Interim Results
Greencore Group PLC
29 May 2002
GREENCORE GROUP PLC
CONTACT: MR. B.J. POWER TELEPHONE 353 1 605 1029
FAX 353 1 605 1104
Greencore Group plc
Interim Statement of results for the half year ended 29 March 2002
Financial Highlights
Half Year Ended 29 March 2002
• Turnover from continuing operations up 45% to €816m
• Like-for-like sales growth of 5%
• Operating profit from continuing operations* up 40% to €50.3m
• Profit before tax from continuing operations* up 32% to €22.1m
• Proceeds to date from disposal programme of €198m, exceeding target
* adjusted for exceptional items and goodwill amortisation
Note: the accounts reflect the inclusion of Hazlewood Foods for six months
Compared with three months in the prior period.
Interim Statement
Half year ended 29 March 2002
Greencore has continued to make good progress in the first six months of this
financial year. Profits from continuing operations have grown strongly, the
total proceeds from the disposal programme have exceeded the announced target
and the restructuring programme initiated following last year's acquisition of
Hazlewood Foods is nearing completion. The success of the disposal programme,
although earnings dilutive in the short term, has sharply improved the strategic
direction and focus of the Group going forward.
Results
Sales from continuing operations increased by 45% from €561m to €816m. This
principally reflects the inclusion of the results of the retained Hazlewood
businesses for six months, compared with three months in the comparative period;
in addition, like-for-like sales from continuing operations grew by 5%,
reflecting the growth in the markets in which Greencore now operates. Operating
profit from continuing operations (before goodwill and exceptional items) also
showed strong growth, increasing by 40% from €35.9m to €50.3m.
Adjusted earnings per share were 13.8c (prior period 14.2c), reflecting
primarily the dilutive impact of the disposal programme. An interim dividend of
4.38c per share is to be paid, which is in line with last year.
Integration of Hazlewood Foods
The successful acquisition of Hazlewood Foods has provided the Group with
significant growth prospects, as demonstrated by the financial performance in
the first six months of the year. To enable the Group to take advantage of
these improved prospects, a substantial disposal and restructuring programme was
undertaken. In the first six months of the year, five additional businesses
were sold, as well as 50% of the flour milling business, Odlums. Total disposal
proceeds of €53m were generated in the period, and a further €45m has been
realised since the half year end from additional business and property sales.
In total, eighteen businesses have now been sold since the acquisition of
Hazlewood, with proceeds of some €198m generated, and a further four closed.
Following the disposal programme, the Group's convenience portfolio is now
focused on product categories with significant growth prospects.
As previously reported, three substantial projects were also progressed in the
first half of the current year. In the ambient sauces and pickles operation,
two smaller facilities in North Wales and Manchester were consolidated on time
and on budget into the main factory in Yorkshire, which has been completely
refurbished. The Group is already benefiting from this consolidation. In
pizza, a new factory, which will ultimately house all of the Group's topped
pizza production, was built again, on time and on budget. The commissioning
process continues and full operational efficiencies have yet to be achieved. We
anticipate that the transfer of production from the Bedford facility will be
completed before the end of the current financial year and the new facility
fully commissioned by the end of December. Finally, in cakes and desserts, the
rationalisation of the cost base of the new Hull facility, into which four
separate bakeries were consolidated last year, is still being progressed.
Operating and cost improvements have resulted, although the facility has still
further to go to fulfil its potential.
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 well advanced in
achieving the synergies targeted pre-acquisition.
Review of Operations
Chilled and Frozen
Operating profit from continuing activities increased to €19.3m in the period on
sales of €362.3m, compared with €8.8m on sales of €179.5m in the prior period,
with operating profit margins rising from 4.9% to 5.3%. In sandwiches, the
combination of the new state-of-the-art Manton Wood facility, double-digit sales
growth in the category, and Hazlewood's clear market leadership delivered
improved results. Chilled sauces continued to benefit from both strong category
growth and new product introductions with the product base continuing to expand
from the core pasta sauce range to include meat sauces and sweet sauces. These
same two factors drove growth in quiche and ready meals, which also benefited
from the rationalisation measures taken in the last financial year. The new
pizza facility will benefit the Group's topped pizza business in the same way as
the Manton Wood facility has enhanced the sandwich business, whilst the Group's
Dutch pizza operation completed on budget a €3m investment in a new production
hall, which will provide additional necessary capacity to service continental
market growth.
Ingredients
Sales increased from €239.1m to €246m, whilst operating profit was up from
€20.1m to €20.4m. As reported at the AGM, Irish Sugar's profitability declined
due to an increase in beet prices and the shutdown of the two factories during
the related dispute with beet growers. However, the five year agreement
subsequently entered into with the Irish Farmers' Association provides the basis
for stability going forward.
In milling, Odlums produced to the capacity of its mills, with profits
benefiting accordingly, although a mild winter in the US as well as
post-September 11th de-stocking programmes inhibited the very strong recent
growth record of its McCanns branded oatmeal product. Malt generated a good
increase in sales and profits, in particular in the UK, which benefited from
excellent cost management.
Ambient Grocery
Operating profit on continuing activities increased from €7.1m last year to
€12.1m, with sales from continuing operations up from €138.1m to €209.4m. Much
of the increase was due to the inclusion of Hazlewood for the entire period,
although operating profit margins also showed good improvement, increasing from
5.1% to 5.8% on continuing activities.
The Scottish mineral water business, Campsie, continues to benefit from the
increasing demand for mineral water in the UK, whilst remaining very focused on
its cost base. The ambient sauces and pickles business continues to recover
volume; although the sector remains very competitive, the rationalisation of the
two smaller facilities will result in further improvements to the cost base.
Results from Rathbones declined significantly versus the same period last year,
as the UK bread market remained very competitive. Transfer of production to the
new cake and dessert facility in Hull was delayed, resulting in significant
underperformance during the peak Christmas cake season.
Agribusiness
Agribusiness profitability from continuing operations increased from €0.9m to
€1.2m on sales of €33m versus €28.6m, with a strong performance in the
agrichemical distribution business more than offsetting the impact of a
reduction in EU grain import levies immediately post-harvest. The fertiliser
business, Grassland, was sold since the half-year, and its results have been
included in discontinued activities.
Associates
Share of profit of associates, net of share of interest, declined from €1.9m to
€1.5m, due principally to a reduction in profitability at the UK sugar
distributor associate.
Financial Review
Net debt in the first six months was reduced by €54.9m from €722.6m to €667.7m.
The March 2002 net debt figure is €206m lower than the level at March 2001. Net
interest payable increased from €20.4m to €28.4m, reflecting the inclusion for
the entire period of the acquisition financing of Hazlewood. Amortisation of
finance facility costs increased from €0.6m to €1.3m for the same reason. The
exceptional cost within operating profit relates principally to start-up
inefficiencies at the new pizza and cake facilities, whilst the exceptional loss
on disposal of €6.9m relates to the partial disposal of Odlums. Net capital
expenditure in the period declined from €32.5m in the same period last year to
€25.1m. The tax charge of €1.7m equates to an effective rate of 6%, which
reflects the ongoing restructuring of the Group.
Earnings per share (adjusted to eliminate exceptional items, amortisation of
goodwill and finance facility cost) decreased by 2.8% to 13.8c from 14.2c.
Basic earnings per share were 2.1c (2001: 7.2c).
Current Trading and Outlook
The disposal and restructuring programme has proceeded in line with our
timetable and expectations. As outlined above, performance improvement in the
new pizza and cakes facilities is a key priority for the Group in the second
half of the year. The Group expects an uplift in performance in these
businesses by the end of the current financial year.
In Chilled and Frozen, the market continues to show good growth, in line with
consumer demand for fresh prepared food, which is both convenient and of high
quality. The Group is confident of continued profit growth in these categories.
In Ingredients, the outlook for malt is for further improvement in the second
half, with the Belgian operation benefiting from the commencement of its
agreement with Interbrew. Odlums (which, going forward, will be reported as an
associate) continues to trade strongly. Irish Sugar will be impacted by the
additional costs incurred in the campaign earlier in the year, although it will
benefit from sales price increases recently achieved.
In Ambient Grocery, trading continues to be satisfactory in water, sauces and
pickles, and dried soups and sauces, but has not yet improved in bread, where
much effort is being dedicated to improving Rathbones' performance and the
market in which it operates.
A moderate second half is expected from the Group's agribusinesses, which are
becoming an increasingly smaller proportion of the Group overall.
A specific focus in the second half of the year will be on continuing to reduce
indebtedness, whilst driving improvements at the cakes, pizza and bakery
businesses. Although these businesses are unlikely to reach their full
potential in the short term, their medium term prospects are bright. The
outlook for growth in the second half in continuing operations is favourable,
although the results will be impacted by the dilutive effect of the disposal
programme. The acquisition of Hazlewood has transformed Greencore, and whilst
much remains to be done, the Group is already capitalising on its combination of
market leadership positions, excellently invested facilities, and a balanced mix
of strong growth and highly cash generative categories.
A. D. Barry,
Chairman.
29 May 2002
Greencore Group plc
Consolidated Profit and Loss Account (Unaudited)
Half year ended 29 March 2002
Half Year to 29 March 2002 Half Year to
Ordinary Exceptional Total 30 March
Notes Activities items 2001
€'000 €'000 €'000 €'000
Turnover -
Continuing operations 2 816,004 - 816,004 561,135
Discontinued 120,534 - 120,534 167,722
2 936,538 - 936,538 728,857
Operating profit before goodwill amortisation
and exceptional items -
Continuing operations 2, 3 50,298 (6,147) 44,151 35,862
Discontinued 5,016 - 5,016 10,866
2 55,314 (6,147) 49,167 46,728
Goodwill amortisation (9,228) - (9,228) (3,548)
Exceptional items 3 - - - (1,512)
Operating profit 46,086 (6,147) 39,939 41,668
Share of operating profit of associated 1,514 - 1,514 1,916
undertakings
47,600 (6,147) 41,453 43,584
Exceptional items
Disposal of interest in subsidiary
Proceeds in excess of book value 3 - 974 974 -
Goodwill previously written off to reserves 3 - (7,838) (7,838) -
Fundamental re-organisation and restructuring 3 - - - (7,865)
- (6,864) (6,864) (7,865)
Profit on ordinary activities before interest 47,600 (13,011) 34,589 35,719
and taxation
Net interest payable (28,387) - (28,387) (20,397)
Amortisation of issue costs of finance facility (1,318) - (1,318) (621)
Share of interest receivable - associates 15 - 15 17
Profit on ordinary activities before taxation 17,910 (13,011) 4,899 14,718
Taxation on profit on ordinary activities (1,707) 1,668 (39) (559)
Profit on ordinary activities after taxation 16,203 (11,343) 4,860 14,159
Minority interests (866) - (866) (781)
Profit attributable to group shareholders 15,337 (11,343) 3,994 13,378
Dividends 4 (8,204) - (8,204) (8,197)
Retained profit/(loss) 7,133 (11,343) (4,210) 5,181
==== ===== ==== ====
Adjusted earnings per ordinary share 5 13.8c (6.1c) 7.7c 14.2c
Basic earnings per ordinary share 5 8.2c (6.1c) 2.1c 7.2c
Fully diluted earnings per share 5 8.2c (6.1c) 2.1c 7.1c
Dividend per ordinary share 4 - - 4.38c 4.38c
Greencore Group plc
Consolidated Balance Sheet
Half Year Ended 29 March 2002
29 March 30 March 28 September
2002 2001 2001
(Unaudited) (Unaudited) (Audited)
As restated As restated
€'000 €'000 €'000
Fixed assets
Intangible assets 363,777 256,063 350,474
Tangible assets 647,105 819,381 693,872
Financial assets 18,167 8,853 9,466
1,029,049 1,084,297 1,053,812
Current assets
Stocks 239,185 336,300 238,337
Debtors 182,507 343,384 304,109
Cash and bank balances 190,073 138,408 253,421
611,765 818,092 795,867
Creditors
Amounts falling due within one year 510,723 541,769 712,686
Net current assets 101,042 276,323 83,181
Total assets less current liabilities 1,130,091 1,360,620 1,136,993
Creditors
Amounts falling due after more than one year 811,024 1,007,615 801,648
Provisions for liabilities and charges 35,941 43,002 59,191
Development grants 2,146 1,679 1,536
849,111 1,052,296 862,375
Net assets 280,980 308,324 274,618
Capital and reserves
Called up share capital 121,094 120,991 120,991
Capital conversion reserve fund 934 934 934
Share premium account 84,898 84,681 84,684
Profit and loss account/other reserves 68,808 96,871 62,961
Shareholders' funds - equity interests 275,734 303,477 269,570
Minority interests - equity interests 5,246 4,847 5,048
280,980 308,324 274,618
====== ===== ======
Greencore Group plc
Consolidated Cash Flow Statement
Half year ended 29 March 2002
Half Year to Half Year to
29 March 30 March
2002 2001
(Unaudited) (Unaudited)
€'000 €'000
Operating activities
Operating profit 46,086 41,668
Non cash items
- depreciation and amortisation 38,585 27,861
- other (including cash effect of exceptional items) (5,225) 4,256
Changes in working capital 13,382 34,072
Cash flow from operating activities 92,828 107,857
Dividends from associates 925 1,206
Returns on investments and servicing of finance (27,979) (31,757)
Taxation (4,490) (2,564)
Capital expenditure (net) (25,098) (32,504)
Proceeds on issue of share capital 317 306
Disposal/(acquisition) of subsidiary and associated undertakings 19,513 (430,105)
Net debt disposed of /(acquired) 22,510 (278,430)
Equity dividends paid (15,453) (15,431)
Net cash flow 63,073 (681,422)
Translation differences (8,137) 5,305
Movement in net debt in period 54,936 (676,117)
Net debt at start of period (722,638) (197,605)
Net debt at end of period (667,702) (873,722)
======= =======
Greencore Group plc
Statement of Total Recognised Gains and Losses
Half Year Ended 29 March 2002
Half Year to Half Year to
29 March 30 March
2002 2001
(Unaudited) (Unaudited)
€'000 €'000
Profit for period attributable to Group shareholders 3,994 13,378
Exchange adjustments 2,219 1,594
Write back of goodwill previously written off (note 3) 7,838 -
Prior year adjustment (note 6) 1,600 -
Total recognised gains for the period 15,651 14,972
===== =====
Greencore Group plc
Notes
Half year ended 29 March 2002
1. Basis of preparation
The interim statement for the six months to 29 March 2002 is unaudited and was
approved by the Board on 28 May 2002. The information has been prepared on the
basis of the accounting policies set out in the Group's Annual Report for the
year ended 28 September 2001 with the exception of Financial Reporting Standard
No 19 - Deferred Tax, which is applicable to the Group for the first time (see
note 6 below).
2. Analysis of results by activity
Turnover Operating Profit*
Half Year Half Year
2002 2001 2002 2001
€'000 €'000 €'000 €'000
Total Group
Chilled & Frozen 381,075 231,664 19,625 10,345
Ingredients 245,957 239,067 20,372 20,119
Ambient Grocery 246,567 199,336 12,957 11,378
Agribusiness 62,939 58,790 2,360 4,886
936,538 728,857 55,314 46,728
====== ====== ===== =====
Continuing Activities
Chilled & Frozen 362,323 179,474 19,325 8,787
Ingredients 211,276 214,938 17,677 19,085
Ambient Grocery 209,369 138,128 12,139 7,068
Agribusiness 33.036 28,595 1,157 922
816,004 561,135 50,298 35,862
====== ====== ===== =====
* Pre goodwill and exceptional items
3. Exceptional items
The current period exceptional charge comprises a cost of €6.1m in respect of
restructuring issues, primarily related to commissioning projects undertaken by
the Group in the period. In addition, a surplus of proceeds over book value of
€0.97m was recorded on the part disposal of a former subsidiary. Goodwill
previously written off against reserves of €7.8m in respect of the former
subsidiary has been reinstated and written off through the profit and loss
account.
Notes (Continued)
Half Year Ended 29 March 2002
The charge in the prior period reflects the cost of commissioning projects,
€1.5m, and a fundamental reorganisation undertaken at a cost of €7.9m.
4. Dividends
The Interim Dividend of 4.38c (2001: 4.380596c) per share is payable on 22 July
2002 to shareholders on the Register of Members as at 7 June 2002. It is subject
to dividend withholding tax, although certain classes of shareholders may
qualify for exemption.
5. Earnings per share
The calculation of earnings per share is based on earnings of €3.99m (2001:
€13.38m) and on 187.2 million ordinary shares (2001: 187.0 million) being the
weighted average number of shares in issue in the period. The calculation of
adjusted earnings per share is after adjusting for exceptional items, goodwill
and facility fee amortisation. The fully diluted earning per share has been
calculated on the basis of 187.6 million ordinary shares (2001: 187.4 million).
The calculations of earnings per share exclude 4.9 million treasury shares,
arising from the share repurchase programme.
6. 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 €5.1m was required 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 the six month period ended 28 September 2001, and this has been
dealt with as a prior year adjustment. The comparative balance sheet amounts
as presented on page 7 have been restated accordingly.
7. Information
The interim report is being sent by post to all registered shareholders.
Copies are also available to the public from the Company's registered office at
St. Stephen's Green House, Earlsfort Terrace, Dublin 2 and from its registrar
Computershare Investor Services (Ireland) Limited, Heron House, Corrig Road,
Sandyford Industrial Estate, Dublin 18.
B.J. POWER
DIRECTOR & SECRETARY
GREENCORE GROUP PLC,
ST. STEPHEN'S GREEN HOUSE,
EARLFORT TERRACE,
DUBLIN 2.
29th May, 2002.
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