to GBP300,000 from GBP19.1 million.
Operating profit for the first half fell 0.9% to GBP54.1 million with margins decreasing by 10 basis points to 5.9%. The decrease was due to the improvement in trading performance being offset by an increase in depreciation following the completion of a number of capital projects across the business.
"Looking ahead, we continue to remain cautious and anticipate little change in underlying economic and market trends. In particular, input price volatility continues which may in turn impact consumer demand going forward. Despite these pressures, our scale, passion for food and close partnerships with our customers leave us well placed and our expectations for the full year remain unchanged," said Chief Executive Agust Gudmundsson.
Bakkavor Group declared an interim dividend of 2 pence per share for the six month period. Shares in the company were trading flat at 177.60 pence each on Thursday morning.
Real Good Food shares were down 3.6% at 6.50 pence.
Bakkavor (BAKK)