Finsbury Food Group, the licensed cake supplier to supermarkets, said its adjusted profit before tax increased by 18% to £6.5m in the past year.
Unveiling its preliminary results for the 12 months to the 28 June 2014, the company saw revenue dip slightly from £176.6m in 2013 to £175.7m in 2014. However, new non-executive chairman Peter Baker has outlined plans to grow the business.
The AIM-listed group saw its net debt increase to £8.8m, from £7.4m.
Baker said the results showed a “encouraging degree of momentum” and that a “significant corner” had been turned in recent years.
The ex-Maple Leaf boss added: “I have worked in the food and (on and off) the bakery industry for almost four decades. Throughout that period, two constants have remained unchanged - people and products. If the product is effective, you have a powerful springboard. Add the right people and you are primed to succeed.
“Both those two elements are in place at Finsbury; we’re producing great products on a consistent basis and have outstanding people in all spheres of the business.”
Baker said the plan at Finsbury was to improve shareholder value, act justly and fairly to employees and grow.
He added: “It is a pivotal time for Finsbury Foods. We can bring about a degree of organic expansion but growth will primarily be realised through acquisition and mergers. There is a window of opportunity in the markets and the board is actively exploring investment options. Scale will stimulate fresh routes to market, diversification of our customer base and a new perception of the company among analysts and stakeholders.
“Is it possible for a relatively small, listed group like Finsbury to double in size over a relatively short period? The management team believes that it is providing we can find the right opportunities.”
Chief executive John Duffy said the past 12 months could be split into two halves: one which maintained sales and another that was more challenging because of increasing commodity costs and the changing consumer landscape.
Duffy said: “For Finsbury Foods, the situation is delicate. There are self-evident sensitivities between our historical customer base and the burgeoning new players. Ultimately, you have to follow the consumer but existing relationships must be safeguarded.
“Given our recent track record, one area of relative disappointment is the speciality bread business which had been enjoying double-digit growth. A flat year was primarily caused by market dynamics, specifically the impact of the so-called ’bread wars’.
“Organic growth will be harder to come by. Acquisitions signpost the route forward but not at any price. The board has been working assiduously to uncover investment opportunities but is not prepared to meet unrealistic valuations. I am confident that value expectations will start to temper in the near future and we will be ready to step in.”