Glisten Reports Increase in Confectionery Sales for Half Year 2009

Our interim results for the six months ended 31 December 2009 show like for like growth up 10% versus the previous year mainly on the back of a good start to the year in July and August.

22 Mar 2010 --- Glisten Plc, the ambitious impulse snack and confectionery foods group, reports its Interim Results for the six months ended 31 December 2009. Following the General Meeting which approved the recommended cash offer for Glisten Plc by Raisio UK Limited, a subsidiary of Raisio oyj, by means of a scheme of arrangement under part 26 of the Companies Act 2006 this will be, subject to court approval, Glisten's last set of results as an AIM quoted company. Our interim results for the six months ended 31 December 2009 show like for like growth up 10% versus the previous year mainly on the back of a good start to the year in July and August. Our sales in the 6 months to December 2009 increased to £39.0m (2008: £35.4m) and adjusted operating profits were £3.1m (2008: £2.9m) up 7%. Our adjusted diluted earnings per share increased to 11.3p (2008: 10.1p) up 12%.

Operational Review

Most parts of our business are performing steadily and we are satisfied with progress to date this year but remain cautious about continued sales growth during the second half of the year. We believe that consumer focus on both premium and better-for-you/healthier snacks will return strongly but in the short term there is no doubt that the absolute priorities for many consumers continue to be price and value.

Fruit & Cereal Snacks Division (FCSD)

First half sales growth, which was all like for like, increased in FCSD by 14% to £14.3m (2008: £12.6m) and operating profits increased to £1.3m (2008 £1.1m) up 18% due mainly to a much improved July and August compared to the previous year. Overall sales demand in the half remained inconsistent and our 14% sales growth was achieved in spite of a major customer de-stocking during the half.

The issues we experienced in Halo Foods last June, which is a major contributor to FCSD are fully resolved; we have a strengthened management team and we are satisfied that Halo's operating profit performance is back on track and the business is moving forward again.  Overall we are pleased with progress in FCSD and believe its prospects remain positive.

Confectionery Division (GCD)

First half sales increased in GCD by 3% to £16.2m (2008: £15.7m) and operating profits rose 7% to £1.5m (2008: £1.4m).

The retail confectionery market continues to experience price deflation (source: TNS) and the switch to brands supported by promotional activity experienced last year has been maintained affecting own label sales particularly in our chocolate business. We have responded by developing a range of fair-trade products under the "Traidcraft" label which are winning market share and by diversifying and channeling our products into export and adjacent markets sectors to traditional confectionery.

Savoury Snacks Division (SSD)

We are pleased with the progress made in our Savoury Snacking Division over the last six months. Our branded nut business Dormen has had a steady six months and our Weightwatcher savoury snacking products continue to show good sales growth momentum.

Sales in the first half were £8.5m and were 21% ahead of 2008 (£7.0m) assisted by significant promotional activity in Savoury Snacking. During the period we invested selectively in the Dormen brand and incurred the full cost of strengthening the management team in the previous financial year. As a result of these measures operating profits in the half were broadly static at £0.8m (2008: £0.9m).

Financial Review

We are satisfied with our cash generated from operations in the first half of £0.4m (2008: £3.6m). This has been used to fund capital expenditure of £0.2m (2008: £1.4m). At 31 December 2009 Group net borrowings were £27.1m (2008: £27.4m), which is 85% of our available facilities of £32m. Within the working capital outflow in the half of £3.5m, debtor levels were relatively unchanged (£0.1m better). Stock levels increased by £1.1m driven by higher anticipated demand in GCD during the second half. We expect to see stock levels fall in GCD during the second half. Our trade creditors reduced by (£2.5m), primarily in FCSD (£1.9m) caused by lower seasonal activity and the return to more normal payment terms in Halo Foods during the half (£0.75m).

On 31 October 2009 Glisten paid the final £1.25m of deferred consideration to the vendors of Dormen Foods Limited. The Group has no further deferred consideration liabilities (2008 £1.25m).

Net interest costs in the period were £0.84m (2008: £0.91m).

The Group agreed amended loan facilities of £32m with its lenders on 30 November 2009. These facilities, provided by Barclays Bank PLC are renewable on 31 December 2012 and are at variable rates which average 3.61% over LIBOR. £7.5m of this loan is repayable in quarterly instalments between March 2010 and December 2012. As part of agreeing bank facilities the Group has issued a warrant with a six year life over 5% of its issued ordinary share capital (circa 750,000 ordinary shares) at a warrant price of 12.5p.  The cost incurred in relation to these loans is £0.64m. The Group also has a commitment to issue two further tranches of warrants each of 2.5% (circa. 375,000 ordinary shares) at 12.5p in February and May 2010 or pay two amounts of £0.45m, one in February and one in May 2010. The Group has paid the costs which fell due at the end of February rather than issue a 2.5% warrant.

In September 2007 the Group entered into an interest hedge at base rates between 4.25% and 6% against £23m of its borrowing until December 2010. At the same time, it entered into an interest hedge at rates between 4.47% and 6% with a minimum interest rate of 5.43% should base rate fall below 4.47% against £23m of its borrowing for the period from December 2010 until 2015 to be exercised at its lenders discretion at that time.

We entered into these arrangements purely to bring stability to our financing costs. Given the fall in interest rates, these hedges have a fair value cost at 31 December 2009 of £3.7m (2008: £4.3m) and the cost has been included under current liabilities. The change in fair value of this hedge at 31 December 2009 has given rise to a gain of £0.69m in the six month period to December 2009.

These hedges are a non-cash provision and equate to discounted interest costs above the ruling base rates and the projection thereof at 31 December 2009 for a period of six years from the balance sheet date.

Group Capital Investment

Given the current climate we anticipate our capital expenditure will be around £1.8m for the full year and in line with depreciation. We continue to invest carefully to improve the capabilities and the market position of our business for the medium term and, at the end of the half year, we commenced further investment in expanding capacity in our savoury snacking division at Park Royal.

In the first half our capital spend was £0.2m (2008: £1.4m) versus depreciation at £1.0m (2008: £1.0m).