Final Results

Greencore Group PLC 27 November 2002 GREENCORE GROUP PLC CONTACT MS C.M. BERGIN TELEPHONE: +353 1 6051029 FAX: +353 1 605 1104 Greencore Group Preliminary Statement of Results Year Ended 27 September 2002 FINANCIAL HIGHLIGHTS • Turnover from continuing operations up 23% to €1,586 million. • Like-for-like sales growth of 8%, with like-for-like growth in all four divisions. • Operating profit from continuing operations* up 14% to €102.2 million. • Like-for-like operating profit* growth of 6%. • Net debt reduced by €159 million to €563 million. OPERATIONAL HIGHLIGHTS • Integration of Hazlewood Foods into the Group is completed. • Disposal programme proceeds of €230 million have exceeded target of €190 million. • New product development and continuing positive market trends are driving growth, particularly in the Chilled and Frozen division. • Good progress has been made in rationalising the production capacity and distribution system of the UK bakery business. * before exceptional items and goodwill amortisation. Note: The accounts reflect the inclusion of Hazlewood Foods for twelve months compare with nine months in the previous year. Commenting on the results, Greencore Group Chief Executive, David Dilger, said: 'We are pleased with these results. Profit from continuing operations has grown strongly, Hazlewood Foods has been fully integrated into the Group and the total proceeds from the disposal programme have exceeded the announced target. The success of the disposal programme, although earnings dilutive in the short term, has sharply improved the strategic direction and focus of the Group. In addition, the Group's indebtedness has been substantially reduced as a result of the strong operating cashflow of the continuing operations and the proceeds from disposals. 'We have made a solid start to the new financial year, a platform for continued growth into the future has been established and I confidently look forward to reporting future progress.' Wednesday, 27 November 2002 For further information, please contact: David Dilger, Chief Executive Tel: +353 1 605 1002 Patrick Kennedy, Chief Financial Officer Tel: +353 1 605 1003 Billy Murphy/Trish Morrissey, Drury Communications Tel: +353 1 260 5000 RESULTS Sales from continuing operations increased by 23% from €1,289 million to €1,586 million, with strong like-for-like sales growth in all four divisions of the Group and overall like-for-like growth of 8%. This reflects the continued growth in the convenience food businesses which now comprise the majority of the Group's portfolio, along with excellent performances in the Group's more traditional businesses, particularly malt and the agribusinesses. Operating profit from continuing operations* also showed a strong increase, advancing by 14% from €89.8 million to €102.2 million, with like-for-like growth of 6%. Adjusted earnings per share were 29.4c (2001: 30.4c), reflecting primarily the dilutive impact of the disposal programme. In light of the Board's desire to reduce further the debt level arising from the acquisition of Hazlewood, a final dividend of 8.25c is proposed, making a total for the year of 12.63c, which is in line with last year. DIVISIONAL HIGHLIGHTS • The Chilled and Frozen division again achieved an excellent result, with operating profit from continuing operations* up 60% to €41.2 million. Like-for-like sales** grew by 9%. Strong performances at sandwiches and ready meals, along with good progress in the other businesses, more than offset the adverse effects of the commissioning delay at the new chilled pizza facility. • The Ingredients division was impacted by the decline in profitability in Irish Sugar, with operating profit from continuing operations* down 12% to €38.4 million. Nonetheless, the malt and flour businesses both enjoyed strong profit growth. Like-for-like sales grew by 6%. • The Ambient Grocery division increased operating profit from continuing operations* by 6% to €17.0 million, and like-for-like sales** grew by 7%. Difficult market conditions at the UK bread business and commissioning delays in the new cake and desserts facility were more than offset by the inclusion of the acquired Hazlewood businesses for a full year and good performances at the mineral water and ambient sauces businesses. Significant steps have been taken to improve the performance of the UK bread business. • The Agribusiness division increased operating profit from continuing operations* by 24% to €5.6 million, with the businesses benefiting from ongoing reductions in the cost base and a recovery in market share lost in 2001. Like-for-like sales grew by 14%. * before exceptional items and goodwill amortisation. ** adjusted to exclude the October - December 2001 sales from Hazlewood continuing businesses. DISPOSAL AND RESTRUCTURING PROGRAMME The acquisition of Hazlewood Foods provided the Group with significant growth prospects, as demonstrated by the financial performance from continuing operations in the last financial year. To enable the Group to take advantage of these improved prospects, a substantial disposal and restructuring programme was undertaken. During the last financial year, eleven further businesses were sold, as well as 50% of the flour milling business, Odlums; in addition, three businesses were closed. Disposal proceeds of €130 million were generated in the period, bringing total proceeds from the disposal programme to €230 million, versus the initial target of €190 million. In total, twenty-two businesses have now been sold and a further four closed. The diverse spread of businesses and accompanying structures in Hazlewood has been substantially reduced since the acquisition. Businesses exited include paper towels, horticulture, cured meats, vinegar, nappies and fish. Significant savings have been made to the cost base and the Group is now very well advanced in achieving the synergies targeted pre-acquisition. The recently announced closure of the remaining UK divisional structures and the transfer in-house later in the year of the pizza crust requirement of the chilled pizza business should result in the target being exceeded. OUTLOOK The Group is well positioned to achieve further good growth from continuing operations in the current financial year, which has got off to a solid start. The convenience food businesses in the Chilled and Frozen division continue to progress well, in line with consumer demand for fresh prepared food which is both convenient and of high quality. Whilst the chilled pizza operation continues to improve efficiencies at its new facility, much remains to be done. In the Ingredients division, the outlook for the international malt market is favourable and the processing campaign at Irish Sugar has been satisfactory to date. In Ambient Grocery, Christmas cake production has been manufactured on schedule and on budget, whilst additional post-Christmas trade is necessary to deliver satisfactory returns. It is anticipated that the rationalisation of production capacity and distribution systems at the UK baked goods business, combined with new speciality product introductions, will lead to improved results in the current year, although volumes remain under pressure. Continued reduction in indebtedness will lead to a substantial reduction in interest payments. We confidently look forward to another year of good progress. OPERATIONAL REVIEW Chilled and Frozen Division 2002 2001 % Change €m €m Turnover (Continuing Operations) 673.8 492.6 +37% Operating Profit (Continuing Operations)* 41.2 25.8 +60% Operating Margin % 6.1% 5.2% (* before goodwill amortisation and exceptional items) Sandwiches The Group is the world's leading producer of sandwiches. The business had another excellent year, with sales and profits growing strongly. It increased its market leadership of the UK multiple sector, with its share growing from 27% to 30%, as the business grew at twice the rate of overall market growth. Its success was driven by excellent new product development, two state-of-the-art facilities and the radial distribution business, which provides a unique advantage in the fast growing garage forecourt business. The business expanded its share of its existing retail customer base and added a number of new customers, whilst also expanding into other channels. In total, 350 new products were launched during the period. The strong growth over the last decade in the UK sandwich market is forecast to continue, with product availability and quality constantly improving and the lifestyle changes underpinning this growth continuing unabated. Ready Meals Ready meals built on the progress made in the previous year, with another improvement in performance. Hazlewood, at the time of its acquisition by Greencore, operated seven ready meal facilities in various subsectors of the chilled and frozen market, all of which were loss making. The ready meals division now operates three facilities and is generating good levels of profit. The chilled ready meal market in the UK grew by 18% during the year, with the Italian subsector growing by 13%. As the facilities are close to full capacity levels (the business produced 40 million meals last year) and the market is forecast to grow by a further 15% per annum over the next four years, the Group has approved a staged expansion plan at two facilities over the next four years at a total cost of €30 million. Chilled Pizza The Group's chilled pizza business had a challenging year, although substantial progress was made. Whilst the transfer of product from the Bedford bakery to the new Deeside bakery proved to be slower than initially anticipated, all product was transferred before the end of September and the Bedford facility has now been closed. As a consequence of the delay, efficiencies did not increase as quickly as had been expected at the outset, and double running costs (i.e. at Bedford and Deeside) were incurred for six months longer than originally planned. Under the new leadership of Peter Woodall, the business is confident of improved returns in the current year. The market continues to experience double digit annual growth, whilst the business now operates out of a state-of-the-art facility where, although much remains to be done, efficiencies are improving on a weekly basis. Chilled Sauces The Group maintained its clear leadership of the dynamic chilled sauce category. New product development remained at the core of the success of this business, with 65 new products introduced during the period, including new fish sauce, meat sauce, vegetable sauce and pasta sauce ranges. In addition, following investment during the year, the business has expanded into the fast growing chilled soup market, where it has recently started supplying two leading UK retailers. Chilled Quiche The chilled quiche business made further good progress during the year at the new bakery at Kiveton, which is the largest and most efficient quiche facility in the UK. The sector grew by 11% in the year despite a relatively poor summer, as quiche household penetration in the UK increased by 7%. However, Kiveton sales declined by 4% as the business deliberately reduced its promotional activity of the previous year. This strategy resulted in significant efficiency improvements, with profitability benefiting accordingly. As the UK quiche market continues to grow, with an increasing emphasis on premium products, and as the business expands its related product base such as tarts and flans, a year of further progress is expected. Continental Chilled The Continental chilled operations, based in the Netherlands, made good progress during the year. The chilled pizza operation is the Benelux market leader and has grown sales by in excess of 30% over the last two years. During the year, it completed a €3 million investment in a new production hall which will provide additional necessary capacity to service Continental market growth. Sandwich sales in the Netherlands continued to grow strongly, and have grown by 50% over the last two years. An investment of €1 million has been approved for the Group's Dutch sandwich operations to increase capacity to service this growth. Production for chilled sauce customers on the Continent has been moved to the Netherlands, where, from a small base, sales are growing strongly. Frozen Savoury and Desserts Roberts experienced good growth in both the savoury and desserts sector, with profitability increasing accordingly. Further investment was made to accommodate the fast growing single portion dessert business, and more progress is anticipated in the current year. Disposals The businesses disposed of during the year included a UK pastry business, a Dutch cured meat operation and fish processor, the Pann Krisp ready meal businesses and the Group's Australian pizza business. OPERATIONAL REVIEW Ingredients Division 2002 2001 % Change €m €m Turnover (Continuing Operations) 449.0 424.3 +6% Operating Profit (Continuing Operations)* 38.4 43.5 -12% Operating Margin % 8.6% 10.3% (* before goodwill amortisation and exceptional items) Sugar Irish Sugar's profitability declined due to an increase in beet prices, the shutdown of the two factories during the related dispute with beet growers and significant cost inflation, most particularly in insurance. In the second half of the year, the Company recovered some of these cost increases through a modest sugar price increase. In the current financial year, Irish Sugar will benefit from a full year impact of this price increase and the stability provided by the five year agreement entered into with the Irish Farmers Association, although there will be a further beet price increase of €0.50 per tonne and a reduction in sugar quota of 7,052 tonnes, as recently announced by the EU. In addition, a four-year flexibility and change programme, which would substantially reduce manning levels and improve unit costs, is targeted to be introduced this year. Malt The malt division increased its profitability, as both malt production and deliveries reached record levels. Five of the division's eleven plants produced record volumes, including the two largest plants (Bury St Edmunds and Athy). In conjunction with strong cost management, the increased volumes had the effect of reducing overall unit costs for the year. In addition, a successful de-stocking strategy was introduced, with the average Group stock holding level of 3.3 weeks falling below the target of a maximum of 4 week stock levels. Domestic and export malt margins for the UK operation continued to improve, whilst the rationalisation of the branch network and other cost reductions further improved the competitiveness of the Irish business. The year also had the benefit of the first revenues earned by Rusmalt, the joint venture for the supply of management services in the procurement of raw materials and development of capacity and quality enhancement for Sun Interbrew in the Russian market. In the current selling season, the capacities of the Irish and Belgian operations are almost fully sold for the year, whilst the UK sales are well underway. International demand and supply is more favourably aligned than has been the case for a number of years. Trading is and will continue to be influenced by the worldwide barley supply and demand situation, with poor harvests in both Canada and Australia. Sales to date are fully covered by barley purchases, the Group is satisfied with the margin achieved, and is confident about the overall outcome for the financial year. Flour and Oatmeal Odlums enjoyed a very strong performance in the year. The closure of the mills of its principal domestic competitor in the early part of the year resulted in the business winning a number of new customers and producing to the full capacity of its mills. It also benefited from a number of successful retail product launches, including flavour extensions to the successful quick bread range and a new fortified oatmeal product launched under the growing McCann's brand in the US. The Group sold 50% of Odlums in the year and it has been reported as an associate since April 2002. Edible Oils Trilby Trading, Ireland's leading importer and merchandiser of edible oils, performed satisfactorily in the year. OPERATIONAL REVIEW Ambient Grocery Division 2002 2001 % Change €m €m Turnover (Continuing Operations) 368.5 289.8 +27% Operating Profit (Continuing Operations)* 17.0 16.0 +6% Operating Margin % 4.6% 5.5% (* before goodwill amortisation and exceptional items) Ambient Sauces The ambient sauce and pickles operation had a successful year. The consolidation of the business from three facilities into one occurred on budget and on schedule during the year, delivering efficiency improvements. The market grew by a further 8% during the year and, although the environment remained competitive with the branded players increasing their overall share, the Group delivered good top line growth. In addition to benefiting from the high single digit annual market growth which is forecast for the UK ambient sauce market, the business has also won a number of significant co-packing contracts from multi-national branded manufacturers, continuing long-term relationships which have been developed over a number of years. Bread and Baked Goods Rathbones experienced a difficult trading year. Although the roll and hotplate market continued to grow, conditions in the UK private label sliced bread market remained unfavourable, with volumes continuing to be under pressure and branded manufacturers increasing their market share. Rathbones was already the lowest cost producer in the sector; however, additional steps have been taken to reduce the cost base further and improve the competitiveness of the business and, although volumes in the new financial year remain under pressure, the Group is hopeful that improved results will be delivered in the current year. Capacity is being reduced, arising from the closure and sale of the Milton Keynes bakery, which will have ceased all production by early in the new year, and the conversion of a bread plant at the Wigan bakery to a roll plant. These two steps will reduce the sliced bread capacity and the cost base of the business. Rathbones' distribution system has also been rationalised, with a reduction in the number of routes and the closure of the Rotherham distribution depot. The business now supplies a number of customers in the fast-growing UK sandwich market. It continues to grow its speciality offering with ongoing new product introductions, although this will be impacted by the destruction by fire of one of its two hot plate bakeries after the year end. Mineral Water Campsie, the Group's Scottish mineral water business, performed strongly, with double-digit sales growth for the fourth year in succession. Several successful new products were introduced, including a sports cap range. Investments during the year included further blow-moulding equipment on-site. Despite the impressive historic growth record of the category, annual consumption in the UK remains at less than 30 litres per capita, versus 100 litres in Continental Europe. Demand in the UK is forecast to grow by 10% annually over the next four years, and Campsie remains well placed to benefit from this. Speciality Cakes and Desserts Delayed commissioning of the new large-scale bakery at Hull, into which the trade from four smaller sites has been transferred, led to operating inefficiencies in the earlier part of the financial year and a delay in commencing the production of last year's Christmas cake trade. Performance has since improved, driven by a significant cost reduction exercise in the new year and additional customer listings. This year's Christmas cake requirement has been manufactured on schedule and on budget and, in a growing market with a state-of-the-art facility, the additional post-Christmas trade necessary to deliver satisfactory returns at this business should be obtained. The Group experienced further strong growth in the chilled hot eating desserts category, with year-on-year sales growth of 18% as two smaller competitors exited from the sector. Disposals During the year, the Group disposed of its Irish nappy manufacturer, its UK vinegar operation, Erin Foods and William Rodgers. OPERATIONAL REVIEW Agribusiness Division 2002 2001 % Change €m €m Turnover (Continuing Operations) 94.4 82.4 +14% Operating Profit (Continuing Operations)* 5.6 4.5 +24% Operating Margin % 5.9% 5.5% (* before goodwill amortisation and exceptional items) Drummonds showed a good improvement in profitability, notwithstanding the impact of the EU decision to reduce the levy on grain imports from the Baltic and Black Sea regions in October 2001, when Drummonds had purchased over 85% of its harvest intake. The wet summer months resulted in a reduction in grass seed sales and an increase in sales of cereal and potato fungicides, whilst the increase in winter wheat sowings lead to improved sales of both chemicals and fertiliser to this sector. In addition, the business continued to reduce its cost base with the closure of three of its smaller and under-performing branches. Interchem enjoyed growth in both sales and profitability in the year, arising from increased market share, higher usage of cereal and potato fungicides and extensions to its animal health products range. Premier Molasses had a satisfactory year. Whilst the high international molasses price impacted the molasses inclusion rates in compound feeds, sales still advanced, in part, due to the heavy summer rainfall which resulted in poor grazing conditions and a higher demand for compound feeds. During the year, the Group disposed of Grassland Holdings, its fertiliser business. FINANCIAL REVIEW Net debt at 27 September 2002 was €563.2 million, a reduction of €159.5 million from the September 2001 figure and €310.5 million from the March 2001 figure, which was the first reporting period after the Hazlewood acquisition. Net interest payable reduced from €53.4 million to €51.9 million, notwithstanding the inclusion for the entire period of the acquisition financing of Hazlewood. Net interest payable in the second half of the year was €23.5 million, down from €28.4 million in the first half of the year and €33.0 million in the second half of the previous year. The exceptional cost within operating profit relates principally to start-up inefficiencies at the new pizza and cake facilities, redundancies from the elimination of Hazlewood's Continental divisional structure and the rationalisation of the branch network of the Irish malt operation. The exceptional loss on disposals arises from the closure of the Rathbones bakery at Milton Keynes (net of the profit on the disposal of the site) and losses on the disposal of Grassland Holdings and part-disposal of Odlums; these were partially offset by profits on the sale of Erin Foods and William Rodgers and the Group's pizza operation in Australia. Capital expenditure in the year declined from €84.4 million in 2001 to €48.4 million, notwithstanding the completion of the pizza and cake facilities in the UK and the pizza facility in the Netherlands, and the commencement of the expansion of the UK chilled ready meal operations. The depreciation charge for the year was €57.4 million. The tax charge of €7.0 million on ordinary activities equates to an effective rate of 11%, up from 10% in the prior year. Consolidated Profit and Loss Account year ended 27 September 2002 2002 2001 Before Amortisation Total Restated exceptional and Notes items and Exceptional amortisation items €'000 €'000 €'000 €'000 Turnover Continuing operations 1 1,585,614 - 1,585,614 1,289,093 Discontinued operations 1 192,477 - 192,477 509,481 1,778,091 - 1,778,091 1,798,574 Operating profit before goodwill amortisation Continuing operations 1 102,193 - 102,193 89,775 Discontinued operations 1 9,012 - 9,012 26,464 111,205 - 111,205 116,239 Goodwill amortisation - (21,020) (21,020) (13,596) Exceptional items 2 - (13,272) (13,272) (2,214) Operating profit Continuing operations 102,193 (33,088) 69,105 73,965 Discontinued operations 9,012 (1,204) 7,808 26,464 111,205 (34,292) 76,913 100,429 Share of operating profit of associated undertakings 4,546 - 4,546 1,699 115,751 (34,292) 81,459 102,128 Exceptional items 2 Disposal of interest in subsidiaries - Proceeds in excess of/ (less than) - 6,976 6,976 (1,135) book value - Goodwill previously written-off to - (11,633) (11,633) (815) reserves - (4,657) (4,657) (1,950) Fundamental re-organisation and - - - (31,366) restructuring Loss on termination of operation - (10,042) (10,042) (11,529) - (14,699) (14,699) (44,845) Profit/(loss) on ordinary activities before interest and taxation 115,751 (48,991) 66,760 57,283 Net interest payable (51,941) - (51,941) (53,352) Amortisation of issue costs of finance - (2,918) (2,918) (1,860) facility Share of interest (payable)/receivable - associates (375) - (375) 9 Profit/(loss) on ordinary activities before taxation 63,435 (51,909) 11,526 2,080 Taxation (6,969) 6,931 (38) (4,826) Profit/(loss) on ordinary activities after taxation 56,466 (44,978) 11,488 (2,746) Minority interests (1,357) - (1,357) (1,370) Profit/(loss) Loss attributable to Group shareholders 55,109 (44,978) 10,131 (4,116) Dividends 3 (23,721) - (23,721) (23,664) Retained profit/(loss) 31,388 (44,978) (13,590) (27,780) Adjusted earnings per ordinary share 4 29.4c 30.4c Basic earnings/(loss) per ordinary 4 5.4c (2.2c) share Diluted earnings (loss) per ordinary 4 5.4c (2.2c) share Greencore Group plc Consolidated Balance Sheet 27 September 2002 2002 2001 €'000 €'000 Restated Fixed assets Intangible assets 391,773 350,474 Tangible assets 586,180 693,872 Financial assets 16,784 9,466 994,737 1,053,812 Current assets Stocks 137,662 238,337 Debtors 178,974 304,109 Cash and bank balances 103,256 253,421 419,892 795,867 Creditors Amounts falling due within one year 396,053 712,686 Net current assets 23,839 83,181 Total assets less current liabilities 1,018,576 1,136,993 Creditors Amounts falling due after more than one year 693,395 801,648 Provisions for liabilities and charges 46,323 59,191 Development grants 2,332 1,536 742,050 862,375 Net assets 276,526 274,618 Capital and reserves Called up share capital 121,584 120,991 Capital conversion reserve fund 934 934 Share premium account 85,847 84,684 Profit and loss account /other reserves 63,535 62,961 Shareholders' funds - equity interests 271,900 269,570 Minority interests - equity interests 4,626 5,048 276,526 274,618 Greencore Group plc Consolidated Cash Flow Statement year ended 27 September 2002 2002 2001 €'000 €'000 Operating activities Operating profit 76,913 100,429 Non cash items - depreciation 57,351 56,313 - amortisation 19,454 13,055 Other (including translation differences) (12,372) 8,790 Changes in working capital 48,247 40,803 Cashflow from operating activities 189,593 219,390 Dividends from associates 3,159 1,654 Returns on investments and servicing of finance (70,941) (27,256) Taxation (3,718) (6,374) Purchase of tangible fixed assets (46,619) (81,589) Disposal of tangible fixed assets 14,912 11,908 Disposal/(acquisition) of subsidiary and associated undertakings 55,203 (355,562) Net debt disposed of/(acquired) on disposals/acquisitions 37,740 (5,353) Equity dividends paid (23,668) (23,629) Cashflow before use of liquid resources and financing 155,661 (266,811) Management of liquid resources 122,740 (46,749) Financing (298,766) 396,587 (Decrease)/increase in cash in the period (20,365) 83,027 Cashflow from decrease/(increase) in debt and lease financing 300,522 (396,281) Cashflow from(decrease)/ increase in liquid resources (122,740) 46,749 Change in net debt resulting from cashflow 157,417 (266,505) Loans and finance leases disposed/(acquired) with subsidiaries 24 (262,291) Finance leases (2,678) (2,594) Loan notes - 439 Translation differences 4,702 5,918 Movement in net debt in year 159,465 (525,033) Net debt at start of year (722,638) (197,605) Net debt at end of year (563,173) (722,638) Statement of Total Recognised Gains and Losses year ended 27September 2002 Restated Profit/(loss) for year attributable to Group shareholders 10,131 (4,116) Exchange adjustments 2,531 (170) Total recognised losses for the year 12,662 (4,286) Prior year adjustments (note 5) 1,600 Total gains and losses recognised since last annual report 14,262 Greencore Group plc Notes to the Financial Statements year ended 27 September 2002 1. Analysis of Results 2002 2001 Restated Turnover Operating profit Turnover Operating Profit Pre goodwill Post goodwill Pre goodwill Post & exceptional & exceptional & goodwill & exceptional exceptional €'000 €'000 €'000 €'000 €'000 €'000 By Activity Continuing operations Ingredients 448,954 38,414 37,497 424,267 43,521 43,521 Chilled and Frozen 673,763 41,170 18,753 492,597 25,762 17,153 Ambient Grocery 368,540 17,001 7,268 289,833 15,976 8,797 Agribusiness 94,357 5,608 5,587 82,396 4,516 4,494 1,585,614 102,193 69,105 1,289,093 89,775 73,965 Discontinued operations Ingredients 34,681 2,911 2,911 50,591 1,606 1,606 Chilled and Frozen 42,076 1,327 123 181,765 6,169 6,169 Ambient Grocery 77,659 2,895 2,895 210,026 15,248 15,248 Agribusiness 38,061 1,879 1,879 67,099 3,441 3,441 192,477 9,012 7,808 509,481 26,464 26,464 Total subsidiaries 1,778,091 111,205 76,913 1,798,574 116,239 100,429 Associated undertakings Continuing operations 4,546 4,546 3,304 3,304 Discontinued operations - - (1,605) (1,605) Total associates 4,546 4,546 1,699 1,699 Total 115,751 81,459 117,938 102,128 The comparative amounts have been restated to reflect discontinued activities Notes to the Financial Statements continued year ended 27 September 2002 1. Analysis of Results ..../ctd 2002 2001 Restated Turnover Operating Profit Turnover Operating Profit Pre goodwill Post goodwill Pre goodwill Post goodwill & exceptional & exceptional & exceptional & exceptional €'000 €'000 €'000 €'000 €'000 €'000 By Geographical Market Results by Origin Continuing operations Republic of Ireland 348,059 30,082 28,951 326,004 37,584 36,233 United Kingdom & 1,237,555 72,111 40,154 963,089 52,191 37,732 Rest of World 1,585,614 102,193 69,105 1,289,093 89,775 73,965 Discontinued operations Republic of Ireland 123,153 7,579 7,559 188,400 9,176 9,176 United Kingdom & 69,324 1,433 249 321,081 17,288 17,288 Rest of World 192,477 9,012 7,808 509,481 26,464 26,464 Total 1,778,091 111,205 76,913 1,798,574 116,239 100,429 Turnover by Destination Continuing operations Republic of Ireland 329,173 290,753 United Kingdom & 1,256,441 998,340 Rest of World 1,585,614 1,289,093 Discontinued operations Republic of Ireland 111,253 167,853 United Kingdom & 81,224 341,628 Rest of World 192,477 509,481 Total 1,778,091 1,798,574 The comparative amounts have been restated to reflect discontinued activities. 2. Exceptional Items The current year exceptional charge comprises a cost of €13.27 million in respect of restructuring issues, primarily related to commissioning projects undertaken by the Group in the year, redundancies from the elimination of Hazlewood's Continental divisional structure and rationalisation of the branch network of the Irish malt operation. In addition, a surplus of proceeds over book value of €6.98 million was recorded on the disposal of former subsidiaries in the year. Goodwill previously written off against reserves of €11.63 million in respect of the disposed entities has been reinstated and written off through the profit and loss account. A net exceptional charge of €10.04 million was recorded in respect of the closure of one of the Group's U.K. bread bakeries. The comparative exceptional charge comprises €2.21 million which principally relates to start-up costs in respect of two major plants commissioned in the period. In addition, costs of €31.37 million were incurred in respect of a fundamental re-organisation and restructuring of the Group's operations following the acquisition of Hazlewood Foods plc together with the related losses less gains on sale or termination of operations of €13.48 million (€1.95 million and €11.53 million, respectively). 3. Dividends The proposed final dividend per share of 8.25c (2001: 8.253298c) is payable on 10 February 2003 to shareholders on the Register of Members at 6 December 2002. An interim dividend of 4.38c (2001: 4.380596c) was paid in July 2002. 4. Earnings per Share The calculation of adjusted earnings per share is after elimination of the exceptional charge of €21.04 million (tax relief - €6.93 million), goodwill amortisation of €21.02 million (tax relief nil) and amortisation of acquisition finance facility costs of €2.92 million (tax relief nil). The calculation of adjusted earnings per share in 2001 is before the effect of the prior year tax credit of €1.6 million (see note 5 below) and after elimination of exceptional charges of €47.06 million (tax relief nil), goodwill amortisation of €13.60 million (tax relief nil) and amortisation of acquisition facility costs of €1.86 million (tax relief nil). The calculation of basic earnings per share is based on a profit of €10.13 million (2001: loss of €4.12 million as restated). Both the calculation of adjusted EPS and basic EPS are based on 187.4 million ordinary shares (2001: 187.1 million), being the weighted average number of ordinary shares in issue during the period. The calculations of earnings per share exclude 4.9 million treasury shares arising from the share repurchase programme. 5. Deferred Tax The Group's policy on accounting for deferred taxation has been changed to comply with the introduction of Financial Reporting Standard 19 - Deferred Tax, which requires deferred tax to be accounted for on a full provision basis. No additional provision was required as at 29 September 2000 as a result of the adoption of FRS 19, however, an additional provision of €5.1 million was required as at 28 September 2001. Of this amount, €6.7m related to the acquisition of Hazlewood Foods plc and has been dealt with as a fair value adjustment. A credit of €1.6m related to year end 28 September 2001 and the comparative figures have been restated accordingly. 6. Accounting Policies The foregoing accounts are prepared on the basis of the accounting policies set out in the 2001 Annual Report, save for the adoption of FRS19, as outlined in note 5. The Annual Report and Accounts will be circulated to shareholders in January 2003, prior to the Annual General Meeting to be held on 6 February 2003 in Jurys Hotel, Ballsbridge, Dublin 4. By order of the Board. C.M. Bergin Group Company Secretary Greencore Group plc, St. Stephen's Green House, Earlsfort Terrace, Dublin 2 27th November 2002 This information is provided by RNS The company news service from the London Stock Exchange

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