Finsbury, the premium cake and speciality bread maker chaired by Lord Saatchi, baked up strong numbers for the year to June and is hungrily chasing acquisitions in the cake and bread markets. 'We've identified targets in the sectors in which we currently operate,' teases finance man John Lomer. Investors can expect any imminent deals to be financed with debt, of which the balance sheet is currently unfettered.

On a slightly lower turnover of £59.3m (£59.9m) – Finsbury exited some work at unattractive margins – pre-exceptional pre-tax profits were raised from £200,000 to £1.5m. Gross margins warmed up from 33% to 38%, in line with star peer performers like Inter Link, with some price rises helping returns.

Both business arms, Memory Lane Cakes and premium bread maker Nicholas & Harris, had a good year, delivering strong performances. Memory Lane Cakes, which has ties with nearly all major supermarkets, is now in the second year of its exclusive five-year deal to use the Nestlé confectionery brands for ambient cake in the UK. Lomer says the group is on track to create a £50m turnover business (at retail prices) for the Nestlé cake brand over the course of the contract. He is upbeat on growth prospects, arguing that the UK cake market continues to grow, particularly in the premium and 'indulgent' sectors, while the sustained growth is to be found in the speciality bread sector. 'Once you've eaten premium bread, you just don't go back,' he opines. Analysts are bullish on Finsbury's prospects, and so are we. Buy.

Finsbury Food Group	AIM	£8.23m	16.00p	0.00p
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