Interim Results

GREGGS PLC 6 August 1999 INTERIM RESULTS FOR THE 24 WEEKS ENDED 19 JUNE 1999 * Record pre-tax profit of £6.4 million - up 5.7 per cent * Diluted earnings per share up 5.0 per cent to 38.1 pence * Interim dividend raised 8.0 per cent to 13.5 pence per share * Major investment in management, facilities and systems to support future growth * Group like for like sales up 7.0 per cent - core volumes up 4.8 per cent * Strong progress by Greggs divisions - core volumes up 6.1 per cent * Re-branding Thurston and Braggs divisions as Greggs * Core volumes in Bakers Oven divisions up 2.0 per cent * New £2 million Group Technical Centre to open May 2000 * 'We expect to maintain our profit progress in the second half of the year and look forward to achieving improved results in the future as the benefits of our investment programme flow through.' - Mike Darrington, Managing Director ENQUIRIES: Greggs plc Hudson Sandler Mike Darrington, Managing Director Keith Hann / Justin Strong Malcolm Simpson, Financial Director Tel: 0171 796 4133 Tel: 0171 796 4133 on Friday, 6 August only 0191 281 7721 thereafter MANAGING DIRECTOR'S INTERIM STATEMENT The key features of the first half were our success in driving forward like for like sales, and in improving our management, facilities and systems to achieve our vision of sustained profitable growth. Results Across the group as a whole, like for like sales grew by 7.0 per cent in the first 24 weeks of 1999. Core volumes increased by 4.8 per cent. Total sales were up 8.5 per cent at £137.0 million, while pre-tax profits advanced by 5.7 per cent to £6.4 million. Higher central costs as a result of the strengthening of our management and technical resources were the main factor affecting margins. Diluted earnings per share were 5.0 per cent ahead at 38.1 pence. Dividend The Board has declared an interim dividend of 13.5 pence per share (1998: 12.5 pence). This is an increase of 8.0 per cent, reflecting our long-standing commitment to a progressive dividend policy, and our confidence in the future prospects of the group. The interim dividend will be paid on 8 October 1999 to shareholders on the register at the close of business on 10 September 1999. Trading performance The core Greggs divisions continued to perform very well, achieving total like for like sales growth of 8.3 per cent in the period, including core volume growth of 6.1 per cent. This was driven primarily by the success of our takeaway food range of sandwiches and savoury products. Our initiative to raise brand awareness through TV advertising in Scotland and the North East produced good results. The re-branding of Thurston as Greggs of Yorkshire is under way, and the re-branding of Braggs as Greggs of the Midlands will commence during the second half. The initial costs of changing shop fascias and point of sale material will be borne in the current year, but benefits will flow through progressively in the future from our focus on a single national brand. The Bakers Oven divisions achieved like for like sales growth of 4.1 per cent, including core volume growth of 2.0 per cent. We continued our programme to develop Baker's Oven as our premium brand, tightening its focus by the transfer of 14 shops to the Greggs fascia during the first half. We completed 16 further conversions to our new seated catering format, giving us a total of 37 such units by the end of the half year. Sales performance of the conversions has been generally encouraging, although capital and running costs have been high. We are therefore slowing the rate of investment in the short term to allow management to refocus on the key issues of quality, service and costs, and on the improvement of profitability. Investing for the future We have significantly increased our central and divisional management resource in a number of areas, including information technology, purchasing, sales and marketing, product development, quality assurance, shop design, training and personnel. As we anticipated, this has increased our cost base in the current year, but is critical to the delivery of our strategy for long term growth. Further costs will be incurred in the second half as we develop our new £2 million Group Technical Centre at Balliol Park in Newcastle upon Tyne, which is scheduled to open in May 2000. We are achieving steadily improving performances from the two major capital projects we completed last year. The quality of products from our new central savouries unit at Balliol Park has been favourably received by the divisions it is supplying, while unit costs have been reduced. Customer recognition of improved product quality and consistency has contributed to our like for like sales growth. The new distribution facility for Bakers Oven at Kettering is providing an excellent service, significantly better than the previous outsourced operation, and costs are being progressively managed down. We opened 24 new shops during the first 24 weeks and closed 23, of which seven were relocations to better sites. Following this net addition of one shop, we had a total of 1,073 units trading at 19 June. We expect the pattern of openings and closures in the second half to be similar to that in the first 24 weeks. We refitted 37 shops during the first 24 weeks and we plan to refit a further 42 by the year end. Capital expenditure during the first 24 weeks totalled £11.2 million, compared with £9.2 million in the same period last year. Following our decision to moderate the pace of new concept developments for Bakers Oven in the second half, capital expenditure for the year is now estimated at £24.4 million, compared with £26.2 million in 1998. Balance sheet Cash flow remains strong, and we ended the half year with net cash on the balance sheet of £6.1 million, compared with £8.7 million at 2 January 1999. Year 2000 All of our computer hardware, operating systems and application programmes, other than our fixed assets system, are now Year 2000 compliant, and we will complete their roll-out across all divisions by the end of August. The fixed asset system is being rewritten and will be installed throughout by late November. All control chips in our bakery and shop equipment that are not subject to manufacturers' assurances of compliance have been tested and replaced where necessary. We have commissioned an independent audit of this work by two specialist consultancies to confirm that our procedures have been thorough and successful. We are continuing to liaise with our suppliers to ensure that they are adequately prepared and that our supply arrangements will not be compromised. The costs of our millennium compliance programme, most of which have now been incurred, are not material to the group. Outlook Our trading performance trends in the second half to date are similar to that of the first 24 weeks. We continue to bear the increased costs associated with our forward-looking investments in people, facilities, systems and brands. In addition, the days on which Christmas and New Year fall, together with an extra Millennium bank holiday, mean that we will substantially under-recover our fixed costs in the final week of 1999. Nevertheless, we expect to maintain our profit progress in the second half of the year and look forward to achieving improved results in the future as the benefits of our investment programme flow through. Mike Darrington Managing Director 6 August 1999 GROUP PROFIT AND LOSS ACCOUNT FOR THE 24 WEEKS ENDED 19 JUNE 1999 24 weeks to 24 weeks to 52 weeks to 19 June 13 June 2 January 1999 1998 1999 £'000 £'000 £'000 TURNOVER 137,020 126,252 291,420 ----------------------------------- OPERATING PROFIT 6,468 6,061 20,215 Net interest payable and other similar expenses (70) (6) (1) ----------------------------------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 6,398 6,055 20,214 Taxation on profit on ordinary activities (1,823) (1,726) (5,756) ----------------------------------- PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 4,575 4,329 14,458 Dividends (1,605) (1,453) (4,844) ----------------------------------- RETAINED PROFIT FOR THE PERIOD 2,970 2,876 9,614 ====== ====== ====== Earnings per share 38.5p 37.3p 122.8p Diluted earnings per share 38.1p 36.3p 121.7p GROUP BALANCE SHEET AT 19 JUNE 1999 19 June 13 June 2 January 1999 1998 1999 £'000 £'000 £'000 FIXED ASSETS Tangible assets 105,610 90,481 100,309 Investments 1,486 333 1,486 -------------------- ---------- 107,096 90,814 101,795 CURRENT ASSETS Stocks 5,507 4,664 5,880 Debtors 10,443 9,888 9,927 Cash at bank and in hand 7,424 10,431 8,734 -------------------- ---------- 23,374 24,983 24,541 CREDITORS: amounts falling due within one year (53,526) (48,350) (51,350) -------------------- ---------- NET CURRENT LIABILITIES (30,152) (23,367) (26,809) -------------------- ---------- TOTAL ASSETS LESS CURRENT LIABILITIES 76,944 67,447 74,986 CREDITORS: amounts falling due after more than one year (3,095) (4,930) (4,236) PROVISIONS FOR LIABILITIES AND CHARGES Deferred taxation (1,165) (1,257) (1,165) -------------------- ---------- 72,684 61,260 69,585 ====== ====== ====== CAPITAL AND RESERVES Called up share capital 2,379 2,356 2,375 Share premium account 8,569 6,767 8,444 Profit and loss account 61,736 52,137 58,766 -------------------- ---------- Equity shareholders' funds 72,684 61,260 69,585 ====== ====== ====== SUMMARISED GROUP CASH FLOW STATEMENT FOR THE 24 WEEKS ENDED 19 JUNE 1999 24 weeks to 24 weeks to 52 weeks to 19 June 13 June 2 January 1999 1998 1999 £'000 £'000 £'000 £'000 £'000 £'000 Operating profit 6,468 6,061 20,215 Depreciation 5,846 4,914 11,146 Loss / (profit) on disposal of fixed assets 27 (3) (77) Release of government grants (11) (12) (58) Decrease / (increase) in stocks 373 191 (1,025) Increase in debtors (516) (644) (660) Increase in creditors 1,178 2,569 5,361 -------- -------- -------- Net decrease in working capital 1,035 2,116 3,676 -------- -------- -------- Net cash inflow from continuing operating activities 13,365 13,076 34,902 Returns on investments and servicing of finance (70) 17 (1) Taxation paid (363) (318) (3,711) Capital expenditure and financial investments (11,174) (9,153) (26,292) Equity dividends paid (3,373) (2,944) (4,477) Net cash outflow from financing (975) (912) (322) ---------- ---------- ---------- Net (decrease) / increase in cash (2,590) (234) 99 ====== ====== ====== NOTES 1. The interim results are unaudited. 2. The comparative figures for the 53 weeks ended 2 January 1999 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under Section 237(2) or (4) of the Companies Act 1985. 3. The interim report is being posted to all shareholders and copies are available on application to the Secretary, Greggs plc, Fernwood House, Clayton Road, Jesmond, Newcastle upon Tyne, NE2 1TL.

Companies

Greggs (GRG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today