RNS Number:5293L
Greencore Group PLC
27 May 2003
GREENCORE GROUP PLC
Interim statement of results for the half year ended 28 March 2003
Highlights
Half Year Ended 28 March 2003
* Like-for-like sales growth across all three divisions
* Operating profit from continuing operations* up 7% to Euro48.9m
* Constant currency operating profit from continuing operations* up 12%
* Operating margin growth across all three divisions
* Profit before tax* up 9% to Euro31.1m
* Headline EPS* up 2% to 14.1c
* Net interest down 23% to Euro21.9m
* Net debt down Euro66.1m to Euro497.1m
* before exceptional items and goodwill amortisation
For further information, please contact:
David Dilger, Chief Executive Tel: +353 (0)1 6051002
Patrick Kennedy, Chief Financial Officer Tel: +353 (0)1 6051003
Billy Murphy/Trish Morrissey, Drury Communications Tel: +353 (0)1 2605000
Interim Statement
Half Year Ended 28 March 2003
Summary
The Group performed strongly in the first six months of the financial year,
producing excellent results both in terms of profitability and cashflow.
* Profitability
All three divisions increased like-for-like sales and improved operating
margins. As a result, profit before
tax grew by 9%, or Euro2.6m, notwithstanding a reduction of Euro8.5m in operating
profit from discontinued
activities versus the comparable period. Headline EPS grew by 2%, with an
increase in the effective tax
rate from 6% to 13% and the reduction in discontinued profitability more than
offset by the strong trading performance.
* Cashflow
Net interest fell by 23% and net debt reduced by Euro66.1m, despite the normal
seasonal increase in working capital at Irish Sugar. Net debt, at Euro497.1m, was
Euro376.6m below the level at the end of March 2001 of Euro873.7m.
The benefits of the extensive restructuring which the Group has successfully
undertaken over the last two years are clearly evident from these results. We
have created a focused Group with leading market positions, well-invested
facilities, excellent innovation skills and strong cash generation ability. We
are committed to building upon these attributes in the months and years ahead.
* Dividend
In the last two financial years, the Board has decided to maintain, rather than
increase, the level of the interim and final dividend. The aim was to reduce,
as swiftly as possible, the indebtedness assumed as a result of the acquisition
of Hazlewood Foods in 2001. These results clearly demonstrate the benefits
of this prioritisation, and the Board intends to continue this policy for the
time being. The Board, however, also wishes to rebalance the weighting between
the interim and final dividend payments to reflect more closely the relative
profitability of the first half and second half of the financial year. An
interim dividend of 5.05c per share will therefore be paid. Shareholders will
again be offered the option of receiving dividends in the form of cash or
shares.
Review of Operations
Chilled and Frozen
The Chilled and Frozen division performed very strongly in the first six months.
Like-for-like sales grew by 3%, whilst operating margins from continuing
operations increased from 5.1% to 6.0%, resulting in a 12% increase in
continuing operating profit from Euro16.3m to Euro18.2m. On a constant currency
basis, operating profit from continuing operations grew by 19%.
The sandwich business enhanced its position as the world's largest sandwich
manufacturer, with its high level of new product development resulting in top
line growth again ahead of the market. A number of new ranges were successfully
trialled with both existing and new customers, the full benefits of which
will be seen in the second half of this year and the next financial year. Ready
meals continued to trade strongly, whilst the first phase of the expansion of
both the Warrington and Wisbech facilities will be completed on schedule in the
second half of the year.
The quiche business made further progress as product innovation and range
extensions helped to deliver good sales growth in the slower winter months.
Chilled sauces and soup had a satisfactory first half, with strong growth in
soup sales a particular highlight. The business has won significant additional
chilled soup trade since the end of the period and further capacity has been
planned to cater for this growth.
The Group's chilled pizza business had a challenging first half. Although much
was achieved, with the integration of volumes from the Bedford facility closed
just before the start of the period and the closure and transfer of volumes from
the Group's other remaining topped pizza facility at Nelson in March, the
necessary efficiency levels have not yet been achieved. In addition, the focus
on operational improvement has resulted in some sales slippage, although this
should be, in part, redressed by additional trade won since the end of the half
year. Much still remains to be done to generate the returns which are possible
for a business with a state-of-the-art facility and strong market position in
this fast growing sector. Our expectations are for considerable improvement in
performance during the last quarter of this financial year.
Roberts, the Group's frozen savoury and dessert business, experienced a fire at
one of its savoury facilities during the period. Satisfactory insurance was in
place and production is being maintained at other Group facilities whilst the
damaged facility is rebuilt and enhanced. Roberts' market position has not been
materially impacted, and the frozen savoury market continues to grow in
both value and volume terms. Meanwhile, further good growth was experienced in
frozen desserts.
Since the half year end, the Group disposed of its UK chilled sausage business,
J & J Tranfield.
Ambient Grocery
Operating profit from continuing activities grew by 6% from Euro10.4m to Euro11.1m.
Whilst like-for-like sales showed only a modest 0.2% advance over last year's
levels (due to a sales decline at the baked goods business), operating profit
margins improved significantly, increasing from 5.4% to 6.4% on continuing
activities. On a constant currency basis, operating profit from continuing
operations grew by 13%.
The ambient sauces and pickles business performed well, with sales growth driven
by new product development and the successful launch of co-packing contracts
with two large international branded manufacturers. Campsie, the Scottish
mineral water business, benefited from further growth in demand for mineral
water in the UK. The cake and dessert business enjoyed a much improved
Christmas cake season and, as commented on at the AGM, has won additional trade
which will deliver an improved performance for the full year. To build upon
this success, the chilled dessert facility at Bedford was closed in April and
all chilled dessert production is now consolidated at the Hull facility.
Rathbones, the UK baked goods business, improved its performance over the
comparable period, with the benefits of the rationalisation and cost reduction
initiatives of the last twelve months helping to offset continued difficult
market conditions.
Ingredients and Agribusiness*
The division had a strong first half, generating good profitability, high
returns on capital and strong cashflow. Like-for-like sales grew by 3%,
operating margins from continuing activities increased from 7.7% to 7.9% and
continuing operating profit grew by 4% from Euro18.8m to Euro19.6m. On a constant
currency basis, operating profit from continuing operations grew by 6%.
Irish Sugar had a satisfactory first half. Although sugar beet costs increased
and its sugar quota was reduced by 7,052 tonnes, it benefited from the price
increase obtained in the second half of the previous year. In addition, as
reported at the AGM, an excellent operational performance during the processing
campaign helped to offset the lack of sugar beet availability due to poor
weather.
The profits of the Group's malt business increased, driven by excellent sales
and marketing coupled with further efficiency improvements. The Group's
agribusinesses traded satisfactorily, with favourable March weather benefiting
demand.
* Following the disposal of the fertiliser business, Grassland Holdings, in the
second half of the last financial year, the Board has decided to combine the
results of its remaining agribusinesses within the Ingredients division for
reporting purposes going forward.
Associates
Share of profit of associates, net of share of interest, increased significantly
from Euro1.5m to Euro2.9m. This principally reflected the inclusion of the flour and
oatmeal business, Odlums, as an associate, following its partial disposal last
year and its continued strong trading. Other associate companies also performed
well, with strong results, in particular, from the Group's yeast associate and
its UK sugar distributor associate.
Financial Review
Like-for-like sales grew by 2.2%, with each division showing growth. Operating
margins on continuing activities increased from 6.03% to 6.76%, again with each
division showing growth. As a result, operating profit from continuing
activities grew by Euro3.4m, or 7.4%, to Euro48.9m. This growth, together with
the increase in share of profit of associates and the reduction in net interest
payable, more than offset the Euro8.5m reduction in operating profit from
discontinued activities, resulting in growth of 9%, or Euro2.6m, in profit before
tax for the year.
The tax charge of Euro4.0m on ordinary activities compares to Euro1.7m in the first
half of last year, with the effective rate increasing from 6% to 13%, reflecting
the increased level of profitability in higher tax jurisdictions.
The exceptional cost within operating profit of Euro2.9m relates to start-up
inefficiencies at the new pizza facility (as the additional trade from the
closed Bedford and Nelson facilities was transferred), whilst a net surplus of
Euro0.6m was recorded on the closure of the Nelson pizza facility and two
facilities damaged by fire.
Headline earnings per share (adjusted to eliminate exceptional items and
amortisation of goodwill and finance facility costs) increased by 2.2% from
13.8c to 14.1c. Basic earnings per share increased from 2.1c to 6.3c.
Net debt reduced by Euro66.1m to Euro497.1m, benefiting from a particular focus on
cash generation across the Group, as well as a translation benefit of Euro33.2m on
the sterling element of the Group's indebtedness. This result is particularly
satisfactory in light of the normal seasonal increase in working capital at
Irish Sugar.
Significant capital investment was made in the period, most particularly in the
chilled ready meals category; notwithstanding that, net capital expenditure
declined from Euro25.1m in the same period last year to Euro19.4m. Net cash of Euro3.6m
was received in respect of taxation, reflecting the modest amount of
tax payable across the Group and a tax refund received in Continental Europe.
Outlook
The Group is well positioned to continue to generate good growth in
profitability from continuing operations combined with continued strong cash
generation and further reductions in interest payable.
The market dynamics in the two convenience food divisions remain attractive and
the Group's performance will continue to be underpinned by its strong market
positions and excellent innovation skills, as well as specific initiatives in
the individual businesses. Whilst much remains to be done in certain sectors to
achieve an appropriate return on capital, most particularly in pizza and bread,
we are confident of driving continued improvement in these businesses.
The Ingredients and Agribusiness division is well positioned to continue to
generate substantial cashflow and very satisfactory returns on capital. Irish
Sugar will benefit from its second price increase in successive years, which
will help to offset continuing inflation in its cost base, whilst the
competitiveness of the Group's largest malt operation in the UK should be
significantly improved if the recent weakness in sterling is not reversed.
The Group has been transformed over the last two years and now has a
well-balanced, robust portfolio of businesses, which provides a solid platform
for both profit growth and cash generation.
E F Sullivan
Chairman
27 May 2003
Note
Like-for-like sales are calculated on a constant currency basis from continuing
operations adjusted for facilities damaged by fire.
Consolidated Profit and Loss Account (Unaudited)
Half Year Ended 28 March 2003
_______________________________________________________________________________________
Half year ended 28 March 2003 Half year to
Notes Exceptional 29 March
Ordinary items and Total 2002
activities amortisation Euro'000 Euro'000
_______________________________________________________________________________________
Turnover
Continuing
operations 2 723,727 - 723,727 754,444
Discontinued
operations 20,092 - 20,092 182,094
__________ __________ __________ __________
2 743,819 - 743,819 936,538
__________ __________ __________ __________
Operating profit
before goodwill
amortisation and
exceptional items
Continuing
operations 2 48,894 - 48,894 45,530
Discontinued
operations 1,242 - 1,242 9,784
__________ __________ __________ __________
2 50,136 - 50,136 55,314
Goodwill - (10,701) (10,701) (9,228)
amortisation
Exceptional items 3 - (2,927) (2,927) (6,147)
__________ __________ __________ __________
Operating profit 50,136 (13,628) 36,508 39,939
Share of operating
profit of
associated
undertakings 3,032 - 3,032 1,514
__________ __________ __________ __________
53,168 (13,628) 39,540 41,453
__________ __________ __________ __________
Exceptional items
Termination/disposal
of operations
Net surplus over book
value 3 - 576 576 974
Goodwill previously
written off to
reserves 3 - - - (7,838)
__________ __________ __________ __________
576 576 (6,864)
__________ __________ __________ __________
Profit before
interest and
taxation 53,168 (13,052) 40,116 34,589
Net interest
payable (21,925) - (21,925) (28,387)
Amortisation of issue
costs of finance
facility - (2,291) (2,291) (1,318)
Share of interest
(payable)/receivable
- associates (138) - (138) 15
__________ __________ __________ __________
Profit before
taxation 31,105 (15,343) 15,762 4,899
Taxation (3,966) 631 (3,335) (39)
__________ __________ __________ __________
Profit after
taxation 27,139 (14,712) 12,427 4,860
Minority interests (650) - (650) (866)
__________ __________ __________ __________
Profit attributable
to Group
shareholders 26,489 (14,712) 11,777 3,994
Dividends 4 (9,537) - (9,537) (8,204)
__________ __________ __________ __________
Retained profit/
(loss) 16,952 (14,712) 2,240 (4,210)
========== ========== ========== ==========
Adjusted earnings per
ordinary share 5 14.1c 13.8c
Basic earnings per
ordinary share 5 6.3c 2.1c
Diluted earnings per
share 5 6.2c 2.1c
Dividend per ordinary
share 4 5.05c 4.38c
Consolidated Balance Sheet
At 28 March 2003
______________________________________________________________________________
28 March 29 March 27 September
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
Euro'000 Euro'000 Euro'000
______________________________________________________________________________
Fixed assets
Intangible assets 381,075 363,777 391,773
Tangible assets 540,955 647,105 586,180
Financial assets 16,437 18,167 16,784
__________ __________ __________
938,467 1,029,049 994,737
__________ __________ __________
Current assets
Stocks 187,443 239,185 137,662
Debtors 119,961 182,507 178,974
Cash and bank balances 99,846 190,073 103,256
__________ __________ __________
407,250 611,765 419,892
Creditors
Amounts falling due within one
year 388,417 510,723 396,053
__________ __________ __________
Net current assets 18,833 101,042 23,839
__________ __________ __________
Total assets less current
liabilities 957,300 1,130,091 1,018,576
__________ __________ __________
Creditors
Amounts falling due after more
than one year 621,295 811,024 693,395
Provisions for liabilities and
charges 44,013 35,941 46,323
Development grants 1,513 2,146 2,332
__________ __________ __________
666,821 849,111 742,050
__________ __________ __________
Net assets 290,479 280,980 276,526
========== ========== ==========
Capital and reserves
Called up share capital 122,058 121,094 121,584
Capital conversion reserve fund 934 934 934
Share premium account 87,280 84,898 85,847
Profit and loss account/other
reserves 74,969 68,808 63,535
__________ __________ __________
Shareholders' funds - equity
interests 285,241 275,734 271,900
Minority interests - equity
interests 5,238 5,246 4,626
__________ __________ __________
290,479 280,980 276,526
========== ========== ==========
Consolidated Cash Flow Statement
Half Year Ended 28 March 2003
______________________________________________________________________________
Half year to Half year to
28 March 29 March
2003 2002
(Unaudited) (Unaudited)
Euro'000 Euro'000
______________________________________________________________________________
Operating activities
Operating profit 50,136 55,314
Depreciation (net of grant amortisation) 23,105 29,357
Changes in working capital (4,115) 13,382
Other (including cash effect of exceptional
items) 6,662 (5,225)
Capital expenditure (net) (19,438) (25,098)
__________ __________
Cash flow from operating activities 56,350 67,730
Dividends from associates 2,621 925
Returns on investments and servicing of
finance (16,001) (27,979)
Taxation 3,575 (4,490)
Proceeds on issue of share capital 124 317
Disposal of subsidiary and associated
undertakings - 19,513
Net debt disposed of - 22,510
Equity dividends paid (13,739) (15,453)
__________ __________
Net cash flow 32,930 63,073
Translation differences 33,184 (8,137)
__________ __________
Movement in net debt in period 66,114 54,936
__________ __________
Net debt at start of period (563,173) (722,638)
__________ __________
Net debt at end of period (497,059) (667,702)
========== ==========
Statement of Total Recognised Gains and Losses
Half Year Ended 28 March 2003
______________________________________________________________________________
Half year to Half year to Full year to
28 March 29 March 27 September
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
Euro'000 Euro'000 Euro'000
______________________________________________________________________________
Profit for period attributable 11,777 3,994 10,131
to Group shareholders
Exchange adjustments 9,194 2,219 2,531
Prior year adjustment - 1,600 1,600
__________ __________ __________
Total recognised gains for the
period 20,971 7,813 14,262
__________ __________ __________
Notes
Half Year Ended 28 March 2003
1. Basis of preparation
The interim statement for the six months to 28 March 2003 is unaudited and was
approved by the Board on 26 May 2003. The information has been prepared on the
basis of the accounting policies set out in the Group's annual report for the
year ended 27 September 2002. The balance sheet information for 27 September
2002 represents the audited balance sheet from the Group's full accounts for
that year on which the Auditors issued an unqualified audit report and which
have been filed with the Registrar of Companies.
2. Analysis of results by activity
Turnover Operating profit*
Half year Half year
2003 2002 2003 2002
Total Group Euro'000 Euro'000 Euro'000 Euro'000
Chilled and Frozen 322,378 381,075 19,471 19,625
Ambient Grocery 173,698 246,567 11,063 12,957
Ingredients and
Agribusiness 247,743 308,896 19,602 22,732
__________ __________ __________ __________
743,819 936,538 50,136 55,314
__________ __________ __________ __________
Continuing Activities
Chilled and Frozen 302,286 318,574 18,229 16,291
Ambient Grocery 173,698 191,558 11,063 10,405
Ingredients and
Agribusiness 247,743 244,312 19,602 18,834
__________ __________ __________ __________
723,727 754,444 48,894 45,530
__________ __________ __________ __________
* pre goodwill amortisation and exceptional items
3. Exceptional items
The current period exceptional charge comprises a cost of Euro2.9m in respect of
commissioning costs at the Group's new chilled pizza facility. In addition, a
net surplus of Euro0.6m was recorded on the closure of certain Group facilities in
the United Kingdom.
The charge in the prior period reflects restructuring costs, primarily related
to commissioning projects undertaken by the Group in the period, of Euro6.1m, and a
net loss of Euro6.9m after reinstating goodwill of Euro7.8m on the part disposal of a
former subsidiary.
4. Dividends
The interim dividend of 5.05c (2002: 4.38c) per share is payable on 30 September
2003 to shareholders on the Register of Members, as at 6 June 2003. The ordinary
shares will be quoted ex-dividend from 4 June 2003. The dividend will be subject
to dividend withholding tax although certain classes of shareholders may qualify
for exemption.
5. Earnings per share
The calculation of earnings per share is based on earnings of Euro11.78m (2002:
Euro3.99m) and on 188.3 million ordinary shares (2002: 187.2 million) being the
weighted average number of ordinary shares in issue in the period. The
calculation of adjusted earnings per share is after adjusting for exceptional
items, goodwill and facility fee amortisation. The diluted earnings per share
has been calculated on the basis of 188.7 million ordinary shares (2002:
187.6 million). The calculation of earnings per share excludes 4.9 million
treasury shares arising from the share repurchase programme.
6. Information
The interim report is being sent by post to all registered shareholders.
Copies are also available to the public from the Company's registered office at
St. Stephen's Green House, Earlsfort Terrace, Dublin 2 and from its registrar,
Computershare Investor Services (Ireland) Limited, Heron House, Corrig Road,
Sandyford Industrial Estate, Dublin 18.
* * * Press Release As Follows * * *
GREENCORE GROUP PLC
Interim statement of results for the half year ended 28 March 2003
Highlights
Half Year Ended 28 March 2003
* Like-for-like sales growth across all three divisions
* Operating profit from continuing operations* up 7% to Euro48.9m
* Constant currency operating profit from continuing operations* up 12%
* Operating margin growth across all three divisions
* Profit before tax* up 9% to Euro31.1m
* Headline EPS* up 2% to 14.1c
* Net interest down 23% to Euro21.9m
* Net debt down Euro66.1m to Euro497.1m
* before exceptional items and goodwill amortisation
Commenting on the results, Greencore Group Chief Executive, David Dilger, said:
"These are very strong results both in terms of profitability and cashflow, and
are a product of the extensive restructuring which the Group has successfully
undertaken over the last two years.
The Group remains on course to deliver full year earnings per share in line with
consensus analyst forecasts."
For further information, please contact:
David Dilger, Chief Executive Tel: +353 (0)1 6051002
Patrick Kennedy, Chief Financial Officer Tel: +353 (0)1 6051003
Billy Murphy/Trish Morrissey, Drury Communications Tel: +353 (0)1 2605000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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