Oct 2007 Financial News

FFL Releases Half Year Results

Oct 19, 2007

Results for the Half Year Ended June 30, 2007

For the Half Year Ended June 30, 2007, Flavorite Foods Limited (FFL) reported Earnings Per Share (EPS) of $0.39, up a considerable 21.88 per cent or $0.07 on the comparable period in fiscal 2006.

Revenue for the period amounted to $33.61 million, up a healthy 13.86 per cent or $4.09 million on HY06. Additionally, Cost of Sales was up a similar margin of 13.90 per cent, from $13.96 million in HY06 to $15.90 million in HY07. Thus, Gross Profit for the Half Year under review stood at $17.71 million, an increase of 13.83 per cent or $2.15 million on the same period in fiscal 2006.

Other Operating Income for HY07 was $0.30 million, a fall of 21.57 per cent or $0.08 million on the same figure for HY06. Total Expenses was up 9.19 per cent from $12.56 million (HY06) to $13.71 million (HY07), with Administrative Expenses being the largest expense in addition to showing the largest increase. For HY07 Administrative Expenses totaled $7.76 million compared to $6.39 million in HY06, an increase of 21.52 per cent. Distribution Costs was the second largest expense at $5.80 million for the Half Year under review, however unlike Administrative Expenses this expense saw a marginal decrease of 1.87 per cent on the comparable figure for fiscal 2006. Other Operating Expenses amounted to $0.15 million down a significant 42.48 per cent on the same figure for HY06. As a result, FFL’s Operating Profit ended the period at $4.29 million, up a noteworthy 27.14 per cent or $0.92 million on the corresponding figure in fiscal 2006.

After deducting Finance Costs of $0.04 million (up a significant 55.96 per cent on HY06), the Company’s Profit Before Tax stood at $4.24 million for HY07, an increase of $0.90 million or 26.89 per cent on HY06. The Effective Tax Rate for the period under review was 28.64 per cent compared to a Tax Rate of 25.88 per cent on the same period in fiscal 2006. Thus, FFL’s Net Profit for the Half Year Ended June 30, 2007 was $3.03 million, up a considerable 22.16 per cent on the same figure for HY06.

The shares of FFL are currently trading at a price of $5.11. In light of the current results we are maintaining our forecasted EPS of 80 cents for fiscal 2007. At the current price and forecasted EPS of 80 cents, this share is trading at a price to earnings multiple of 6.39 times. This multiple is attractive given that this share usually trades in the band of 7 to 8 times. However, this share is tightly held with the top ten stockholders as at June 30, 2007 holding approximately 97 per cent of the outstanding share capital of this Company. Thus, while we continue to recommend a BUY based on fundamentals, we caution investors on the availability and liquidity of this share.


Gia Singh
WISE Equity Research Team