FIF.L Regulatory News (FIF)

Finsbury Food Group plc

Trading Update

Finsbury Food Group plc (AIM: FIF), a leading manufacturer of cake, bread and morning goods, and gluten free bakery products, is providing an update on trading in advance of entering its close period.

As in the first half of the year, trading continued to be affected by consumers seeking better value through trading down and more frequently choosing products on promotion. This has led to a decrease in Group revenue for the last financial year to 30 June 2010 of 4.1% to £168.3m after adjusting for the 53 week year, with strong Bread and Free From sales partially offsetting the decline in our larger Cake Division.

Bread and Free From Division sales continued to grow strongly throughout the year with growth of 9.3%, after adjusting for acquisitions and the additional week of trading in the prior year. Underpinning this growth was the successful national roll out of the Genius Free From fresh bread brand. The prior year's acquisition of Goswells speciality breads, including the Vogel brand, drove growth to 16.5% including the acquisition.

Sales in the Cake Division were down 9.7% compared with the prior year after adjusting for its extra trading week. In addition to our decision to exit specific low margin business coupled with our bias towards premium and healthier cakes, which have been particularly affected, the overall cake market also declined. Some branded cake sales have continued to buck this trend with Thorntons branded cake sales up 5.2% year on year after adjusting for the extra trading week.

We have continued to make good progress in improving our internal efficiencies whilst investing further in areas of growth and our management teams. This has allowed us to manage through this recessionary period of declining sales and volatile input prices whilst meeting market expectations and operating fully within existing banking facilities.

Negotiations have also been satisfactorily concluded with deferred consideration parties to reschedule some £5m due in the first quarter of our new financial year over the period to March 2012. This relaxes our cash requirements and improves our ability to invest in the businesses growth opportunities.

Commenting, Chief Executive John Duffy said:

"As a premium craft baker in a challenging trading environment, we have continued to invest in our branded innovation led growth opportunities whilst also improving our internal efficiency, talent and competitiveness.

"We have performed in line with management expectations and when we emerge from this recession we will be competitively stronger and better positioned for growth as consumers seek higher quality products that taste great."

§ Publication quality photographs are available via Redleaf Communications on the numbers shown above

Notes to Editors:

§ Finsbury Food Group plc (AIM: FIF), a leading manufacturer of premium and celebration cakes, low fat cake slices and artisan, organic and gluten free bread and morning goods

§ Finsbury Food Group is the second largest participant in the UK cake industry, a market valued at £1.51bn (TNS, January 2008)

§ The Group is also the market leader in the supply of gluten free baked goods to the UK's multiple grocers

§ 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 right bolt on acquisitions to drive longer term value as opportunities and circumstance allow