25 May 2010

 

Lees Foods plc ("Lees" or the "Company")

 

 

Final Results for the year ended 31^st December 2009

 

Highlights

·       Significant increase in pre tax profits, excluding exceptional items, from £379k in 2008 to £843k in 2009

·       13% increase in Sales to £18.2m  ( 2008 sales £16.1m)

·       Gross Profit up 15% to £5.8m (2008: £5.1m)

·       New Board structure in place

·       Dividend increased by 7% from 6.7p to 7.2p (subject to shareholder approval)

 

 

Enquiries

 

Lees Foods Plc	01236 441600
Clive Miquel - Chief Executive David Simson - Finance Director
Shore Capital and Corporate - Nomad and Broker	020 7408 4090
Stephane Auton
3x1 Public Relations	0141 221 0707 / 07771 960326
Cameron Grant

 

 

Chairman's Statement

 

 

It is pleasing to report that the Group had an excellent year's trading in the twelve months to December 2009, with pre-tax profits from continuing operations, before exceptional costs, increasing from £379k to £843k. Sales increased by £2.1m, from £16.1m to £18.2m, up by 13%.  Both companies in the Group, Lees of Scotland and Waverley Bakery, enjoyed record years in terms of sales and profits. Basic earnings per share, from continuing operations rose from 10.7p to 18.0p per share.

 

Following the departure in September 2009 of the Group's Chairman and Chief Executive, Raymond Miquel, the Board was restructured.  I was delighted to take on the role of Chairman and Clive Miquel who was already Managing Director of Lees of Scotland was appointed Chief Executive of Lees Foods.  I am pleased and impressed with the commitment and drive of the executive Board and have been greatly encouraged with the Group's progress since the restructure.

 

Patisserie UK, a subsidiary of the Group involved in the manufacture of speciality bakery products and desserts, was put into administration in March 2009 following continued disappointing performance. We subsequently decided to pursue a claim for breach of warranties by the previous owners of Patisserie UK and in December 2009 a settlement was reached.

 

The Directors are pleased to recommend an increased dividend per share of 7.2p, up from 6.7p last year, which will be paid on 25 June 2010 to those shareholders on the register at close of business on 4 June 2010.

 

May I take this opportunity to thank all our employees for their contribution in helping the Group achieve these results and my thanks also to our shareholders for their ongoing support.

 

Chris Greig

Non-Executive Chairman

 

 

  

Chief Executive's Report

 

It has been an eventful year and I am delighted that we have emerged not only in good shape but have successfully grown our Group Sales and Profits for the year ending 31^st December 2009 to record levels.  I am also pleased to report that these trading levels have been sustained into 2010 with our sales during the first quarter of 2010 slightly ahead of the same period in 2009.

 

The market place in which we operate continues to be extremely competitive although the emergence of competition from European manufacturers has eased due to the current strength of the Euro against sterling.  Whilst some commodity prices and other input costs are not increasing at the same levels seen in recent years, there are a number of cost areas where we are still under pressure.

 

Despite the recessionary environment, we have been successful in growing our total sales by 13% over the last year. This included growth of our existing range of teacakes, snowballs, confectionery, ice cream cones and meringues, together with the introduction of new products, and entering new product categories with our existing UK retail customers.  In addition we started selling the Lees brand to a number of new export customers during the year in Kuwait, France, USA and Australia.  It is pleasing to see that the Group now trades with a diverse range of customers across various sectors both in the UK and overseas.

 

The Group's profitability increased primarily as a result of this growth in sales, with Gross Profit contribution rising from £5.0m to £5.8m.  Gross margins also increased from 31.2% to 32%.  Selling and distribution costs, which include investment in customer promotions, increased in line with Sales from £2.35m to £2.67m.  Despite a one-off charge of £230k relating to the board restructuring, profit from operations grew by 46% to £639k (2008: £438k).  Finance costs fell to £58k (2008: £111k) as the Group improved the net cash position to £375k (2008: £44k).

 

During the year we invested further in our production facilities, including the purchase of a new meringue depositor which gives us increased capacity and greater flexibility in our meringue production.  We have a planned programme of capital investment over the next 3 years which includes the installation of new ovens during the first half of 2010.  This will give us additional capacity to support our future growth ambitions.

 

The Group's future strategy will focus on developing new products to reflect the changes in consumer demand and will concentrate on improving profit margins through a combination of tight cost control and an improvement in our sales mix of products.

 

The Directors are committed to driving the Group forward to achieve the growth targeted in our business plans.  We are excited about the future and whilst we are focusing on organic growth we will look at complementary acquisition opportunities if and when these arise. 

 

Clive Miquel

Chief Executive

 

 

 

 

 

 

Consolidated Income Statement

 

For the year ended 31 December 2009

 

 

			2009	2008
			£	£
				(re-presented)
Continuing Operations
Revenue			18,191,142	16,116,478
Cost of sales			(12,367,496)	(11,081,609)
			───────	───────
Gross profit			5,823,646	5,034,869
Selling and distribution costs			(2,671,610)	(2,346,321)
Administrative costs			(2,300,140)	(2,268,356)
Exceptional administrative costs			(230,049)	-
Other operating income			16,912	17,380
			───────	───────
			(5,184,887)	(4,597,297)
			───────	───────
Profit from operations			638,759	437,572
Interest receivable			32,131	52,570
Finance costs			(58,438)	(111,360)
			───────	───────
Profit on Ordinary Activities before Taxation			612,452	378,782
Tax on profit on ordinary activities			(180,971)	(122,940)
			───────	───────
Profit for the year from continuing operations			431,481	255,842
Discontinued Operations
(Loss) for the year from discontinued operations			(118,798)	(1,796,874)
			───────	───────
Profit/(Loss) for the year			312,683	(1,541,032)
			════════	════════

 

Earnings per Share
From continuing and discontinued operations
Basic (pence per share)		13.03p	(64.23)p
Diluted (pence per share)		12.97p	(63.53)p

 

From continuing operations
Basic (pence per share)		17.98p	10.66p
Diluted (pence per share)		17.90p	10.55p

 

Consolidated Statement of Comprehensive Income

Profit/(Loss) for the period / Total comprehensive income/(expense)		312,683	(1,541,032)
		════════	════════
Attributable to :
Owners of the parent company		312,683	(1,541,032)
		════════	════════

 

 

 

Consolidated Statement of Financial Position

 

As at 31 December 2009

		2009	2008
		£	£
Non-Current Assets
Intangible assets		1,803,414	1,803,414
Property, plant and equipment		2,265,288	2,504,995
		───────	───────
		4,068,702	4,308,409
Current Assets
Inventories		1,222,825	1,438,807
Trade and other receivables		2,986,100	2,700,968
Cash at bank and in hand		2,075,082	1,295,615
		───────	───────
		6,284,007	5,435,390
Current liabilities
Trade and other payables		(5,634,086)	(4,990,801)
Current tax liabilities		(139,345)	(123,014)
		───────	───────
Net Current Assets		510,576	321,575
Total Assets less Current Liabilities		4,579,278	4,629,984
Non-current liabilities
Other payables		(176,930)	(250,000)
Accruals and deferred income		(113,212)	(130,124)
Provisions for Liabilities
Deferred taxation		(266,256)	(296,247)
		───────	───────
		4,022,880	3,953,613
		═══════	═══════
Equity
Called up share capital		2,339,751	2,404,751
Share premium account		790,612	883,562
Share-based payment reserve		60,647	58,346
Capital redemption reserve		65,000	-
Retained earnings		367,983	209,967
Merger reserve		579,934	579,934
Employee Share Ownership Trust		(181,047)	(182,947)
		───────	───────
Total Equity Shareholders' Funds		4,022,880	3,953,613
		═══════	═══════

 

 

 

Consolidated Statement of Cash Flows

 

For the year ended 31 December 2009

 

		2009	2008
		£	£
Net cash inflow from operating activities		908,510	456,671
		───────	───────
Investing activities
Interest received		32,131	52,620
Proceeds on disposal of property, plant and equipment		8,800	13,060
Purchases of property, plant and equipment		(48,879)	(201,396)
		───────	───────
Net cash used in investing activities		(7,948)	(135,716)
		───────	───────
Financing activities
Dividends paid		(154,667)	(154,019)
Repayment of borrowings		(375,000)	(250,000)
Repayment of obligations under finance leases		(40,367)	(59,709)
Proceeds from issuance of share capital		-	10,000
		───────	───────
Net cash used in financing activities		(570,034)	(453,728)
		───────	───────
Net increase/(decrease) in cash and cash equivalents		330,528	(132,773)
Cash and cash equivalents at beginning of year		44,260	177,033
		───────	───────
Cash and cash equivalents at end of year		374,788	44,260
		═══════	═══════
Cash and cash equivalents
Bank and cash in hand		2,075,082	1,295,615
Bank overdraft		(1,700,294)	(1,251,355)
		───────	───────
		374,788	44,260
		═══════	═══════

 

 

 

Consolidated Statement of Cash Flows (continued)

 

For the year ended 31 December 2009

 

		2009	2008
		£	£
Profit/(Loss) from operations		518,130	(1,357,520)
Adjustment for:
Share premium written back on share repurchase		(92,950)	-
Loss arising from fixed asset write off following administration of Patisserie UK Ltd		179,070	-
Impairment of goodwill		-	1,818,286
Depreciation of property, plant and equipment		367,280	477,027
Loss/(Gain) on disposal of property, plant and equipment		11,378	(5,124)
Development grant release		(16,912)	(17,380)
ESOP shares vested unconditionally with employees		1,900	-
Share based payments		2,301	3,649
		───────	───────
Operating cash flows before movements in working capital		970,197	918,938
		═══════	═══════
Decrease/(Increase) in inventories		215,982	(296,793)
(Increase) in receivables		(285,132)	(201,529)
Increase in payables		258,701	471,334
Income taxes paid		(192,800)	(323,919)
Interest paid - bank overdraft and loan		(44,260)	(95,390)
Interest paid - HP and finance lease		(14,178)	(15,970)
		───────	───────
Net cash flow from operating activities		908,510	456,671
		═══════	═══════

 

Cash flows from discontinued operations		2009	2008
		£	£
Loss from the year from discontinued operations		(112,824)	(1,796,874)
Share premium written back on share repurchase		(92,950)	-
Loss arising from administration of Patisserie UK Ltd		287,595	-
Impairment of goodwill		-	1,818,286
Tax adjustment		(1,831)	(113,633)
Depreciation of property, plant & equipment		-	48,372
Gain on disposal of property, plant & equipment		-	(15,200)
Interest received		-	(54)
Interest paid		769	-
Increase in inventories		-	(14,007)
Decrease in receivables		-	100,252
Decrease in payables		-	(111,116)
		───────	───────
Net cash generated by operating activities		80,759	(83,974)
		═══════	═══════
Investing activities
Interest received		-	54
Purchases of property, plant and equipment		-	(36,033)
		───────	───────
Net cash used in investing activities		-	(35,979)
		═══════	═══════
Net increase in cash and cash equivalents		80,759	(119,953)
		═══════	═══════

 

 

 

Notes to the Consolidated Financial Statements

 

For the year ended 31 December 2009

 

1.       Accounting Policies

 

Statement of compliance

 

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board, and International Financial Reporting Interpretations Committee (IFRIC) interpretations endorsed by the European Union.

 

Basis of consolidation

 

The consolidated financial statements incorporate the financial statements of the company and all principal subsidiaries for the year ended 31 December 2009.  The results of subsidiaries acquired are included in the consolidated income statement from the effective date of acquisition.

 

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

 

In accordance with the Companies Act 2006, a separate income statement for Lees Foods Plc is not presented as the results of the company are included in the consolidated income statement.

         

2.	Exceptional administrative costs	2009	2008
		£	£
	Costs associated with the departure of Raymond Miquel, the previous Chairman and Chief Executive	230,049	-
		═══════	═══════

 

3.	Discontinued operations
	On 6 March 2009 Patisserie UK Limited was put into administration.
	The results of the discontinued operations included in the Consolidated Income Statement  are set out below.  The comparative profit and cash flows from discontinued operations have been re-presented to include the operation classified as discontinued in the current period.
	Analysis of loss for the year from discontinued operations	2009	2008
		£	£
	Revenue	284,668	2,176,170
	Other income	-	54
		───────	───────
		284,668	2,176,224
	Expenses	(405,297)	(2,152,981)
	Impairment of goodwill	-	(1,818,286)
		───────	───────
	Loss before tax	(120,629)	(1,795,043)
	Attributable income tax expense	1,831	(1,831)
		───────	───────
	Loss for the year from discontinued operations (attributable to owners of the company)	(118,798)	(1,796,874)
		═══════	═══════

 

4.       Earnings per share

         

          Basic earnings per share

 

          Basic earnings per share is calculated by dividing the result for the financial year by the weighted average number of ordinary shares in issue during the year.  The weighted average number of ordinary shares in 2009 has been calculated based on the following assumptions;

 

(a)     2,404,751 ordinary shares were in issue up to 3 December 2009.

 

(b)     65,000 ordinary shares were effectively repurchased on 4 December 2009, giving a total of 2,339,751 ordinary shares at 31 December 2009.

         

          Diluted earnings per share

 

          In accordance with IAS 33 "Earnings Per Share", diluted earnings per share takes into account the dilutive effect of outstanding share options.  The following assumptions have been made:

 

          (a)     The weighted average number of shares under option is 60,000 (2008: 60,000).

 

          (b)     The weighted average number of shares that would have been issued at the average market value is 48,780 (2008: 33,520).

 

          (c)    The average market value of £1.23 during 2009 (2008: £1.79) per ordinary share has been used in the calculation.

 

From continuing and discontinued operations	Basic Earnings	Basic Shares	EPS
	£	Number	Pence
2009
Profit attributable to ordinary equity holders	312,683
Weighted average shares during year		2,399,765
Basic EPS			13.03
Weighted average number of shares under option		60,000
Weighted average number of shares that would have been issued at the market value		(48,780)
Diluted EPS			12.97
	───────	───────	───────
2008
Loss attributable to ordinary equity holders	(1,541,032)
Weighted average shares during year		2,399,177
Basic EPS			(64.23)
Weighted average number of shares under option		60,000
Weighted average number of shares that would have been issued at the market value		(33,520)
Diluted EPS			(63.53)
	───────	───────	───────

 

From continuing operations	Basic Earnings	Basic Shares	EPS
	£	Number	Pence
2009
Profit attributable to ordinary equity holders	431,481
Weighted average shares during year		2,399,765
Basic EPS			17.98
Weighted average number of shares under option		60,000
Weighted average number of shares that would have been issued at the market value		(48,780)
Diluted EPS			17.90
	───────	───────	───────
2008
Profit attributable to ordinary equity holders	255,842
Weighted average shares during year		2,399,177
Basic EPS			10.66
Weighted average number of shares under option		60,000
Weighted average number of shares that would have been issued at the market value		(33,520)
Diluted EPS			10.55
	───────	───────	───────

 

	2009	2008
	Pence per share	Pence per share
Basic earnings per share
From continuing operations	17.98	10.66
From discontinued operations	(4.95)	(74.89)
	───────	───────
Total basic earnings per share	13.03	(64.23)
	═══════	═══════
Diluted earnings per share
From continuing operations	17.90	10.55
From discontinued operations	(4.93)	(74.08)
	───────	───────
Total diluted earnings per share	12.97	(63.53)
	═══════	═══════

 

		2009	2008
5.	Dividend	£	£
	Dividend paid in the year on 2,404,751 ordinary shares at 6.7p per share (2008 - 2,394,751 ordinary shares at 6.7p)	161,118	160,470
	Less proportion of dividend due to Lees Group Holdings
	Limited Employee Share Ownership Trust	(6,451)	(6,451)
		───────	───────
		154,667	154,019
		═══════	═══════

 

6.       Despatch of Documents

 

Copies of the Group's audited statutory accounts for the year ended 31 December 2009 will be despatched to shareholders shortly. Copies will also be available to the public at the Company's office at Lees Food Plc, North Caldeen Road, Coatbridge, North Lanarkshire, ML5 4EF.