Simonds Farsons Cisk Plc

Earnings Release • May 16, 2018

Simonds Farsons Cisk plc The Brewery, Mriehel, BKR 3000, Malta Phone: (+356) 238 14 114 Fax: (+356) 238 14 150 Website: http://www.farsons.com Email: sfc@farsons.com Registration Number: C113

COMPANY ANNOUNCEMENT

The following is a Company Announcement by Simonds Farsons Cisk plc pursuant to the Malta Financial Services Authority Listing Rules Chapter 5.

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The Board of Directors of Simonds Farsons Cisk plc (the "Company") has on Wednesday, 16th May 2018 met and approved for publication the financial statements of the Company for the year ended 31st January 2018, and resolved to propose the same for the approval of the shareholders at the forthcoming Annual General Meeting of the Company to be held on 21st June 2018.

A Preliminary Statement of Annual Results for the year ended 31st January 2018, audited by PricewaterhouseCoopers and approved by the Board of Directors on 16th May 2018, is attached herewith and is available to the public on http://www.farsons.com/en/financial-statements.

The Board of Directors of Simonds Farsons Cisk plc has resolved to recommend for the approval of the Annual General Meeting the distribution, out of tax exempt profits, of a final net dividend of €2,600,000, that is €0.0866 per ordinary share of €0.30, to be paid on 22nd June 2018.

An interim net dividend of €1,000,000, that is €0.0333 per ordinary share was approved at the Board Meeting held on 27th September 2017 and distributed to shareholders on 18th October 2017. Therefore, the total net dividend settled in cash to the ordinary shareholders relating to the financial year ended 31st January 2018 amounts to €3,600,000, that is €0.12 per ordinary share.

Furthermore, on 20th December 2017 the Company declared a net interim dividend of €37,211,000 (€1.2403667 per share) paid in kind through the distribution to shareholders of the Company's entire shareholding in Trident Estates plc. being 30,000,000 ordinary shares of €1 each. The Trident shares were admitted to the official list of the Malta Stock Exchange on 30th January 2018.

The Board of Directors has established 22nd May 2018 as the Effective Date on which all shareholders, then on the register of members, shall be entitled to receive notice of and attend the Annual General Meeting, be paid dividends declared by the General Meeting and appoint directors or vote at the election of Directors.

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Antoinette Caruana Company Secretary

16th May 2018

Simonds Farsons Cisk plc Preliminary Statement of Annual Results 2018

FOR THE YEAR ENDED 31 JANUARY 2018

REVIEW OF BUSINESS

TRADING PERFORMANCE

The Board of Directors is pleased to announce the Farsons Group's financial results for the year ended 31 January 2018.

The Group registered positive and robust growth across all sectors resulting in an increase of ¤1.63 million or 13.4% in its profit after taxation. Profit for the year ended amounted to ¤13.7 million, while pre-tax profit from continuing operations amounted to ¤13.4 million, an improvement of 18.2% over the same period last year. Return on turnover from continuing operations stood at 14.2% as compared to 12.9% in the comparative period.

Group turnover increased by ¤6.8 million to reach a record level of ¤94.9 million, a significant growth of 7.8% on the previous year. The operational ratio for the Group improved from 24.5% to 23.6% as a result of increased turnover and a comparative slower increase in overheads. The Group's overhead expenses increased by ¤814,000 during the year under review.

Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to ¤22 million, an increase of ¤1 million over last year. In September 2017 the Board of Directors exercised early redemption of the ¤15 million 6% bond issued in 2010 whilst at the same time the Company issued an unsecured bond of ¤20 million at an interest rate of 3.5% per annum. The Group's net borrowings increased by ¤3.9 million and were mainly employed in the payment of capital projects costs together with an additional cash injection in Trident Estates plc of ¤6.5 million prior to the spin-off. The gearing ratio as at year-end stood at 28.8% compared to 22.2% in 2017, reflecting the significant dividend 'in kind' distributed to the shareholders following the spin-off of Trident Estates plc. As a result of the significant total dividend pay-out to the shareholders (see below), total equity decreased from ¤123.2 million to ¤96.6 million.

INFLUENCING FACTORS AND SEGMENTAL PERFORMANCE

The Group registered improved performance in its turnover as well as profitability across all three operational segments.

The country's continued positive economic performance, the sustained growth of the tourism industry, the favourable weather conditions experienced during the larger part of 2017 together with major crowd events hosted during the year have all contributed positively to the performance of the beverage and food segments.

The various proactive investments made by Farsons over the past 10 years ensured that the Company was well equipped and resourced to respond to the ever-changing local and export market conditions. Efficiency gains resulting from investments made in the production lines, together with various management initiatives for improvement in productivity, further contributed to the results achieved by the Company during the financial year.

Demand across all beverage sectors grew during the year under review and the Company responded in a timely manner in order to serve

The beverage importation company has maintained its positive trend in turnover and profitability. Targeted and effective marketing

the market effectively and efficiently, despite growing competition within the local market.

campaigns together with continuous enhancements to the product portfolio were important elements leading toward the growth registered within this segment.

The introduction of diverse products within the food importation company has strengthened its position in this highly competitive segment. The company has satisfactorily registered higher turnover together with improved profitability.

The franchised food business has also registered a significantly positive year, with growth in sales, guest count, guest spend and profitability over the previous year across all its three brands namely, Burger King, Pizza Hut and KFC. Investment to ensure continuing high standards across all stores is ongoing, with a significant refurbishing programme underway.

INVESTMENTS

During 2017 the Group invested a further ¤13.5 million to complement the major plant investments carried out over the previous decade.

Following the completion of the beer packaging facility in 2016, further investment in the logistics facilities was undertaken to complement the improved productivity capacity acquired through the enhanced plant. New un/loading bays were completed and commissioned during 2017 to enhance the company's capabilities for export operations and better management of its logistics function. Furthermore, extensions to the warehouse capabilities together with the building of a new truck depot were completed

and commissioned soon after the end of the financial year.

The Group invested in a modern state-of-theart beer and soft drinks keg plant and an 18.9 litre water-filling line. Both plants make use of modern robot handling technology to replace previous machinery on the line.

Moreover, a new larger and modernised office complex, offering a more effective and efficient working environment, was completed during the financial year. The Group's corporate office complex replaced all offices previously housed within the original Farsons building and became fully operative during the last quarter of the year.

PROPERTY INTERESTS AND TRIDENT ESTATES

Spin-off

As a result of the successful spin-off of Trident Estates plc into a separate listed entity and the change in shareholding, the Group has disposed of its property management segment which had been classified as discontinued operations. During the Annual

General Meeting held on 27 June 2017, the shareholders approved a resolution to spin-off the Company's shareholding in Trident Estates plc through the payment of a dividend 'in kind' by way of a distribution of the company's shareholding in Trident to the shareholders. Through the distribution of a dividend 'in kind' of ¤37,211,000, the Company's entire

shareholding in Trident Estates Limited was passed on to the shareholders pro rata to the number of shares held in the Company. Trident

OUTLOOK FOR FINANCIAL YEAR ENDING 31 JANUARY 2019

The Group remains vigilant for the everchanging local and overseas market conditions, and is committed to such further investments as are required in order to continue transforming challenges into tangible market opportunities. The positive national economic performance, which has enhanced the performance of the Group and is expected to persist, will continue to impact the Group's

The Group continues to build on its two growth pillars namely, innovation and internationalisation. Following the significant investments made by the Group, further tapping of export markets remains a priority. These markets present new and ongoing challenges which are being addressed on an ongoing basis.

profitability and growth potentials.

Innovation also remains high on the Group's agenda and management will continue to prioritise the development of products which proactively meet, and exceed, ever evolving consumer expectations.

In line with its commitment to both

environmental and social responsibilities, the Group has pledged to positively contribute to the objective of reducing sugar consumption by 10% by 2020 through:

• the reformulation of existing products, • innovation and introduction of new products,

DIVIDENDS AND RESERVES

During this financial year, the Board declared an interim dividend settled in cash as well as an interim dividend that was settled 'in kind'.

The cash interim dividend of ¤1,000,000 (net) was paid to the ordinary shareholders on 18 October 2017.

Furthermore, on 20 December 2017, the Board declared a net interim dividend of ¤37,211,000, which was settled 'in kind' through the transfer of shares held by the Company in Trident Estates plc to the shareholders.

The Board of Directors will recommend the payment of a final dividend of ¤2,600,000 (net) at the Annual General Meeting scheduled for 21 June 2018.

Estates plc was listed on the Malta Stock Exchange on 30 January 2018.

• increasing the availability of smaller pack
• sizes, • investment in the promotion of drinks with reduced or no sugar.

The beverage and food importation segments of the Group are continuously engaged in enhancing the products offered to the market. In a highly competitive environment with intense pricing tactics, retaining an efficient and effective workforce to meet the market demands whilst maintaining a consistent growth in performance is the clear way forward.

The improved performance of Food Chain, despite additional operational expenses and increased refurbishment costs, is expected to be sustained. Ongoing challenges in recruitment together with an increasing number of competitive brands opening outlets locally, will possibly influence the full growth potential of this segment.

The aggressive competition experienced in the food and beverage market coupled with legislative changes expected in the Beverage Container Refund Scheme necessitates that the Group retains its competitive edge by focusing on product development, ensuring high levels of efficiency while also enhancing its export drive in order to further sustain the positive growth in profitability registered to date.

Both interim dividends were paid out of tax exempt profits. If approved at the Annual General Meeting, the final dividend will be paid on 22 June 2018 (also out of tax exempt profits) to those shareholders included on the Register of Members of the Company as at 22 May 2018. As a result, total declared dividends settled in cash relating to the financial year ended 31 January 2018 shall amount to ¤3,600,000 (2017: ¤3,400,000).

Retained profits carried forward at the reporting date amounted to ¤38,718,000 (2017: ¤55,830,000) for the Group and ¤41,347,000 (2017: ¤50,580,000) for the Company.

BY ORDER OF THE BOARD 16 May 2018

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

• 1. This statement is published pursuant to the Malta Financial Services Authority Listing Rules Chapter 5 and the Prevention of Financial Markets Abuse (Disclosure and Notification) Regulations, 2005.
• 1. The financial information contained herein has been extracted from the Simonds Farsons Cisk plc Group's audited financial statements for the year ended 31 January 2018 as approved by the Board of Directors on 16 May 2018. The accounting policies used in the preparation of the financial statements for the year ended 31 January 2018 are consistent with those used in the annual financial statements for the year ended 31 January 2017.
• 1. The Group's operations consist of the brewing, production and sale of branded beers and beverages, the importation, wholesale and retail of food and beverages, including wines and spirits and the operation of franchised food retailing establishments. During 2018 the Group spun-off its property management segment.
• 1. Earnings per share at ¤0.46 (2017: ¤0.40) have been calculated by dividing the profit attributable to the equity shareholders by the weighted average number of ordinary shares in issue during the year and ranking for dividend.

SIMONDS FARSONS CISK PLC

The Brewery, Mdina Road, Mriehel BKR 3000, Malta. Telephone: (+356) 2381 4114 www.farsons.com email: sfc@farsons.com

	Group		Company
	2018	2017	2018	2017
ASSETS	¤'000	¤'000	¤'000	¤'000
Non-current assets	127,100	117,993	129,899	122,631
Current assets	36,428	33,682	27,454	26,674
Non-current assets classified
as held for sale	–	31,266	–	9,057
Total assets	163,528	182,941	157,353	158,362
EQUITY AND LIABILITIES
Capital and reserves attributable to
owners of the company	96,632	123,271	95,989	105,012
Non-current liabilities	34,452	33,236	34,452	33,236
Current liabilities	32,444	24,297	26,912	20,109
Liabilities directly attributable to
non-current assets held for sale	–	2,137	–	5
Total liabilities	66,896	59,670	61,364	53,350
Total equity and liabilities	163,528	182,941	157,353	158,362

CONDENSED INCOME STATEMENTS

	Group		Company
	2018	2017	2018	2017
	¤'000	¤'000	¤'000	¤'000
Continuing operations:
Revenue	94,980	88,119	50,924	46,511
Cost of sales	(57,920)	(53,683)	(24,802)	(22,352)
Gross profit	37,060	34,436	26,122	24,159
Selling and distribution costs	(10,332)	(10,712)	(7,628)	(7,668)
Administrative expenses	(12,066)	(10,872)	(7,514)	(6,288)
Operating profit	14,662	12,852	10,980	10,203
Finance income	–	5	139	189
Finance costs	(1,207)	(1,470)	(1,144)	(1,417)
Profit before tax	13,455	11,387	9,975	8,975
Tax income	949	471	2,000	1,196
Profit for the year from continuing operations	14,404	11,858	11,975	10,171
Discontinued operations:
(Loss)/Profit for the year from discontinued operations	(642)	274	19,403	–
Profit for the year	13,762	12,132	31,378	10,171
Earnings per share for the year attributable to shareholders	¤0.459	¤0.404

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

	Group		Company
	2018	2017	2018	2017
	¤'000	¤'000	¤'000	¤'000
Profit for the year	13,762	12,132	31,378	10,171
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Revaluation surplus, net of deferred tax	–	4,666	–	1,176
Items that may be subsequently reclassified to profit or loss:
Cash flow hedges net of deferred tax	210	214	210	214
Other comprehensive income for the year	210	4,880	210	1,390
Total comprehensive income for the year	13,972	17,012	31,588	11,561

CONDENSED STATEMENTS OF CASH FLOWS

	Group		Company
	2018	2017	2018	2017
	¤'000	¤'000	¤'000	¤'000
Net cash generated from operating activities	20,893	13,135	17,185	13,922
Net cash used in investing activities	(21,407)	(19,714)	(19,481)	(18,685)
Net cash (used in)/generated from financing activities	(656)	4,091	(656)	4,091
Net movement in cash and cash equivalents	(1,170)	(2,488)	(2,952)	(672)
Cash and cash equivalents at beginning of year	(1,322)	1,166	(1,157)	(485)
Cash and cash equivalents at end of year	(2,492)	(1,322)	(4,109)	(1,157)

CONDENSED STATEMENTS OF FINANCIAL POSITION CONDENSED STATEMENTS OF CHANGES IN EQUITY

	Share	Hedging	Revaluation and other	Retained	Total
	capital	reserve	reserves	earnings	equity
GROUP Balance at 1 February 2016	¤'000 9,000	¤'000 (919)	¤'000 54,105	¤'000 47,273	¤'000 109,459
Comprehensive income Profit for the year	–	–	–	12,132	12,132
Other comprehensive
income:
Cash flow hedges net
of deferred tax Revaluation of property,	–	214	–	–	214
plant and equipment net of
deferred tax	–	–	4,666	–	4,666
Net transfers of fair value movements on investment
property, net of deferred tax	–	–	375	(375)	–
Total comprehensive
income	–	214	5,041	11,757	17,012
Transactions with owners
Dividends relating to 2016 and 2017	–	–	–	(3,200)	(3,200)
Balance at 31 January 201 7	9,000	(705)	59,146	55,830	123,271
Balance at 1 February 2017	9,000	(705)	59,146	55,830	123,271
Comprehensive income
Profit for the year	–	–	–	13,762	13,762
Other comprehensive
income:
Cash flow hedges net of deferred tax	–	210	–	–	210
Transfer of reserve upon
disposal of investment
property, net of deferred tax	–	–	(9,737)	9,737	–
Total comprehensive income	–	210	(9,737)	23,499	13,972
Transactions with owners
Dividends relating to 2017 and 2018
- Paid in cash	–	–	–	(3,400)	(3,400)
- Paid 'in kind'	–	–	–	(37,211)	(37,211)
Balance at 31 January 2018	9,000	(495)	49,409	38,718	96,632
COMPANY	¤'000	¤'000	¤'000	¤'000	¤'000
Balance at 1 February 2016	9,000	(919)	44,961	43,609	96,651
Comprehensive income
Profit for the year	–	–	–	10,171	10,171
Other comprehensive income:
Cash flow hedges net of
deferred tax	–	214	–	–	214
Revaluation of property, plant and equipment, net of
deferred tax	–	–	1,176	–	1,176
Total comprehensive
income	–	214	1,176	10,171	11,561
Transactions with owners
Dividends relating to 2016 and 2017	–	–	–	(3,200)	(3,200)
Balance at 31 January 2017	9,000	(705)	46,137	50,580	105,012
Balance at 1 February 2017 Comprehensive income	9,000	(705)	46,137	50,580	105,012
Profit for the year	–	–	–	31,378	31,378
Other comprehensive
income:
Cash flow hedges net of deferred tax	–	210	–	–	210
Total comprehensive
income	–	210	–	31,378	31,588
Transactions with owners Dividends relating
to 2017 and 2018
- Paid in cash	–	–	–	(3,400)	(3,400)
- Paid 'in kind'	–	–	–	(37,211)	(37,211)
Balance at 31 January 2018	9,000	(495)	46,137	41,347	95,989