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Finsbury Food moves for deal with Genius
by Sion Barry - 05/01/2011
"CAKE to gluten free bakery goods maker Finsbury Food Group has entered into a new joint venture agreement which could result in a £21m sale of two of its subsidiaries."
The Cardiff headquartered Aim-listed company – via its businesses Livwell and United Central Bakeries (UCB) – has entered into a new contractual agreement with Genius Foods.
Finsbury and Genius are expanding their existing relationship through the introduction of additional gluten free products to be sold under the Genius brand.
The agreement also contains details of an option, granted by Finsbury to Genius, to buy the business and assets of UCB and Livwell for a consideration of £21m at any point over the next year. UCB and Livwell produce Finsbury’s gluten-free products, as well as yum-yums and potato scones.
In the year ended 30 June 2010, the businesses recorded revenues of £23.1m and profit before tax (after group costs) of £1m.
In the event of the option being exercised Finsbury said the proceeds of the sale will be used to repay debt and for general corporate purposes.
John Duffy, chief executive of Finsbury, said: “We are delighted to announce the formation of this joint venture with Genius, the leading and most innovative brand in the gluten free market.
“We have enjoyed a successful working relationship with Genius, and believe that this joint venture will cement and develop this relationship further.
“We also believe the joint venture will give added momentum to the fastest growing area of our business and we look forward to working with Genius to drive forward our market leading position for the longer term.”
Gervase Cottam, chief executive of Genius, said: “We are looking forward to further developing the strong team that has been working with Finsbury as a key partner in the UK.
“Both parties are aligned and focused on developing great tasting gluten free products that deliver against the exacting demands of our customers and consumers.”
In its last financial year – to July 3, 2010 – Finsbury generated sales of £168.3m, down 5.9% on the previous year’s £178.9m.
However, by driving through efficiencies and reducing administrative expenses, coupled with strong bread sales, the company marginally improved its pre-tax profit from just over £5m to £5.39m – a rise of 7%, although adjusted to eliminate the impact of significant non-recurring items.
Finsbury cut administrative expenses by 6% from £38.3m to £36.1m.
Its total net bank debt reduced by 11% from £41m to £36.5m at year end within established banking facilities of £50.2m.
In Cardiff, where the company operates under the Memory Lane brand, Finsbury employs 950. Memory Lane is the UK leader of premium own- label cake ranges for retailers.
It also produces under a number of brands, notably Nestlé, WeightWatchers and Thorntons.
More Details: http://www.walesonline.co.uk/business-in-wales/business-news/2011/01/04/finsbury-food-in-genius-move-91466-27927012/Sio
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