Final Results
Greencore Group PLC
27 November 2007
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 28 SEPTEMBER 2007
GREENCORE GROUP PLC ('Greencore' or the 'Group'), one of Europe's leading
convenience food and malt producers, today issues the following preliminary
statement of results for the year ended 28 September 2007.
HIGHLIGHTS
- Excellent performance across the Group's continuing portfolio
- Group operating profit (pre-exceptionals) up 22% to EUR 91.0m
- Profit before tax (pre-exceptionals) up 32% to EUR 75.1m
- Adjusted EPS(1) from continuing operations up 50% to 29.8 cent (total
adjusted EPS1 was 30.6 cent which compares with an FY06 level,
including discontinued sugar operations, of 31.1 cent)
- Difficult second half of year impacting Convenience Foods performance but
conditions for recovery in place:
- Turnover growth of 4% to EUR 933.1m with a 1% decline in the second
half of year
- Operating profit decline of 7% to EUR 64.4m with a 16% decline in the
second half of year
- Strong market share positions maintained as platform for recovery in
FY08
- Strong performance in Ingredients & Related Property division:
- Operating profits of EUR 26.6m, an increase of 372%
- All ingredient businesses delivering strong turnover and profit growth
- Positive momentum in the management of each of the Group's four significant
related property assets
- Net finance costs reduced by 8% and effective tax rate reduced to 18%
- Net exceptional profit of EUR 48.2m of which the sale of the Group's 50%
interest in Odlums was the largest contributor
- Comparable net debt of EUR 320.5m, a reduction of EUR 64.9m since September
2006
- Recommended increase in full year dividend of 5%; final dividend at 8.21 cent
up from 7.58 cent in FY06
- Positive outlook for FY08 and beyond
COMMENTING ON THE RESULTS, DAVID DILGER, GROUP CHIEF EXECUTIVE, SAID:
'Greencore has made great progress in 2007 with significant growth in operating
profits, profit before tax and continuing EPS. Convenience Foods is central to
Group strategy and performance, and while we had a tough second half this year,
due principally to external factors, our market positions and executional skills
remain very strong. In common with the rest of the industry, we are working
hard to offset the impact of high levels of raw material inflation. Progress in
achieving price increases is encouraging.
'Our Malt business, in which we are a European leader, has had an excellent
year, with a strong recovery in profits bringing the business back towards more
acceptable levels of return. We have also made considerable progress in adding
value to our Related Property sites in Mallow, Carlow and Athy in Ireland, and
at Littlehampton in West Sussex, UK.
'With a strong Convenience Foods business, a recovering Malt franchise, nearly
1,000 acres of development property and a stronger balance sheet, the Group is
confident in its ability to deliver substantial value to shareholders in the
coming years. This confidence is reflected in the Board's decision to recommend
its first dividend increase since 2000.'
Footnote (1): Before exceptional items, inter-company foreign exchange gains/
losses and the movement in the fair value of all derivative financial
instruments and related debt adjustments.
FOR FURTHER INFORMATION, PLEASE CONTACT:
David Dilger, Group Chief Executive +353 (0)1 605 1045
Patrick Coveney, Chief Financial Officer +353 (0)1 605 1018
Eoin Tonge, Group Capital Markets Director +353 (0)1 605 1036
Billy Murphy or Anne-Marie Curran, Drury Communications +353 (0)1 260 5000
Rory Godson, Powerscourt +44 (0)207 250 1446
ABOUT GREENCORE
- Greencore is one of Europe's leading producers of convenience foods with
its principal operations in the UK.
- Greencore is one of Europe's largest producers of malt for the brewing and
distilling industries with operations in Ireland, the UK and Belgium.
- Greencore is Europe's largest sandwich manufacturer, producing more than
200 million sandwiches per annum.
- Greencore is the UK's largest Christmas cake manufacturer with a 33%
market share.
- Greencore is the UK's largest producer of customer branded mineral water
producing 200 million units per annum.
- Greencore retains nearly 1,000 acres of property assets with the potential
for development in Ireland and the UK.
SUMMARY
In the first year following its exit from sugar processing activities, Greencore
delivered an adjusted EPS level of 30.6 cent - a level that almost matched the
FY06 adjusted EPS level of 31.1 cent, a figure that reflected 9.9 cent of
discontinued 'sugar' EPS. On a continuing EPS basis, the Group delivered a 50%
increase year-on-year (from 19.9 cent to 29.8 cent). This strong Group
financial performance was driven by excellent recovery in the Ingredients &
Related Property division, good Convenience Foods performance in the first half
of the year, a reduced finance charge and a lower effective tax rate.
Although the Convenience Foods division performed well in the first half of the
year with revenue and operating profits up 8% and 5% respectively, performance
in the critical second half period was disappointing. Profit declined 16% in
this period primarily due to the impact of unseasonal summer weather and strong
raw material cost inflation in the final quarter. On a full year basis,
turnover rose 4% to EUR 933.1m, and operating profit fell 7% to EUR 64.4m,
reflecting a fall in operating margin from 7.7% to 6.9%. Notwithstanding the
decline in operating profits relating largely to external factors, the year saw
continued momentum against our key strategic and operational objectives:
- LEADERSHIP OF GROWING CONCENTRATED PRODUCT CATEGORIES: No. 1 or No. 2
category share positions maintained (2). Despite difficult summer trading
conditions, critically, our 'summer-weighted' categories (Sandwiches,
Water and Quiche) maintained or grew market share during the year.
- BROAD CHANNEL EXPOSURE: Sales to non-multiple customers in FY07 retained
at one third of divisional turnover.
- AN INCREASED COMMITMENT TO BRANDED PRODUCTS: Sales of 'branded' products
grew by 22% and account for 13% of divisional turnover.
- RELENTLESS FOCUS ON TOTAL LOWEST COST ('TLC'): TLC initiatives drove
operational cost reduction of more than 2% of sales in FY07.
- AGGRESSIVE PRODUCT DEVELOPMENT: More than 40% of our FY07 product range
is less than one year old.
- WELL-INVESTED FOOD FACILITIES DELIVERING EXCELLENT OPERATIONAL
PERFORMANCE: Customer service levels averaged 99% in FY07.
The Ingredients & Related Property division made considerable progress in FY07,
delivering operating profits from continuing operations of EUR 26.6m, an
increase of 372% from the FY06 level of EUR 5.6m. Turnover from continuing
operations rose 21% to EUR 334.0m.
The key driver was the strong recovery of our Malt business. Global malt
markets now have a better balance between demand and supply, and the UK market
in particular has strengthened as a result. Our Malt business has benefited
from the restructuring investments made in FY05 and FY06 and from excellent
commercial and operational performance in FY07 such that it is now delivering
more acceptable returns. Increased profitability from each of the other
ingredient businesses and an increased level of disposals of small, surplus
properties also contributed to the division's strong operating profit growth in
FY07.
The Group's net finance charge for the financial year has been reduced by 8% to
EUR 16.7m, impacted by a significant improvement in the net pension credit. In
addition, the Group's effective tax rate decreased to 18% (FY06: 22.5% on
continuing operations) consistent with the change in the mix of Group profits.
The Group's cash position has improved with comparable net debt at year-end
totalling EUR 320.5m, a reduction of EUR 64.9m on September 2006.
The Group generated total exceptional gains (net of tax) of EUR 48.2m in the
period, reflecting profits on the disposal of several businesses and lower net
sugar exit costs than envisaged in our Restructuring Plan.
The Group continues to add value to all four of its large Related Property sites
- Mallow, Carlow, Littlehampton and Athy, with the zoning and planning status of
each of the sites enhanced during the year.
Footnote (2): Source: TNS
DIVIDEND
The board of directors is pleased to recommend a final dividend of 8.21 cent.
If approved by shareholders, this will result in a total dividend of 13.26 cent
for the full year which would represent a 5% increase on last year's level of
12.63 cent. This increase reflects a progression in underlying earnings
performance together with the Group's improving capital position. Going
forward, the Board expects to grow the dividend further while broadly
maintaining dividend cover.
OUTLOOK
The Board anticipates further progress across each element of the Group's
portfolio.
In Convenience Foods, market conditions remain challenging. At this point,
inflationary pressures in raw material markets are expected to contribute to an
8% to 10% increase the division's 'cost of goods'. Despite this impact, the
Group is confident that the combination of strong operational performance,
necessary sales pricing improvements (much of which have already been
implemented), tight cost management and the delivery of key new commercial
initiatives will enable us to deliver good growth in FY08.
The Group expects the strong performance evident across our Ingredients &
Related Property division in FY07 to be sustained into FY08, with the medium
term prospects for our Malt business remaining very encouraging. The progress
made in respect of our Related Property assets over the last year has served to
underpin our confidence regarding the potential to generate significant value
from these assets over the coming years.
Overall, the Board believes the Group is well positioned to deliver substantial
value to shareholders in FY08 and beyond.
OPERATIONAL REVIEW - CONVENIENCE FOODS
FY07 FY06 Change
EUR'm EUR'm
Turnover 933.1 901.4 4%
Operating Profit 64.4 69.0 -7%
The Convenience Foods division accounted for more than 70% of Group turnover and
operating profits in FY07. Performance in the period was disappointing with
turnover growth falling back to 4% (from 8% in FY06) and operating profit
declining by 7 % (compared to 6% growth in FY06). However, the aggregated full
year turnover and profit performance reflects very different results across the
two halves of the year.
1. STRONG FIRST HALF PERFORMANCE
In the first half of the year, the division delivered turnover and operating
profit growth of 8% and 5% respectively. This performance was characterised by
turnover growth at more than twice the underlying market rate (all achieved
organically), strong margin performance despite inflationary pressures and the
one-off impact of a fire at our largest chilled food facility, and a consistent
level of excellent operational performance across all elements of our portfolio.
2. DIFFICULT INDUSTRY CONDITIONS IMPACTED SECOND HALF
Our Convenience Foods portfolio has always been 'second half weighted' with
profits in the second half typically exceeding those in the first half by more
than 25%. This weighting is driven more by differences in product mix than by
absolute uplifts in divisional turnover. In FY07, this anticipated second half
profit uplift did not materialise. Turnover declined by 1% on H2 FY06 and by 5%
on H1 FY07. Although second half operating margins (at 7.2%) increased modestly
on the first half level (6.7%), they fell well short of the level earned in H2
FY06 (8.4%). The sales and margin impacts reduced second half operating profits
by 16% on H2 FY06 and were driven by:
- POOR SUMMER TRADING
Unseasonal weather conditions led to weaker trading in our key 'summer-weighted categories' such as
Sandwiches, Mineral Water and Quiche. In the case of the Sandwiches category, this effect was compounded by
the lag associated with replacing the loss of an important customer contract in the period. Importantly, we
maintained or grew our share in each of these categories during the period.
- ACCELERATING INPUT PRICE INFLATION
Raw material and packaging prices increased considerably during the year with increases seen in items such
as bread, flour, dairy, eggs, cooked meats, onions, glass, corrugated paper and PET. While we were able to
offset most of these inflationary pressures with cost reduction initiatives in the first half of the year,
the level of increase in the second half, and particularly in the final quarter, was much more significant.
This was driven by global and local demand dynamics across nearly all dairy and soft commodity products.
The year also saw continued labour inflation across the division, in part driven by a 6% increase in minimum
wage levels in the UK in October 2006. Inflationary pressures experienced in FY07 were not recovered
through customer price increases in the year and, in fact, overall sales price deflation (including trading
terms and promotional support) for the year amounted to nearly 1% largely due to pricing arrangements
carried forward from the previous year.
3. STRONG PERFORMANCE AGAINST STRATEGIC AND OPERATIONAL OBJECTIVES
Despite these events and the impact on results, the Board is pleased with the
underlying delivery of the Convenience Foods division against its strategic and
operational objectives.
- MARKET LEADING POSITIONS IN ATTRACTIVE PRODUCT CATEGORIES
The Convenience Foods division continues to compete in attractive product categories. Our key product
categories and segments continue to grow at levels above the total food market and deliver strong economic
returns both for our customers and for Greencore. For example, consumers continue to seek variety in the
expanding food-to-go market which sees category growth rates of 5% in sandwiches, 15% in salads and 50% in
sushi (2). Within Sandwiches, wraps are growing at 15% and premium sandwiches at 13%. At Cakes & Desserts,
we now produce one in three Christmas cakes sold in the UK, with a gain of more than two percentage points
of market share on FY06. We continue to seek No. 1 or strong No. 2 market share positions in the categories
and segments in which we operate. Greencore holds the No. 1 position in eight of our nine convenience foods
categories and we are the No. 2 player in the other category (2).
- BALANCED CUSTOMER AND CHANNEL EXPOSURE
A distinctive feature of Greencore Convenience Foods is the balance that it achieves across customers and
channels. Two thirds of divisional turnover is conducted through the large retailer multiple channel where
the relative size of each customer is balanced to broadly reflect their respective shares of the UK grocery
market. The quality of our relationships with these customers is central to the performance and prospects
of our business model. High levels of consumer-centric innovation, a passion to deliver excellent in-store
performance and outstanding supply chain and technical accuracy underpin these relationships. This is
reflected not only in strong customer service levels for the year (averaging 99% 'right first time delivery
to customer order' across the Group for the year) but also by an important number of both formal and
informal customer and industry awards and recognition that our category teams received throughout the year.
A significant proportion of Greencore sales are conducted through small convenience store and foodservice
outlets, many of which are served by our direct store delivery model. In FY07, we grew turnover to these
non-multiple customers in line with the overall divisional growth rate despite the loss of a significant
sandwich customer in the second half of the year. A number of new customer 'wins', together with the
broader mix of products now being sold through our direct delivery model, will enable the division to extend
the share of total sales to non-multiple customers going forward.
- A COMMITMENT TO OPERATIONAL EXCELLENCE AND LOW COST
Greencore is committed to being the lowest cost competitor in convenience foods - it is critical to
sustaining margin delivery to our shareholders and our customers over time. The Total Lowest Cost (TLC)
culture and underpinning programmes are deeply embedded across all aspects and all levels of our business.
As with previous years, there were more than 200 initiatives which yielded real operational cost savings of
more than 2% of sales volume. The year saw a further development of our Lean Greencore programme, which
drove a large number of operational improvement projects targeting waste reduction, improved productivity,
energy use and 'food miles' reduction. For example, initiatives at our largest chilled facility at Manton
Wood have led to a 14% decrease in total waste in the year.
In addition, the Group delivered a significant number of both large and small purchasing initiatives
focusing on all aspects of the inbound and outbound supply chain. The Group continues to focus on the size
and mix of its supplier base with a reduction of more than 100 packaging suppliers achieved during the year.
In FY07, this level of TLC delivery enabled Greencore to offset much of the impact of input price inflation.
- STRONG PRODUCT AND CATEGORY INNOVATION, SUPPLEMENTED WITH EMERGING BRANDED INNOVATION
We operate in fast moving categories. Innovation is critical to delivering excitement to consumers and
customers while sustaining margins. At the end of September 2007, more than 40% of our portfolio comprised
products that were less than one year old. This rate of innovation is comparable to that which we have
delivered in prior years.
Health initiatives continue to be a key element of the Group's innovation agenda. We have now removed all
trans fats and hydrogenated vegetable oils from our products and have made significant progress towards the
UK Food Standards Agency's 2010 salt level targets (with some categories already achieving its required
targets). For example, this drive to healthier ingredients has contributed to 100% innovation in our Cakes
& Desserts category this year.
In FY07, we also launched a number of new large-scale category initiatives. In the food-to-go area, we now
have growing positions in the baguettes, snack salads and sushi categories, the latter enabled by the
acquisition of a small sushi business. All of these segments have been new to Greencore in the last
eighteen months. We have further new category and segment innovations planned for FY08.
The level of branded innovation being pursued by Greencore has also increased, with 13% of turnover now
branded, up 22% on FY06. Recent initiatives include the further extension of the WeightWatchers license,
the launch of Pudz frozen desserts and Strathlomond mineral water, the integration of the Ross pickles
brand, the re-branding of Sutherland Deli and the recent launch of our Kiveton's Kitchen range targeted
exclusively at the convenience store channel.
- LEVERAGING OUR CONVENIENCE FOODS CAPABILITIES BEYOND THE UK
In FY07, we made considerable progress in building our chilled food businesses in the Netherlands and
Ireland. Turnover in these markets rose strongly year on year and the Group is well positioned for further
progress in both markets. A key initiative for the Group has been deepening our knowledge of chilled food
opportunities in the US. The Group is now looking to make a modest acquisition as a means of establishing an
entry route into this promising market.
- ROBUST FINANCIAL DISCIPLINE
Fixed and working capital investments continue to be tightly managed. There was EUR 42.4m of new fixed
capital invested in Convenience Foods in FY07. The spend continues to be focused on automation (such as new
bread denesting equipment at our Sandwich sites), increasing capacity (such as new labelling and
blow-moulding equipment at our Mineral Water facility) and extension into new product areas (e.g.,
investment at our Chilled Meals facilities to support category expansion into longer shelf-life products).
By continuing to deliver against these critical strategic and operating
imperatives, we have strengthened our Convenience Foods franchise and positioned
it for further progress in the coming years.
However, the division has some significant near-term challenges, the most
important of which is offsetting the high levels of input price inflation. The
UK food manufacturing industry is facing unprecedented inflationary pressures,
driven principally by rapid rises in food commodity pricing. The 'cost of
goods' to our Convenience Foods division is now anticipated to increase by 8% to
10% in FY08. Recovering this inflation with appropriate price increases is a
critical challenge. To date, we are encouraged by our success in working with
our key customers to offset these impacts.
OPERATIONAL REVIEW - INGREDIENTS & RELATED PROPERTY
FY07 FY06 Change
EUR'm EUR'm
Turnover (Continuing Operations) 334.0 275.3 21%
Operating Profit (Continuing Operations) 26.6 5.6 372%
In the year under review, the Ingredients & Related Property division delivered
a significant improvement in performance. Turnover rose by 21% to EUR 334.0m
and operating profit increased by 372% to EUR 26.6m. This performance has
brought operating profit close to the level of total divisional pre-tax
operating profit of EUR 27.6m achieved in FY06 which included EUR 22.0m of
pre-tax sugar profits. All elements of the division delivered material growth
in both turnover and operating profit but the most significant driver of
divisional performance was the strong recovery in our Malt business. This
recovery was most evident in the second half of the year, with approximately 70%
of divisional profits delivered during that period. The Group also made
considerable progress in adding value to each of the four significant Related
Property sites, with positive zoning progress emerging at Mallow (396 acres),
Carlow (333 acres) and Littlehampton (123 acres) and planning submissions lodged
for our now rezoned site in Athy (40 acres).
1. RECOVERY OF MALT TO ACCEPTABLE RETURNS
Malt represents approximately 60% of divisional turnover. The anticipated
recovery in the Group's Malt business took root in FY07, driven by a combination
of a global rebalancing of capacity and demand, an improved industry structure
in the UK, the benefits of our FY05 and FY06 restructuring programmes, and
strong commercial and operational performance.
- AN IMPROVED GLOBAL MALT ENVIRONMENT
The combination of robust global demand for beer and whisky and a slowdown in the growth of Malt capacity
has led to a better balance between supply and demand. Concerns regarding malt availability have been
compounded by lower malting barley sowings and difficult harvests in the key source markets. The
combination of a more balanced demand and capacity environment in malt markets and barley scarcity has
shifted the focus of maltsters and brewers/distillers away from cost towards securing supply. The impact of
these changes is most evident in the UK, our largest malt market.
- BENEFITS FLOWING FROM RESTRUCTURING ACTIVITY ON FY05 AND FY06
Greencore rationalised its Malt capacity in the UK and Ireland by approximately 115,000 tonnes with the
closure of its less competitive Ipswich, Carnoustie and Banagher maltings in FY05. The benefits of those
closures were augmented by a restructuring programme at each of our seven remaining malting facilities in
FY06. These changes have delivered a leaner, more efficient Malt business model.
- STRONG COMMERCIAL AND OPERATIONAL PERFORMANCE
Our Malt business has delivered strong operational performance in all geographies. With a leaner asset
footprint, the business has focused on domestic beer and whisky markets, resulting in a significant
reduction in the volumes sold into more commoditised global markets. Malt production rose by 3% to a record
512,000 tonnes across our remaining assets and strong sourcing, manufacturing, logistical and commercial
performance enabled us to fulfil the needs of our customers despite a challenging raw material environment.
The impact of industry changes and Greencore initiatives has been to bring Malt
back to an acceptable level of return. In FY07, Malt launched a number of
initiatives designed to better secure our future returns. These included the
decision to expand our maltings in Scotland to support the increased demand for
Scottish whisky, the establishment of Global Malting Services to provide
value-added support to brewers and maltsters in the developing world, and the
securing of a number of long-term partnerships with key domestic customers.
The industry dynamics experienced in FY07 are expected to continue. These
factors, allied to focused commercial and operational performance across our
business, position Greencore Malt for further progress in the coming years.
2. MOMENTUM IN OTHER INGREDIENTS & RELATED PROPERTY BUSINESSES
Greencore operates three other ingredient businesses in Ireland - Trilby
Trading, Drummonds and Premier Molasses. All three delivered improved sales,
profit and cash performance in FY07. While individually modest and mature
categories, these businesses have strong market positions, customer
relationships and cashflow and make a positive overall contribution to
divisional performance.
During the year under review, the Group disposed of five small surplus
properties in Ireland (17 acres in total) that had previously been part of the
Group's agri-business network. This level of disposal represents an increase on
the two disposals (totalling eleven acres) made in FY06 and has led to an
increase of approximately EUR 4m in related property profits year-on-year. The
FY07 level of surplus property disposals is similar to budgeted plans for small
non-core property disposals in FY08.
3. ADDING VALUE TO OUR FOUR SIGNIFICANT RELATED PROPERTY SITES
The Group's longer-term property strategy is focused on adding value to high
potential development property sites. In FY07, we have made excellent progress
in enhancing the zoning and planning status at each of our four significant
properties (representing 892 acres of potential development land). While there
is considerable work to do to deliver the full potential of these properties
over the coming years, progress achieved to date has been very encouraging.
- 'MALLOW WEST' (396 ACRES)
In July 2007, our Mallow site was allocated a zoning objective for high density mixed use and tourism/
leisure use, with the specifics to be determined by agreement with Cork County Council. The
master-planning process is progressing well and, although the specific timing is a matter for the Council,
we expect it to conclude by March 2008. As part of this process, in September 2007, the Mallow West
Development Board (chaired by Redmond O' Donoghue) was established to frame the plan for the enterprise
aspects of the Mallow West Plan.
- 'CARLOW GATEWAY' (333 ACRES)
Carlow County Council is expected to publish its draft Local Area Plan (LAP) in the coming months. This
LAP will consider the Carlow Gateway plan we submitted to the Council. Our plan has generated significant
levels of community and stakeholder support to date but, ultimately, the decision will be a matter for the
county councils. We look forward to publication of the Carlow draft LAP. 110 acres of the Carlow Gateway
site is located in Laois and Laois County Council has undertaken to consider the Laois aspects of Carlow
Gateway once the Carlow LAP advances. We expect both processes to conclude before the end of FY08.
- ATHY (40 ACRES)
In August 2007, we lodged a planning application for the first phase of a retail scheme on approximately
ten acres of our forty-acre site in Athy. This was followed in October 2007 by a second application for an
additional ten acres of complementary retail warehousing. The remaining acres will be planned after these
first phases have been worked through the planning process.
- LITTLEHAMPTON (123 ACRES)
In addition to the above Irish property projects, the Group is leading an effort to redevelop 123 acres in
north Littlehampton that was acquired as part of Hazlewood Foods in 2001. In collaboration with other
landowners, Greencore is now leading a consortium to promote 170 acres of former glasshouse land on the
northern edge of Littlehampton in West Sussex. Greencore owns 123 aces of the consortium lands. In August
2007, the local district council published its draft Core Strategy Plan (CSP) for addressing the future
housing needs of the area. Our consortium site was, at this first stage, earmarked as a key contributing
site for 1,500 homes and 30,000 square metres of employment space, together with associated new
infrastructure. This was targeted by the CSP for delivery in the period from early 2011 to 2016. It is
possible that a planning application will be made in 2009, in advance of a formal zoning decision expected
in 2010, although there are significant consultation and development appraisal processes to be conducted in
advance of this.
Separate to these substantial property projects, the Group is carrying out
development appraisals for four other smaller sites (approximately twenty acres)
that are at earlier stages of the re-zoning or planning processes. The Group
also continues to monitor the value in use of its remaining property assets
against their development potential.
4. CLOSE TO FINALISATION OF ISSUES SURROUNDING SUGAR EXIT
The Group's exit from its Irish sugar-processing operations has progressed well.
To date, the Group has been able to deal with aspects of its former sugar
operations at a somewhat lower cost than envisaged in the Restructuring Plan.
This has resulted in an exceptional gain of EUR 10.9m in the period under
review, largely reflecting a reversal of the impairment of certain sugar assets
contained in the FY06 accounts.
Greencore received its first tranche of EU aid totalling EUR 43.6m in July 2007.
The Board welcomed the Irish High Court judgment in June 2007 that set aside
the Irish Government's decision of July 2006 on the allocation of EU aid. The
Government has lodged an appeal to the High Court decision. In September 2007,
the EU Council of Ministers voted to amend Regulations 318, 320 and 968, the
effect of which should raise the minimum EU aid payable to Greencore to EUR
112.1m (less the EUR 43.6m already received). While the Board remains confident
of its original entitlement to full EU aid (a total of EUR 130.9m), the fact
that our entitlement remains subject to legal appeal has led the Group to
account for a 'virtually certain' receivable of EUR 112.1m (of which EUR 43.6
has already been received). As a result, the accounts contain an exceptional
benefit of EUR 10.2m which has been recorded in this year's accounts to reflect
the difference between the value of the receivable recorded in the FY06 accounts
(the EUR 98.4m allocated to Greencore in the Government's decision of July 2006)
and the present value of EUR 112.1m.
5. SALE OF LARGEST ASSOCIATE HOLDING
In August 2007, the Group completed the sale of its fifty percent shareholding
in Odlum Group to Origin Enterprises plc ('Origin'). As part of the sale,
Greencore received EUR 35m in cash and Origin assumed approximately EUR 10m of
the Odlum Group's net debt. The Group recorded an exceptional profit of EUR
24.2m on the transaction.
FINANCIAL REVIEW
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union.
1. EARNINGS
Results for the financial period totalled EUR 111.8m, up from EUR 0.3m in FY06.
Group operating profit from continuing operations (pre-exceptional) totalled EUR
91.0m for FY07, an increase of 22% on FY06 (EUR 74.6m). Profit before tax
(pre-exceptional) of EUR 75.1m was up 32% on FY06 (EUR 56.8m).
Basic EPS for FY07 was 55.5 cent, up from -0.2c in FY06. Adjusted EPS for FY07
(stripping out exceptional items and the EUR 1.2m gain resulting from the impact
of inter-company foreign exchange and the effect of marking-to-market our
trading derivatives) was 30.6 cent versus 31.1 cent in FY06. This is based on a
weighted average number of ordinary shares of 198.9m (FY06: 196.2m).
2. FINANCE
Comparable net debt which excludes the impact of marking-to-market all
derivative financial instruments and related debt adjustments was EUR 320.5m at
28 September 2007. This reflects a reduction of EUR 64.9m from the September
2006 figure and a reduction of EUR 72.4m since March 2007. This debt movement
reflects EUR 35m of consideration from the Odlums disposal, net inflows from the
sugar exit (EU aid less cash outflows) of EUR 18.0m, but cash outflows
associated primarily with an increase in working capital (driven by increased
stock value of commodity ingredients) of EUR 16.1m. The underlying trajectory
of cash generation remains in place.
The Group's net finance charge for the period was EUR 16.7m, driven by:
- Net bank interest cost on comparable net debt of EUR 30.6m (FY06: EUR 30.7m)
- A net pension credit of EUR 10.2m (FY06: EUR 7.0m), representing the difference between the expected return
on defined benefit scheme plan assets and the finance cost of those liabilities
- A benefit of EUR 2.5m related to income arising on the increase in the present value of the EU sugar aid
receivable
- A net gain of EUR 1.2m (FY06: EUR 5.7m), reflecting the impact of inter-company foreign exchange losses and
marking-to-market gains on our trading derivatives.
3. TAXATION
The Group's tax charge on continuing operations (excluding exceptionals and
associates) was EUR 13.1m. The effective tax rate on continuing operations
(pre-exceptional) was reduced to 18% for the year (FY06: 22.5%), reflecting a
change in the mix of the Group's profits. The amount of cash taxation continues
to be well below the tax charge.
4. EXCEPTIONAL ITEMS
The Group incurred an exceptional benefit (net of tax) of EUR 48.2m in the
period under review (full details of which are contained in Note 3 to the
Preliminary Statement). This total benefit (net of tax) comprised five separate
areas:
- ASSOCIATE DISPOSAL EUR 24.2m benefit from the sale of the Group's 50% shareholding
in the Odlum Group
- SUGAR EXIT EUR 21.1m net benefit (versus FY06 net exit provisions) related
to the exit from sugar processing in Ireland
- AGRIBUSINESS DISPOSAL EUR 3.0m benefit from the sale of Irish agri-businesses
- ADJUSTMENT ON BUSINESS EUR 4.1m benefit related to the finalisation of matters
associated with a 2005 disposal
TERMINATION
- LEASE OBLIGATIONS EUR 4.3m charge to address the Group's property obligations on
selected properties
5. CAPITAL INVESTMENT
EUR 49.2m of capital investment was made in the period (FY06: EUR 47.9m). The
depreciation charge on our continuing businesses of EUR 29.7m is lower than the
FY06 level of EUR 32.4m, with the reduction in depreciation reflecting an aging
of assets and asset life assessments, netted against depreciation on capital
additions.
6. PENSIONS
The fair value of total plan assets relating to the Group's defined benefit
pension schemes (excluding associates) increased to EUR 547.3m at September 2007
from EUR 539.9m at September 2006. The present value of total pension
liabilities for these schemes decreased to EUR 573.1m from EUR 591.5m over the
same period. This is reflected in a reduction in the net pension deficit
(before related deferred tax) to EUR 25.8m at September 2007 (from a net pension
deficit of EUR 51.6m at September 2006). The Group has agreed funding proposals
to address the relevant deficits.
The primary Irish scheme, the Greencore Group Pension Scheme, had a surplus
(before related deferred tax) of EUR 37.5m at September 2007. Given its strong
funding position and the relative maturity of the scheme, the Group and Trustees
have begun a review of the risk profile of the scheme. The results of this
review will likely impact both the risk and the expected rate of return of the
scheme assets in future years.
GROUP INCOME STATEMENT
year ended 28 September 2007
2007 2006
Notes Pre - Exceptional Total Pre - Exceptional Total
exceptional exceptional
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Continuing operations
Revenue 2 1,267,156 - 1,267,156 1,176,784 - 1,176,784
Cost of sales (903,296) - (903,296) (826,666) (181) (826,847)
-------------- -------------- -------------- -------------- -------------- --------------
Gross profit 363,860 - 363,860 350,118 (181) 349,937
Operating costs, net (272,819) (5,923) (278,742) (275,508) 1,998 (273,510)
-------------- -------------- -------------- -------------- -------------- --------------
Group operating profit/ 2 91,041 (5,923) 85,118 74,610 1,817 76,427
(loss)
Finance income 6 43,645 - 43,645 35,929 - 35,929
Finance costs 6 (60,343) - (60,343) (54,002) - (54,002)
Share of profit of 733 - 733 222 - 222
associates after tax
-------------- -------------- -------------- -------------- -------------- --------------
Profit/(loss) before 75,076 (5,923) 69,153 56,759 1,817 58,576
taxation
Taxation 7 (13,131) 1,658 (11,473) (11,447) 10 (11,437)
-------------- -------------- -------------- -------------- -------------- --------------
Result for the period 61,945 (4,265) 57,680 45,312 1,827 47,139
from continuing
operations
Discontinued operations
Result from discontinued 1,628 52,455 54,083 22,024 (68,903) (46,879)
operations (incl.
associate)
-------------- -------------- -------------- -------------- -------------- --------------
Result for the financial 63,573 48,190 111,763 67,336 (67,076) 260
period
-------------- -------------- -------------- -------------- -------------- --------------
Attributable to:
Equity shareholders 62,200 48,190 110,390 66,620 (67,076) (456)
Minority interests 1,373 - 1,373 716 - 716
-------------- -------------- -------------- -------------- -------------- --------------
63,573 48,190 111,763 67,336 (67,076) 260
-------------- -------------- -------------- -------------- -------------- --------------
Basic earnings per share 5
(cent)
Continuing operations 28.3 23.7
Discontinued 27.2 (23.9)
operations
-------------- --------------
55.5 (0.2)
-------------- --------------
Diluted earnings per 5
share (cent)
Continuing operations 28.2 23.6
Discontinued 27.1 (23.8)
operations
-------------- --------------
55.3 (0.2)
-------------- --------------
GROUP BALANCE SHEET
at 28 September 2007
2007 2006
EUR'000 EUR'000
ASSETS
Non-current assets
Intangible assets 357,229 353,897
Property, plant and equipment 393,424 385,771
Investment property 905 1,003
Investments in associates 1,404 8,216
Trade and other receivables 64,967 56,508
Retirement benefit assets 37,674 24,981
Deferred tax assets 17,098 24,957
-------------- --------------
Total non-current assets 872,701 855,333
-------------- --------------
Current assets
Inventories 142,789 126,774
Trade and other receivables 114,417 154,324
Cash and cash equivalents 117,949 78,967
Available for sale financial assets 290 530
Derivative financial instruments 1,836 389
-------------- --------------
Total current assets 377,281 360,984
-------------- --------------
Total assets 1,249,982 1,216,317
-------------- --------------
EQUITY
Capital and reserves attributable to equity holders of the Company
Share capital 128,125 126,820
Share premium 110,366 104,137
Other reserves 1,659 2,572
Retained earnings 38,663 (54,156)
278,813 179,373
Minority interest in equity 4,196 3,572
-------------- --------------
Total equity 283,009 182,945
-------------- --------------
LIABILITIES
Non-current liabilities
Borrowings 316,334 433,657
Derivative financial instruments 42,086 32,043
Retirement benefit obligations 63,458 76,603
Other payables 8,033 11,818
Provisions for other liabilities and charges 18,804 14,422
Deferred tax liabilities 37,845 42,202
Government grants 1,160 1,182
-------------- --------------
Total non-current liabilities 487,720 611,927
-------------- --------------
Current liabilities
Borrowings 81,919 265
Derivative financial instruments 120 1,153
Trade and other payables 359,278 362,285
Provisions for other liabilities and charges 10,902 33,230
Income taxes payable 27,034 24,512
-------------- --------------
Total current liabilities 479,253 421,445
-------------- --------------
Total liabilities 966,973 1,033,372
-------------- --------------
Total equity and liabilities 1,249,982 1,216,317
-------------- --------------
GROUP CASH FLOW STATEMENT
year ended 28 September 2007
2007 2006
EUR'000 EUR'000
Operating profit (pre-exceptional) 91,041 74,610
Profit on discontinued operations (pre-exceptional) - 21,991
Depreciation 29,740 35,509
Amortisation of intangibles 1,148 1,014
Employee share option expense 382 430
Amortisation of government grants (91) (243)
Difference between pension charge and cash contributions (5,998) (3,692)
Changes in working capital (16,097) (103)
Other movements 1,419 (3,611)
-------------- --------------
Net cash inflow from operating activities before exceptional items 101,544 125,905
Cash inflows/(outflows) related to exceptional items 17,981 (15,011)
Interest paid (33,842) (32,767)
Tax (paid)/received (1,386) 395
-------------- --------------
Net cash inflows from operating activities 84,297 78,522
-------------- --------------
Cash flows from investing activities
Dividends received from associates 728 1,205
Purchase of property, plant, equipment and software (49,200) (47,924)
Acquisition of undertakings (1,840) -
Disposal of undertakings & investment in associate 40,640 -
Interest received 2,741 2,139
Government grants received/(repaid) 69 (27)
-------------- --------------
Net cash outflows from investing activities (6,862) (44,607)
-------------- --------------
Cash flows from financing activities
Proceeds from issue of shares 899 1,183
Decrease in borrowings (16,956) (9,527)
Decrease in finance lease liabilities (128) (1,944)
Dividends paid to equity holders of the Company (18,361) (17,470)
Dividends paid to minority interests (749) (1,586)
-------------- --------------
Net cash outflows from financing activities (35,295) (29,344)
-------------- --------------
Net increase in cash & cash equivalents 42,140 4,571
-------------- --------------
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at beginning of year 78,967 74,102
Translation adjustment (3,158) 294
Increase in cash and cash equivalents 42,140 4,571
-------------- --------------
Cash and cash equivalents at end of year 117,949 78,967
-------------- --------------
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
year ended 28 September 2007
2007 2006
EUR'000 EUR'000
Items of income and expense taken directly within equity
Currency translation differences (723) 50
Actuarial gain on Group defined benefit pension schemes 6,764 11,187
Deferred tax on Group defined benefit pension schemes (1,171) (1,352)
Share of actuarial gain on defined benefit pension schemes of 1,947 490
associates (net)
Fair value of available for sale financial assets (223) (406)
Cash flow hedges:
(Loss)/gain taken to equity (166) 389
Transferred to profit and loss for the period (333) (169)
Deferred tax on cash flow hedge 150 (66)
-------------- --------------
Net income recognised directly within equity 6,245 10,123
Group result for the financial period 111,763 260
-------------- --------------
Total recognised income and expense for the financial year 118,008 10,383
Attributable to:
Equity Shareholders 116,635 9,667
Minority Interests 1,373 716
-------------- --------------
Total recognised income and expense for the financial year 118,008 10,383
-------------- --------------
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
NOTES TO THE PRELIMINARY STATEMENT
year ended 28 September 2007
1. BASIS OF PREPARATION OF FINANCIAL INFORMATION UNDER IFRS
The financial information presented in this preliminary announcement has been
prepared in accordance with International Financial Reporting Standards (IFRS)
and International Financial Reporting Interpretations Committee (IFRIC)
interpretations adopted by the European Union (EU) and with those parts of the
Companies Acts, 1963 to 2006, applicable to companies reporting under IFRS.
The financial information, which is presented in EUR o and rounded to the
nearest thousand (unless otherwise stated), has been prepared under the
historical cost convention, as modified by the revaluation of property, plant
and equipment, and the measurement at fair value of certain financial assets and
financial liabilities, including share options, available for sale investments
and derivative financial instruments. The carrying values of recognised assets
and liabilities that are hedged are adjusted to record the changes in the fair
values attributable to the risks being hedged. Full details of the Group's
accounting policies will be included in the 2007 annual report which will be
distributed in January 2008.
2. SEGMENTAL REPORTING
The Group's primary reporting segment is by class of business. The Group has
two primary reporting segments: (i) Convenience Foods and (ii) Ingredients &
Related Property.
Revenue Operating Profit
2007 2006 2007 2006
EUR'000 EUR'000 EUR'000 EUR'000
GROUP SUBSIDIARIES
Continuing
Convenience Foods 933,149 901,443 64,417 68,967
Ingredients & Related Property 334,007 275,341 26,624 5,643
-------------- -------------- -------------- --------------
Total continuing 1,267,156 1,176,784 91,041 74,610
-------------- -------------- -------------- --------------
Discontinued
Convenience Foods - - - -
Ingredients & Related Property - 175,161 - 21,991
-------------- -------------- -------------- --------------
Total discontinued - 175,161 - 21,991
-------------- -------------- -------------- --------------
ASSOCIATED UNDERTAKINGS
Ingredients & Related Property
-------------- -------------- -------------- --------------
Continuing (pre interest & tax) 27,343 6,285 1,087 443
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Discontinued (pre interest & tax) 36,406 37,899 2,250 3,414
-------------- -------------- -------------- --------------
3. EXCEPTIONAL ITEMS
Exceptional items are those that, in management's judgment, need to be disclosed
by virtue of their nature or amount. Such items are included within the income
statement caption to which they relate and are separately disclosed in the notes
to the consolidated financial statements.
The Group reports the following exceptional items (net of tax):
2007 2006
EUR'000 EUR'000
Continuing operations
Lease obligation provision (a) (4,265) -
Malt legal settlement (f) - 4,930
Malt restructuring (g) - (4,459)
Pension curtailment gain (h) - 3,365
Chilled Sauce business restructuring (i) - (2,009)
-------------- --------------
Total continuing operations (4,265) 1,827
-------------- --------------
Discontinued operations
Exit from sugar processing (b) 21,134 (68,903)
Profit on disposal of investment in associate (c) 24,158 -
Reduction in provision for loss on termination of operations (d) 4,117 -
Profit on business disposals (e) 3,046 -
-------------- --------------
Total discontinued operations 52,455 (68,903)
-------------- --------------
Total exceptional gains/(costs) 48,190 (67,076)
-------------- --------------
(a) LEASE OBLIGATION PROVISION
Following a strategic review of the Group's property portfolio, a decision was
made to provide for the exit costs associated with terminating certain leases.
The exceptional loss of EUR 4.3m represents the costs associated with these
obligations.
(b) EXIT FROM SUGAR PROCESSING
During 2006, Greencore confirmed its intention to exit sugar processing in
Ireland, renounce its quota and apply for EU restructuring aid under the Council
Regulations (EC) No. 320/2006 and No. 968/2006 (the Regulations). The total EU
restructuring aid available for the sugar quota renounced by Greencore is EUR
145.5m. These Regulations, prior to their recent amendment, stated, inter alia,
that at least 10% of the restructuring aid shall be reserved for sugar beet
growers and machinery contractors. The Regulations gave Member States the
responsibility to determine if this percentage is to be increased, but imposed
on Member States the requirement to ensure that an economically sound balance
between the elements of the restructuring plan is achieved.
In July 2006, the Government announced that it was allocating 67.6%
(representing EUR 98.4m) to Greencore, with the balance of the EU aid to be
allocated to sugar beet growers and machinery contractors. The Board of
Greencore rejected the basis of this allocation and sought a judicial review of
the decision in the High Court. The findings of this judicial review were
issued in June 2007 and the Government's decision regarding allocation of the
restructuring aid was quashed. The Government has subsequently indicated that
it may appeal the High Court judgment to the Supreme Court.
Although the matter of the final allocation of restructuring aid had yet to be
finalised, the Government deemed Greencore's restructuring plan (which was
submitted to the Government on 31 July 2006) to be eligible for restructuring
aid (on 19 September 2006). Additionally, Greencore agreed that it would amend
this plan to reflect any lawful decision of the Government taken pursuant to the
outcome of the legal proceedings. On this basis, the Group has further
progressed its exit from sugar processing during 2007.
The financial consequences to Greencore are as follows:
2007 2006
EUR'm EUR'm
Reversal of/(recognition of) write-down and impairment of assets 8.4 (115.0)
Environmental, remediation, demolition, redundancy & other costs 2.5 (49.8)
-------------- --------------
10.9 (164.8)
Present value of additional EU restructuring aid
which may be regarded as virtually certain 10.2 95.9
-------------- --------------
Net exceptional gain/(charge) 21.1 (68.9)
-------------- --------------
- RESTRUCTURING COSTS
As at 28 September 2007, the costs associated with exiting from the sugar processing business and delivering
the elements of the eligible restructuring plan are estimated at EUR 153.9m (2006: EUR 164.8m).
- ACCOUNTING FOR THE RECEIPT OF EU AID
The Group's entitlement to EU Restructuring Aid is estimated to be EUR 130.9m. At 29 September 2006, the
receipt of EUR 98.4m was regarded as virtually certain and the present value of that amount was recorded in
the September 2006 financial statements. EUR 43.6m of this amount was received during 2007.
On 26 September 2007, the European Council approved changes to the sugar restructuring scheme and on 9
October 2007 the EU published amendments to the relevant regulations. These amendments should result in
Greencore becoming entitled to a minimum amount of EUR 112.1m, even in circumstances where any appeal to the
Supreme Court by the Government might be upheld. As a result, Greencore now regards the receipt of EUR
112.1m as virtually certain. The present value of the outstanding receivable of EUR 68.4m (being EUR 65.0m)
has been included as an asset in the year-end balance sheet. Given the possible protracted nature of the
abovementioned appeal to the Supreme Court by the Government, this receivable has been included in
non-current assets.
The balance of the Group's entitlement of EUR 17.8m (that being the present value of the difference between
EUR 130.9m and EUR 112.1m) which cannot yet be reasonably regarded as virtually certain, is treated as a
contingent asset and, therefore, disclosed but not recognised as a receivable.
(c) PROFIT ON DISPOSAL OF INVESTMENT IN ASSOCIATE
In August 2007, the Group's investment in the Odlums Group (an associate
investment) was sold for a consideration of EUR 35.0m. The Group recorded an
exceptional gain of EUR 24.2m (net of tax) on this transaction.
(d) REDUCTION IN PROVISION FOR LOSS ON TERMINATION OF OPERATIONS
In September 2005, the Group made a provision of EUR 40.1m (net of tax) for the
costs associated with the disposal of a business for a nominal consideration.
The exceptional item booked at that time included a provision to write down all
of the relevant assets to their recoverable amount and to cover all costs
associated with this business termination. The EUR 4.1m exceptional credit
represents a gain associated with the finalisation of the treatment of certain
items associated with that provision/exit.
(e) PROFIT ON BUSINESS DISPOSALS
Exceptional gains of EUR 3.0m arose on the disposal of agri-businesses whose
activities were closely related to sugar processing (a business which Greencore
exited during the year ended 29 September 2006).
(f) MALT LEGAL SETTLEMENT
During 2006, the Group settled an outstanding claim related to Greencore Malt at
EUR 4.9m (net of costs).
(g) MALT RESTRUCTURING
Greencore Malt closed three maltings during 2005. In 2006, the business
continued this restructuring work focusing specifically on its core operations
in both Ireland and the UK. The exceptional loss represents the costs
associated with this business restructuring.
(h) PENSION CURTAILMENT GAIN
In April 2006, a number of changes in benefit design were implemented in respect
of the Hazlewood Foods Retirement Benefits Scheme. These changes included a
shift to a career average revalued basis in respect of accrued benefits with
revaluation set at the level of limited price inflation. It also included the
integration of the scheme with the basic state pension in respect of future
service. These scheme amendments, net of related costs, resulted in an
exceptional pension curtailment gain (net of tax) of EUR 3.4m.
(i) CHILLED SAUCES BUSINESS RESTRUCTURING
Following a strategic review at Greencore Chilled Sauces, a decision was made to
consolidate all chilled sauce manufacturing at the Bristol facility and to close
the Chesterfield factory. The exceptional loss of EUR 2.0m represents the costs
associated with this decision.
4. DIVIDENDS
2007 2006
EUR' 000 EUR' 000
Amounts recognised as distributions to equity holders in the year:
Equity dividends on ordinary shares:
Final dividend of 7.58c for the year ended 29 September 2006 (2005: 7.58c) 15,053 14,853
Interim dividend of 5.05c for the year ended 28 September 2007 (2006: 5.05c) 10,058 9,961
25,111 24,814
Proposed for approval at AGM:
Equity dividends on ordinary shares:
Final dividend of 8.21c for the year ended 28 September 2007 (2006: 7.58c) 16,404 15,053
This proposed final dividend is payable on 4 April 2008 to shareholders on the
Register of Members at 7 December 2007.
This proposed dividend is subject to approval by the shareholders at the annual
general meeting and has not been included as a liability in the balance sheet of
the Group as at 28 September 2007, in accordance with IAS 10 'Events after the
Balance Sheet Date'.
5. EARNINGS PER ORDINARY SHARE
The calculation of the Group's basic earnings per ordinary share for continuing
operations is based on a profit of EUR 56.3m (2006: EUR 46.4m) and on 198.9m
ordinary shares (2006: 196.2m), being the weighted average number of ordinary
shares in issue in the period. The calculation of basic earnings per ordinary
share from discontinued operations is based on a profit of EUR 54.1m (2006: loss
of EUR 46.9m).
The calculation of the diluted earnings per ordinary share for continuing
operations is based on a profit of EUR 56.3m (2006: EUR 46.4m) and on 199.5m
ordinary shares (2006: 196.9m) being the weighted average number of ordinary
shares outstanding assuming conversion of all dilutive potential ordinary
shares. Employee share options, which are performance-based, are treated as
contingently issuable shares because their issue is contingent upon satisfaction
of specified performance conditions in addition to the passage of time. These
contingently issuable ordinary shares are excluded from the computation of
diluted earnings per ordinary share where the conditions governing
exercisability have not been satisfied as at the end of the reporting period.
The calculation of diluted earnings per ordinary share from discontinued
operations is based on a profit of EUR 54.1m (2006: loss of EUR 46.9m).
The Group's adjusted earnings per share is calculated after the elimination of
the exceptional items reported in note 3, inter-company foreign exchange gains/
(losses) and the movement in the fair value of derivative financial instruments
and related debt adjustments. The Group separately presents adjusted earnings
per share for continuing operations and discontinued operations.
The calculation of adjusted earnings per ordinary share from continuing
operations is based on a pre-exceptional profit of EUR 61.9m (2006: EUR 45.3m)
adjusted to exclude inter-company foreign exchange gains/(losses) and the
movement in the fair value of derivative financial instruments and related debt
adjustments totalling EUR 1.2m (2006: EUR 5.7m). The calculation of adjusted
earnings per ordinary share from discontinued operations is based on a
pre-exceptional profit of EUR 1.6m (2006: EUR 22.0m). The weighted average
number of ordinary shares in issue during the period was 198.9m (2006: 196.2m).
2007 2006
cent cent
Adjusted EPS - continuing operations 29.8 19.9
Adjusted EPS - discontinued operations 0.8 11.2
30.6 31.1
6. COMPONENTS OF NET DEBT AND FINANCING
2007 2006
EUR'000 EUR'000
Net Debt
Current assets
Cash and cash equivalents 117,949 78,967
Current liabilities
Borrowings (81,919) (265)
Non-current liabilities
Borrowings before fair value adjustment (356,567) (464,127)
Comparable net debt (320,537) (385,425)
Borrowings - fair value hedge adjustment (non-current liabilities) 40,233 30,470
Total cash, cash equivalents & borrowing (280,304) (354,955)
Finance (Costs)/Income
Net finance costs on interest bearing cash and cash equivalents and (30,633) (30,717)
borrowings
Net pension financing credit 10,182 6,987
Change in fair value of derivatives 2,645 5,157
Foreign exchange (loss)/gain (1,399) 500
Increase in the present value of the EU receivable 2,507 -
(16,698) (18,073)
Analysed as:
Finance income 43,645 35,929
Finance costs (60,343) (54,002)
(16,698) (18,073)
7. TAXATION
Analysis of charge/(credit) in year 2007 2006
EUR'000 EUR'000
Continuing Operations
Corporation tax charge 2,869 5,041
Overseas tax charge/(credit) 1,774 (867)
4,643 4,174
Deferred tax 8,488 7,273
Income tax expense (pre-exceptional) 13,131 11,447
Tax on exceptional items
Current tax credit - (1,452)
Deferred tax (credit)/charge (1,658) 1,442
Exceptional tax credit (1,658) (10)
Income tax charge from continuing operations (pre associates) 11,473 11,437
Discontinued operations
Pre-exceptional
Current tax charge for the year (including discontinued associate) 195 2,966
Exceptional
Current tax charge for the year - -
Deferred tax (credit)/charge for the year (3,597) 221
Total income tax (credit)/charge from discontinued operations (3,402) 3,187
Total income tax charge for the year 8,071 14,624
8. INFORMATION
The financial information in this preliminary announcement is not the statutory
accounts of the company, a copy of which is required to be annexed to the
Company's annual return to the Companies Registration Office.
The annual report and accounts will be circulated to shareholders on 14 January
2008, prior to the annual general meeting to be held on 14 February 2008 in the
Conrad Hotel, Earlsfort Terrace, Dublin 2, Ireland.
By order of the Board, CM Bergin, Company Secretary, 27 November 2007, Greencore
Group plc, St Stephen's Green House, Earlsfort Terrace, Dublin 2, Ireland.
* * *
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