FIF.L Regulatory News (FIF)

Finsbury Food Group plc

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 four months of the new financial year.

The Board is pleased to report that, following the very strong growth of recent years, trading has been successfully maintained at these levels into the new financial year and performance is in line with expectation. Total Group sales revenues were £101.5m during the first four months, despite an established trend of UK retail food market deflation. The UK Bakery division declined by 4.0% however the Overseas division, the Group's 50% owned European business, grew by 36.5% continuing to demonstrate the strengths of our strategic diversification.

Whilst consumer confidence has remained stronger than anticipated, input costs, which are globally priced in dollars or euros, have increased substantially following sterling's weakness. The Group has been able to respond to these challenges by modifying promotional activity whist also reviewing potential opportunities for reformulation changes to minimise the on-cost and maintain affordability of our great products for customers.

The Group continues to benefit from strong cashflow allowing elevated levels of investment to increase product innovation and importantly efficiency and productivity throughout the Group. The Directors see this as a fundamental part of our long-term competitiveness as well as enabling the Group to continue to deal with known headwinds such as sterling induced commodity inflation and the planned national living wage increases.

Our larger, more diversified speciality bakery group is a strong multi-channel business which the Board believes is well equipped to deliver growth and improved shareholder value over the coming years.

This announcement contains inside information.

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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 £950m (Source Symphony IRI 52 w/e 13 August 2016). The annual retail bread and morning goods market has a value in excess of £4.0 billion (source Kantar Worldpanel 52 weeks to 19 June 2016). 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 that supplies