28 Feb 2013 07:00
Date: | 28 February 2013 |
On behalf of: | Finsbury Food Group plc ('Finsbury', 'the Company' or 'the Group') |
Embargoed until: 0700hrs | |
Finsbury Food Group plc
Sale of Free From Business for £21 million
Finsbury Food Group plc (AIM: FIF), a leading manufacturer of cake, bread and bakery goods, announces today that it has sold its Free From business for a total value of approximately £21 million to focus on its core Cake and Bread businesses.
The Free From business consists of two subsidiaries, Livwell Limited ("Livwell") and United Bakeries (Holdings) Limited ("UBH") (the holding company of United Central Bakeries Limited ("UCB")). These subsidiaries, which account for 14% of Group revenues, have been sold to Genius Foods Limited ("Genius"), on a debt-free, cash-free basis.
The sale will transform Finsbury's balance sheet with a cash balance of approximately £17.7 million paid to the Group on completion, and a further £3 million payable by the second anniversary of completion. This will allow Finsbury to focus on growing its cake and bread businesses, to further develop its licensed brand portfolio, and to take advantage of the right bolt on acquisitions to drive longer term value as opportunities and circumstance allow. In addition to the investment in its current businesses, the Group will also continue to pay down its outstanding debts.
The Group will continue on its stated strategy of generating returns for shareholders by building a crafted bakery group focused on premium, celebration and well-being that delivers for its customers and the end consumer.
John Duffy, Chief Executive of Finsbury Food Group plc, commented;
"We believe that our decision to focus on our core Cake and Bread business is the Group putting its best foot forward. The sale will allow the Group to further invest, pay down debt, and take advantage of additional opportunities available to us, with the ultimate goal of driving shareholder value."
INFORMATION ON THE FREE FROM BUSINESS AND ITS FINANCIAL PERFORMANCE
Through Livwell and UBH (the "Free From Companies"), Finsbury has been a producer of Free From bakery and other morning goods products since it acquired UCB in November 2005 for £2.7 million and Livwell in April 2008 for £9.6 million. In December 2010, the Group entered in to contractual joint venture arrangements with Genius in respect of fresh gluten-free bread and an additional range of gluten-free products to be sold under the Genius brand. UCB and Livwell produce Finsbury's gluten-free products as well as yum yums and potato scones.
The Free From Companies achieved total sales of £28.5 million for the year ended June 2012 and annual profit before tax of £0.6 million (after allocation of Group overhead costs and after the recharge of interest from Group). The annual profit before tax for the year ended June 2012 before allocation of Group overhead costs and before the recharge of interest from Group would have been £1.4m.
The value of the net assets of the Free From business is £6.1 million as of 29 December 2012.
SUMMARY OF THE SHARE SALE AGREEMENT
Under the sale and purchase agreement (the "Share Sale Agreement"), Finsbury is selling Livwell and UBH. As a result, the three subsidiary companies of UBH (including UCB) will also transfer to Genius. UCB and Livwell are the only operating companies out of the five subsidiaries being transferred. The rest are dormant (and have been since 2006).
Finsbury will receive approximately £17.7m million in cash on completion, with a further £3 million payable to it by Genius in cash by the second anniversary of completion. This deferred consideration is secured by way of a second ranking security over the Genius and Free From business. At completion, certain inter-company loans owed to/from Finsbury and UCB and Livwell, and external debt owed by UCB and Livwell, will be repaid.
As part of the transaction, the contractual joint venture arrangements between Finsbury and Genius noted above have been terminated.
For further information: | |
Finsbury Food Group plc | www.finsburyfoods.co.uk |
John Duffy (Chief Executive) | 029 20 357 500 |
Stephen Boyd (Finance Director) | |
Cenkos Securities plc
| |
Bobbie Hilliam (Corporate Finance) | |
Alex Aylen (Sales) | |
Redleaf Polhill | finsbury@redleafpolhill.com |
Rebecca Sanders-Hewett | 020 7566 6720 |
Jenny Bahr |
Notes to Editors:
§ Finsbury Food Group plc (AIM: FIF), is a leading manufacturer of premium and celebration cakes, low fat cake slices and artisan, organic and bread and morning goods.
§ Finsbury Food Group is the second largest manufacturer of Ambient Packaged Cake (excluding In Store Bakery) in the UK, a market valued at £903 m (Source: Kantar Worldpanel Total UK Coverage, 52 we 23rd December 2012 ).
§ The Group's strategy is to generate returns for shareholders by building a crafted bakery group focused on premium, celebration and well being that delivers for customers and consumers. Finsbury continues to develop its licensed brand portfolio to complement its core retailer brand relationships and improve its understanding of and response to changing consumer needs.
§ Whilst the Company sees exciting organic growth opportunities in all its businesses and its short-term focus is on integrating and growing its existing businesses, the aim is to take advantage of the appropriate bolt on acquisitions to drive longer term value as opportunities and circumstance allow.