Final Results
Greggs PLC
12 March 2007
12 March 2007
GREGGS plc
PRELIMINARY RESULTS
FOR THE 52 WEEKS ENDED 30 DECEMBER 2006
KEY FINANCIALS
+---------+-----------------------------------+-----------------------------------+
| | Before Bakers Oven restructuring | After Bakers Oven restructuring |
| | costs | costs |
+---------+-------------+---------------------+-------------+---------------------+
| | 2006| Change YOY| 2006| Change YOY|
+---------+-------------+---------------------+-------------+---------------------+
|Sales | £551m| +3.3%| £551m| +3.3%|
+---------+-------------+---------------------+-------------+---------------------+
|Operating| £42.2m| -10.4%| £38.7m| -17.8%|
|profit | | | | |
+---------+-------------+---------------------+-------------+---------------------+
|Pre-tax | £43.7m| -12.8%| £40.2m| -19.8%|
|profit | | | | |
+---------+-------------+---------------------+-------------+---------------------+
|Diluted | 261.6p| -6.2%| 239.9p| -14.0%|
|earnings | | | | |
|per share| | | | |
+---------+-------------+---------------------+-------------+---------------------+
|Dividends| 116.0p| +9.4%| 116.0p| +9.4%|
|per share| | | | |
+---------+-------------+---------------------+-------------+---------------------+
• Like-for-like sales up 0.5% for year: more positive trend in final weeks
• Operating profit before restructuring costs down £4.9m including energy
costs up £4.5m
• £39.5m distributed via share buybacks
• Twenty-second consecutive year of dividend growth reflecting continued
strong cash generation and confidence in the future
• Comprehensive business review completed
• Retail Director for Greggs brand appointed
• Significantly increasing customer focus and responsiveness; many
innovative trials being developed
"Like-for-like sales in the nine weeks to 3 March 2007 have increased by 3.9 per
cent, broadly in line with inflation. Operating profit is in line with our
budget and ahead of the comparable period last year. In our programme to
strengthen and develop the Greggs brand, the emphasis this year will be very
much on evaluating and learning from the results of our trials, along with the
steady and progressive adoption of best practice across the business. Although
we expect to see some near term benefits from this work, its real objective is
to enhance the growth potential of the Group over the next two to three years.
While additional costs will be incurred as we reorganise and develop the Greggs
brand, overall we expect that 2007 will be a year of progress for the Group."
- Derek Netherton, Chairman
ENQUIRIES:
Greggs plc Hudson Sandler
Sir Michael Darrington, Managing Director Michael Sandler / Wendy Baker
Richard Hutton, Financial Director Tel: 020 7796 4133
Tel: 020 7796 4133 on Monday, 12 March only
0191 281 7721 thereafter
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CHAIRMAN'S STATEMENT
As we had anticipated, 2006 proved to be a challenging year for the Group.
During the year we conducted a comprehensive review of the business, which
confirmed its fundamental strengths in terms of branding, shops, products and
people, but also identified opportunities for improvement. We are therefore
making changes to enable us to become even more focused on our customers,
respond more rapidly to a fast-changing and increasingly competitive market
place, and facilitate Greggs' continuing development as a powerful and
innovative national brand.
Results
Total Group sales for the 52 weeks ended 30 December 2006 increased by 3.3 per
cent to £551 million (2005: £533 million). After a flat first half,
like-for-like sales performance improved towards the end of the year. The
like-for-like sales improvement during the second half (28 weeks) was 0.9 per
cent, making an increase for the year as a whole of 0.5 per cent.
Operating profit, excluding the costs of restructuring the Bakers Oven business
in the North and Scotland, was £42.2 million (2005: £47.1 million), a reduction
of 10.4 per cent giving an operating margin of 7.7 per cent (2005: 8.8 per cent)
for the year. The principal factors here were the modest like-for-like sales
progress, including a 2.5 per cent decline in core volumes, and a £4.5 million
increase in energy costs. These were mitigated to some extent by efficiency
improvements and a continuing effort to bear down on overheads.
Finance income was reduced by 50 per cent to £1.5 million (2005: £3.0 million)
as we returned surplus cash to our shareholders through increased dividends and
share buybacks. In consequence, pre-tax profit before restructuring costs was
£43.7 million (2005: £50.2 million), a reduction of 12.8 per cent. After the
£3.5 million closure costs arising from the Bakers Oven restructuring pre-tax
profit was 19.8 per cent lower than in 2005 at £40.2 million.
Before restructuring costs, diluted earnings per share were 262 pence (2005: 279
pence), a reduction of 6.2 per cent. This compared favourably with the 10.4 per
cent decrease in operating profit, reflecting the benefit of share buybacks.
After the impact of restructuring costs, diluted earnings per share were 240
pence (2005: 279 pence), a reduction of 14.0 per cent.
Dividend
The Board recommends a final dividend of 78.0 pence per share (2005: 70.0
pence), an increase of 11.4 per cent. Together with the interim dividend of 38.0
pence (2004: 36.0 pence), paid in October 2006, this makes a total for the year
of 116.0 pence (2005: 106.0 pence). This is a rise of 9.4 per cent, making 2006
our twenty-second consecutive year of dividend growth since Greggs came to the
stock market in 1984. The increased dividend is covered 2.3 times by diluted
earnings per share before restructuring costs (2005: 2.6 times) and is
consistent with our previously stated intention to progress towards cover of 2.0
times.
Subject to the approval of the Annual General Meeting, the final dividend will
be paid on 25 May 2007 to shareholders on the register at 27 April 2007.
As announced in the interim report, we believe that our shareholders will
benefit from a more efficient balance sheet. In addition to delivering value
through increased dividends, the Company spent a total of £39.5 million during
the year purchasing 1,036,479 of its ordinary shares for cancellation, at an
average price of £37.87 per share. The trustees of the Greggs Employee Benefit
Trust purchased a further 438,829 shares at a cost of £16.4 million for the
future satisfaction of employee share options. The combined effect of these
purchases, totalling £55.9 million, is seen in the reduction of net cash on our
balance sheet from £65.6 million to £19.6 million during 2006.
It is the Board's intention to renew its authority to buy back shares at the
Annual General Meeting, and to continue to buy back shares when it is in the
interests of our shareholders to do so.
Results of strategic review
During 2006 we completed a thorough review, looking at all aspects of our
business, to ensure that it continues to develop in line with our customers'
needs. In order to accelerate the implementation of initiatives to extend the
appeal and availability of products under the Greggs brand we are creating a new
management structure. Key priorities will include the improvement of our product
range to enhance its appeal as the mass market becomes more aspirational, and
the development of formats and opening hours that can satisfy demand for food on
the go throughout the day. Action in these areas will be backed by significantly
increased investments in research, advertising and promotion, and in improving
the retail environment through refits and refurbishments. This programme of
change is intended to drive a progressive acceleration of both top and bottom
line growth. Profitability is also expected to benefit in the medium term from
cost reductions as best practice is implemented across the business. Mike
Darrington discusses these changes in more detail in his report.
The Board
Raymond Reynolds (47) was appointed to the Board as an Executive Director in the
new role of Retail Director for the Greggs brand on 18 December 2006. He is
charged with the development of a stronger, more unified and customer-focused
Greggs brand throughout the UK.
Two Directors who have made truly exceptional contributions to the business will
retire at our AGM in May. Ian Gregg (67), who has served as a Non-Executive
Director since August 2002, was Executive Chairman and Managing Director from
1964-84, then Executive Chairman 1984-93 and Non-Executive Chairman 1993-2002.
Greggs is a unique business in many ways, one of which is the integrity of its
values and the way in which these are embedded throughout the company. Ian was
the inspiration for this as well as many other strengths of the business. On a
personal note I am also very grateful for all the help that he has given to me
since I took over from him as Chairman. Malcolm Simpson (65), retired as
Financial Director in May 2006 after 31 years on the Board in that role. For the
last year he has served as an Executive Director in charge of our IT function.
His contribution to the business cannot be overestimated. Mike Darrington pays
tribute to Ian and Malcolm at the end of this report.
People
This has been a challenging year for all at Greggs, and I would like to express
the thanks of the Board to every member of our team for their continued
commitment to delivering excellent customer service, and for their positive
response to the necessary changes we have made during the year.
Prospects
The more positive sales trend which developed in the final weeks of 2006 has
continued in the current year to date. Like-for-like sales in the nine weeks to
3 March 2007 have increased by 3.9 per cent, broadly in line with inflation.
Operating profit is in line with our budget and ahead of the comparable period
last year. In our programme to strengthen and develop the Greggs brand, the
emphasis this year will be very much on evaluating and learning from the results
of our trials, along with the progressive adoption of best practice across the
business. Although we expect to see some near term benefits from this work, its
real objective is to enhance the growth potential of the Group over the next two
to three years. While additional costs will be incurred as we reorganise and
develop the Greggs brand, overall we expect that 2007 will be a year of progress
for the Group.
Derek Netherton, Chairman
12 March 2007
MANAGING DIRECTOR'S REPORT
We are significantly increasing our customer focus to enable us to drive a
stronger and more unified Greggs brand that can respond more rapidly and
effectively to changing needs and tastes. We are taking major initiatives in the
areas of management, customers, products, shops and marketing. These actions
will create a more streamlined Group with the capability to deliver
progressively improving performance through a focus on innovation and best
practice.
Trading performance
Trading conditions during 2006 were the most demanding that we have encountered
for well over a decade, and these were reflected in our disappointing
like-for-like sales performance. The flat like-for-like sales trend of the first
half (24 weeks) continued for longer than we had expected in the second half,
partly because of the effects of an exceptionally hot summer. Real improvements
were achieved, against progressively easier comparatives, in the final two
months of the year, with like-for-like sales in the six weeks to 9 December
growing by 2.0 per cent and in the final three weeks to 30 December by 3.3 per
cent. As the Chairman has noted, these delivered an uplift of 0.9 per cent over
the second half as a whole, making an increase of 0.5 per cent for the year.
With our selling price inflation averaging 3.0 per cent, this represented a 2.5
per cent decline in core volumes year-on-year.
The market in which we operate has become progressively more competitive, with
the proliferation of high street convenience formats operated by the major
supermarket groups, and the growth of numerous specialist takeaway food chains.
This has occurred at a time when high street footfall has in any case been under
pressure. The high operational gearing of the business makes it sensitive to
changes in like-for-like sales.
In 2006, we faced an exceptional increase in energy costs following the end of a
long term electricity supply agreement and significant hikes in gas and other
power costs. In total, the Group's energy bill rose by £4.5 million compared
with 2005, and this was the largest single contributor to the £4.9 million
reduction in continuing operating profit. Through forward buying we managed to
avoid the peak of the energy cost spike and, as a consequence, these costs in
2007 are likely to be at a similar level to 2006.
Advantageous forward buying also enabled us to mitigate the effects of a
significant increase in the market price of flour, our most important
ingredient, from autumn 2006, as poor harvests worldwide resulted in a shortage
of good quality milling wheat. Labour, our largest single cost, reflected
underlying wage inflation of just under 4 per cent, partially offset by improved
scheduling of shop staff hours and a continued drive to enhance efficiency. We
also robustly challenged all spending as part of a determined focus on tighter
cost management across the Group.
Greggs brand UK. The Greggs brand in the UK recorded a like-for-like sales
decline of 0.3 per cent in the first half and an improvement of 1.2 per cent in
the second half, making an increase of 0.5 per cent for the year. Selling price
inflation averaged 3.1 per cent, once again reflecting improvements to our
product offer as well as the recovery of cost increases.
Bakers Oven brand. Like-for-like sales under the Bakers Oven brand grew by 0.8
per cent in the first half and recorded a marginal decline of 0.1 per cent in
the second half, making an increase of 0.4 per cent for the year as a whole.
Selling price inflation averaged 2.6 per cent.
Greggs Continental Europe. Our Belgian business is now trading from six shops in
Antwerp and Leuven, which are achieving good core sales growth. We plan to open
at least two more shops in Belgium during 2007.
Structure and strategy: Greggs
As the Chairman has noted, we have conducted a comprehensive review of our
structure and strategy during 2006. Whilst confirming the fundamental strengths
of the business, it has made us even more determined to drive harder in those
areas where there are opportunities for improvement.
Management. We operate in an increasingly fast-moving market place, and it is
essential that we have the capacity to react quickly to changing consumer
demands and tastes. Following our review, the Board concluded that the previous
management structure, which allowed considerable autonomy to the eight Greggs
divisions in the UK, could no longer meet this key requirement. Raymond Reynolds
was therefore appointed Retail Director in December 2006 to unify the Greggs
brand and to drive an improvement programme based on an even greater
understanding of our customers and their needs.
Customers. Our market research has confirmed the great loyalty of the million
customers who visit Greggs each day. It has also highlighted clear opportunities
to strengthen engagement with our existing customers and to extend our appeal to
new groups of consumers. Our objective is to develop the Greggs brand to deliver
quality food on the go to customers throughout the day, with a range that is
capable of satisfying their varying lifestyles and preferences.
Products. While maintaining our focus on delivering great taste and enjoyment at
competitive prices, we will develop our offer to cater for more aspirational
demands. We will continue to offer iconic bakery products such as our sausage
rolls and doughnuts. These will be complemented by more adventurous new products
and by further expansion and development of our Healthier Options range of
wraps, rolls and sandwiches, which currently comprises seven lines. Each product
contains less than 400 Kcalories, less than 10g of fat, less than 4g of
saturated fat and less than 2g of salt. The range is complemented by a healthy
fruit salad pot. Together, Healthier Options products already account for over
10 per cent of our sandwich sales.
Shops. The strategic review has confirmed the fundamental strength of our retail
property portfolio. We are now seeking to develop our range of outlets and
opening times so that they are appropriately geared to each meal occasion and to
local demand for food on the go. In developing our retail estate, we will
progressively focus on new types of locations where there is demand for high
quality takeaway food, as well as on the traditional high street. We will also
put increasing emphasis on capital investment devoted to enhancing the appeal of
our existing shops through refits and refurbishments.
Marketing. All these changes will be supported by a significant increase in our
marketing expenditure, including a campaign to promote awareness of the Greggs
brand. We will place particular emphasis on the freshness, quality and
enjoyability of our products, including the excellent provenance of our
ingredients.
As our new structure becomes established, we will speed up the adoption of best
practice throughout the Greggs business, both in the product range we offer and
in the way it is produced and sold. This will help us to drive down costs as
well as building Greggs' reputation as a consistent, national brand.
Structure and strategy: Bakers Oven
In August we announced the restructuring of Bakers Oven in the North and
Scotland, involving the closure of these two divisions and the transfer of 49 of
their shops either to the Greggs brand or the successful Bakers Oven Midlands
operation. A further 14 poorly performing shops were closed. These changes have
been implemented in accordance with our plans, and will deliver the projected
profit enhancement of £1.25 million per annum from 2007.
We incurred total restructuring costs of £3.5 million, slightly below our
revised estimate but exceeding our original budget of £2.5 million owing to
higher than expected property costs. Since the beginning of the current year we
have completed the sale of the Carricks bakery site in Newcastle upon Tyne,
formerly the headquarters of Bakers Oven North. As we have previously disclosed,
the property profit on this sale will help to mitigate the costs of closure.
Bakers Oven in the South and Midlands remains a successful and profitable
business, delivering good returns on our investment, and we remain committed to
its future growth and development.
Retail profile
We opened 48 new shops during the year and closed 31, giving us a net increase
of 17 units to a total of 1,336 at 30 December 2006. There were a larger number
of closures than usual as a result of the restructuring of Bakers Oven in the
North and Scotland. Following these changes, our portfolio at the year end
comprised 1,165 shops (2005: 1,098) under the Greggs brand in the UK, an
increase of 67; 165 (2005: 216) under the Bakers Oven brand, a reduction of 51;
and six under the Greggs brand in Belgium, an increase of one.
We completed 29 comprehensive shop refurbishments and 24 minor refits during the
year.
During 2007, we expect to add a net 20 - 25 new shops to our portfolio, after a
continuing programme of action to weed out underperforming outlets. As part of
our drive to enhance the customer appeal of our stores, we will accelerate the
pace of our programme of refurbishments and refits during the year.
Capital investment
Capital expenditure during the year was £30.0 million (2005: £41.7 million).
This was significantly below our original budget of £40 million, principally as
the result of site problems which delayed the start of work on our new Glasgow
bakery, and the scaling back of planned shop openings. We plan to invest some
£39 million in the business during 2007, which will include the Glasgow bakery
construction; the completion of a smaller scale expansion of our South Wales
facility; and a substantial increase in our expenditure on shop refits and
refurbishments.
Cash flow and balance sheet
The business remains consistently highly cash generative, underpinning the
Board's strategic decision to maintain our long-established, progressive
dividend policy, reduce dividend cover and conduct a continuing share buyback
programme. During the year the Company and the Greggs Employee Benefit Trust
together spent £55.9 million on the purchase of shares; the Company paid
dividends to shareholders totalling £12.1 million; and we made an additional
contribution of £5.5 million to our main pension scheme, reducing its deficit
under IAS19 to £1.9 million at 30 December 2006 (2005: £9.7 million).
Despite these substantial outlays, we ended the year with net cash on the
balance sheet of £19.6 million, a reduction of £46.0 million since our previous
year end.
Community and environment
We are proud to have maintained our commitment to the communities in which we
operate during 2006, both through the Company's continued charitable donations
and the efforts of our employees. In total Greggs gave £540,000 to charities
during the year (2005: £609,000), amounting to 1.3 per cent of our pre-tax
profit. This was directed principally through the Greggs Trust and our Greggs
Breakfast Clubs scheme, where the number of clubs operating in primary schools
in disadvantaged areas rose from 113 to 124. In addition to this our staff
helped to raise £345,000 for children's cancer charities through regional fun
runs and over £70,000 for the BBC Children In Need appeal.
We have maintained our drive to improve energy efficiency and reduce carbon
emissions through our SEBA (Save Energy Be Aware) initiative in all our shops
and bakeries. I am pleased to report that this delivered a 10 per cent reduction
in our energy usage in production during 2006. We have also continued to pursue
various initiatives to increase recycling and reduce the amount of food waste
going to landfill.
People
Our excellent people have again demonstrated their dedication to the business,
and have worked hard to overcome the challenges created by a more demanding
market place. I would like to record my special appreciation of the way those
affected by the restructuring of Bakers Oven pulled together to help us to make
those changes as quickly and smoothly as possible. I would also like to thank
and send our good wishes for the future to two senior members of our management
team who retired this year after long periods of service: Ian Edgeworth, who had
been personnel director at our Group head office in Newcastle upon Tyne since
1983; and Peter Rossi, who joined the business in 1988 and had been managing
director of Greggs of Yorkshire since 1997. In addition we have two other
significant retirements coming in 2007 and, as the Chairman has noted, a
personal tribute from me to Ian Gregg and Malcolm Simpson follows this report.
The future
We are taking clear steps to address the difficulties we encountered in 2006,
and have initiated a programme of change that will build on the enormous
fundamental strengths of the Group. This will help us to develop an even more
responsive and cost-effective business that can satisfy the needs of customers,
employees and shareholders alike. We will do so without compromising our core
values or our commitment to delivering excellent products and service. I am
confident that this will provide the most solid of foundations for the delivery
of our vision of long term growth as Europe's finest bakery-related retailer.
Sir Michael Darrington
Managing Director
12 March 2007
TRIBUTE TO IAN GREGG AND MALCOLM SIMPSON BY SIR MICHAEL DARRINGTON
The Greggs business was started by Ian's parents in the late 30s, selling yeast
and eggs from a van. As a young boy, after his parents bought their first shop
and bakery in 1951, Ian found himself helping with all the tasks in the bakery,
as well as studying. Just as Ian qualified as a lawyer, his father died
unexpectedly. Ian agreed to help his mother with the business for a short period
but, to his surprise, found he became enthused by it. At that time, the business
comprised a bakery in Gosforth with one shop and seven delivery vans and, in
those days, the business was mainly bread, rolls and cakes.
Ian progressively built the business over the next 20 years, growing it both
organically and by acquisition. He developed the savoury business, putting ovens
into all the shops and he found himself working bakers' hours. He also
reintroduced the iconic Stottie Cake.
As those who know him understand, Ian loves working with people and is excellent
at choosing them, which has contributed to the strong and stable team that was
built. He has excellent personal values which he built into the business in the
early days and which we have progressively developed as the business has grown.
He is remarkable in that he has the vision of an entrepreneur but was never
happier than when he went in to help out with a problem in the bakery.
In the early 80s, Ian decided he had done his bit in growing Greggs, which was
still a private business, and he asked me to join and to continue the
improvement and expansion of the business. I came to Greggs as MD in 1983 from a
large public company, joining a relatively small family business, which was a
bit of an act of faith. However, I had met Ian on a number of occasions and as
we got to know each other I felt we shared lots of ideas and had a lot of values
in common and that Ian was somebody to be trusted.
The business floated on the London Stock Exchange in May 1984 and we carried on
growing and improving the business. Ian became progressively more non-executive
in his Chairman's role. He retired as Chairman in 2002 but, fortunately for us,
agreed to stay on for a few more years. Ian was amazing in that the
understanding we had was that he would leave me to get on with doing things my
way rather than getting involved himself. He did this even when, on a number of
occasions, he must have felt pretty uncomfortable. I doubt that anyone else
could have done this as well as Ian.
Even during his most frenetic times, Ian found time for the other passion in his
life - salmon fishing. He has always been very involved in conservation -
including being the Chairman of the River Tweed Commissioners and Tweed
Foundation, for which he was awarded an OBE. He is also very generous and set up
a significant charitable trust to help the disadvantaged. He has a large number
of achievements, both in and out of the business, which have influenced a lot of
people.
Ian is a very modest and unassuming man, with great strength of character. His
retirement from Greggs is the end of an era.
The AGM also sees the retirement of another pillar of Greggs - Malcolm Simpson,
who has been Financial Director of Greggs since 1976. He was a great help to Ian
in the early days and, when I joined Greggs in 1983, Malcolm was particularly
welcoming and supportive in what was initially a challenging time. Malcolm
steered us through our flotation in May 1984. He is a larger-than-life character
who has had a wide-ranging involvement in most areas of our business and has
made a major contribution to our success over many years. He is very
strong-minded and (most of the time!) I have appreciated both his challenging
approach as well as his supportiveness.
Greggs have been very fortunate to have two such excellent people giving such
long-term commitment to the very successful building of our business.
I know that I, and many others, will miss them tremendously and would like to
wish them every success and happiness in the future.
Greggs plc
Consolidated income statement
for the 52 weeks ended 30 December 2006
(2005: 52 weeks ended 31 December 2005)
2006 2006 2006 2005
£'000 £'000 £'000 £'000
Excluding Bakers Oven Total
Bakers Oven restructuring
restructuring costs
costs
Revenue 550,849 - 550,849 533,435
Cost of sales (209,455) (68) (209,523) (203,346)
________ ________ ________ ________
Gross profit 341,394 (68) 341,326 330,089
Distribution and selling costs (262,917) (2,947) (265,864) (247,188)
Administrative expenses (36,232) (483) (36,715) (35,758)
________ ________ ________ ________
Operating profit 42,245 (3,498) 38,747 47,143
Finance income 1,579 - 1,579 3,106
Finance expenses (87) - (87) (90)
________ ________ ________ ________
Profit before tax 43,737 (3,498) 40,239 50,159
Income tax (14,227) 1,049 (13,178) (16,085)
________ ________ ________ ________
Profit for the financial year
attributable to equity holders of
the parent 29,510 (2,449) 27,061 34,074
======= ======= ======= =======
Basic earnings per share 241.2p 282.1p
Diluted earnings per share 239.9p 278.9p
Dividends
2006 2005
Interim dividend paid (pence per
share) 38p 36p
Final dividend proposed (pence per
share) 78p 70p
Greggs plc
Consolidated statement of recognised income and expense
for the 52 weeks ended 30 December 2006
(2005: 52 weeks ended 31 December 2005)
2006 2005
£'000 £'000
Actuarial gains / (losses) on defined benefit pension plans 2,741 (2,345)
Tax on items taken directly to equity (822) 704
________ ________
Net income / (expense) recognised directly in equity 1,919 (1,641)
Profit for the financial year 27,061 34,074
________ ________
Total recognised income and expense for the financial year
attributable to equity holders of the parent 28,980 32,433
======= =======
Greggs plc
Consolidated balance sheet
at 30 December 2006
(2005: 31 December 2005)
2006 2005
£'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 184,325 180,826
Current assets
Inventories 8,429 7,713
Trade and other receivables 16,026 15,861
Cash and cash equivalents 19,585 65,602
Asset held for sale 275 -
________ ________
44,315 89,176
________ ________
Total assets 228,640 270,002
________ ________
LIABILITIES
Current liabilities
Trade and other payables (61,295) (58,686)
Current tax liabilities (5,467) (8,086)
________ ________
(66,762) (66,772)
Non-current liabilities
Defined benefit pension liability (1,883) (9,730)
Other payables (90) (98)
Deferred tax liability (15,014) (11,927)
________ ________
(16,987) (21,755)
________ ________
Total liabilities (83,749) (88,527)
________ ________
Net assets 144,891 181,475
======= =======
EQUITY
Capital and reserves
Issued capital 2,232 2,439
Share premium account 13,533 13,440
Capital redemption reserve 207 -
Retained earnings 128,919 165,596
________ ________
Total equity attributable to equity holders of the parent 144,891 181,475
======= =======
Greggs plc
Consolidated statement of cashflows
for the 52 weeks ended 30 December 2006
(2005: 52 weeks ended 31 December 2005)
2006 2005
£'000 £'000
Operating activities
Cash generated from operations (see below) 66,185 67,689
Income tax paid (13,600) (14,625)
________ ________
Net cash inflow from operating activities 52,585 53,064
________ ________
Investing activities
Acquisition of property, plant and equipment (30,023) (41,687)
Proceeds from sale of property, plant and equipment 1,599 2,171
Interest received 1,579 3,106
________ ________
Net cash outflow from investing activities (26,845) (36,410)
________ ________
Financing activities
Defined benefit pension scheme special contribution (5,500) (4,000)
Interest paid (74) (90)
Proceeds from issue of share capital 93 1,234
Sale of own shares 1,809 3,695
Purchase of own shares (16,436) (2,173)
Shares purchased and cancelled (39,544) -
Dividends paid (12,105) (12,319)
________ ________
Net cash outflow from financing activities (71,757) (13,653)
________ ________
Net (decrease) / increase in cash and cash equivalents (46,017) 3,001
Cash and cash equivalents at the start of the year 65,602 62,601
________ ________
Cash and cash equivalents at the end of the year 19,585 65,602
======= =======
Cash flow statement - cash generated from operations
2006 2005
£'000 £'000
Profit for the financial year 27,061 34,074
Depreciation 23,884 22,038
Loss on sale of property, plant and equipment 753 484
Release of government grants (8) (7)
Share based payment expenses 687 557
Finance income (1,579) (3,106)
Finance expenses 87 90
Income tax expense 13,178 16,085
Increase in inventories (716) (430)
Increase in debtors (165) (1,912)
Increase / (decrease) in creditors 2,609 (517)
Increase in pension liability 394 333
________ ________
Cash from operating activities 66,185 67,689
======= =======
Greggs plc
NOTES:
1. Status of financial information
The financial information set out above does not constitute the company's
statutory accounts for the years ended 30 December 2006 or 31 December 2005. The
financial information for 2005 is derived from the statutory accounts for 2005
which have been delivered to the registrar of companies. The auditors have
reported on the 2005 accounts; their report was (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew attention by way
of emphasis without qualifying their report and (iii) did not contain a
statement under section 237(2) or (3) of the Companies Act 1985. The statutory
accounts for 2006 will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the registrar of companies in due course.
2. Dividends
The following tables analyse dividends when paid and the year to which they
relate:
2006 2005
Per share Per share
pence pence
2004 final dividend - 66.0p
2005 interim dividend - 36.0p
2005 final dividend 70.0p -
2006 interim dividend 38.0p -
________ ________
108.0p 102.0p
======= =======
The proposed final dividend in respect of 2006 amounts to 78.0 pence per share
(£8,706,000). This proposed dividend is subject to approval at the Annual
General Meeting and has not been included as a liability in these accounts.
2006 2005
£'000 £'000
2004 final dividend - 7,959
2005 interim dividend - 4,360
2005 final dividend 8,013 -
2006 interim dividend 4,092 -
________ ________
12,105 12,319
======= =======
Capital Retained 2006 2005
Issued Share redemption earnings Total Total
capital premium reserve
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1
January 2006 2,439 13,440 - 165,596 181,475 157,156
Shares issued
in the year - 93 - - 93 1,234
Shares
purchased and
cancelled (207) - 207 (39,544) (39,544) -
Total
recognised
income and
expense - - - 28,980 28,980 32,433
Purchase of
own shares - - - (16,436) (16,436) (2,173)
Sale of own
shares - - - 1,809 1,809 3,695
Share-based
payments - - - 687 687 557
Dividends - - - (12,105) (12,105) (12,319)
Tax items
taken directly
to reserves - - - (68) (68) 892
________ ________ ________ ________ ________ ________
Balance at 30
December 2006 2,232 13,533 207 128,919 144,891 181,475
======= ======= ======= ======= ======= =======
4. Earnings per share
Basic earnings per share
The calculation of basic earning per share at 30 December 2006 was based on
profit attributable to ordinary shareholders of £27,061,000 (2005: £34,074,000)
and a weighted average number of ordinary shares outstanding during the year
ended 30 December 2006 of 11,220,493 (2005: 12,080,526).
Diluted earning per share
The calculation of diluted earnings per share at 30 December 2006 was based on
profit attributable to ordinary shareholders of £27,061,000 (2005: £34,074,000)
and a weighted average number of ordinary shares outstanding during the year
ended 31 December 2005 of 11,280,902 (2005: 12,215,800).
Adjusted earnings per share
Basic and diluted earnings per share have been calculated for the year ended 30
December 2006 which exclude the effect of the Bakers Oven restructuring costs.
These have been calculated by dividing profit attributable to ordinary
shareholders excluding Bakers Oven restructuring costs by the relevant weighted
average number of ordinary shares as calculated below.
Profit attributable to ordinary shareholders
2006 2006 2006 2005
£'000 £'000 £'000 £'000
Excluding Bakers Oven Total
Bakers Oven restructuring
restructuring costs
costs
Profit for the financial year
attributable to equity holders
of the parent 29,510 (2,449) 27,061 34,074
======= ======= ======= =======
Basic earnings per share 263.0p (21.8p) 241.2p 282.1p
Diluted earnings per share 261.6p (21.7p) 239.9p 278.9p
This information is provided by RNS
The company news service from the London Stock Exchange
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