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FARSONS ANNOUNCES ENCOURAGING RESULTS 14/04/2010

The Farsons Group has announced a notable improvement in its results for the financial year ended 31 January 2010.

Whilst group turnover declined marginally by 2% from €66.4 million to €65.1 million, profit before tax improved by €2.4 million to €3.2 million.

The directors stated that the improvement in group operating profit was “the result of the group’s determined efforts to attain targeted production and distribution efficiencies emanating from the major capital expenditure programme undertaken in 2006-2008, the continuing focus on the containment and reduction of operating and administrative costs, and the implementation of its declared strategy of divesting itself from loss making operations”. A number of other factors contributed to these positive results, including a more effective sales and marketing strategy, decreases in the cost of raw materials and certain one-off charges on old plant and early retirement charges.

All four business segments improved their profitability, with the brewing production and sale of branded beers and beverages’ segment reporting a marked increase of €1.3 million in contribution to profits compared with the result from the segment for the prior financial year. 

Group indebtedness decreased considerably compared to the previous financial year figure to €38.5 million from €44.0 million. EBITDA (Earnings before interest, tax, depreciation and amortization) for the financial year under review amounted to €10.2 million, an improvement of a little over €2 million for the year.  The gearing ratio, that is, the ratio of debt on equity and debt at the year end stood at 31.4%, also an improvement over the previous year’s 34.8%.

The directors also commented on the outlook for the new financial year, and stated that the general economic uncertainty and further competitive activity present sustained challenges for the group. Higher utility costs will continue to put pressure on the group’s overheads, and cost containment right across the group still remains a priority for management, principally managed through increased productivity and reduced overhead costs. The beverage importation arm has strengthened its portfolio through the recently secured representation of Red Bull. 

The group has recently unveiled its new corporate identity. The new identity draws on elements which have long been associated with the group’s solid reputation and reliable past, whilst at the same time bringing the group in line with contemporary business image standards.

Preparatory work on the €14 million investment in a new brewhouse and water treatment facility are at an advanced stage, and civil works are expected to commence in July 2010. When completed, this project will totally free up the façade of the brewery for eventual further re-development in due course. 

The company has submitted an application to the Listing Authority for the approval of a bond issue amounting to €15 million, which if forthcoming, shall be issued in May 2010.  The proceeds shall be used to finance a bond exchange programme for the 6.6% SFC Bonds 2010-2012 which are due for redemption on 2nd November 2010, and for general financing requirements of the Farsons Group, including the construction of the new brewhouse.

The Board of Directors remain confident that the group’s business model is proving to be based on a resilient strategy for continued growth and development, ensuring a competitive response in the fast changing and dynamic economy we operate in.

The directors shall be recommending a record total dividend to the ordinary shareholders of €1,800,000 at its Annual General Meeting on 24 June 2010, of which €300,000 has already been paid by way of an interim dividend in October 2009.