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Farsons reports subdued results 5/26/2021

Farsons reports subdued results

Simonds Farsons Cisk plc has announced its financial results for year ended 31 January 2021 which was characterised by the declaration and evolution of the Covid-19 pandemic.  The Group’s vigilance throughout this difficult and unprecedented year to contain costs, seek alternative opportunities to replace part of the lost customer base together with the assistance received from the Government of Malta under the wage supplement scheme have yielded a better than expected result in this pandemic year. The Group has retained its full workforce throughout the year despite significant reductions in its turnover and profitability. 

The Group reported profit before tax for the year of €4.4 million reflecting a decrease of €7.9 million, i.e. 64% lower than that reported for the previous year. Group turnover for the year 2021 amounted to €73 million compared with €103.5 million the previous year, a decrease of 29.4%. This reduction in turnover was experienced across all segments, with the higher drops being registered in the beverages importation operations and the franchised food retailing establishments both of which were heavily impacted by the lack of tourist traffic and the closure of bars and restaurants at various times during the year together with the cancellation of all mass events. However, the drop in the franchised food retailing establishments was partially mitigated by higher drive thru and home delivery volumes. 

Earnings before interest, tax, depreciation and amortization (EBITDA) amounted to €14.95 million, compared to €22.7 million last year. The Group’s net indebtedness decreased by €15.6 million and now stands at €18.6 million due to measures taken by the Board and management to curtail capital expenditure, destocking of inventory and a strong focus on trade collections, as well as certain VAT and social security payment deferral schemes introduced by government. The gearing ratio reduced from 25.9% to 16.8%. The tax charge in this year’s results amounts to €1.1 million, an increase over the previous year despite the decreased profit. This is due to a reduction in the recognized deferred tax asset results due to the subdued profit outlook over the post COVID-19 recovery period.  Profit after taxation amounts to €3.3 million.

Farsons Group Chief Executive Officer Norman Aquilina said, “The pandemic has unfortunately interrupted our Group’s year-on-year growth in turnover and profitability levels. Nonetheless, there is room for us to be reasonably satisfied when one considers the context of the very challenging and complex environment in which we have had to operate.”

“Faced with this scale of disruption and decline in consumption, our Group immediately undertook a number of measures to ensure a safer, yet productive working environment, whilst re-aligning our cost structures to preserve the financial strength we have developed over the decades. As the spread of the contagion is contained and COVID-19 restrictive measures are lifted, we are preparing for better days. We remain focused, motivated and hopeful – not only in overcoming the pandemic and regaining lost ground but also to pursue our long-term growth strategy,” explained Mr Aquilina. He also gave due appreciation to the Group’s employees who not only understood, but fully supported and collaboratively responded to the measures taken to mitigate the impact of the pandemic.

Commenting on the Group’s performance, Farsons Group Chairman Louis A. Farrugia said: “Given the extraordinarily difficult circumstances that the past year has presented to the Group, the Board is satisfied with these results and clearly is looking forward to better times. The decision to defer or suspend the declaration of regular dividends has not been taken lightly.  However, given the huge uncertainty that prevailed last year, the Board does not feel able to recommend a dividend with respect to the financial year under review. Should things go well, as it is hoped will be the case, then the Board hopes to favourably consider the declaration of an interim dividend at the time of the announcement of our half yearly results in September 2021.”

Mr Farrugia also referred to the Old Brewhouse investment, reporting progress of this keenly awaited project.  When completed, this project will promote the Group’s proud industrial heritage and will house revenue earning facilities such as the creation of a micro-brewery on the lines of specialized craft breweries which will enable the Group to tap into a new sector in the beer brewing industry as well as other innovative spaces and outlets.

The Farsons Group will be holding its Annual General Meeting remotely on the 24th June 2021.