Half Yearly Report

RNS Number : 7675S

Greencore Group PLC

26 May 2009

 

HALF YEARLY FINANCIAL STATEMENTS 2009

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INTERIM MANAGEMENT REPORT

for the half year ended 27 March 2009

Greencore Group plc, a leading international convenience food and ingredient producer, today announces its results for the half year ended 27 March 2009. 

Highlights 1&2

Financial

• Group sales of €545.4m, an increase of 3.0% in continuing businesses on a constant currency basis
• Group operating profit3 of €31.4m, an increase of 4.6% in continuing businesses on a constant currency basis
• 17% depreciation in average EUR/GBP exchange rate versus first half of FY08 impacted translation of operating profit by €5.7m
• Adjusted EPS4  of 7.4c in line with the first half of FY08 on a constant currency basis
• Net exceptional loss of €25.1m on discontinued activities and restructuring initiatives. Cash positive by €0.4m overall
• Successful refinancing completed of €410m of banking facilities in April and May 2009
• Rebasing of total dividend for year to a payout ratio in the range of 40-50% of adjusted EPS with an interim dividend of 3.0 cent per share (interim dividend FY08: 5.30 cent)

Resilient performance in Convenience Foods Division

• Sales in continuing businesses increased by 2.8% on a constant currency basis
• Operating profit3 in continuing businesses increased by 6.0% on a constant currency basis
• Continued momentum in US
• 10bps increase in operating margin to 5.1%
  

Good performance in Ingredients & Related Property division

• Sales in continuing businesses increased by 3.6% on a constant currency basis
• Operating profit3 in continuing businesses increased by 2.1% on a constant currency basis
  

Commenting on the results, Patrick Coveney, Group chief executive, said:

'Trading in the first half of the year has held up well in challenging conditions. We remain on track to deliver operating profit in line with 2008 on a constant currency basis, albeit with the seasonally more important summer period to come. We have stabilised the business but are not complacent - we know that we have some distance to go to deliver on the potential of our Group. However, we are confident, given our leading market positions, efficient operations and developing presence in the growing US prepared foods market, that Greencore can realise the returns of which it is undoubtedly capable.' 

 

1      The results for the first half of FY08 have been restated for the impact of the cost concealment issue at the Group’s Mineral Water business.

2      Continuing business comparisons exclude Drummonds in the Ingredients and Related Property division and frozen desserts in the Convenience Foods division. Both of these businesses were discontinued during the first half of FY09 but have not been classified as discontinued operations in the condensed financial statements.

3      Before exceptional items and acquisition related amortisation.

4      Before exceptional items, pension finance items, acquisition related amortisation, FX on inter-company and certain external loan balances and the movement in the fair value of all derivative financial instruments and related debt adjustments.

Presentation

A presentation of the results will be made to analysts and institutional investors at 9.00am on Tuesday, 26 May 2009 at Investec Bank Plc, 2 Gresham Street, London EC2V 7QP.  

This presentation can be accessed live through the following channels:

• Webcast - details on www.greencore.com     

• Conference call 
  Ireland number:    + 353 (0) 1 436 0959
  UK number:         + 44 (0) 203 037 9148
  The participant code is 'Greencore' in both cases

Replay of the presentation will be available on www.greencore.com. It will also be available through a conference call replay facility which will be available for one week - to dial into the replay, the Ireland number is [phone]; the UK number is [phone]. The replay pass code is 271009#.

For Further Information, Please Contact

Patrick Coveney	Chief Executive Officer	Tel: [phone]
Geoff Doherty	Chief Financial Officer	Tel: [phone]
Eoin Tonge	Group Capital Markets Director	Tel: [phone]
Billy Murphy or Anne Marie Curran	Drury Communications	Tel: [phone]
Elizabeth Rous or Rob Greening	Powerscourt	Tel: [phone]

Greencore Group

• A leading international producer of convenience food with operations in the UK, the US and the Netherlands 
• Strong market leadership positions in the UK convenience food market across sandwiches, chilled prepared meals, chilled soups and sauces, ambient sauces & pickles, cakes & desserts, mineral water and Yorkshire puddings
• Extending presence outside the UK with fast-growing convenience food businesses in the US, the Netherlands and Ireland
• An established ingredients supplier with leading market positions in malt production for the brewing and distilling industries in Ireland, the UK and Belgium

  Summary 1&2

Overall

The Group delivered a solid performance overall in a challenging trading environment. Adjusted EPS of 7.4 cent was in line with the first half of FY08 on a constant currency basis but was down by 17.8% on the comparative amount for last year of 9.0 cent. The EUR/GBP exchange rate impacted the translation of the Group results year-on-year with a 17% depreciation in the average exchange rate compared to the first half of FY08. Both divisions delivered constant currency operating profit³ performances ahead of the first half of FY08. Group operating profit³ and sales increased by 4.6% and 3.0% respectively in continuing businesses. 

Convenience Foods

The Convenience Foods division, which accounted for 64% of Group operating profit3 in the first half of FY09, delivered a resilient performance in a very challenging consumer environment. The comparative operating profit for the first half of FY08 has been restated by €5.6m to reflect the impact of the cost concealment issue at the Group's Mineral Water business. Operating profit in continuing businesses of €19.6m increased by 6% on a constant currency basis (a decrease of 12.1% after the impact of currency translation). Sales in continuing businesses of €385.8m increased by 2.8% on a constant currency basis (a decrease of 12.5% after the impact of currency translation) with the UK flat overall both on a volume and price basis, albeit with variability in individual categories. The operating margin increased by 10bps to 5.1% reflecting, in the main, cost saving initiatives implemented in the first half of FY09 with further initiatives already implemented in the second half of the year. There was a notable improvement in the consistency of performance in the second quarter (January - March 2009) when compared to the more volatile weekly performance in the first quarter. 

Ingredients & Related Property

The Ingredients and Related Property division delivered a good first half performance. Operating profit3 in continuing businesses increased by 2.1% on a constant currency basis representing a decrease of 10.9% to €11.8m after the impact of currency translation. Sales in continuing businesses of €159.6m were up 3.6% on a constant currency basis (a decrease of 4.3% after the impact of currency translation). The key driver of the divisional performance, Malt, held up during the first half and delivered an operating profit performance broadly in line with the previous year with more favourable energy pricing, in particular, off-setting a weaker deliveries performance. 

Finance and Treasury

In April 2009 the Group secured a new three year bank debt facility of €360m which fully refinanced the Group's previous syndicated banking facility of €336m. In addition, a new bi-lateral facility of €50m was agreed in May 2009 with a maturity of August 2011. On that basis all 2010 maturities (14% of overall facilities) have now either been refinanced or committed facilities are in place to replace them. 78% of the Group's borrowing facilities now have maturities between April 2012 and October 2015 with the remaining 8% maturing in 2011. The Group's bank interest charge of €12.3m reduced by 20.8% during the period reflecting, in the main, the favourable impact of the EUR/GBP exchange rate on the sterling denominated portion of the Group's interest expense. The significant reduction in global interest rates resulted in a non-cash mark to market loss of €22.9m in our fixed debt. This does not relate to the cash interest charge for the first half of FY09 but to the fixed interest contracts in place at the end of period which will unwind in the next three and a half years. The Group's comparable net debt position was €332.6m at 27 March 2009, an increase of €49.2m on the position at the end of September 2008. A net cash outflow from pre-exceptional operating activities of €7.3m was recorded compared to an inflow of €2.1m in the first half of FY08. A working capital outflow of €47.8m was recorded in the first half of FY09 compared to an outflow of €46.6m in the first half of FY08. The first half of the year is typically cash consuming reflecting the timing of harvest cash flows and an associated impact on our Ingredients business. 

Dividends

The Board has decided to rebase the dividend for the year to a payout ratio in the range of 40-50% of adjusted EPS. This reflects the desire of the Board to adopt a prudent approach in the current environment that balances payout to shareholders with medium-term capital needs. In accordance with this policy, an interim dividend of 3.00 cent per share is proposed (FY08 interim dividend: 5.30 cent per share).

  Outlook1&2

Trading in the first half of FY09 held up well in challenging conditions with both continuing business sales and operating profit ahead of the same period last year on a constant currency basis. We remain on track to deliver operating profit in line with FY08 on a constant currency basis albeit with the seasonally more important summer period to come.

Our interest expense will be higher in the remaining part of the year by circa €3.0m after tax reflecting the increased cost of funds associated with our recent €410m refinancing. We obtained the funding on competitive terms in the current market and it secures the operational and development funding needs of the business for the medium term. Currency translation impacted our results in the first half and given current levels of EUR/GBP this will continue in the second half. Approximately 80% of total operating profit3 is expected to be delivered in sterling. As previously guided, if the EUR/GBP, level continues in the 0.88 - 0.90 range, the translation effect year-on-year would reduce Group operating profit by c. €8m and profit before tax by c. €6m.

We remain confident over the medium term that the combination of our leading market positions, our low cost leadership, our increasing presence in the growing fresh prepared foods market in the US, and the consumer need for safe convenience food, will position the Group favourably to make progress in the coming years. We have stabilised the performance of the Group but are not complacent. There is still some distance to go to deliver the returns we believe the business is capable of delivering over time.

Review of Operations1&2

Convenience Foods 

	H1 FY09 €'m	H1 FY08 €'m	Change	Constant currency change
Turnover	385.8	440.9	-12.5%	+2.8%
Operating profit	19.6	22.3	-12.1%	+6.0%
Operating margin	5.1%	5.0%

The above table excludes the discontinued frozen desserts business. The comparative operating profit for the first half of FY08 has been restated by €5.6m to reflect the impact of the cost concealment issue at the Group's Mineral Water business

The Convenience Foods division had a resilient first half recording both continuing business sales and operating profit growth. The UK, in particular, has been a challenging environment with weaker consumer demand generally. The nature of our portfolio is such that certain categories perform well in this environment with others having to promote more to attract the consumer. Notably, there was a greater consistency in the weekly performance in the second quarter (January - March 2009) than that of the first quarter. The geographic profile of our business continues to change with 14% of convenience food sales in the first half of FY09 generated outside the UK compared to 7% a year ago. The US is performing well, albeit from a small but growing base, with consumers switching from foodservice outlets to purchasing fresh prepared food at grocery retailers which is our key market. Overall, our convenience portfolio is making progress. We continue to pay close attention to costs, generating the equivalent of c.2% of sales in cost savings in the period from low cost initiatives, in particular on non factory related costs. In addition, our reputation for excellence in category management and innovation was recognised in the period with 'The Grocer' awarding Greencore with the award as best private label chilled foods supplier in the UK. 

•  Food to Go 

Food to Go is our largest category business comprising fresh sandwiches, salads and sushi.  Weaker consumer sentiment impacted significantly in the period before Christmas with sandwich market volume behind year-on-year by 5.7% for the final quarter of calendar year 2008 with the total food-to-go market adverse by 3.9%. Since Christmas, however, the market has improved with volumes lifted by new value ranges, promotional activity and a consumer returning to convenience. In the twelve weeks to the end of March, sandwich market volumes were down by 1.2% with total food-to-go category volumes returning to growth at +1.2%. There is a significant mix change as consumers buy cheaper products rather than giving up the convenience of a pre-packaged food-to-go offering. Newer food-to-go products are performing well with food-to-go salads growing at 24% and sushi by 14% in the twelve weeks to the end of March. We continue to grow our sushi business which has seen us increase our supply to Sainsburys and gain new listings in Spar, Wilkinsons and Budgens.  

•  Prepared Meals 

Our prepared meals business comprises of two broad categories, chilled ready meals (CRM) and quiche. The key issue which all players face in UK CRM is the current level of over-capacity. However, with consumers now eating out less, this provides the CRM category with an opportunity over time to drive new consumer and eating occassions. The capacity issue is some distance from being solved but has improved in recent months with the Northern Foods site, Fenland Foods, mothballed during 2008, the recent closure of two Bakkavor sites in Grimsby and Biggleswade as well as Greencore's closure of one of its Sheffield CRM facilities in December 2008. Penetration in UK CRM remains high at 80% but with consumers trading down within the category from premium to core ranges and in turn from core ranges to value. Our business is the UK's number one player in Italian range CRM with a 23% market share. The CRM category had a difficult first quarter but demonstrated a good recovery in the second quarter with market growth of 1.3%.

• Grocery 

Our grocery business comprises ambient cooking sauces, pickles and salad dressings. 95% of our sales are driven by cooking sauces and pickles which have seen volume growth of 8.3% and 4.2% respectively over the past twelve months. Sales of these categories are buoyant in an era where the consumer is willing to participate more in the cooking process if they can get value. We have the largest cooking sauce facility in Europe at our Selby plant which enables us to produce efficiently at an industry-leading cost per unit. Greencore has 57% of the UK private label ambient cooking sauce market and 48% of the UK private label pickles market.  

• Cakes and Desserts  

Our cakes and desserts business had a mixed performance in the period under review with overall cake volumes declining combined with a switch to lower value ranges. Overall Christmas cake sales were similar to the previous year, celebration cakes recorded modest growth but the portioned cake business performed behind the first half of FY08. The consumer in the current environment is still willing to shop for indulgent offerings but is seeking value and, in particular, is buying more on promotion than in prior years.

• Chilled Sauces and Soups

We are the UK's number one chilled sauce manufacturer with a 34% market share complemented by an 8.3% share of the UK chilled soup market. After a weak start to the year, with promotional activity taking time to get traction with the consumer, the business had a stronger second quarter driven by a better promotional performance and the securing of new soups business with Sainsbury.  

• Frozen Foods

Our frozen Yorkshire pudding business had a strong first half with sales ahead by 16% on the previous year on a constant currency basis. The category has performed well with the consumer choosing to purchase product for consumption at home rather dining out in what is a traditional Sunday lunch offering. Greencore has a 44% market share of the frozen baked Yorkshire pudding market. The Group had a sub-scale market position in frozen desserts and a decision was taken to exit this category in December 2008.  

• Foodservice Desserts - Ministry of Cake

We are the number one supplier to the UK food service desserts trade with a market share of c. 20%. Our offering is positioned well with the value foodservice players who are benefiting from a switch from premium to value foodservice. Our sales grew by 19% in the first half driven by growth of existing customers complemented by new business with Whitbread, Asda (café) business, Mitchells & Butler and 3663. We have also commenced trading with McDonalds where we now supply their childrens' party cake range.  

• US Convenience Foods 

Our US business recorded a strong first half trading performance with underlying sales ahead by 33% on the previous year. There is continuing evidence of consumers switching from food service to more supermarket prepared food due to the combined effect of retail investment in store, better quality prepared food offerings, a greater focus on food provenance and the tougher economic climate making it more cost efficient for the consumer to eat at home. We are now the number one player in the north east of the US in chilled entrées, chilled prepared salads and chilled prepared quiche. We commenced our trial of WeightWatchers chilled foods in January 2009 in 350 retail outlets. The early signs from this trial are encouraging. Our partnership with Kroger is taking significant steps forward with a small test facility now opened in Cincinnati which will test the fresh pre-packaged sandwich proposition in the US. The trial will serve 60 Kroger stores daily and will be reviewed in the last quarter of this financial year. Our US business, albeit from a small base, is well on the way to doubling its contribution to Group sales in FY09 from the FY08 level.  

• Continental Convenience Foods 

Our continental convenience foods business recorded a sales decrease of 2.5% in the first half due to the negative consumer environment in The Netherlands. Notwithstanding the sales performance, the business delivered a consistent operating performance versus the first half of FY08. We have strong market positions in The Netherlands with number one positions in sandwiches, chilled sauces and chilled pizza with market shares of 45%, 75% and 92% respectively. This is helping to maintain its operating performance despite the impact of a weaker sales performance.

  Ingredients and Related Property 

	H1 FY09 €'m	H1 FY08 €'m	Change	Constant Currency change
Sales	159.6	166.8	-4.3%	+3.6%
Operating profit	11.8	13.2	-10.9%	+2.1%
Operating margin	7.8%	7.9%

The above table excludes Drummonds

The Ingredients and Related Property division delivered a good overall performance in the first half of FY09. Sales and operating profit3 in continuing businesses grew by 3.6% and 2.1% respectively on a constant currency basis. These measures showed a year-on-year decrease of 4.3% and 10.9% after the impact of currency translation. The key business in the division, Malt, which contributed 70% of divisional continuing business sales, delivered a constant currency operating profit performance broadly in line with the first half of FY08.

Ingredients

In our Malt business, the trading environment in our core UK brewing and distilling markets has changed significantly in the last six months. UK beer volumes fell by 8.2% in the first quarter of calendar 2009 with overall malt deliveries down by a similar amount in the first half of FY09. In FY09 we will be insulated to a significant extent from the impact of this because of our policy of forward selling and entering into long-term agreements with our customers. In addition, we have c. 60% of our business already contracted for FY10 with a weaker sterling providing a further opportunity to increase export volumes in FY10. In 2008, global malt supply and demand was broadly in balance. Since then malsters internationally, in light of the downturn, have now postponed previously planned capacity extensions of 820,000 tonnes (circa 3.5% of an increase in total global capacity) which may provide some support for export malt demand in FY10. Notwithstanding the demand side uncertainty which makes us somewhat cautious about FY10, the combination of committed forward contracts, export potential and the significant capacity reductions in our core UK market over the past five years should provide a level of support. 

In December 2008 we took a decision to exit the Drummonds agri-trading business in Ireland. This was the result of lower than acceptable returns on capital being achieved in an industry which is likely to face significant challenges in the coming years. On 19 May 2009 we disposed of the business subject to Competition Authority (CA) approval, with the CA decision expected in June 2009. This disposal which was cash positive together with the €3.0m of costs associated with the very poor 2008 Irish harvest resulted in an exceptional accounting loss of €15.3m in the division. Our edible oils business, Trilby Trading, had a challenging first half with overall tonnage adverse by 23% compared with the first half of FY08 reflecting weaker demand from Irish food and snack manufacturers. Our Premier Molasses business held up well compared to the first half of FY08 delivering a similar operating profit. Our associate molasses business in Northern Ireland was down on last year reflecting the impact of a combined 17% decrease in the EUR/GBP exchange rate and additional capacity in the Northern Irish market.  

Property

Property markets in both Ireland and the UK remain significantly challenged with no change in this position expected for some time. In Ireland we have ceased all planning and development spend and await a more favourable market from which to effect our exit. In the meantime we continue to progress the remediation and clean up work at Carlow and Mallow. In Littlehampton, in the UK, the situation is slightly more positive and we continue with the promotional effort of our lands in an effort to achieve a favourable planning and housing allocation. Development land values in the UK are down significantly over the past twelve months and we will have to wait for a more favourable market in time from which to realise value. Our ongoing spend on property planning and development activity will be modest. 

  Financial Review1&2

• Overview

In headline terms, the strengthening of the euro against sterling has had a significant translation impact on the results when compared to the same period last year. The average EUR/GBP exchange rate was 0.74 in the first half of FY08 compared to 0.89 in the first half of FY09, impacting translation of our sterling results negatively by 17% in the period. Approximately 80% of total operating profits are sterling denominated. Operating profit3 in continuing businesses in the half year of €31.4m was 4.6% ahead of last year on a constant currency basis, or 11.7% behind after the impact of currency translation. Sales in continuing businesses of €545.4m were 3.0% ahead of last year on a constant currency basis or 10.3% behind after the impact of currency translation.

• Financing

The Group's net finance charge in the first half of FY09 was €34.8m (€11.7m in the first half of FY08). The change in the fair value of derivatives related debt adjustments and FX movements on inter-company balances and external loan balances was a non cash prospective charge of €22.9m at the end of March 2009 compared to a non cash prospective charge of €2.0m at the end of March 2008, reflecting the significant reduction in interest rates and the impact of this on the Group's fixed interest rate swaps. The non cash pension financing credit of €0.5m was significantly less than the credit in the first half of FY08 of €4.5m reflecting the reduction in interest rates and the lower expected returns on pension assets. The bank interest charge of €12.3m reduced by 20.8% on the charge in the first half of FY08 reflecting, in the main, the favourable impact of the EUR/GBP exchange rate on the sterling denominated portion of the Group's interest expense. 

• Taxation

The Group's effective tax rate in the first half of FY09 was 16% which is the same as the full year effective tax percentage in FY'08.  

• Earnings per share

Adjusted EPS4 for the first half of FY09 was 7.4 cent which is 1.6 cent or 17.8% adverse on the restated adjusted EPS of 9.0 cent in the first half of FY08. Adjusted EPS was in line with first half of FY08 on a constant currency basis. This is based on a weighted average number of ordinary shares of 201.5m in the period (first half of FY08:199.8m).  

• Exceptional items

An exceptional item, after a related tax credit of €1.5m, of €25.1m was recorded in the first half of FY09. These items are cash positive by €0.4m. The charge is a composite item which comprises a loss on the disposal of Drummonds (our former grain trading business) and the €3.0m of costs associated with the adverse Irish grain harvest which in aggregate was €15.3m, a restructuring charge in Convenience Foods of €10.2m largely due to the exit of Frozen Desserts, a gain of €2.7m on the settlement of a malt property damage insurance claim and a loss of €3.8m on the settlement of a legal case against the Group's former sugar business.  

• Cash flow and net debt

Comparable net debt (excluding the impact of marking to market all derivative financial instruments and related debt) at 27 March 2009 was €332.6m, an increase of €49.2m, or 17.4% from the position at 26 September 2008 of €283.4m. A cash outflow from operating activities of €7.3m was recorded compared to an inflow of €2.1m in the first half of FY08 reflecting in the main a translation impact on the conversion of sterling denominated operating profits. The Group seasonally increases working capital in the first half, particularly in its ingredients business. A working capital outflow of €47.8m (first half of FY08 outflow of €46.6m) was recorded in the first half of FY09 reflecting, in the main, the timing of harvest cashflows and the associated impact on our ingredients businesses. Net capital expenditure of €19.7m was incurred as we continue to invest in our convenience food and malt facilities as well as remediating our former sugar facilities. The Group acquired a UK food-to-go brand in the period 'Foo go' for a consideration of €4.4m. In addition, deferred consideration of €0.6m was paid in respect of an amount due on the FY08 acquisition of Ministry of Cake. The Group also acquired the remaining minority interest in Trilby Trading Limited in the period for a consideration of €1.1m. 

• Dividends

The Board has adopted a policy for FY09 onwards of a dividend payout ratio in the range of 40-50% of adjusted EPS. This ratio is consistent with the long term average payout in the years prior to FY08. In accordance with this policy an interim dividend of 3.0 cent per share is proposed (FY08 interim dividend 5.30 cent per share). 

• Employee Benefits

The fair value of total plan assets relating to the Group's Defined Benefit Pension Schemes (excluding associates) decreased to €297.8m at March 2009 from €386.6m at September 2008. The present values of the total pension liability for these schemes decreased to €396.2m from €454.7m over the same period. This is reflected in an increase in the net pension deficit (before related deferred tax) to €98.4m at March 2009 (from a net pension deficit of €68.1m at September 2008).

• Total Equity

Total equity at 27 March 2009 was €144.6m compared to €244.1m at 26 September 2008 due primarily to the retained loss in the period of €32.4m, a net actuarial loss of €39.7m on the Group's Defined Benefit Pension Schemes and dividends payable of €16.6m. 

• Key Performance Indicators 

The Group uses a set of headline key performance indicators to measure the performance of its operations. Although separate measures, the relationship between all four is also monitored. In addition, other performance indicators are measured at individual business unit level. 

•  Return on capital employed

Capital is defined as the sum of the book value of shareholders' equity plus comparable net debt but excluding land subject to remediation, pension scheme assets or deficits with the returns measure expressed as operating profit3 including share of associates. Return on capital employed for the year to 27 March 2009 was 13.9%. The capital amount excludes land subject to remediation of €32.6m.

• Sales Growth

Group continuing sales of €545.4m increased by 3.0% in the first half of FY09. In our Convenience Foods business the Group measures weekly sales growth. In the first half of FY09 we recorded continuing sales growth of 2.8%. In the Ingredients & Related Property division we track monthly sales. In the first half of FY09 we recorded core sales growth of 3.6%.

• Operating Margin

The Group's pre- exceptional operating margin in the first half of FY09 was 5.7% compared to 5.8% in the first half of FY08. In Convenience Foods the pre-exceptional operating margin was 5.1% compared to 5.0% in the first half of FY08.

• Free Cash flow

The Group's free cash measure is net cash flow from operating activities before exceptional items adjusted for replacement capital expenditure. Group free cash was an outflow of €11.8m in the first half of FY09 compared to a Group pre-exceptional operating profit of €31.4m. The first half of the financial year is not typically a cash converting period due to the timing of harvest cash flows and an associated impact on working capital. The working capital outflow in the first half of FY09 was €47.8m. Replacement capital expenditure 5 in the period amounted to €3.9m.

5     Replacement capital expenditure comprises items of capital which are required to maintain the Group's manufacturing facilities at existing levels of capacity.

• Principal Risks and Uncertainties

Under the Transparency (Directive 2004/109/EC) Regulations 2007, the Group is required to give a description of the principal risks and uncertainties it faces. As with any large group, Greencore faces a number of risks and uncertainties. Individual business unit management teams primarily drive the process by which individual risks and uncertainties are identified, these teams being best placed to identify significant and emerging risks and uncertainties in their businesses. The key risks facing the business include the following:

• The loss of a significant manufacturing/operational site through fire, natural catastrophe, act of vandalism or critical plant failure could potentially have a material impact on the Group.
• The impact on our cost base of fluctuating raw material and energy prices.
• The Group benefits from close commercial relationships with a number of key customers. The loss of any of these key customers, or a significant worsening in commercial terms, could result in a material impact on the Group's results.
• As a producer of convenience foods, Greencore is subject to general market related risks, including product contamination and general food scares.
• In common with the food industry manufacturers, unforeseen changes in food consumption patterns or changes in government legislation regarding the composition of food products may impact the Group.
• Financial risks associated with interest rate, foreign currency, liquidity and credit risk.
• The Group's defined benefit pension schemes are exposed to the risk of changes in interest rates and the market value of investments, as well as inflation and increasing longevity of scheme members.
• A significant IT system failure could adversely impact on operations.
• The value of the Group's property assets is subject to the macro-economic environment in Ireland and the UK, the successful environmental clean up of the brownfield sugar factory sites and the nature and timing of any zoning and subsequent planning permission.
• The Group's Convenience Foods portfolio is second half weighted. Weather and seasonal buying patterns impact, in particular, the demand for chilled product categories.

• Related Party Transactions

There were no related party transactions in the half year that have materially affected the financial position or performance of the Group in the period. In addition, there were no changes in related party transactions from the last annual report that could have had a material effect on the financial position or performance of the Group in the first six months.

• Auditor Review

This half yearly financial report has not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.

• Forward-Looking Statements

Certain statements made in these interim results are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from the expected future events or results referred to in these forward-looking statements.

E.F. Sullivan

Chairman

26 May, 2009 

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RESPONSIBILITY STATEMENT

The Directors are responsible for preparing the Half Yearly Financial Report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the Irish Financial Services Regulatory Authority and with IAS 34, Interim Financial Reporting as adopted by the European Union.

The Directors confirm that, to the best of their knowledge:

• the Group Condensed Financial Statements for the half year ended 27 March 2009 have been prepared in accordance with the International Accounting Standard applicable to interim financial reporting (IAS34 Interim Financial Reporting) adopted pursuant to the procedure provided for under Article 6 of the Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002;

• the Interim Management Report includes a fair review of the important events that have occurred during the first six months of the financial year, and their impact on the Group Condensed Financial Statements for the half year ended 27 March 2009, and a description of the principal risks and uncertainties for the remaining six months;

• the Interim Management Report includes a fair review of related party transactions that have occurred during the first six months of the current financial year and that have materially affected the financial position or the performance of the Group during that period, and any changes in the related parties' transactions described in the last Annual Report that could have a material effect on the financial position or performance of the Group in the first six months of the current financial year.

P.F. Coveney	G.P. Doherty
Chief Executive Officer   26 May, 2009	Chief Financial Officer

Current Directors

Mr. E.F. Sullivan       (Chairman)

Mr. P.F. Coveney      (Chief executive)

Mr. G.P. Doherty       (Chief financial officer)

Mr. A.M. Hynes         (Chief operating officer)

Ms. D.S. Walker        (Chief executive, convenience food, UK) 

Mr. G.M.N. Corbett

Mr. I.T. Herlihy

Mr. P.G. Kennedy

Mr. P.A. McCann

Mr. D.M. Simons

Mr. D.A. Sugden

Ms. C.M. Bergin          (Group company secretary)

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            GROUP CONDENSED FINANCIAL STATEMENTS

            GROUP CONDENSED INCOME STATEMENT

for the half year ended 27 March 2009

		Half year ended 27 March 2009 (Unaudited)							Half year ended 28 March 2008 *as restated (Unaudited)
	Note		Pre – exceptional		Exceptional		Total			Pre – exceptional		Exceptional		Total
			€'000		€'000		€'000			€'000		€'000		€'000
Continuing operations
Revenue	3		550,160		–		550,160			648,655		–		648,655
Cost of sales			(392,607)		(4,388)		(396,995)			(473,558)		–		(473,558)
Gross profit			157,553		(4,388)		153,165			175,097		–		175,097
Operating costs, net			(126,574)		(18,431)		(145,005)			(139,646)		–		(139,646)
Group operating profit/(loss) before acquisition related amortisation	3		30,979		(22,819)		8,160			35,451		–		35,451
Amortisation of acquisition related intangibles			(897)		–		(897)			(180)		–		(180)
Group operating profit/(loss)	3		30,082		(22,819)		7,263			35,271		–		35,271
Finance income	12		18,605		–		18,605			22,915		–		22,915
Finance costs	12		(53,393)		–		(53,393)			(34,580)		–		(34,580)
Share of profit of associates after tax			262		–		262			825		–		825
(Loss)/profit before taxation			(4,444)		(22,819)		(27,263)			24,431		–		24,431
Taxation	6		(2,888)		1,463		(1,425)			(3,703)		–		(3,703)
(Loss)/profit from continuing operations			(7,332)		(21,356)		(28,688)			20,728		–		20,728
(Loss)/profit from discontinued operations	5		–		(3,750)		(3,750)			–		18,128		18,128
(Loss)/profit for the financial period			(7,332)		(25,106)		(32,438)			20,728		18,128		38,856
Attributable to:
Equity shareholders			(8,230)		(25,106)		(33,336)			19,658		18,128		37,786
Minority interests			898		–		898			1,070		–		1,070
			(7,332)		(25,106)		(32,438)			20,728		18,128		38,856
Basic (loss)/earnings per share (cent)
Continuing operations							(14.7)							9.8
Discontinued operations							(1.9)							9.1
	8						(16.6)							18.9
Diluted (loss)/earnings per share (cent)
Continuing operations							(14.7)							9.8
Discontinued operations							(1.9)							9.0
	8						(16.6)							18.8

*Restated in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The financial impact of the restatement is set out in Note 17

      GROUP CONDENSED BALANCE SHEET

    as at 27 March 2009

			27 Mar 09		28 Mar 08		26 Sept 08
					*as restated
			(Unaudited)		(Unaudited)		(Audited)
	Note		€'000		€'000		€'000
ASSETS
Non-current assets
Intangible assets	9		410,076		368,593		402,986
Property, plant and equipment	9		317,287		360,838		367,388
Investment property			759		857		808
Investments in associates			1,237		1,605		1,244
Retirement benefit assets	16		-		4,436		866
Deferred tax assets			33,428		15,667		35,722
Total non-current assets			762,787		751,996		809,014
Current assets
Inventories			93,591		123,233		125,160
Trade and other receivables			106,339		135,603		138,834
Cash and cash equivalents	12		170,550		126,039		139,040
Available for sale financial assets			19		79		23
Assets held for sale	5b		32,913		-		-
Total current assets			403,412		384,954		403,057
Total assets			1,166,199		1,136,950		1,212,071
EQUITY
Capital and reserves attributable to equity holders of the Company
Share capital	10		129,641		128,371		129,641
Share premium	11		118,961		111,808		118,961
Other reserves	11		(13,944)		(3,830)		(4,417)
Retained earnings	11		(94,569)		22,332		(4,947)
			140,089		258,681		239,238
Minority interest in equity	15		4,487		5,241		4,816
Total equity			144,576		263,922		244,054
LIABILITIES
Non-current liabilities
Borrowings	12		491,764		377,523		407,500
Derivative financial instruments			10,869		25,044		15,346
Retirement benefit obligations	16		98,366		41,732		68,956
Other payables			8,704		7,647		10,148
Provisions for liabilities	13		11,408		13,436		11,831
Deferred tax liabilities			45,230		33,324		51,183
Government grants			1,166		1,113		1,047
Total non-current liabilities			667,507		499,819		566,011
Current liabilities
Borrowings	12		1,099		20		69
Derivative financial instruments			31,958		4,817		5,286
Trade and other payables			264,740		329,642		356,953
Provisions for liabilities	13		9,467		10,802		12,601
Income taxes payable			26,323		27,928		27,097
Liabilities held for sale	5b		20,529		-		-
Total current liabilities			354,116		373,209		402,006
Total liabilities			1,021,623		873,028		968,017
Total equity and liabilities			1,166,199		1,136,950		1,212,071

*Restated in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The financial impact of the restatement is set out in Note 17.

      GROUP CONDENSED CASH FLOW STATEMENT

    for the half year ended 27 March 2009

	Half year ended 27 Mar 2009		Half year  ended 28 Mar 2008
			*as restated
	(Unaudited)		(Unaudited)
	€'000		€'000
(Loss)/profit before taxation	(27,263)		24,431
Finance income	(18,605)		(22,915)
Finance costs	53,393		34,580
Share of profit of associates (after tax)	(262)		(825)
Exceptional charge	22,819		-
Operating profit (pre-exceptional)	30,082		35,271
Depreciation	13,450		14,197
Amortisation of intangibles	1,386		625
Employee share option expense	306		494
Amortisation of government grants	(57)		-
Difference between pension charge and cash contributions	(3,477)		(3,434)
Working capital movement	(47,741)		(46,647)
Other movements	(1,206)		1,635
Net cash (outflow)/inflow from operating activities before exceptional items	(7,257)		2,141
Cash (outflow)/inflow related to exceptional items	(11,428)		81,820
Interest paid	(14,815)		(17,666)
Tax paid	(54)		(59)
Net cash (outflow)/inflow from operating activities	(33,554)		66,236
Cash flows from investing activities
Dividends received from associates	68		44
Purchase of property, plant and equipment	(19,706)		(20,571)
Purchase of intangible assets	(4,965)		(265)
Acquisition of undertakings	(113)		(19,577)
Acquisition of minority interest	(1,132)		-
Deferred and contingent consideration paid	(560)		-
Disposal of undertakings and investment in associate	-		(75)
Interest received	1,283		4,458
Government grants received/(repaid)	172		(14)
Net cash outflows from investing activities	(24,953)		(36,000)
Cash flows from financing activities
Proceeds from issue of shares	-		193
Increase in bank borrowings	120,945		164
Repayment of loan notes	-		(1,308)
Decrease in finance lease liabilities	(21)		(48)
Dividends paid to equity holders of the Company	(10,697)		(8,563)
Dividends paid to minority interests	-		(25)
Net cash inflow/(outflow) from financing activities	110,227		(9,587)
Net increase in cash and cash equivalents	51,720		20,649
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at beginning of period	139,040		117,949
Translation adjustment	(20,210)		(12,559)
Increase in cash and cash equivalents	51,720		20,649
Cash and cash equivalents at end of period	170,550		126,039

*Restated in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The financial impact of the restatement is set out in Note 17.

      GROUP CONDENSED STATEMENT OF RECOGNISED INCOME AND EXPENSE

    for the half year ended 27 March 2009

	Note	Half year Ended 27 March 2009		Half year Ended 28 March 2008
				*as restated
		(Unaudited)		(Unaudited)
		€'000		€'000
Items of income and expense taken directly within equity
Currency translation differences		(4,877)		(4,234)
Hedge of net investment in foreign currency subsidiary		(3,011)		-
Actuarial loss on Group defined benefit pension schemes		(42,272)		(25,018)
Deferred tax on Group defined benefit pension schemes		2,569		(51)
Fair value of available for sale financial assets		-		(178)
Cash flow hedges:
Loss taken to equity		(3,758)		(2,714)
Transferred to income statement in the period		1,057		70
Deferred tax on cash flow hedge		756		740
Net expense recognised directly within equity		(49,536)		(31,385)
Group result for the financial period		(32,438)		38,856
Total recognised income and expense for the financial period		(81,974)		7,471
Restatement	11, 17			(12,318)
Total recognised income and expense				(4,847)
Attributable to:
Equity shareholders		(82,872)		(5,917)
Minority interests		898		1,070
Total recognised income and expense for the financial period		(81,974)		(4,847)

*Restated in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The financial impact of the restatement is set out in Note 17.

NOTES TO THE GROUP CONDENSED FINANCIAL STATEMENTS

for the half year ended 27 March 2009

         1. Basis of preparation

The Group Condensed Financial Statements have been prepared in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the Irish Financial Services Authority and with IAS 34 - Interim Financial Reporting as adopted by the European Union.

These Condensed Financial Statements do not comprise statutory accounts within the meaning of Section 19 of the Companies (Amendment) Act 1986. The Group condensed financial information for the year ended 26 September 2008 represents an abbreviated version of the Group Financial Statements for that year. Those financial statements, upon which the auditors issued an unqualified audit report, have been filed with the Registrar of Companies.

2. Accounting Policies

The accounting policies and methods of computation adopted in the preparation of the Group Condensed Financial Statements are consistent with those applied in the Annual Report for the financial year ended 26 September 2008 and are as set out in those financial statements.

The Group did not adopt any new International Financial Reporting Standards (IFRS) or Interpretations in the period that have had a material impact on the Group Condensed Financial Statements for the half year.

3. Segment Information

The Group's primary reporting format is by business segment. There are two primary business segments: (i) Convenience Foods and (ii) Ingredients & Related Property.

                                    Ingredients and

                                                             Convenience Foods               Related Property                                     Total

Continuing Operations	2009		2008		2009		2008		2009		2008
			as restated								as restated
	€'000		€'000		€'000		€'000		€'000		€'000
Revenue	385,831		451,240		164,329		197,415		550,160		648,655
Operating profit (pre-exceptional and acquisition related  amortisation)	19,554		22,249		11,425		13,202		30,979		35,451
Amortisation of acquisition related intangible assets	(897)		(180)		-		-		(897)		(180)
Exceptional charge	(10,223)		-		(12,596)		-		(22,819)		-
Operating profit	8,434		22,069		(1,171)		13,202		7,263		35,271

The Group exited its Frozen Desserts business and announced the disposal of its grain trading business during the period. Neither of these businesses was classified as a discontinued operation as they did not represent a separate major line of business or geographical area of operation in accordance with IFRS 5 discontinued operations.

4. Seasonality

The Group's convenience foods portfolio is second half weighted. This weighting is primarily driven by weather and seasonal buying patterns impacting, in particular, the demand for chilled product categories.

5. Exceptional Items

		Half year		Half year
		2009		2008
		€'000		€'000
Continuing operations
Convenience Foods	(a)	(10,223)		-
Ingredients and Related Property	(b)	(15,296)		-
Insurance receivable	(c)	2,700		-
		(22,819)		-
Tax on exceptional items		1,463		-
Total continuing operations		(21,356)		-
Discontinued operations
Exit from sugar processing	(d)	46		18,128
Legal settlement	(e)	(3,796)		-
Total discontinued operations		(3,750)		18,128
Total exceptional items		(25,106)		18,128

(a) Convenience Foods

During the period, the Group finalised it's strategic review of the Frozen Desserts category. It was concluded that it should exit from its frozen desserts business, due to its tertiary market position, by closing its remaining facility. The Group also continued its business restructuring program resulting in further head count reductions at business units. The total cost of this restructuring, which comprised principally asset write offs and redundancy costs, was €10.2m. 

(b) Ingredients and Related Property

During the period, the Group determined that it would either close or sell off its grain trading business at Drummonds. As a result of this decision provisions of €12.3m have been recognised to write assets down to fair value less costs to sell. Additionally, the Group has taken a charge of €3.0m related to grain/barley stocks associated with the poor harvest quality arising as a result of the extreme adverse 2008 weather conditions experienced during the harvest period.    

The underlying assets of the Group's grain trading business have been reclassified as held for sale.

(c) Insurance receivable

The Group is in the process of negotiating an insurance settlement in relation to an incident at its malting facility at Ghlin, Belgium in 2008. The Group has applied for planning permission to redevelop at this location. The final settlement amount may be impacted by the receipt of planning approval as this will be required in order for the Group to reinstate at this location in accordance with the terms of the insurance policy. A gain of €2.7m has been recognised in respect of the settlement amount that is, in the opinion of the Directors, virtually certain at the balance sheet date.

(d) Exit from sugar 

The Group exited its sugar processing business in 2006. The Group continues to sell off assets and remediate the former sugar processing sites. A net gain in the half year to March 2009 arises on the reversal of impairment of assets. In the prior year a gain of €1.2m was recognised on the disposal of previously impaired assets and a gain of €16.9m arose on the resolution of the allocation of restructuring aid under the Council Regulations (EC) No 320/2006 (as amended in September 2007). This had been the subject of a protracted dispute between the Group and the Irish Government.

(e) Legal settlement

The Group settled an outstanding claim dating back to its Sugar activities and recognises an exceptional charge of €3.8m related to both settlement and legal costs.

6. Taxation

Interim period tax is accrued using the tax rate that is estimated to be applicable to expected total annual earnings, that is the estimated average annual effective income tax rate applied to the taxable income of the interim period.

7. Dividends Paid and Proposed

A dividend of 8.21 cent per share was approved at the AGM on 12 February 2009 as a final dividend in respect of the year ended 26 September 2008 and a total of €14.3m was paid to shareholders on 3 April 2009. 

An interim dividend of 3.00 cent (2008: 5.30 cent) per share is payable on 1 October 2009 to the shareholders on the Register of Members as of 5 June 2009. The ordinary shares will be quoted ex-dividend from 3 June 2009. The dividend will be subject to dividend withholding tax, although certain classes of shareholders may qualify for exemption.

The liability in respect of this interim dividend is not recognised in the balance sheet of the Group for the half year ended 27 March 2009 because the interim dividend had not been approved at the balance sheet date (but was subsequently declared by the Directors of the Company).

8. Earnings per Ordinary Share

Basic (loss)/earnings per ordinary share

Basic (loss)/earnings per ordinary share is calculated by dividing the (loss)/profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Company and held as treasury shares and shares held in trust under the Group's share awards plan. The adjusted figures for basic and diluted earnings per ordinary share are after the elimination of exceptional items, the effect of foreign exchange (FX) on inter-company balances and external loans where hedge accounting is not applied, the movement in the fair value of all derivative financial instruments and related debt adjustments, the amortisation of acquisition related intangible assets and the effect of pension financing.

	Half year 2009		Half year 2008
			as restated
	€'000		€'000
(Loss)/profit attributable to equity holders of the Company	(33,336)		37,786
Exceptional items (post tax)	25,106		(18,128)
Fair value of derivative financial instruments and related debt adjustments	23,513		3,354
FX on inter-company balances & external loans where hedge accounting is not applied	(641)		(1,325)
Amortisation of acquisition related intangible assets	897		180
Pension financing	(544)		(4,487)
Tax effect of pension financing and amortisation of acquisition related intangibles	(186)		538
Numerator for adjusted earnings per share calculation	14,809		17,918
Result for the period from discontinued operations - pre exceptional	-		-
Numerator for continuing adjusted earnings per share calculation	14,809		17,918
Numerator for Discontinued basic EPS
Discontinued (loss)/profit for the year	(3,750)		18,128
Numerator for Discontinued adjusted EPS
Profit for the year from discontinued operations (pre-exceptional)	-		-
	Half year 2009		Half year 2008
	cent		cent
Basic (loss)/earnings per ordinary share
Continuing operations	(14.7)		9.8
Discontinued operations	(1.9)		9.1
	(16.6)		18.9
Adjusted basic earnings per ordinary share	7.4		9.0
Continuing adjusted earnings per ordinary share	7.4		9.0
Denominator for earnings per share and adjusted earnings per share calculation
Shares in issue at the beginning of the year	205,779		203,373
Treasury shares	(3,905)		(3,905)
Shares held by trust	(393)		-
Effect of shares issued in period	-		345
Weighted average number of ordinary shares in issue during the period (thousands)	201,481		199,813

Diluted earnings per ordinary share 

Diluted (loss)/earnings per ordinary share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. Employee share options, which are performance based, are treated as contingently issuable shares, because their issue is contingent upon satisfaction of specified performance conditions in addition to the passage of time. These contingently issuable ordinary shares are excluded from the computation of diluted earnings per ordinary share where the conditions governing exercisability have not been satisfied as at the end of the reporting period. Options over 7,047,963 (2008: 6,140,838) shares were excluded from the diluted EPS calculation as they were either anti-dilutive or contingently issuable ordinary shares which had not satisfied the performance conditions attaching at the end of the reporting period.

	Half year 2009		Half year 2008
	cent		cent
Basic (loss)/earnings per ordinary share
Continuing operations	(14.7)		9.8
Discontinued operations	(1.9)		9.0
	(16.6)		18.8
Adjusted diluted earnings per ordinary share	7.3		8.9
Adjusted continuing diluted earnings per ordinary share	7.3		8.9
Adjusted discontinued diluted earnings per share	(1.9)		9.0

A reconciliation of the weighted average number of ordinary shares used for the purposes of calculating diluted (loss)/earning per share is as follows:

	Half year 2009		Half year 2008
Denominator for diluted (loss)/earnings per share and adjusted earnings per share calculation
Weighted average number of ordinary shares in issue during the period (thousands)	201,482		199,813
Dilutive effect of share options (thousands)	452		693
Weighted average number of ordinary shares for diluted earnings per share (thousands)	201,934		200,506

9. Property Plant and Equipment, Intangible Assets, Capital Expenditure and Commitments

During the six month period to 27 March 2009 the Group spent approximately €24.7m (2008: €20.8m) on additions to property, plant and equipment and intangible assets. The Group also disposed of certain assets with a carrying amount of €3.1m (2008: €7.4m) for proceeds of €1.1m (2008: €9.7m). 

At 27 March 2009 the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to €4.2m (2008: €11.5m).

The carrying amount of the Group's property assets at 27 March 2009 was €33.1m.

10. Equity share capital

Issued capital as at 27 March 2009 and 26 September 2008 amounted to €129.6m of which €2.5m is attributable to treasury shares. There were 1,690,000 share options granted under the Group executive share options scheme and no shares granted under the Group SAYE scheme in the period from 26 September 2008 to 27 March 2009. There were no share options granted under the Group executive share options scheme or the Group SAYE scheme in the period from 28 September 2007 to 28 March 2008.

11. Reconciliation of Movements in Shareholders' Equity

                        Other reserves

	Share premium	Share options	Own shares held by Trust	Capital conversion reserve fund	Hedging reserve	Foreign currency translation reserve	Retained earnings	Total
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
At 27 September 2008	118,961	982	(407)	934	(1,550)	(4,376)	(4,947)	109,597
Actuarial loss on Group defined benefit pension schemes	-	-	-	-	-	-	(42,272)	(42,272)
Employee share option expense	-	158	148	-	-	-	-	306
Dividends	-	-	-	-	-	-	(16,583)	(16,583)
Cash flow hedges
fair value losses in period	-	-	-	-	(3,758)	-	-	(3,758)
tax on fair value losses	-	-	-	-	1,052	-	-	1,052
transfers to income statement	-	-	-	-	1,057	-	-	1,057
tax on transfers to income statement	-	-	-	-	(296)	-	-	(296)
Net investment hedge	-	-	-	-	-	(3,011)	-	(3,011)
Currency translation differences	-	-	-	-	-	(4,877)	-	(4,877)
Deferred tax asset on Group defined benefit pension schemes	-	-	-	-	-	-	2,569	2,569
Group loss for the financial period attributable to equity holders of the Company	-	-	-	-	-	-	(33,336)	(33,336)
At 27 March 2009	118,961	1,140	(259)	934	(3,495)	(12,264)	(94,569)	10,448

                        Other reserves

	Share premium	Share option	Capital conversion reserve fund	Hedging reserve	Foreign currency translation reserve	Available-for-sale investment reserve	Retained earnings	Total
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
At 29 September 2007 - as previously stated	110,366	1,056	934	(77)	101	(355)	38,663	150,688
Restatement	-	-	-	-	333	-	(12,651)	(12,318)
At 29 September 2007 - as restated	110,366	1,056	934	(77)	434	(355)	26,012	138,370
Premium on issue of shares	1,442	-	-	-	-	-	-	1,442
Actuarial gain on Group defined benefit pension schemes	-	-	-	-	-	-	(25,018)	(25,018)
Employee share option expense	-	494	-	-	-	-	-	494
Dividends	-	-	-	-	-	-	(16,397)	(16,397)
Cash flow hedges
fair value losses in period	-	-	-	(2,714)	-	-	-	(2,714)
tax on fair value losses	-	-	-	760	-	-	-	760
transfers to income statement	-	-	-	70	-	-	-	70
tax on transfers to income statement	-	-	-	(20)	-	-	-	(20)
Fair value available for sale financial assets	-	-	-	-	-	(178)	-	(178)
Currency translation differences - as restated	-	-	-	-	(4,201)	(33)	-	(4,234)
Deferred tax on Group defined benefit pension schemes	-	-	-	-	-	-	(51)	(51)
Group profit for the financial period attributable to equity holders of the Company - as restated	-	-	-	-	-	-	37,786	37,786
At 28 March 2008	111,808	1,550	934	(1,981)	(3,767)	(566)	22,332	130,310

12. Components of Net Debt and Financing

During the period the Group maintained its existing bank facilities. The cash flows from financing activities are set out in the Group Condensed Cash Flow Statement.

	Half year		Half year
	2009		2008
	€'000		€'000
Net Debt
Current assets
Cash and cash equivalents	170,550		126,039
Current liabilities
Borrowings	(1,099)		(20)
Non-current liabilities
Borrowings before fair value adjustment	(502,053)		(401,426)
Comparable net debt	(332,602)		(275,407)
Borrowings - fair value adjustment (non-current liabilities)	10,289		23,903
Group net debt	(322,313)		(251,504)
Net Finance Costs
Net finance costs on interest bearing cash and cash equivalents and borrowings	(12,342)		(15,588)
Net pension financing credit	544		4,487
Change in fair value of derivatives and related debt adjustments	(23,513)		(3,354)
Foreign exchange on inter-company balances & external loans where hedge accounting is not applied	641		1,325
Unwind of present value discount on non-current payables and other finance costs	(118)		(57)
Income arising on the increase in the present value of the EU receivable	-		1,522
	(34,788)		(11,665)
Analysed as:
Finance income	18,605		22,915
Finance costs	(53,393)		(34,580)
	(34,788)		(11,665)

Comparable net debt is a non-IFRS measure used by the Group as a key performance indicator.

The change in fair value of derivatives reflects the significant reduction in interest rates in the period and the consequential impact of this on the Group's interest rate swaps.

13. Provisions for Liabilities and Charges

			Half year
			2009
			€'000
Six months ended 27 March 2009
At beginning of period			24,432
Utilised in period			(4,084)
Created in period			966
Currency translation differences			(476)
Unwind discount			37
At end of period			20,875
	27 Mar 09		26 Sept 08
Analysed as:	€'000		€'000
Non-current liabilities	11,408		11,831
Current liabilities	9,467		12,601
	20,875		24,432

Provisions for liabilities are comprised of environmental and restructuring, deferred contingent consideration and other provisions.

Environmental and Restructuring

Environmental obligations and related costs arose primarily from the Group's discontinued sugar processing operations and have been established to cover either a statutory or constructive obligation of the Group to carry out remedial works. Restructuring provisions relate to irrevocable commitments in respect of programmes commenced and committed to in the Ingredients & Related Property segment, primarily related to the exit from sugar processing. 

Deferred contingent consideration

Deferred contingent consideration represents the estimated amount payable in respect of certain acquisitions and is dependent on the results of those acquisitions for specified periods.

Other

Other provisions primarily consists of a) provisions for leasehold dilapidations in respect of certain leases, relating to the estimated cost of reinstating leasehold premises to their original condition at the time of the inception of the lease as provided for in the lease agreement, and b) provision for onerous contractual obligations for properties held under operating lease. It is anticipated that these will be payable within five years.

14. Contingencies

Certain subsidiaries of the Group continue to be subject to legal proceedings. Provisions for anticipated settlement costs and associated expenses arising from legal and other disputes are made where a reliable estimate can be made of the probable outcome of the proceedings.

The Group has provided security to the Government of Ireland for the purpose of facilitating the receipt of restructuring aid as provided for in Commission Regulation (EC) No 968/2006. The security is in the form of a bank guarantee and amounts to €20.0m (March 2008: €83.4m). The guarantee becomes payable if the Group does not complete its commitments under its restructuring plan, at which time, that part of the aid granted in respect of the commitment concerned can be recovered from the Group. The Group continues to perform its commitments under its restructuring plan and accordingly, in the opinion of the Directors, the repayment of any restructuring aid received is considered to be remote therefore no provision has been recognised in the Group Financial Statements in respect of this guarantee.

15. Purchase of Minority Interest

During the period the Group bought minority interest shareholdings in two of its subsidiaries, Trilby Trading Ltd and William McKinney (1975) Ltd. The total cash consideration for the shares was €1.1m with an additional deferred contingent element payable depending on future business performance. The difference between the book value of the share of net assets acquired at acquisition and the consideration was recorded as an adjustment to goodwill. 

16. Retirement Benefit Schemes

In consultation with the independent actuaries to the schemes, the valuation of the pension obligations have been updated to reflect current market discount rates, rates of increase in salaries, pension payments and inflation, current market values of investments and actual investment returns.    

The principal actuarial assumptions are as follows:

	Mar 09	Sept 08
Rate of increase in salaries	2.0% - 2.75%	3.0% - 4.3%
Rate of increase in pension payment	2.0% - 2.75%	2.0% - 3.3%
Discount rate	6.2% - 7.0%	6.65% - 7.05%
Inflation assumptions	2.0% - 2.75%	2.0% - 3.3%

The financial position of the schemes was as follows:

	27 Mar 09
	€'000
Total market value of assets	297,806
Present value of scheme liabilities	(396,172)
Net deficit in schemes	(98,366)
Deferred tax asset	14,312
Net liability at 27 March 2009	(84,054)

	26 Sept 08
	€'000
Total market value of assets	386,610
Present value of scheme liabilities	(454,700)
Net deficit in schemes	(68,090)
Deferred tax asset	14,395
Net liability at 26 September 2008	(53,695)

17. Restatement

In June 2008, the Group uncovered a deliberate concealment of costs at its Mineral Water business (part of the Convenience Foods segment) which resulted in a material misstatement of the Group financial position and performance presented in the Annual Reports for the financial years 2006 and 2007 and the 2008 Half Yearly Financial Report. The investigation undertaken indicated that this concealment of costs was undertaken by the former financial controller of the Mineral Water business who left the business prior to this issue being uncovered. The effect of this restatement on the financial statements for the half year ended 28 March 2008 is summarised below. The effect on the financial statements for the year ended 26 September 2008 is included in the 2008 Annual Report which is available for download from the Group website. 

	As previously stated		As restated		Restatement
	2008		2008		2008
	€'000		€'000		€'000
Effect on Balance Sheet
Property, plant and equipment	362,046		360,838		(1,208)
Inventory	129,153		123,233		(5,920)
Trade and other receivables	136,255		135,603		(652)
Trade and other payables	317,291		329,642		(12,351)
Deferred tax liabilities	38,868		33,324		5,544
					(14,587)
Retained earnings					(16,663)
Other reserves					2,076
Net decrease in Equity					(14,587)

	As previously stated		As restated		Restatement
	2008		2008		2008
	€'000		€'000		€'000
Effect on Income Statement
Increase in cost of sales	472,803		473,558		755
Increase in other expenses (pre exceptional)	134,977		139,826		4,849
Group operating profit (pre exceptional)					5,604
Taxation					(1,592)
Decrease in result for the period from continuing operations					4,012

	As previously stated		As restated		Restatement
Effect on Earnings per share	2008		2008		2008
Earnings per share	20.9		18.9		2.0
Adjusted earnings per share	13.0		9.0		4.0
Diluted earnings per share	20.8		18.8		2.0
Adjusted diluted earnings per share	12.9		8.9		4.0

There was no cash flow impact as a result of the restatement other than the consequential adjustments arising as a result of the restatement of the comparative Balance Sheet at 28 March 2008.

18. Subsequent Events

Subsequent to the period end the Group completed a refinancing of its bank debt facilities. New facilities totaling €360 million, with a maturity date of April 2012, which replaced existing facilities of €336 million with a maturity of May 2010. In addition, a new bi-lateral facility of €50m was agreed in May 2009 with a maturity of August 2011.

19. Constant currency calculations

Constant currency calculations are performed by retranslating current year income statement revenue and profit of sterling functional currency businesses to euro using the average exchange rate that was applicable to the prior comparative period financial statements. The average EUR/GBP exchange rate for the first half of 2009 was 0.88610 (2008: 0.73827).

20. Information

Copies of the Half Yearly Financial Report are available for download from the Group's website at www.greencore.com.

 

END

 

 

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