Glisten plc
AIM : GLI

Glisten plc

September 13, 2005 02:17 ET

Glisten plc Preliminary Results

LONDON, UNITED KINGDOM--(CCNMatthews - Sept. 13, 2005) - Glisten plc (AIM:GLI) ("Glisten" or "the Group"), the fast-growing confectionery, snack foods and specialist ingredients group, today reports its Preliminary Results for the year ended 30 June 2005.

Highlights

- Turnover increased 99% to Pounds Sterling 41.2 million (2004: Pounds Sterling 20.8 million)

- Profit before tax and amortisation and exceptional item increased 68% to Pounds Sterling 3.02 million (2004: Pounds Sterling 1.8 million)

- Adjusted earnings per share up 51% to 21.8 pence (2004: 14.4 pence)

- Strong cash generation from operations up 86% at Pounds Sterling 3.9m (2004: Pounds Sterling 2.1m)

- Final dividend of 0.6 pence per share proposed

- Sales in the first two months of current financial year have more than doubled

- Excellent maiden contributions from Halo and Nimbus acquisitions

- Significantly strengthened divisional senior management team

Commenting on the results, Paul Simmonds, Chief Executive of Glisten plc, said: "Glisten is evolving into the multi-sector food group we set out to create when we listed on AIM in June 2002. We have a broad range of UK and international customers, a varied and attractive product range with some niche capabilities which differentiate us from competitors, and the level of cross-selling in our business is accelerating constantly.

"Our objective following the acquisition of Halo Foods and Nimbus Foods, and our entry into the rapidly growing sector of cereal bars, is to increase our share of the dynamic and diverse hand-held snacks and inclusions markets. We remain very interested in sectors adjacent to these which will compliment what we currently do. Acquisitions continue to be an important element of our growth formula and I am pleased to advise that the pipeline of acquisition opportunities which satisfy our performance and strategic-fit criteria continues to be strong. In 2002 we set ourselves the goal of building a Group with sales of Pounds Sterling 100 million within five years; we continue to believe that this goal is achievable."



For further information please contact:

Glisten plc

Jeremy Hamer, Non-Executive Chairman Tel: +44 (0) 7977 234 614

Paul Simmonds, Chief Executive Tel: +44 (0) 7734 263224
paul.simmonds@glisten.plc.uk www.glisten.plc.uk

Rob Davies, Finance Director Tel: +44 (0) 7734 592 616
rob.davies@glisten.plc.uk

KBC Peel Hunt

Julian Blunt, Corporate Finance Tel: +44 (0) 20 7418 8900
julian.blunt@kbcpeelhunt.com www.kbcpeelhunt.com

Media enquiries:

Abchurch

Sarah Hollins / Justin Heath Tel: +44 (0) 20 7398 7700
sarah.hollins@abchurch-group.com www.abchurch-group.com


Notes to editors:

Glisten plc is a fast-growing confectionery, snack foods and specialist ingredients group. It serves a wide variety of customers including many high street retailers, major food manufacturers and the foodservice sector and export markets.

The principal activities of Glisten are the manufacture of chocolate and sugar-based confectionery, edible decorations, specialist confectionery ingredients and through the December 2004 acquisition of Halo Foods - cereal and health bars.

These activities are all underpinned by a strong focus on market research, product innovation and customer partnerships. In the specialist ingredients ('inclusions') and cereal bar sectors Glisten has integrated relationships with some of Europe's biggest brand-name food companies.

Glisten, is based in Blackburn. It listed on the AIM market in June 2002. The Company employs 650 people across its five UK manufacturing sites supplying the UK and 21 other countries around the globe.

CHAIRMAN'S STATEMENT

It is with great pleasure that I can announce that our third year as an AIM listed company has marked a step change in the development of Glisten plc. The acquisition in December 2004 of Halo Foods Limited and its subsidiaries has not only doubled our turnover but taken us into the rapidly growing sector of cereal bars as well as strengthening our speciality ingredients proposition. The progress that has since followed both in these newly acquired businesses as well as in our recently integrated confectionery division is still to be fully seen. With Glisten Confectionery Skegness now performing well, specific earnings enhancing capital expenditure projects underway, and a significantly strengthened senior management team in place, our financial year has finished strongly.

Results

Our results for the year show that the profit before taxation, amortisation and exceptional item rose by 68% to Pounds Sterling 3,017,000 (2004: Pounds Sterling 1,801,000) on turnover of Pounds Sterling 41,219,000 (2004: Pounds Sterling 20,755,000) up 99% overall and 9% on a like for like basis. The profit after taxation, but before amortisation and exceptional item, was up 92% to Pounds Sterling 2,508,000 (2004: Pounds Sterling 1,301,000). The adjusted earnings per share increased by 51% to 21.8 pence (2004: 14.4 pence).

Our net borrowings ended the year at Pounds Sterling 9,433,000 (2004: Pounds Sterling 5,068,000) giving gearing of 52% (2004: 53%).

Dividends

The Board are pleased to recommend the payment of a final dividend for the year ended June 2005 of 0.6 pence (2004: 0.5 pence) per Ordinary Share, making 1.1 pence (2004: 0.5 pence) for the year, an increase of 120%. It is our intention to grow the dividend distribution sensibly going forward. If approved, the final dividend will be paid on 11 November 2005 to Shareholders on the Register at the close of business on 14 October 2005.

Acquisitions

In July 2004 we completed the acquisition of certain assets of House of York, North Shields, a specialist toffee manufacturer, for a consideration of Pounds Sterling 162,000 funded from cash flow. The production capabilities purchased through this acquisition were integrated immediately into our other manufacturing sites.

On 22 December 2004 we completed the purchase of the entire share capital of Halo Foods Limited and its subsidiaries for an initial consideration of Pounds Sterling 5,938,000 which included Pounds Sterling 300,000 of Ordinary Shares in Glisten. This acquisition is subject to a maximum conditional profit related earn-out of Pounds Sterling 8,000,000 based on the operating profits before tax of the calendar years ended 31 December 2005 and 31 December 2006. Any amounts earned are payable subject to a maximum of Pounds Sterling 3,000,000 on 31 March 2006, Pounds Sterling 2,500,000 on 31 March 2007 and Pounds Sterling 2,500,000 on 31 March 2008. Based upon our current optimism the directors have increased the provision by Pounds Sterling 1,000,000 to Pounds Sterling 5,505,000 of conditional profit related deferred consideration in these accounts and will continue to review this level annually each year. Costs of Pounds Sterling 653,000 were incurred on this transaction.

On 22 December 2004 we placed 3,106,383 Ordinary Shares at Pounds Sterling 2.35 raising Pounds Sterling 7,300,000 of equity and the vendor of Halo Foods received 109,649 Ordinary Shares at Pounds Sterling 2.74, an amount of Pounds Sterling 300,000 as part consideration. The costs of the placing were Pounds Sterling 360,000.

On 31 December 2004, a portion of the final payment of deferred and conditional consideration of Pounds Sterling 589,000 was made to the vendors of Glisten Confectionery. There remains an outstanding balance of Pounds Sterling 411,000 which will be paid subject to the completion of an outstanding taxation matter.

On 14 January 2005 we paid Pounds Sterling 800,000 deferred consideration to the Fravigar family, following agreement of the completion accounts. A further and final payment of Pounds Sterling 40,000 was paid in September 2005.

Strategy

The first three years of our life as an AIM listed company has seen us create a business with three specific food manufacturing capabilities.

Our confectionery division offers a broadening range of products to a wide market place including multiple retailers, the food service sector, wholesalers, other food manufacturers and the export market. It is not too exposed to any particular customer or sector.

Our newly acquired cereal based snack bars, diet bars and energy bars business is the UK's largest independent manufacturer of these products producing for many of the major brands. This is a relatively young and fast growing market which offers significant opportunities to those who can align their product development to ever changing market demands.

Our small speciality ingredients business, which we have turned from loss to profit in our first six months of ownership, supplies valuable taste and texture inclusions to the major manufacturers in the ice cream, bakery and cereal sectors.

Going forward we will be concentrating on the acceleration of the earnings performance of these three businesses through a combination of further strategic acquisitions, specific capital expenditure projects, new product development and greater penetration of our markets.

The recently strengthened senior management team is already adding considerable expertise and energy to the delivery of these plans while allowing the main Board to continue to search the market for acquisitions.

Staff

The Board joins me in welcoming the employees of Halo Foods and Nimbus Foods to the Group and thanking all our employees for the efforts they have made in our third year of trading, without whose commitment we would not have achieved another record performance.

I would like to thank Guy McCracken who resigned as non executive director to take up a senior role in the Co-op. The Board is seeking to appoint a replacement.

In line with our objective of establishing a group structure as our business grows, we have continued to build the senior team and during the year we have appointed two new divisional Managing Directors, reporting to Paul Simmonds, the Chief Executive of Glisten plc as well as strengthening the senior management as outlined in the Chief Executive's Review.

Shareholders

Our share issue on 22 December 2004 has broadened our institutional shareholder base. We are also pleased that our private shareholder base has increased in number by 35% to around 568 shareholders (2004: 420). It is the Board's intention to communicate fully with all shareholders, current and future, and in so doing continually build awareness of Glisten plc over the coming years and to this end a significant investment is going into updating our website. It remains our aim to create a growing earnings stream and a better than average liquidity in the shares.

Outlook

The current year has started extremely well, with sales ahead in all divisions and overall sales for the first two months of the year have more than doubled and are up 16% on a like for like basis.

Acquisitions continue to be a priority for the Board and remain integral to the buy and build strategy that we are developing in the confectionery, snacking and ingredient sectors of food manufacture.

Following the reorganisation of the Group into three divisions, which is covered in more detail in the Chief Executive's review, our businesses have clearer focus and with broader capabilities are delivering new listings as well as a full order book for Christmas. We are very confident of another excellent year.

Jeremy Hamer

Chairman

CHIEF EXECUTIVE'S REVIEW

- Halo and Nimbus fully integrated and performing well

- Core confectionery business performing well, 9% organic sales growth

- Sales up 99% to Pounds Sterling 41.2m with part-year contribution from Halo and Nimbus

- Strengthening of management team across the business to give further capacity for expansion

- Move to integrated divisional structure now complete

- Increasing development focus on 'better for you' confectionery and snacks
including low-fat, low-sugar, low-carb

- Further acquisitions under review

Review of the Period

I am delighted to be able to advise that Glisten plc made significant progress towards our goal of building a broadly based value-added food group during the 2004/05 financial year. These results represent our third successive year of record sales, operating profits and cash generation and as a consequence adjusted earnings per share has increased by 51% to 21.8 pence (2004: 14.4 pence).

I am particularly pleased that we have once again met or exceeded the key performance measures which describe the health and momentum of the business we are building. Our sales were Pounds Sterling 41,219,000 (2004: Pounds Sterling 20,755,000), up 99% overall and 9% on a like-for-like basis.

Operating profits pre amortisation and exceptional item increased by 73% to Pounds Sterling 3,668,000 (2004: Pounds Sterling 2,116,000), and cash generation increased to Pounds Sterling 3,872,000 (2004: Pounds Sterling 2,084,000), up 86%.

In my report last year I restated our determination to become a multi-sector food group focused on emerging sectors and specialist product niches within confectionery, snacking or ingredients markets. During 2004/05 we made further substantial progress towards this goal but the potential in the business is building all of the time.

Since our acquisition of Halo Foods Ltd and Nimbus Foods Ltd occurred in late December 2004 these results do not fully reflect the impact of these excellent additions to our Group.

We have had many highlights in what has been an extremely active and satisfying year but the advances which have contributed most to our strong performance are as follows;-

- The acquisition of Halo Foods Ltd (December 2004), a sector leader in the development and production of cereal based snack bars, diet bars and energy bars. Halo produces more than 200 million bars each year.

- The acquisition of Nimbus Foods Ltd (December 2004), focused on the development and production of technically advanced inclusions for international brands and major food manufacturing groups across Europe.

- Acquisition of the assets of House of York Ltd (July 2004), a specialist toffee manufacturer. This enabled us to increase our confectionery bagging capacity at Blackburn to 70 million bags per annum and expanded the product range in our Skegness site. Demand for our Toffee range has increased strongly throughout the year.

- We have strengthened our senior management team right across the business and moved to a new Group structure. Glisten plc now comprises three market-focused business units with day-to-day leadership from experienced food industry professionals.

I am pleased to advise that after a period of substantial change in both businesses, Halo and Nimbus are fully integrated within the Glisten approach and have performed in line with our aspirations.

As a result of these acquisitions and our ongoing drive to achieve double digit organic growth, sales in the six months since 1 January 2005 were Pounds Sterling 27,022,000, substantially ahead of the first half of the year (Pounds Sterling 14,197,000).

Review of Performance by Division

Glisten Confectionery Division (GCD)

The newly formed 'Glisten Confectionery Division' comprises the activity of two sites - Blackburn, Lancashire and Skegness, Lincolnshire, now renamed 'Glisten Confectionery, Skegness'. The latter was formerly called F. Fravigar Ltd and was acquired into our Group in January 2004.

Our position in confectionery continues to grow. Total sales were Pounds Sterling 25,459,000, up 23% from the previous year (2004: Pounds Sterling 20,755,000) as a result of the acquisitions of F. Fravigar Ltd and the assets of Penguin Confectionery Ltd, but organic sales growth in what was our core business, Glisten, Blackburn again grew strongly, by 9% on a like for like basis to Pounds Sterling 20,003,000.

In October 2004 Ian Hague joined Glisten, Blackburn as Divisional Managing Director from a successful career managing multi-site businesses within Northern Foods, Glanbia and Universal Flavours Corporation.

In April 2005 we moved management responsibility for F. Fravigar to the Glisten Confectionery Division reporting to Ian as part of our progression towards an integrated Group structure.

This is an important strategic step in our development as it will substantially accelerate the rate of cross-selling within the Confectionery Division and expose our expanded product capabilities to a far broader range of customers many of whom we do not yet serve from Skegness.

Both our confectionery sites maintained their Higher Level British Retail Consortium (BRC) Accreditation and during the year there were continuing advances in innovation, product quality, customer service and operations planning. Sales from our Blackburn site have grown from Pounds Sterling 14,263,000 to Pounds Sterling 20,003,000 since 2002 and these programmes reflect our determination to continue to optimise operating performance as we grow further.

The Confectionery Division was successful in broadening its customer base and building momentum with the major retailers, to industry and to foodservice. Export sales grew by virtue of the acquisition of Fravigar which generated new business and new customers in Ireland and Australia but given the focus on fulfilling UK growth we continue to serve 21 overseas countries, the same number as in 2004.

Christmas 2004 volumes were in line with our expectations at Pounds Sterling 1,600,000 marginally down on last year's record levels, but as a result of the rise in our all-year round business, sales of our Christmas range represented a smaller proportion of our overall confectionery business. Despite this we feel that the seasonal and 'novelty' capabilities we have acquired and developed are now a strong feature of our confectionery business. We therefore expect next years Easter, Halloween, Christmas and 'special events' ranges produced at both Blackburn and Skegness to be in growth as the result of a focused development plan in this area.

Halo Foods Division

Halo has performed in line with our expectations at the time of acquisition. Sales were Pounds Sterling 13,863,000 in the period under review and our first 6 months of ownership has marked a period of significant structural and strategy change inside the business.

Halo is a highly regarded producer within the market sector known as 'cereal bars'. However Halo's product capabilities are diverse, spanning energy bars, technically advanced diet bars, lo-carb bars, low-glycaemic index ("Low G.I") products and chocolate enrobed snack bars. Customers include many of the worlds largest household name brands in slimming, snacking and confectionery as well as a number of the major high street retailers own labels.

We acquired Halo with plans to:

- Capitalise on the continuing strong growth and interest in the arena of 'better for you' snacking.

- Reduce the cost-base of the business in order to deliver more consistent margins.

- Re-energise the business by introducing a more focused customer and product development programme.

- Develop Halo into a more broadly-based 'healthy snacks' business.

I am pleased to say that many of the operational and structural change-programmes we had in mind for the business at the time of acquisition have now been completed, albeit that the drive to make all of our business units more effective and efficient is continual. We feel that the potential for Halo is even more than we expected it to be.

Customer and product focus will be a dominant feature of our programme over the next 6 months but we are very pleased with the response from both existing and potential new customers to our new approach.

In February 2005 Richard Garrett joined the business as Managing Director Halo Foods Division. Richard joined us from a successful career spanning Cadbury Schweppes, Albert Fisher Group and Uniq Plc.

In June 2005 the Halo senior management team was itself strengthened by the appointment of Darren Edwards as Finance and IT Director and, Paul Cartwright as Sales and Marketing Director following a successful career at Ginsters (Samworth Group) and Wells Soft Drinks. In addition Robin Williams who joined Halo in 2002 stepped up to the Halo senior team to lead HR and take on further responsibility for Health and Safety.

Product innovation and technical excellence are key attributes of the Halo offering. Since January Halo has introduced a range of Fair-trade cereal bars under the Halo brand-name, developed Lo-Carb ranges for several leading brand names, and an innovative range of high-fruit bars for a leading UK food brand. These launches illustrate the variety of Halo's offering but we feel that the pace of innovation and the level of consumer focus will increase further as we build our position in this dynamic young market sector.

Halo now employs around 360 people and produces over 200 million cereal bars each year at sites in Tywyn and Newport in Wales. Both sites have capacity to expand beyond current levels and we are well placed to respond as the market grows.

Nimbus Foods (Glisten Inclusions Division)

We are very pleased with the progress made in Nimbus since we acquired it at the end of December. Sales were Pounds Sterling 1,680,000 in the period under review and operating profits were ahead of expectations.

Nimbus is a specialist inclusions developer based in Dolgellau, Wales now employing 38 people.

'Inclusions' is the industry term for highly developed ingredients which add value, taste or interest to other food products. This includes particularly coatings for ice lilies, toppings for cakes and fudge or toffee pieces which require specific freeze or baking characteristics. Nimbus customers include many of the UK's major ice cream and dessert producers as well as several multi-national confectioners and fast-food outlets where Nimbus produces 'barrier-coated' crispy and crunch pieces. Ian Ramsay is Managing Director of Nimbus. Ian has been with Nimbus for 3 years having joined the business from Nestle.

When we acquired Nimbus it had been operating at break-even for several years. Our aim was to move the business into profitability and create a viable growth platform within 18 months. The efforts of the Nimbus team have enabled us to achieve a positive performance ahead of plan as a result of an increased focus on cost-reduction and waste control, and a clearer strategy with much stronger emphasis on trade sector development.

This has enabled us to begin to capitalise on growth opportunities in the following sectors:-

- Ice Cream coatings, toppings, fillings.

- Foodservice - in March Nimbus developed a range of cappuccino toppings which are now being sold in Europe.

- Niche confectionery - Dolgellau is an excellent nut-free facility and its capabilities on specialist confectionery compliment those of Glisten Confectionery Division perfectly.

- Bakery - this is an under-exploited area for Nimbus.

Although the last six months performance needs to be consolidated for a full year, I am pleased to advise that we have gained sufficient confidence in Nimbus' prospects to accelerate a capital investment programme aimed at expanding the product range. This will take the business into three new market areas during the year ahead.

Nimbus operates within a market sector which we believe will grow and become more internationally focused in the coming years and we are confident that the best is yet to come for this exciting addition to our Group.

Group Buying

Following the acquisition of Halo we have created a specialist buying function to focus on improving the buying effectiveness throughout the Group. While it is early days this initiative is already bringing added benefits and will assist in maintaining our competitive edge.

Capital Expenditure Programme

Our capital expenditure in the year was Pounds Sterling 928,000, significantly ahead of last years levels (2004: Pounds Sterling 746,000), but in line with the growth of the Group. Our focus this year was on improving the efficiency and capabilities within our plants.

In the year ahead we expect to increase capital expenditure again to around Pounds Sterling 2,000,000 in line with the growth of the Group, and we have an exciting programme underway. The main components of this are a new Enterprise Resource Planning system for Glisten Confectionery which will integrate the planning and management of the Blackburn and Skegness sites, new production equipment to enable market entry in Nimbus (as outlined above), product innovation programmes in Halo which will enable new product formats to be produced, and new high speed packing equipment to increase capacity and flexibility.

People

While Glisten is continually developing the last year has been a period of substantial change. We have added a number of key people to the business which will give us the management capacity to continue building the Group, but our restructuring programmes inside the business particularly in Halo, Nimbus and at Skegness have been far reaching.

The quality, strength in depth and commitment of our people is key to achieving consistently high performance at pace. We now employ around 650 people at 5 sites and I would like to thank everyone for their support, energy and commitment over the past year; our progress would not have been possible without a high level of belief and teamwork throughout the business.

Outlook

Glisten plc is evolving into the multi-sector food group we set out to create when we listed on the AIM stock market in June 2002. We have a broad range of UK and international customers, a varied and attractive product range with some niche capabilities which differentiate us from competitors, and the level of cross-selling in our business is accelerating constantly.

Our objective following the acquisition of Halo Foods and Nimbus Foods, and our entry into the rapidly growing sector of cereal bars, is to increase our share of the dynamic and diverse hand-held snacks and inclusions markets. We remain very interested in sectors adjacent to these which will compliment what we currently do. Acquisitions continue to be an important element of our growth formula and I am pleased to advise that the pipeline of acquisition opportunities which satisfy our performance and strategic-fit criteria continues to be strong. In 2002 we set ourselves the goal of building a Group with sales of Pounds Sterling 100m within 5 years; we continue to believe that this goal is achievable.

Paul Simmonds

Chief Executive

FINANCE DIRECTOR'S REPORT

Results

Turnover has increased by 99% to Pounds Sterling 41,219,000 (2004: Pounds Sterling 20,755,000) and on a like for like basis is 9% ahead. Operating margins pre amortisation and exceptional items fell from 10.2% to 8.9% and on a like for like basis fell slightly to 9.2% (2004: 10.2%). Operating profit before amortisation and exceptional item was ahead 73% at Pounds Sterling 3,668,000 (2004: Pounds Sterling 2,116,000) and profit before taxation, amortisation and exceptional item ahead by 68% at Pounds Sterling 3,017,000 (2004: Pounds Sterling 1,801,000).

Net interest charges payable during the year were Pounds Sterling 651,000 (2004: Pounds Sterling 315,000) reflecting the growth of borrowings which took place as a direct result of the acquisitions made during the year. Interest was covered on a pre goodwill basis 5.5 times (2004: 6.7 times).

Earnings per Share

The FRS 3 basic earnings per share in the year as per note 8 was 10.2 pence (2004: 9.2 pence) up 11%.

The adjusted basic earnings per share has increased by 51% to 21.8 pence (2004: 14.4 pence) and the adjusted diluted earnings per share by 54% to 20.2 pence (2004: 13.1pence).

Taxation

The effective rate of taxation in the year on profit after goodwill is 28.2% (2004: 37.6%). This is lower than last year due to the exercise of a number of director and employee EMI share options during the financial year which may be offset against corporation tax.

The deferred taxation liability carried forward at the 30 June 2005 was Pounds Sterling 1,362,000 (2004: Pounds Sterling 498,000).

Equity Funding

On 22 December 2004 we placed 3,106,383 shares raising Pounds Sterling 7,300,000 to fund the acquisition of Halo Foods Limited, the costs in relation to this issue amounted to Pounds Sterling 360,000. As part of the consideration a further 109,649 shares were issued to the vendor raising Pounds Sterling 300,000. Throughout the year employees and directors exercised options over 346,600 ordinary shares raising a further Pounds Sterling 116,000. A total of 3,562,632 shares were issued during the year raising Pounds Sterling 7,356,000 net of costs.

Acquisition of House of York

On 23 July 2004 we completed the acquisition of certain assets, the brand name and recipes from House of York Limited, part of the Kiril Mischeff Group for a consideration of Pounds Sterling 162,000 including Pounds Sterling 42,000 of stock which following a review thereon necessitated a fair value adjustment of Pounds Sterling 29,000.

Acquisition of Halo Foods Limited

On 22 December 2004 we acquired 100% of the share capital of Halo Foods Limited and its subsidiary Nimbus Foods Limited for an initial consideration of Pounds Sterling 5,938,000 with further conditional deferred payments up to Pounds Sterling 8,000,000. These deferred payments are conditional on the achievement of certain operating profit targets in the calendar years 2005 and 2006 and are payable on 31 March each year up to a maximum of Pounds Sterling 3,000,000 in 2006, Pounds Sterling 2,500,000 in 2007 and Pounds Sterling 2,500,000 in 2008. The Board has provided for Pounds Sterling 5,505,000 of this conditional payment in these financial statements and will review the position again at 31 December 2005. Fees in respect of this transaction were Pounds Sterling 653,000 giving a total cost of Pounds Sterling 12,096,000.

Acquisition of Glisten Confectionery

The Group paid on 31 December 2004 Pounds Sterling 589,000 of the Pounds Sterling 1,000,000 final deferred payment in respect of the acquisition of Glisten Confectionery on 28 June 2002. The balance of Pounds Sterling 411,000 will be paid immediately an outstanding taxation matter in relation to an employee benefit trust set up by the vendors is resolved.

Acquisition of F. Fravigar Limited

On 14 January 2005 Pounds Sterling 800,000 of Pounds Sterling 1,000,000 deferred consideration was paid, a further sum of Pounds Sterling 40,000 was paid in September 2005 following the agreement of the completion accounts. This reduced the consideration by Pounds Sterling 314,000 although following a second year review of fair values, further provisions were made in relation to stock and plant and machinery amounting to Pounds Sterling 314,000. On 30 June 2005 the business and assets of F. Fravigar Limited were hived up into Glisten plc.

Cash Flow

The net cash inflow from operating activities during the year was Pounds Sterling 3,872,000 (2004: Pounds Sterling 2,084,000) and arose due to a strong operating cash performance before interest, taxation, depreciation and goodwill amortisation of Pounds Sterling 4,640,000 (2004: Pounds Sterling 2,630,000). Increases in working capital during the year accounted for the difference of Pounds Sterling 768,000 (2004: Pounds Sterling 546,000). This reflects a strong conversion of profits to cash.

The Group has continued its targeted capital expenditure programme in the factory this year where a further Pounds Sterling 729,000 was spent focussing on improving efficiency and capacity throughout the plants. The capital expenditure programme was financed through the Group's cash resources. Total capital expenditure in the year amounted to Pounds Sterling 928,000.

Before acquisitions and disposals the group generated free cash of Pounds Sterling 1,338,000 (2004: Pounds Sterling 723,000) which was used to pay deferred consideration in the year of Pounds Sterling 1,389,000. Equity raised in the year was Pounds Sterling 7,356,000 of which Pounds Sterling 6,753,000 was spent on acquisitions with the balance funding borrowings of Pounds Sterling 4,557,000 acquired with Halo Foods Limited increasing net debt after bank fees by Pounds Sterling 4,365,000 at 30 June 2005 to Pounds Sterling 9,433,000 (2004: Pounds Sterling 5,068,000) representing gearing of 52% (2004: 53%).

The Group expects to make a Pounds Sterling 3,000,000 payment in respect of conditional deferred consideration to the vendors of Halo Foods Limited but because of strong operating cash flows expected over the coming year gearing is not expected to be any higher at June 2006.

Bank Facilities

The Group has loan facilities of Pounds Sterling 17,250,000 which are renewable on 22 December 2009 consisting of two loan facilities amounting to Pounds Sterling 11,250,000 and a revolving credit / overdraft facility of Pounds Sterling 6,000,000 provided by Barclays Bank at variable rates which currently average 2.0% (2004: 2.25%) over base rate (2004: LIBOR). Pounds Sterling 5,000,000 of this loan is repayable in quarterly instalments between March 2007 and December 2009. The costs of raising this loan of Pounds Sterling 317,000 are being written off over the life of the loan and during the year a sum of Pounds Sterling 32,000 was amortised (2004: Pounds Sterling 55,000). During the year the Group repaid its borrowings to Bank of Scotland and charged to profit and loss account Pounds Sterling 445,000 being the outstanding amortisation and a termination charge of Pounds Sterling 45,000.

At 30 June 2005 the Group had headroom in its existing borrowing facilities of Pounds Sterling 8,614,000 (2004: Pounds Sterling 4,932,000).

Exchange Rate Risk

The Group is not exposed to any direct foreign currency risks as the majority of its cash flows are in sterling. Transactions of an immaterial nature are settled at spot rates whereas forward currency contracts are used for transactions of a material nature. There were no outstanding forward currency contracts at 30 June 2005 (2004: nil).

The Group purchases certain of its raw materials in foreign currencies but these are fixed at the time the order is placed The exception is sugar which is subject to a fortnightly sterling euro adjustment. This adjustment is kept under review and where it is deemed appropriate exchange rates are fixed.

Forward Contract Risk

The Group takes the opportunity to secure forward supplies of some raw material commodities when prices are deemed to be favourable. These contracts are managed under policies and procedures approved and monitored by the Board on a monthly basis.

Robert Davies

Finance Director



CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR ENDED 30 JUNE 2005

Year ended 30 June 2005
Pre- Goodwill/
amortisation amortisation/
/exceptional exceptional Total
Notes Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000
TURNOVER
From continuing
operations 25,459 - 25,459
From acquisitions 15,760 - 15,760
----------------------------------
2 41,219 - 41,219
Cost of sales (33,578) - (33,578)
----------------------------------
GROSS PROFIT 7,641 - 7,641

Administrative costs
- other (3,973) (743) (4,716)
exceptional 3 - (175) (175)
----------------------------------
OPERATING PROFIT
From continuing
operations 2,325 (542) 1,783
From acquisitions 1,343 (376) 967
----------------------------------
3,668 (918) 2,750
Interest 5 (651) (477) (1,128)
----------------------------------

PROFIT ON ORDINARY
ACTIVITIES
BEFORE TAXATION 3,017 (1,395) 1,622

Taxation 4 (509) 52 (457)
----------------------------------

PROFIT ON ORDINARY
ACTIVITIES AFTER
TAXATION 2,508 (1,343) 1,165
----------------------------------

Dividends 6 (144) - (144)
----------------------------------

RETAINED PROFIT
FOR THE YEAR 2,364 (1,343) 1,021
----------------------------------
----------------------------------

Basic earnings
per share 7 21.8p (11.6p) 10.2p
----------------------------------
----------------------------------

Diluted earnings
per share 7 20.2p (10.7p) 9.5p
----------------------------------
----------------------------------

Dividend per share 1.1p - 1.1p
----------------------------------
----------------------------------


Year ended 30 June 2004
Pre- Goodwill/
amortisation amortisation/
/exceptional exceptional Total
Notes Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000
TURNOVER
From continuing
operations 17,307 - 17,307
From acquisitions 3,448 - 3,448
----------------------------------
2 20,755 - 20,755
Cost of sales (16,320) - (16,320)
----------------------------------
GROSS PROFIT 4,435 - 4,435

Administrative costs
- other (2,319) (415) (2,734)
exceptional 3 - - -
----------------------------------
OPERATING PROFIT
From continuing
operations 1,685 (271) 1,414
From acquisitions 431 (144) 287
----------------------------------
2,116 (415) 1,701
Interest 5 (315) (55) (370)
----------------------------------

PROFIT ON ORDINARY
ACTIVITIES
BEFORE TAXATION 1,801 (470) 1,331

Taxation 4 (500) - (500)
----------------------------------

PROFIT ON ORDINARY
ACTIVITIES AFTER
TAXATION 1,301 (470) 831
----------------------------------

Dividends 6 (49) - (49)
----------------------------------

RETAINED PROFIT
FOR THE YEAR 1,252 (470) 782
----------------------------------
----------------------------------

Basic earnings
per share 7 14.4p (5.2p) 9.2p
----------------------------------
----------------------------------

Diluted earnings
per share 7 13.1p (4.7p) 8.4p
----------------------------------
----------------------------------

Dividend per share 0.5p - 0.5p
----------------------------------
----------------------------------


There are no other recognised gains and losses other than those in the profit and loss account above.

The parent company has taken advantage of section 230 of the Companies Act 1985 and has not included its own profit and loss account in these financial statements. The profit for the financial year of the company after taxation was Pounds Sterling 486,000 (2004: Pounds Sterling 707,000).



BALANCE SHEETS
30 JUNE 2005

2005 2004

Group Company Group Company
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling
'000 '000 '000 '000
FIXED ASSETS
Intangible 18,437 9,622 10,136 5,655
Tangible assets 12,531 5,727 5,491 3,799
Investments - 12,216 - 4,716
------------------------------------
30,968 27,565 15,627 14,170
CURRENT ASSETS
Stocks and work in progress 5,085 2,933 2,641 1,947
Debtors 8,101 7,696 3,502 5,921
Cash at bank and in hand 2,614 1,287 432 160
------------------------------------
15,800 11,916 6,575 8,028

CREDITORS - Amounts falling due
within one year (12,848) (8,311) (7,028) (7,343)
------------------------------------

NET CURRENT ASSETS /
(LIABILITIES) 2,952 3,605 (453) 685
------------------------------------

TOTAL ASSETS LESS CURRENT
LIABILITIES 33,920 31,170 15,174 14,855

CREDITORS AFTER ONE YEAR
Other creditors (14,199) (13,470) (5,099) (5,099)

PROVISION FOR LIABILITIES AND
CHARGES (1,767) (549) (498) (303)
------------------------------------

NET ASSETS 17,954 17,151 9,577 9,453
------------------------------------
------------------------------------

CAPITAL AND RESERVES
Called up share capital 1,663 1,663 1,217 1,217
Share premium account 13,850 13,850 6,940 6,940
Profit and loss account 2,441 1,638 1,420 1,296
------------------------------------
TOTAL SHAREHOLDERS' FUNDS 17,954 17,151 9,577 9,453
------------------------------------
------------------------------------



CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 30 JUNE 2005

Year Year
ended ended
30 June 30 June
2005 2004
Pounds Pounds
Sterling Sterling
Notes '000 '000

NET CASH INFLOW FROM OPERATING ACTIVITIES 8 3,872 2,084

RETURNS ON INVESTMENTS AND SERVICING OF
FINANCING 9 (666) (322)

TAXATION (838) (298)

DIVIDEND (113) -

CAPITAL EXPENDITURE 9 (917) (741)

ACQUISITIONS AND DISPOSALS 9 (12,399) (7,221)
------------------

CASH OUTFLOW BEFORE THE USE OF LIQUID
RESOURCES AND FINANCING (11,061) (6,498)

FINANCING 9 12,446 6,500
------------------

INCREASE IN CASH IN THE YEAR 1,385 2
------------------
------------------

RECONCILIATION OF NET CASH FLOW TO MOVEMENT
IN NET FUNDS

INCREASE IN CASH IN THE YEAR 1,385 2

CASH INFLOW FROM INCREASE IN DEBT (5,750) (4,000)
------------------

MOVEMENT IN NET DEBT IN THE YEAR (4,365) (3,998)

NET DEBT AT 30 JUNE 2004 10 (5,068) (1,070)
------------------

NET DEBT AT 30 JUNE 2005 10 (9,433) (5,068)
------------------
------------------



NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2005


1. BASIS OF PREPARATION

The preliminary financial information has been prepared in accordance with the accounting policies adopted in the statutory accounts for the period ended 30 June 2004.



2. TURNOVER
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

UK 35,597 18,895
Europe 5,217 1,331
Rest of World 405 529
------------------
Total 41,219 20,755
------------------
------------------


3. EXCEPTIONAL ITEM

Exceptional items comprise restructuring costs of Pounds Sterling 175,000 at Halo Foods and Nimbus Foods following their acquisition by the group.



4. TAXATION

2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Corporation tax at 5.2% (2004: 30.5%) 84 406
Deferred tax 373 94
--------------------
457 500
--------------------
--------------------

The corporation tax assessed for the year is different than the
standard rate of corporation tax in the United Kingdom of 30%.
The differences are explained below.

Profit on ordinary activities before tax 1,622 1,331
--------------------
--------------------

Profit on ordinary activities multiplied
by the standard rate of corporation tax
in the UK of 30%. 487 399

Effect of:
Goodwill, options and other non
deductible items (28) 116
Depreciation in excess of capital
allowances (17) (20)
Short term timing differences - (22)
Rate difference (small companies
relief) - -
Utilisation of tax losses (358) (67)
--------------------
84 406
--------------------
--------------------


5. NET INTEREST PAYABLE

During the year the group changed bankers from Bank of Scotland Limited to Barclays Bank plc this necessitated the write off of outstanding amortisation costs of Pounds Sterling 408,000 including a termination charge of Pounds Sterling 45,000.




2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Interest receivable on deposits at
short call (30) (8)
Interest payable on bank loans and
overdraft 692 332
Other interest 2 -
Exchange gain on foreign currency (13) (9)
-------------------
Net Interest payable 651 315
Amortisation of financing arrangement
costs 477 55
-------------------
1,128 370
-------------------
-------------------


6. DIVIDENDS

2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Interim dividend paid 64 -
Final proposed of 0.6p per share (2004: 0.5p) 80 49
-----------------
144 49
-----------------
-----------------


7. EARNINGS PER SHARE

Earnings per share is calculated on the basis of profit for the year of Pounds Sterling 1,165,000 (2004: Pounds Sterling 831,000) divided by the weighted average number of shares in issue for the year to 30 June 2005 of 11,481,052 (2004: 9,015,940). The diluted earnings per share is calculated on the assumption all options granted were exercised, this would give rise to a total weighted average number of ordinary shares in issue of 12,510,899 (2004: 10,062,199).

The directors consider that a more realistic measure for basic earnings per share is arrived at by using the profit after taxation set out in the profit and loss account under the column headed pre amortisation and exceptional of Pounds Sterling 2,508,000 (2004: Pounds Sterling 1,301,000) divided by the relevant weighted average number of shares. This is described as the adjusted earnings per share. It is this measure of earnings per share that the directors believe demonstrates the progress of the business.



Basic earnings Diluted earnings
per share per share
2005 2004 2005 2004

Basic and diluted earnings per share 10.2p 9.2p 9.5p 8.4p

Adjusted basic and diluted earnings
per share 21.8p 14.4p 20.2p 13.1p


2005 2004
Number Number
of shares of shares

Weighted average number of shares

Basic and diluted earnings per share:
For basic earnings per share 11,481,052 9,015,940

Exercise of share options 1,029,847 1,046,259
-----------------------
For diluted earnings per share 12,510,89 10,062,199
-----------------------
-----------------------


8. PURCHASE OF SUBSIDIARY UNDERTAKINGS AND BUSINESSES

All acquisitions have been accounted for using the acquisition method of accounting, and goodwill arising on consolidation has been capitalised and will be written off over 20 years.

Below is a summary of the consolidated profit and loss account showing information separated between continuing operations and acquisitions.



From
continuing
operations Acquisitions Total
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Turnover 25,459 15,760 41,219
Gross Profit 5,017 2,624 7,641
Administrative expenses (3,234) (1,657) (4,891)
Operating profit 1,783 967 2,750


The following tables set out the book values of the identifiable assets and liabilities acquired and their fair value to the Group.

House of York

On 23 July 2004 the group acquired the trade and specific assets of House of York Limited, part of the Kiril Mischeff Group, for Pounds Sterling 162,000. There were no costs associated with this transaction. The consideration was satisfied by cash. Following the acquisition the assets were relocated to Blackburn and Skegness and the business integrated into Glisten Confectionery and F. Fravigar Limited.



Book value
and fair value

Pounds Sterling '000
Net assets acquired:

Tangible fixed assets 120
Stocks 42
---------------------
162
Less fair value adjustment in respect of stock (29)
Goodwill 29
---------------------
162
---------------------
---------------------
Satisfied by:

Cash
162
---------------------
Consideration before fees 162
Fees -
---------------------
162
---------------------
---------------------


Halo Foods Limited

On 22 December 2004 the group acquired the entire share capital of Halo Foods Limited for an initial consideration of Pounds Sterling 5,938,000 satisfied by cash of Pounds Sterling 5,638,000 and the issue of 109,649 ordinary shares of 12.5p at Pounds Sterling 2.735 amounting to Pounds Sterling 300,000. A further sum of up to Pounds Sterling 8,000,000 is payable based upon the achievement of profit targets in the calendar years 2005 and 2006. If an adjusted operating profit of Pounds Sterling 2,285,000 is achieved in either of these years then the full Pounds Sterling 8,000,000 is payable, the directors have provided in these accounts an amount of Pounds Sterling 5,505,000 which equates to an operating profit level of Pounds Sterling 1,835,000 and at this time is the maximum amount the directors believe will be payable. This will be reviewed again at 31 December 2005. The amounts provided are payable up to a maximum of Pounds Sterling 3,000,000 on 31 March 2006 and up to a maximum of Pounds Sterling 2,500,000 on both 31 March 2007 and 31 March 2008.

Following the acquisition Halo Foods Limited and its subsidiary, Nimbus Foods Limited, continue to trade as subsidiaries of Glisten plc.



Fair Value
Book Value adjustment Fair Value
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Net assets acquired:

Tangible fixed assets 7,653 (503) 7,150
Stock 2,433 - 2,433
Debtors 3,530 - 3,530
Cash at bank and in hand (4,557) - (4,557)
Creditors (4,303) (117) (4,420)
Provisions - (649) (649)
Taxation 236 - 236
Deferred tax (642) - (642)
----------------------------------------
4,350 (1,269) 3,081
--------------------------
--------------------------
Goodwill 9,015
-----------
12,096
-----------
-----------


Satisfied by: Pounds Sterling

Cash 5,638
Shares 300
Conditional deferred
consideration 5,505
--------------
Consideration before fees 11,443
Fees 653
--------------
12,096
--------------
--------------


Below are shown extracts from the consolidated profit and loss account of Halo Foods Limited from 1 January 2004 until acquisition on 22 December 2004.



Pounds Sterling
'000

Turnover 27,484
Operating loss (1,496)
Interest (239)
Loss before tax (1,735)
Taxation 520
--------------
Loss for the financial
period (1,215)
--------------
--------------


In the year ended 31 December 2003 Halo Foods Limited made a profit after tax of Pounds Sterling 1,114,000.

F. Fravigar Limited

On 14 January 2004 the group acquired the entire share capital of F. Fravigar Limited for an initial consideration of Pounds Sterling 7,500,000 satisfied by cash of Pounds Sterling 6,200,000 and the issue of 181,818 ordinary shares of 12.5p at Pounds Sterling 1.65 amounting to Pounds Sterling 300,000. Pounds Sterling 800,000 of the remaining fixed part of the consideration of Pounds Sterling 1,000,000 was paid on 14 January 2005 and final amount of Pounds Sterling 40,000 was paid in September 2005. This reduced the consideration by Pounds Sterling 314,000 and following a second year review of fair values, further provisions were made in relation to stock and plant and machinery amounting to Pounds Sterling 314,000.

On 30 June 2005 F. Fravigar Limited was hived up into Glisten plc as part of the reorganisation of the confectionery businesses under the Blackburn management team.

8. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES



Year Year
ended ended
30 June 30 June
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000
Group
Operating profit 2,750 1,701
Depreciation 1,146 513
Loss on sale of fixed assets 1 1
Goodwill amortisation 743 415
(Increase) in stocks (81) (195)
(Increase) in debtors (912) (847)
Increase in creditors 225 496
---------------------------
NET CASH INFLOW FROM OPERATING ACTIVITIES 3,872 2,084
---------------------------
---------------------------


9. GROSS CASH FLOWS

Year Year
ended ended
30 June 30 June
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 30 8
Exchange differences 13 9
Interest paid (709) (339)
------------------------
(666) (322)
------------------------
------------------------

CAPITAL EXPENDITURE
Payments to acquire tangible fixed
assets (928) (746)
Receipts from sales of tangible
fixed assets 11 5
------------------------
(917) (741)
------------------------
------------------------

ACQUISITIONS AND DISPOSALS
Payment of deferred consideration in
respect of subsidiaries (1,389) (1,154)
Purchase of subsidiary undertakings (6,453) (7,740)
Effect of fair value adjustment - (30)
Net cash acquired with subsidiary
undertakings (4,557) 1,703
------------------------
Net cash outflow for acquisitions and
disposals (12,399) (7,221)
------------------------
------------------------

FINANCING
Issue of ordinary share capital 7,056 2,765
Increase in long term borrowings 5,750 4,000
Expenses paid in connection with borrowings (360) (265)
------------------------
12,446 6,500
------------------------
------------------------


10. ANALYSIS OF CHANGES IN NET DEBT
At 30 At 30
Cash June June
flows 2005 2004
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Cash at bank and in hand 2,182 2,614 432
Other loans and finance within
1 year (290) (290) -
Other loans and finance after
1 year (507) (507) -
---------------------------------------
Net movement in cash 1,385 1,817 432
Debt after 1 year (5,750) (11,250) (5,500)
---------------------------------------
Total (4,365) (9,433) (5,068)
---------------------------------------
---------------------------------------


11. DISTRIBUTION OF THE ANNUAL REPORT AND ACCOUNTS TO MEMBERS

The announcement set out above does not constitute a full financial statement of the company's affairs for the year ended 30 June 2005 or 2004. The Company's auditors have reported on the full accounts of the said years and have accompanied them with an unqualified report. The accounts have yet to be delivered to the Registrar of Companies.

This annual report and accounts will be posted to all shareholders of the Company, and will be available on our web site (www.glisten.plc.uk) and for inspection by the public at the registered office of the Company during normal business hours on any weekday. Further copies will be available on request from Glisten plc, Hill Street, Blackburn, Lancashire, BB1 3HG.

The company's annual general meeting will take place on 3 November 2005 at The International Suite 4, Blackburn Rovers Football Ground, Ewood Park, Blackburn, starting at 2.30pm.

Contact Information