FIF.L Regulatory News (FIF)

Finsbury Food Group plc

Pre-Close Trading Statement

Finsbury Food Group Plc (AIM: FIF), a leading UK speciality bakery manufacturer of cake, bread and morning goods for both the retail and foodservice channels, is today providing an update on trading for the first half of the current financial year, ended 31 December 2016, prior to entering its close period.

The Board is pleased to report that since the AGM trading update in November 2016, trading has continued to be solid throughout the Christmas period and performance is in line with management expectations following the significant growth achieved in recent years. Total Group sales revenues were £156.6m during the first half, delivering a flat year on year performance. The UK Bakery division declined by 2.9%, against a backdrop of UK retail food market deflation in the period, whilst the Overseas division, the Group's 50% owned European business, grew by 31.7% continuing to demonstrate the strengths of our strategic diversification.

The Group continues to benefit from strong cashflow and invested a record £5m in capital projects in the first half to build on its successful product innovation and importantly continue to improve efficiency and productivity throughout the Group. The Board has identified continued investment as a fundamental part of the Group's long-term competitiveness strategy and it will play an important role in helping address the current challenges of sterling induced commodity inflation and planned national living wage increases. As previously communicated, the scale of the current cost inflation is such that despite such internal initiatives, further cost recovery will be required and will become inflationary in the second half and beyond.

The Board has built the Group into a diverse multi-channel speciality bakery group. Following the exceptional growth and diversification over the prior years, the business is well placed to maintain its position, despite the market conditions. As such, the Board believes it is well equipped to continue to deliver growth and improved shareholder value over the coming years.

This announcement contains inside information.

- ENDS -

Sam Modlin

Notes to Editors:

§ Finsbury Food Group Plc (AIM: FIF) is a leading UK manufacturer of cake and bread bakery goods, supplying a broad range of blue chip customers within both the grocery retail and 'out of home eating' foodservice sectors including major multiples and leading foodservice providers.

§ Following the acquisition of the Fletchers Group of bakeries, the Company is one of the largest speciality bakery groups in the UK with annualised sales in 2016 exceeding £300 million.

§ The Company's bakery product range is comprehensive and includes:

· Large premium and celebration cakes.

· Small snacking cake formats such as cake slices and bites.

· Artisan, healthy lifestyle and organic breads through to rolls, muffins (sweet and savoury) and morning pastries, all of which are available both fresh and frozen dependent on customer channel requirements.

§ The Company is now the second largest manufacturer of ambient packaged cake (excluding In Store Bakery (ISB)) in the UK, a market valued at over £945m (Source Symphony IRI, 52 w/e 31st December 2016). The annual retail bread and morning goods market has a value of £3.7 billion (source Kantar Worldpanel 52 weeks to 1 January 2017). The UK foodservice bread and morning goods bakery sector is worth approximately £800 million per annum, 70 per cent of which is in morning goods. The UK foodservice cake and sweet treat bakery sector is worth approximately £600m per annum.

§ The Company comprises a UK Bakery division and an Overseas division:

· UK Bakery has manufacturing sites in Cardiff, East Kilbride, Hamilton, Twechar, Salisbury, Sheffield, London and Manchester.

· The overseas sector comprise, the Company's 50% owned Company Lightbody Stretz Ltd, which supplies and distributes the Group's UK manufactured products and third party products, primarily to Europe.