Chairman's Address to the AGM

RNS Number : 3559A

Greencore Group PLC

31 January 2011

 

GREENCORE GROUP PLC

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31 January 2011

GREENCORE GROUP PLC

CHAIRMAN'S ADDRESS TO THE ANNUAL GENERAL MEETING

Performance

The Group delivered a good performance overall in 2010 with the Convenience Foods division having a very strong year, benefiting from overall market growth, positive consumer trends with a sustained trend of the consumer eating more food at home with a switch from dining out and a tighter capacity environment in the UK.

Adjusted EPS for the Group was 16.7 cent compared to 17.4 cent in FY09 with the initially dilutive impact of the disposal of Malt substantially offset by strong growth in convenience foods earnings. A key highlight of the performance during the year was the resurgence in chilled ready meals with the Group's sales growing by 22% due to growth with existing customers as well as the addition of a significant new ready meal customer during the year.

In 2010 the Group completed a successful disposal programme with its Malt, Water and Continental convenience food businesses disposed of for an aggregate total consideration of €142.3m.

The Group exited FY10 as a focused, strong performing convenience foods business with 31.8% less net debt than at the end of September 2009.

The underlying performance of our Convenience Foods division has remained good in the first three months of FY11, being the period ended 24 December 2010. The division recorded continuing business revenue of €208.7m in the period, which represented an increase of 7.6% on the comparable period in FY10 or an increase of 3.0% on a constant currency basis, despite severe adverse weather in the UK in December. 

In particular, the operating performance in our two key categories of Food to Go and Prepared Meals remained strong with a continuation of the favourable underlying market trends seen in FY10.  Value remains a key consumer theme and the Group's portfolio meets this need.  As expected, ingredient and packaging inflation is more pronounced than in FY10; the Group is effectively managing this through a combination of selling price increases and cost reduction initiatives.  Our US business traded in line with our expectations in the quarter as we completed the re-fit of the Newburyport facility and acquired a fresh sandwich business, On a Roll Sales Inc. in December 2010.

Following the disposal of our Malt business in FY10, we expect the contribution from the Ingredients & Property division to represent a much more modest part of the overall Group result.  On a continuing basis, trading in the first three months ended 24 December 2010 was down on the same period last year, principally due to the timing of small property disposals. 

Financial Position

The Group has a strong balance sheet and is well capitalised to meet the operational and development needs of the business.  As previously outlined, the Group's interest expense is expected to be significantly lower in FY11, reflecting the full year impact associated with the Group's FY10 disposals and the related debt restructuring.

Outlook

While we are at an early point in our financial year, assuming an average EUR/GBP exchange rate in FY11 in the range of 0.85 to 0.88 and based on our expectation of continued strong performance in Convenience Foods, the Board continues to expect to deliver strong growth on a continuing basis in FY11.

Proposed Merger with Northern Foods plc

The proposed merger of Greencore and Northern Foods plc, was announced and recommended by both Boards on 17 November 2010. Subsequently a cash offer of 73p per share has been made for Northern Foods by BH Acquisitions Limited.  The Board of Greencore continues to believe that a combination with Northern Foods to create Essenta Foods represents a compelling opportunity for value creation for both Greencore and Northern Foods shareholders, through the formation of a business with increased scale in the industry and the ability to deliver substantial synergies around which the board has increased confidence. However, the Board recognises the importance attached by the Northern Foods Board to the certainty of cash value in their decision to change their recommendation.

Given this latest development and as announced on 24 January 2011, the Board of Greencore is now considering its options. A further announcement will be made in due course.

Board Changes

There have been a number of Board changes in the past year with Gerard Corbett retiring as a Non-Executive Director in February, Caroline Bergin resigning as Group Company Secretary in May, Tony Hynes retiring in December and Geoff Doherty resigning in December. I would like to take this opportunity to thank them all on behalf of the Board for their outstanding contribution to the Group over the past many years. Equally I would like to welcome Eric Nicoli, who joined the Board as a Non-Executive Director in May 2010 and Conor O'Leary who replaced Caroline Bergin as Group Company Secretary in May 2010.

E.F. Sullivan

Chairman

31 January 2011

 

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