TIDMGNC
RNS Number : 1275H
Greencore Group PLC
24 May 2011
HALF YEARLY FINANCIAL REPORT
For the half year ended 25 March 2011
INTERIM MANAGEMENT REPORT
Greencore Group plc, a leading international convenience food
producer, today announces its results for the half year ended 25
March 2011.
HIGHLIGHTS(1&2)
Financial Delivery
-- Group sales of EUR442m representing a 7.9% increase in
year-on-year reported sales and a 4.4% increase on a constant
currency basis
-- Group operating profit of EUR27.0m, an increase of EUR0.5m or
1.7% in year-on-year reported profits and a reduction of EUR0.6m or
2.2% on a constant currency basis, primarily due to a reduction in
property trading activity
-- Bank interest payable reduced by EUR4.7m to EUR9.2m due to
the significant reduction in Group debt as a result of the FY10
disposal programme
-- Continuing adjusted EPS(3) of 6.8c, an increase of 35.4% on a
constant currency basis
-- Interim dividend of 3.0c per share (interim dividend FY10:
3.0c per share)
-- Completion of the refinancing of the Group's primary bank
facility of GBP280m for a 5 year term at competitive rates
Summary Performance
Comparison to H1'10
Increase Constant currency
H1'11 / (decrease) increase/ (decrease)
-------------------------- ------- ------------- ---------------------
Revenue EUR442m +7.9% +4.4%
Group operating profit(2) EUR27m +1.7% -2.2%
Operating margin(2) 6.1% -40bps -40bps
Adjusted EPS 6.8c +41.7% +35.4%
-------------------------- ------- ------------- ---------------------
Business Performance
-- Good performance in Convenience Foods in challenging market
conditions
- Constant currency sales growth of 4.3%
- Operating margin of 6.5% (H1'10 6.7%)
- Greencore growth in excess of UK market growth driven by good
trading and new business wins
- Continued progress on the US development agenda
-- Performance in Ingredients & Property division impacted
by reduced property trading activity
- Now represents less than 10% of overall Group activity
- Good ingredients performance more than offset by reduced
property trading profits
-- During the half, the business fully evaluated both a merger
with and a subsequent acquisition of Northern Foods. In March, the
board announced its intention not to make a revised offer for
Northern Foods which was sold to a third party
Commenting on the results, Patrick Coveney, Group Chief
Executive Officer said:
"Our business continues to perform well, despite some of the
recent challenges in the UK and US food markets. We are delighted
to have delivered sales growth for the first half of 7.9%, and in
particular to have driven this through to a 42% growth in
continuing adjusted earnings per share. This delivery is grounded
in close customer relationships, strong operational performance, a
passionate Greencore team and a focus on driving down financing
costs following our disposal programme last year. Clearly, in the
last six months we devoted considerable time and resources to
corporate development activity and it was disappointing not to be
able to execute a combination with Northern Foods. However, we
learnt an enormous amount from the process and we are optimistic
about our ability to drive growth and shareholder value from both
our existing business and from corporate development in the months
and years ahead."
____________________
1 Continuing operations comparatives exclude activities disposed
of during FY'10 (Malt in the Ingredients & Property division
and Water and the Continental businesses in the Convenience Foods
division).
2 Before exceptional items and acquisition related
amortisation.
3 Before exceptional items, pension finance items, acquisition
related amortisation, FX on inter-company & certain external
balances and the movement in the fair value of all derivative
financial instruments and related debt adjustments.
4 Based on Kantar market data for 24 weeks ended 23 March
2011
Presentation
A presentation of the results will be made to analysts and
institutional investors at 9.00am on Tuesday 24 May 2011 at
Investec London, 2 Gresham Street, London EC2V 7QP.
This presentation can be accessed live through the following
channels:
Webcast - details on: www.greencore.com/investor_relations
Conference call:
+44 (0)20 7806
UK: 1966
Ireland: +353 (0) 1 4860916
Pass code: 6523469#
Replay of the presentation will be available on our website
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:-
+44 (0)20 7111
UK replay number: 1244
Ireland replay
number: +353 (0) 1 4860902
Replay code: 6523469#
For further information, please contact
Patrick Coveney Chief Executive Officer Tel: +353 1 605 1045
Alan Williams Chief Financial Officer Tel: +353 1 605 1018
Imelda Hurley Group Finance Director Tel: +353 1 605 1018
Billy Murphy or Anne Marie Drury Communications Tel: +353 1 260 5000
Curran
Rob Greening Powerscourt Tel: +44 (0) 207 250
1446
Greencore Group
-- A leading international producer of convenience food with
operations in the UK and the US
-- Strong market positions in the UK convenience food market
across sandwiches, chilled prepared meals, chilled soups and
sauces, ambient sauces & pickles, cakes & desserts and
Yorkshire puddings
-- Extending presence outside the UK with an emerging
convenience food business in the US
SUMMARY (1, 2 & 3)
Overall
The Group is now primarily a convenience foods business
(representing over 90% of sales), supported by an ingredients
business and a property trading operation. It delivered a solid
H1'11 performance with constant currency sales growth of 4.4%, a
modest increase in reported operating profit, an absolute reduction
of EUR4.7m in bank interest costs and a 41.7% increase in
continuing adjusted EPS. A key highlight of FY11 to date is the
successful completion of the refinancing of GBP280m of primary bank
facility for a five year term at competitive rates.
Convenience Foods
The Convenience Foods division had a good first half in
challenging market conditions growing constant currency sales by
4.3% and constant currency operating profit by 0.7% resulting in a
modest 20bps reduction in operating margins. The sales performance
was encouraging in the light of the challenging trading environment
and significant disruption from severe weather in four of our
largest factories in the UK and the US during December / January
(Manton Wood, Kiveton, Hull and Newburyport). Raw material
inflation has been a significant factor in H1'11 and will be an
area of focus for management for the foreseeable future. The impact
has been largely offset during H1'11 through selective price
increases, product re-engineering in conjunction with our retail
partners and significant efficiency programmes throughout the
business, such as the Lean Manufacturing and Total Lowest Cost
initiatives.
Ingredients & Property
Ingredients & Property activity which comprises the
molasses, edible oils and property trading operations now
represents less than 10% of overall Group activity following the
disposal of Malt during H1'10.
This division delivered operating profits of EUR1.0m. This was
EUR0.8m lower than H1'10 operating profit as a result of a
reduction in property trading activity due to the adverse economic
environment currently being experienced in Ireland, where the
majority of the Group's property portfolio is located.
Finance, Treasury and Taxation
The Group undertook a significant business disposal programme
during FY'10, generating proceeds in excess of EUR100m which were
used to reduce the level of Group debt. In October 2010, the Group
repaid EUR38.9m of maturing Private Placement Notes and settled a
portion of the Group's fixed interest contracts for EUR4.6m. Net
debt at 25 March 2011 was EUR236.7m compared to EUR193.4m at 24
September 2010 and was negatively impacted by acquisition costs, an
exceptional charge largely related to merger/acquisition activity
associated with Northern Foods and a seasonal working capital
outflow during the period. The current year interest charge has
been positively impacted by the FY'10 debt reduction with the bank
interest charge in the period totalling EUR9.2m compared to a level
of EUR13.9m in H1'10. The Group's net non-cash finance credit in
the period was EUR3.4m mainly comprising movements in the fair
value of derivatives and pension financing items. Subsequent to the
period end the Group completed the refinancing of the primary bank
facility of GBP280m for a five year term at competitive rates and
extending our average debt maturity from 1.6 years to 4.6
years.
A net exceptional cost of EUR17.5m was recorded during the
period related to costs associated with the proposed merger with
Northern Foods, an assessment of a potential acquisition of
Northern Foods, transaction costs associated with the On A Roll
acquisition and costs of settling an outstanding legal claim
related to former activities. The Group's effective tax rate in
H1'11 (including the tax impact associated with pension finance
items) was 18% and was in line with H1'10 continuing operations
effective tax rate. The Group result for H1'11 was a loss of
EUR0.3m compared to a profit of EUR25.2m in H1'10.
Dividends
The Board of Directors is announcing an interim dividend of 3.0
cent per share (H1'10: 3.0 cent).
OUTLOOK (1,2 & 3 )
The trading environment in the UK proved challenging during
H1'11 and whilst market performance improved during March and
April, the consumer environment is expected to remain subdued
throughout 2011. Against this backdrop, trading in our core
Convenience Foods business was solid during H1'11 with growth ahead
of the market in our largest businesses. The seasonally more
important second half of the year has started well and we continue
to experience strong demand for our convenience food offerings.
Input cost inflation is now running at more pronounced levels than
at the start of the current financial year and managing its impact
will remain a key area of management focus in the second half. With
continued good revenue growth coupled with a material reduction in
interest charges the Board anticipates delivering adjusted EPS in
line with market expectations.
REVIEW OF OPERATIONS (1&2)
Convenience Foods
Constant
H1 FY'11 H1 FY'10 currency
EUR'm EUR'm Change change
------------------------ --------- --------- ------- ----------
Turnover - continuing* 402.4 372.0 +8.2% +4.3%
Operating profit(2) 26.0 24.8 +4.9% +0.7%
Operating margin(2) 6.5% 6.7%
------------------------ --------- --------- ------- ----------
* excludes Water and Continental businesses disposed of during
FY'10
The Convenience Foods division had a good first half in
challenging market conditions growing constant currency sales by
4.3% and constant currency operating profit by 0.7% resulting in a
modest 20bps reduction in operating margins. The sales performance
was encouraging in the light of the challenging trading environment
and significant disruption from severe weather in four of our
largest factories in the UK and US during December / January
(Manton Wood, Kiveton, Hull and Newburyport). Raw material
inflation has been a significant factor in H1'11 and will continue
to be an area of focus for management for the foreseeable future.
The impact has been largely offset during H1'11 through selective
price increases, product re-engineering in conjunction with our
retail partners and significant efficiency programmes throughout
the business, such as the Lean Manufacturing and Total Lowest Cost
initiatives.
UK Convenience Foods
Food to Go
Food to Go is our largest category business comprising the
manufacture of fresh sandwiches, salads and sushi together with a
distribution business which distributes in excess of 40% of our
sales direct to over 7,000 stores throughout the UK six days a
week. Both the food to go market and the Greencore Food to Go
business proved particularly resilient despite the subdued retail
environment with the sandwich market growing value by 2.6%(4) in
the period while Greencore delivered 8.4%(4) growth on the same
basis. Our Food to Go business experienced sandwich value growth in
excess of volume growth by 2.8%(4 ) due to commodity price
inflation impacting the sales price, the cost impact of a move to
cardboard and a modest 'trading up' by consumers. Key to our
continued success has been (a) our manufacturing excellence coupled
with outstanding high quality innovation and service (both of which
have been recognised by recent customer awards) which is delivered
at the lowest possible cost to customers and which resulted in this
category continuing to win significant new business with customers
during the period and (b) the unique direct to store distribution
service which Greencore offers and where we also continue to add
customers (over 300 new store deliveries have commenced in the last
12 months).
Prepared Meals
The Prepared Meals business, our second largest Convenience
Foods business, comprises chilled ready meals (CRM) and chilled
quiche both of which are produced as own label product and
complemented by a range of branded Weight Watchers products. Our
Prepared Meals business performed strongly in FY'10 and has
continued to build on this momentum during H1'11. In particular,
our CRM business showed value growth of 19.3%(4) in the period
compared to market value growth of 9.4%(4) with our growth driven
by both existing and new customer gains. Consumers continue to seek
out 'best deals' aiming for value for money and not wanting to
compromise on quality or convenience. As a result, multi-buy
activity and 'dine in' promotions remain key features of this
category. In conjunction with our customers, Greencore has
developed particularly strong high quality eat at home ranges which
sell as part of multi-buy activity.
Grocery
The Grocery category undertook a significant SKU rationalisation
programme to eliminate non-core products during FY'10 and as a
result the business is now focused on the ambient cooking sauces,
table sauces and pickles markets. While this has reduced overall
sales in the category, it has significantly simplified the business
and improved returns. The largest category in which it participates
is cooking sauce, which market has achieved 4.9%(4) value growth
and 3.2%(4) volume growth in the period. We have seen an increase
in the level of branded promotional activity in the category with
consumers seeking out the best deals. Against this back-drop our
business delivered a solid performance working closely with
customers to retain business contracts and deal with the impact of
raw material inflation while delivering value at a high quality for
consumers.
Cakes and Desserts
Our Cakes and Desserts business had a challenging H1'11 with the
business being impacted by excess industry capacity, a significant
level of raw material inflation and an increasing level of
promotional activity. The total ambient cakes market grew value by
0.2%(4) in the period while volumes declined by 1.1%(4) . Our
reported category sales were consistent with H1'10, a strong
performance in the context of the loss of a major range in May 2010
however operating margins reduced significantly year-on-year due to
the impact of pronounced raw material inflation, the excess
industry capacity and market competition.
Chilled Sauces and Soups
Greencore is one of the largest producers of chilled sauces in
the UK with a 32%(4) market share and with a complementary 12%(4)
market share in chilled soup. The chilled sauce category
experienced 7%(4) value growth in the period. The chilled soup
market had a particularly strong growth pattern in the period with
consumers being tempted into this category particularly during the
very cold winter. That market showed 12%(4) value growth while
Greencore experienced 20%(4) value growth. Due to our strong growth
in soups, we invested in further production capacity during the
period
Frozen Yorkshire Puddings
Our Frozen Yorkshire Puddings business primarily produces own
label Yorkshire puddings from a facility in Leeds. The business had
a challenging FY'10 during which a fire damaged the manufacturing
facility. The business has invested in two new state of the art
ovens. Substantial progress has been made on oven commissioning,
however sales were lower versus H1'10 as the business continued to
recover from the fire.
Foodservice Desserts - Ministry of Cake
Our Foodservice Desserts business is the smallest category
within Convenience Foods. It had a solid H1'11 in the context of a
challenging foodservice market which was significantly impacted by
the very cold winter experiencing a modest sales decline.
US Convenience Foods
Our US business which now operates from three facilities made
considerable progress in the period. A significant plant refit was
completed in November 2010 at the Newburyport facility. The
business refocused its offering during the period by exiting trade
with poor returns, in particular Thanksgiving 'holiday dinner
kits'. The business was also impacted by exceptionally challenging
weather conditions in January 2011. In addition we commenced a
trial of Weight Watchers prepared meal products in a number of
Wal*Mart stores during the period.
In December 2010, the business completed the acquisition of On A
Roll Sales. The business has performed strongly since acquisition
and represented 1.3% of Group sales in the period. We have already
realised significant operational benefits from running the
businesses together.
Ingredients & Property
Constant
H1 FY'11 H1 FY'10 currency
EUR'm EUR'm Change change
--------------------- --------- --------- ------- ----------
Sales 39.5 37.5 +5.3% +5.3%
Operating profit(2) 1.0 1.8 -42.4% -42.4%
Operating margin(2) 2.6% 4.8%
--------------------- --------- --------- ------- ----------
Ingredients & Property activity which comprises the
molasses, edible oils and property trading operations now
represents less than 10% of overall Group activity following the
disposal of Malt during H1'10. The performance of Malt, previously
reported within this division, has been separately disclosed as a
discontinued activity. This Division recorded an acceptable first
half in difficult market conditions with operating profits of
EUR1.0m. This was EUR0.8m lower than H1'10 operating profit as a
result of a reduction in property trading activity due to the
adverse economic environment currently being experienced in
Ireland, where the majority of the Group's property portfolio is
located.
Malt - discontinued
The Group's Malt business was disposed of on 26 March 2010 and
as a consequence the FY'10 comparative reflects its contribution
for the first half of the previous financial year. There were no
profits or losses recorded in respect of the Malt business in the
period ended 25 March 2011.
FINANCIAL REVIEW (1&2 )
( )
Overview
The weakening of the euro against sterling had a modest impact
on the results when compared to last year. The average EUR/GBP
exchange rate was 0.888 in H1'10 compared to 0.857 in H1'11
impacting the translation of our sterling results positively by
3.5% in the period. Constant currency comparisons are made by
re-stating the H1'11 financial information at the average rate for
H1'10. Group sales of EUR441.8m were 4.4% ahead of H1'10 on a
constant currency basis and 7.9% ahead after the impact of currency
translation. Operating profit in the period of EUR27.0m was 2.2%
adverse to H1'10 on a constant currency basis but was 1.7% ahead
after the impact of currency translation. The Group operating
margin on continuing operations was 6.1% compared to 6.5% in H1'10
of which 20 bps was due to lower property profits. The Group result
for H1'11 was a loss of EUR0.3m compared to a profit of EUR25.2m in
H1'10.
Capital Structure
The Group employs a combination of debt and equity to fund its
operations. At 25 March 2011 the total capital employed in the
Group was EUR457.3m (H1'10: EUR426.8m). Capital employed is defined
as the sum of the book value of shareholders' equity plus
comparable net debt but excluding investment property and pension
scheme assets or deficits. The Group's primary source of
incremental capital, outside of the capital markets, is its cash
flow from operations which was EUR13.0m before exceptional items
during H1'11. The Group funds its acquisition activity from a
combination of cash flow and available headroom within committed
bank facilities.
As at 25 March 2011 the Group's net debt was EUR236.7m which
represented 2.9 times EBITDA in the 12 months to 25 March 2011,
comfortably within the Group's key debt covenant. At 25 March 2011
the Group had committed facilities of EUR445m with maturity dates
extending through to October 2015. GBP280m of our facilities were
refinanced on 13 May 2011 for a 5 year period.
Bank Debt and Interest Payable
The Group's bank interest payable in H1'11 was EUR9.2m, a
EUR4.7m reduction on the H1'10 charge of EUR13.9m. The composition
of the charge in the period was interest payable of EUR7.6m,
commitment fees for undrawn facilities of EUR0.9m and an
amortisation charge in respect of facility arrangement fees of
EUR0.7m. The Group undertook a significant disposal programme
during FY'10 disposing of the Malt, Water and Continental
businesses. As a consequence of that programme, the Group
restructured the debt profile of the Group during FY'10 by repaying
bank borrowings and settling fixed interest contracts. In October
2010 the Group repaid further debt totalling EUR38.9m of Private
Placement Notes and settled a portion of the Group's fixed interest
contracts for EUR4.6m. The settlement cost associated with the
fixed interest contracts had been fully provided for in the Group's
financial statements and represented an acceleration of amounts
which would have been paid in future years as interest payable.
Average net debt, as is customary and having regard to the seasonal
profile of our business and our customers' and suppliers' working
capital profile, is forecast to be approximately EUR75m higher than
net debt at the end of the financial year which is a seasonally low
point.
Non Cash Finance Charges
The Group's net non cash finance charge in H1'11 was a credit of
EUR3.4m (charge of EUR1.1m in H1'10). The change in the fair value
of derivatives and related debt adjustments was a non cash credit
of EUR3.7m in the period compared to a credit of EUR0.4m in the
comparative period reflecting, in the main, the movement in
interest rates in the period which has a resulting impact on
marking to market the Group's fixed interest rate swaps coupled
with the passage of time bringing the interest rate swaps six
months closer to maturity. The non cash pension financing charge of
EUR0.7m was higher than the charge in H1'10 of EUR0.1m reflecting
changes in the discount rates.
Taxation
The Group's effective tax rate in H1'11 was 18% including the
tax impact associated with pension finance items. This is
consistent with the effective tax rate for the continuing
operations of the Group during H1'10.
Exceptional Items
An exceptional cost of EUR17.7m (pre tax) was recorded during
H1'11. Of this:
- EUR13.6m related to transaction costs associated with the
costs of a proposed merger with Northern Foods, an assessment of a
potential acquisition of Northern Foods and the transaction costs
relating to the On A Roll acquisition in the US.
- EUR4.1m represents a legal claim related to former
activities.
Earnings per share(3)
Adjusted earnings per share for H1'11 were 6.8 cent compared to
8.5 cent in the comparable period. Continuing adjusted earnings
totalled 6.8 cent compared to 4.8 cent in H1'10 with the current
period growth driven in the main by the significant reduction in
year-on-year interest costs. The relevant weighted average number
of ordinary shares for the period was 206.1m (H1'10 204.3m). The
adjusted earnings per share calculation is stated before
exceptional items, fair value items, intercompany and external
balances foreign exchange effects, pension finance items and
amortisation of acquisition related intangibles.
Pensions
The fair value of total plan assets relating to the Group's
defined benefit pension schemes (excluding associates) was
EUR380.5m at 25 March 2011, a modest reduction from the 24
September 2010 level of EUR381.4m. The present value of the total
pension liabilities for these schemes was EUR482.0m at period end,
down from EUR499.3m at 24 September 2010. This is reflected in a
reduction in the net pension deficit (before related deferred tax)
to EUR102.2m at 25 March 2011 (from a net pension deficit of
EUR118.4m at 24 September 2010). The net pension deficit was
EUR78.8m after related deferred tax at 25 March 2011 (from a
deficit of EUR90.8m after related deferred tax at 24 September
2010). The key driver of the reduction in liabilities in the period
was the movement in corporate bond yields which is the interest
rate required under IAS19 to calculate pension liabilities. The
Group provides all pension benefits for current employees and new
entrants under defined contribution pension arrangements having
closed all defined benefit schemes to future accrual during
FY'10.
Cash Flow and Net Debt
Net debt at 25 March 2011 was EUR236.7m, an increase of EUR43.3m
compared to the EUR193.4m reported as of 24 September 2010. The key
drivers of the c.EUR43m increase were business acquisition costs
totalling EUR13.1m, exceptional cash payments of EUR14.4m and a
seasonal working capital outflow of EUR20.6m. A net cash inflow
(pre exceptional items and working capital movements) from
operating activities of EUR33.6m was recorded in the period.
Capital expenditure of EUR15.2m was incurred in the period.
Interest costs of EUR10.7m were paid in the period with dividends
paid to equity holders totalling EUR4.8m. A cash payment of EUR4.6m
was incurred on settling a portion of the Group's fixed interest
rate contracts. The translation of the GBP and USD components of
the Group's debt positively impacted net debt at March 2011 by
EUR9.0m versus the September 2010 debt level.
Dividends
Dividend policy is an annual payout ratio in the range of 40-50%
of adjusted EPS. In accordance with this policy an interim dividend
of 3.0 cent per share is proposed (FY'10 interim dividend 3.0 cent
per share).
Total Equity
Total equity at 25 March 2011 was EUR179.9m compared to
EUR178.9m at 24 September 2010.
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 investment property
and pension scheme assets or deficits with the returns measure
expressed as a proportion of operating profit(1& ) (2)
including share of associates. This calculation is undertaken on a
rolling 12-month basis. The Group's return on capital on a
continuing basis in the 12 months to 25 March 2011 was 13.3%
(13.8%: 12 months to 26 March 2010). The reduction in the
year-on-year return on capital employed was driven in the main by
the increased level of debt due to exceptional costs and the early
settlement of interest rate swaps.
-- Sales growth
Group sales from continuing businesses increased by 4.4% on a
constant currency basis and by 7.9% after the impact of currency
translation. The Convenience Foods business measures weekly sales
growth. In H1'11 it recorded 4.3% constant currency sales growth
and 8.2% growth after currency translation. The Ingredients &
Property division tracks monthly sales. In H1'11 a 5.3% increase in
continuing sales was recorded, albeit this activity now represents
a small proportion of Group sales and cash margin represents a more
appropriate long term KPI for this business.
-- Operating margin
The Group's pre-exceptional operating margin on continuing
businesses in H1'11 was 6.1% compared to 6.5% in the comparative
period. In Convenience Foods, the operating margin on continuing
businesses was 6.5% compared to 6.7% in H1'10.
-- Free cash flow
The Group's free cash measure is net cash flow from operating
activities after capital expenditure but before exceptional items
and pension deficit funding. Group continuing free cash was
EUR2.7m.
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 output from this process feeds into the
regular management reporting structures. Risks and mitigating
controls, common across all categories are managed and reviewed at
a Group level. Risks identified and associated mitigating controls
are subject to review as part of the Group's health and safety,
technical compliance and operational/financial audit programmes.
The key risks facing the business include the following:
Strategic risks
-- The Group operates in highly competitive markets,
particularly within the Convenience Foods division. Significant
product innovations, technical advances or the intensification of
price competition could adversely affect the Group's results.
-- In order for the Group to continue its strategic expansion,
it is necessary that it identifies and pursues suitable acquisition
targets or green-field development sites and integrates these
successfully into the Group's existing operations in an efficient
and sustainable manner.
Commercial risks
-- In common with other food industry manufacturers, unforeseen
changes in food consumption patterns and/or amendments to
government legislation regarding the composition of food products
may impact the Group. In addition, demand for a number of the
Group's products and the recoverability of amounts receivable can
be adversely affected by global economic conditions.
-- 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.
-- The Group's cost base can be affected by fluctuating raw
material and energy prices.
Operational risks
-- As a producer of convenience foods and ingredients, Greencore
is subject to general market related risks, including product
contamination and general food scares. In addition, Greencore is
subject to rigorous and constantly evolving regulations and
legislation in the areas of environmental protection and employee
health and safety.
-- 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.
-- A significant IT system failure could adversely impact on
operations.
-- The ongoing success of the Group is dependent on attracting
and retaining high quality senior management and staff who have the
ability to effectively manage the Group's operations in a period of
economic stability and in a downturn.
Financial risks
-- In the multi-currency and multi-national trading environment
in which the Group operates, there are inherent risks associated
with fluctuations in both foreign exchange rates and interest
rates. In addition, in the current economic climate, the Group's
credit rating and its related ability to obtain funding for future
development and expansion are specific risks.
-- 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, increasing longevity of scheme
members and changes to pension legislation.
Other
-- The Group has a considerable land-bank for future
development. The value of this holding is directly related to the
macro-economic environment in Ireland and the UK, the successful
environmental clean-up of the brown-field sugar factory sites and
the nature and timing of any zoning and subsequent planning
permission obtained.
-- The Group's Convenience Foods portfolio is second half
weighted. Weather (both severe adverse weather and favourable
weather conditions) and seasonal buying patterns impact, in
particular, the demand for chilled product categories.
Further details of the principal risks and uncertainties facing
the Group are set out in the 2010 Annual Report.
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 this announcement are
forward-looking. These represent expectations for the Group's
business, and involve risks and uncertainties. The Group has based
these forward-looking statements on current expectations and
projections about future events. The Group believes that
expectations and assumptions with respect to these forward-looking
statements are reasonable. However, because they involve known and
unknown risks, uncertainties and other factors, which in some cases
are beyond the Group's control, actual results or performance, may
differ materially from those expressed or implied by such
forward-looking statements.
E.F. Sullivan
Chairman
24 May 2011
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 25 March 2011 have been prepared in accordance with the
international accounting standard applicable to 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 25 March 2011, 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 A.R. Williams
Chief Executive Officer Chief Financial Officer
24 May 2011
Current Directors
Mr. E.F. Sullivan (Chairman)
Mr. P.F. Coveney (Chief Executive Officer)
Mr. A.R. Williams (Chief Financial Officer)
Ms. D.S. Walker (Chief Executive, Convenience
Food, UK)
Mr. J.T. Herlihy
Mr. P.G. Kennedy
Mr. P.A. McCann
Mr. E.L. Nicoli
Mr. D.M. Simons
Mr. D.A. Sugden
Mr. C.M. O'Leary (Group Company Secretary)
GROUP CONDENSED FINANCIAL STATEMENTS
GROUP CONDENSED INCOME STATEMENT
for the half year ended 25 March 2011
Half Year ended 26 March
Half Year ended 25 March 2010
2011 *As re-presented
(Unaudited) (Unaudited)
Pre - Exceptional Pre - Exceptional
Notes exceptional (Note 5) Total exceptional (Note 5) Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
Continuing
operations
Revenue 3 441,834 - 441,834 409,503 - 409,503
Cost of sales (299,000) - (299,000) (273,892) - (273,892)
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
Gross profit 142,834 - 142,834 135,611 - 135,611
Operating costs,
net (115,788) (17,652) (133,440) (109,018) - (109,018)
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
Group operating
profit/(loss)
before
acquisition
related
amortisation 3 27,046 (17,652) 9,394 26,593 - 26,593
Amortisation of
acquisition
related
intangibles (1,433) - (1,433) (1,171) - (1,171)
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
Group operating
profit/(loss) 25,613 (17,652) 7,961 25,422 - 25,422
Finance income 11 11,821 - 11,821 12,398 - 12,398
Finance costs 11 (17,641) - (17,641) (27,423) - (27,423)
Share of profit
of associates
after tax 338 - 338 338 - 338
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
Profit/(loss)
before taxation 20,131 (17,652) 2,479 10,735 - 10,735
Taxation 6 (2,855) 125 (2,730) (2,032) - (2,032)
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
Result for the
period from
continuing
operations 17,276 (17,527) (251) 8,703 - 8,703
Discontinued
operations
Result from
discontinued
operations 14 - - - 7,926 8,521 16,447
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
Result for the
financial
period 17,276 (17,527) (251) 16,629 8,521 25,150
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
Attributable to:
Equity
shareholders 16,870 (17,527) (657) 16,129 8,521 24,650
Non-controlling
interests 406 - 406 500 - 500
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
17,276 (17,527) (251) 16,629 8,521 25,150
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
Basic (loss)/earnings per share (cent)
Continuing
operations (0.3) 4.0
Discontinued
operations - 8.1
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
8 (0.3) 12.1
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
Diluted (loss)/earnings per share
(cent)
Continuing
operations (0.3) 4.0
Discontinued
operations - 8.0
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
8 (0.3) 12.0
------------------ ------ ----------- ----------- --------- ----------- ----------- ---------
* As re-presented to reflect the effect of discontinued
operations - refer to Note 14 for further information
GROUP CONDENSED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the half year ended 25 March 2011
Half year Half year
ended ended
25 March 26 March
2011 2010
(Unaudited) (Unaudited)
EUR'000 EUR'000
-------------------------------------------------- ------------ ------------
Items of income and expense taken directly within
equity
Currency translation differences (3,094) 6,026
Current tax on currency translation differences 754 -
Currency translation differences recycled to
Income Statement on disposal - 7,232
Hedge of net investment in foreign currency
subsidiaries 5,519 (3,805)
Actuarial gain/(loss) on Group defined benefit
pension schemes 8,962 (1,803)
Deferred tax on Group defined benefit pension
schemes (3,341) 1,931
Cash flow hedges:
Gain taken to equity - 61
Transferred to Income Statement for the period - 1,766
Deferred tax on cash flow hedges - (497)
Cash flow hedge losses recycled to Income
Statement on disposal - 108
-------------------------------------------------- ------------ ------------
Net income recognised directly within equity 8,800 11,019
Group result for the financial period (251) 25,150
-------------------------------------------------- ------------ ------------
Total recognised income and expense for the
financial period 8,549 36,169
-------------------------------------------------- ------------ ------------
Attributable to:
Equity shareholders 8,143 35,669
Non-controlling interests 406 500
-------------------------------------------------- ------------ ------------
Total recognised income and expense for the
financial period 8,549 36,169
-------------------------------------------------- ------------ ------------
GROUP CONDENSED BALANCE SHEET
at 25 March 2011
25 March 26 March 24 Sept
2011 2010 2010
Notes (Unaudited) (Unaudited) (Audited)
EUR'000 EUR'000 EUR'000
------------------------------- ----- ------------ ------------ ----------
ASSETS
Non-current assets
Intangible assets 9 411,435 404,959 404,555
Property, plant and equipment 9 210,338 213,060 217,532
Investment property 9 37,727 36,140 37,916
Investment in associates 979 972 682
Other receivables 3,148 3,032 6,310
Derivative financial
instruments 11 11,804 22,296 19,220
Deferred tax assets 41,439 41,480 46,284
------------------------------- ----- ------------ ------------ ----------
Total non-current assets 716,870 721,939 732,499
------------------------------- ----- ------------ ------------ ----------
Current assets
Inventories 45,055 46,960 39,549
Trade and other receivables 75,018 68,394 64,537
Derivative financial
instruments 77 4,751 2,486
Cash and cash equivalents 11 6,991 199,105 11,707
------------------------------- ----- ------------ ------------ ----------
Total current assets 127,141 319,210 118,279
------------------------------- ----- ------------ ------------ ----------
Total assets 844,011 1,041,149 850,778
------------------------------- ----- ------------ ------------ ----------
EQUITY
Capital and reserves
attributable to equity holders
of the Company
Share capital 10 133,348 132,056 132,661
Share premium 121,854 120,378 121,162
Reserves (78,557) (57,056) (77,820)
------------------------------- ----- ------------ ------------ ----------
176,645 195,378 176,003
Non-controlling interests 3,287 4,091 2,881
------------------------------- ----- ------------ ------------ ----------
Total equity 179,932 199,469 178,884
------------------------------- ----- ------------ ------------ ----------
LIABILITIES
Non-current liabilities
Borrowings 11 255,481 378,033 185,415
Retirement benefit obligations 15 102,180 93,814 118,442
Other payables 4,575 6,525 5,193
Provisions for liabilities 12 3,830 4,495 3,950
Deferred tax liabilities 43,447 41,803 43,842
Government grants 101 119 114
------------------------------- ----- ------------ ------------ ----------
Total non-current liabilities 409,614 524,789 356,956
------------------------------- ----- ------------ ------------ ----------
Current liabilities
Borrowings 11 - 41,577 41,401
Derivative financial
instruments 9,806 24,732 18,894
Trade and other payables 210,399 215,178 218,126
Provisions for liabilities 12 7,406 9,867 8,297
Income taxes payable 26,854 25,537 28,220
------------------------------- ----- ------------ ------------ ----------
Total current liabilities 254,465 316,891 314,938
------------------------------- ----- ------------ ------------ ----------
Total liabilities 664,079 841,680 671,894
------------------------------- ----- ------------ ------------ ----------
Total equity and liabilities 844,011 1,041,149 850,778
------------------------------- ----- ------------ ------------ ----------
GROUP CONDENSED CASH FLOW STATEMENT
for the half year ended 25 March 2011
Half year Half year
ended ended
25 March 26 March
2011 2010
*As re-presented
(Unaudited) (Unaudited)
EUR'000 EUR'000
------------------------------------------- ------------- ------------------
Profit before taxation 2,479 10,735
Finance income (11,821) (12,398)
Finance costs 17,641 27,423
Share of profit of associates (after tax) (338) (338)
Exceptional items - continuing 17,652 -
------------------------------------------- ------------- ------------------
Operating profit - continuing
(pre-exceptional) 25,613 25,422
Depreciation 9,999 9,419
Amortisation of intangibles 2,107 1,892
Share based payments expense 966 688
Amortisation of government grants (8) (26)
Difference between pension charge and cash
contributions (4,895) (2,713)
Working capital movement (20,565) 5,798
Other movements (174) 260
------------------------------------------- ------------- ------------------
Net cash inflow from operating activities
before exceptional items 13,043 40,740
Cash outflow related to exceptional items (14,366) (3,834)
Interest paid (10,685) (15,007)
Tax paid (1,715) (46)
Operating cash flows from discontinued
operations - (12,744)
------------------------------------------- ------------- ------------------
Net cash (outflow)/inflow from operating
activities (13,723) 9,109
------------------------------------------- ------------- ------------------
Cash flow from investing activities
Dividends received from associates - 17
Purchase of property, plant and equipment (14,549) (13,867)
Purchase of investment property (675) -
Purchase of intangible assets (3) (3)
Acquisition of undertakings and purchase of
non-controlling interests (13,093) -
Disposal of undertakings 470 107,717
Interest received 38 902
Investing cash flows from discontinued
operations - (2,090)
------------------------------------------- ------------- ------------------
Net cash (outflow)/inflow from investing
activities (27,812) 92,676
------------------------------------------- ------------- ------------------
Cash flow from financing activities
Proceeds from issue of shares 16 -
Ordinary shares purchased - own shares (500) (2,000)
Increase in bank borrowings 86,243 110,000
Repayment of Private Placement Notes (38,857) (50,009)
Decrease in finance lease liabilities - (19)
Cash outflow arising from derivative
financial instruments (4,609) -
Dividends paid to equity holders of the
Company (4,837) (4,572)
------------------------------------------- ------------- ------------------
Net cash inflow from financing activities 37,456 53,400
------------------------------------------- ------------- ------------------
Net (decrease)/increase in cash and cash
equivalents (4,079) 155,185
------------------------------------------- ------------- ------------------
Reconciliation of opening to closing cash
and cash equivalents
Cash and cash equivalents at beginning of
period 11,707 43,933
Translation adjustment (637) (13)
(Decrease)/increase in cash and cash
equivalents (4,079) 155,185
------------------------------------------- ------------- ------------------
Cash and cash equivalents at end of period 6,991 199,105
------------------------------------------- ------------- ------------------
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
for the half year ended 25 March 2011
Share Share Other Retained Non-controlling Total
capital premium reserves earnings Total interests equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------- -------- -------- --------- --------- -------- ---------------- --------
At 24
September
2010 132,661 121,162 (17,840) (59,980) 176,003 2,881 178,884
Items of
income and
expense taken
directly
within equity
Currency
translation
differences - - (3,094) - (3,094) - (3,094)
Current tax on
currency
translation
differences - - - 754 754 - 754
Net investment
hedge - - 5,519 - 5,519 - 5,519
Actuarial gain
on Group
defined
benefit
pension
schemes - - - 8,962 8,962 - 8,962
Deferred tax
on Group
defined
benefit
pension
schemes - - - (3,341) (3,341) - (3,341)
Result for the
financial
period - - - (657) (657) 406 (251)
Share based
payments
expense - - 966 - 966 - 966
Transfer on
exercise,
lapse or
forfeit of
share options
and awards - - (1,267) 1,267 - - -
Shares
acquired by
Deferred
Share Awards
Trust - - (500) - (500) - (500)
Shares granted
to
beneficiaries
of Deferred
Share Awards
Trust - - 1,621 (1,621) - - -
Issue of
shares 687 692 - - 1,379 - 1,379
Dividends - - (152) (9,194) (9,346) - (9,346)
--------------- -------- -------- --------- --------- -------- ---------------- --------
At 25 March
2011 133,348 121,854 (14,747) (63,810) 176,645 3,287 179,932
--------------- -------- -------- --------- --------- -------- ---------------- --------
Share Share Other Retained Non-controlling Total
capital premium reserves earnings Total interests equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------- -------- -------- --------- --------- -------- ---------------- --------
At 25
September
2009 131,250 119,623 (29,552) (52,604) 168,717 3,591 172,308
Items of
income and
expense
taken
directly
within
equity
Currency
translation
differences - - 6,026 - 6,026 - 6,026
Tax on
translation
of cashflow
hedge
reserve - - 14 - 14 - 14
Currency
translation
differences
recycled to
Income
Statement
on disposal
of foreign
operation - - 7,232 - 7,232 - 7,232
Net
investment
hedge - - (3,805) - (3,805) - (3,805)
Actuarial
loss on
Group
defined
benefit
pension
schemes - - - (1,803) (1,803) - (1,803)
Deferred tax
on Group
defined
benefit
pension
schemes - - - 1,931 1,931 - 1,931
Cash flow
hedges
fair value
gains in
period - - 61 - 61 - 61
tax on fair
value
gains - - (17) - (17) - (17)
transfers
to Income
Statement - - 1,766 - 1,766 - 1,766
tax on
transfers
to Income
Statement - - (494) - (494) - (494)
recycled to
Income
Statement
on
disposal
of
operation - - 108 - 108 - 108
Result for
the
financial
period - - - 24,650 24,650 500 25,150
Share based
payments
expense - - 688 - 688 - 688
Shares
acquired by
Deferred
Share
Awards
Trust - - (2,000) - (2,000) - (2,000)
Issue of
shares 806 755 - - 1,561 - 1,561
Dividends - - - (9,257) (9,257) - (9,257)
------------- -------- -------- --------- --------- -------- ---------------- --------
At 26 March
2010 132,056 120,378 (19,973) (37,083) 195,378 4,091 199,469
------------- -------- -------- --------- --------- -------- ---------------- --------
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
for the half year ended 25 March 2011
Other Reserves
Capital Foreign
conversion currency
Share Own reserve Hedging translation
options shares fund reserve reserve Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------- -------- --------- ----------- -------- ------------ ---------
At 24
September
2010 3,063 (23,443) 934 - 1,606 (17,840)
Items of
income and
expense taken
directly
within equity
Currency
translation
differences - - - - (3,094) (3,094)
Net investment
hedge - - - - 5,519 5,519
Share based
payments
expense 966 - - - - 966
Transfer on
exercise,
lapse or
forfeit of
share options
and awards (1,267) - - - - (1,267)
Shares
acquired by
Deferred
Share Awards
Trust - (500) - - - (500)
Shares granted
to
beneficiaries
of Deferred
Share Awards
Trust - 1,621 - - - 1,621
Dividends - (152) - - - (152)
--------------- -------- --------- ----------- -------- ------------ ---------
At 25 March
2011 2,762 (22,474) 934 - 4,031 (14,747)
--------------- -------- --------- ----------- -------- ------------ ---------
Capital Foreign
conversion currency
Share Own reserve Hedging translation
options shares fund reserve reserve Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------- -------- --------- ----------- -------- ------------ ---------
At 25
September
2009 1,757 (21,443) 934 (1,385) (9,415) (29,552)
Items of
income and
expense
taken
directly
within
equity
Currency
translation
differences - - - (53) 6,079 6,026
Tax on
translation
of cashflow
hedge
reserve - - - 14 - 14
Currency
translation
differences
recycled to
Income
Statement
on disposal
of foreign
operation - - - - 7,232 7,232
Net
investment
hedge - - - - (3,805) (3,805)
Cash flow
hedges
fair value
gains in
period - - - 61 - 61
tax on fair
value
gains - - - (17) - (17)
transfers
to Income
Statement - - - 1,766 - 1,766
tax on
transfers
to Income
Statement - - - (494) - (494)
recycled to
Income
Statement
on
disposal
of
operation - - - 108 - 108
Share based
payments
expense 688 - - - - 688
Shares
acquired by
Deferred
Share
Awards
Trust - (2,000) - - - (2,000)
------------- -------- --------- ----------- -------- ------------ ---------
At 26 March
2010 2,445 (23,443) 934 - 91 (19,973)
------------- -------- --------- ----------- -------- ------------ ---------
NOTES TO THE GROUP CONDENSED FINANCIAL STATEMENTS
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 24 September 2010 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 24 September 2010 and are as set out in those
financial statements. The Group has reviewed its accounting policy
for Exceptional Items and is making the following
clarification:
'Exceptional items include transaction costs. In management's
judgement such costs, by virtue of their nature as non-recurring
and unrelated to the trading result of the business, should be
highlighted and disclosed as exceptional items.'
The adoption of new standards and interpretations (as set out in
the 2010 Annual Report) that became effective for the Group's
financial statements for the year ended 30 September 2011 did not
have any significant impact on the Group Condensed Financial
Statements.
3. Segment Information
The Group is organised around different product portfolios. The
Group's reportable segments under IFRS 8 are as follows:
Convenience Foods - this reportable segment is the aggregation
of two operating segments, Convenience Foods UK and International
Convenience Foods. This segment derives its revenue from the
production and sale of convenience food.
Ingredients & Property - this segment represents the
aggregation of 'all other segments' as permitted under IFRS 8 (IFRS
8 states that where the external revenue of reportable segments
exceeds 75% of the total Group revenue, then it is permissible to
aggregate all other segments into one reportable segment). The
Ingredients & Property reportable segment derives its revenue
from the distribution of vegetable oils, molasses and the
management of the Group's surplus property assets.
The Greencore Malt reportable segment represented the
manufacture and sale of malt. This business was discontinued during
2010 (Note 14).
The Chief Operating Decision Maker monitors the operating
results of segments separately in order to allocate resources
between segments and to assess performance. Segment performance is
predominantly evaluated based on operating profit before
exceptionals and acquisition related amortisation. Net finance
costs and income tax are managed on a centralised basis, therefore,
these items are not allocated between operating segments for the
purposes of the information presented to the Chief Operating
Decision Maker and are accordingly omitted from the segmental
information below. Intersegment revenue is not material.
On 26 March 2010, the Group completed the disposal of its Malt
business ("Greencore Malt") and its bottled water business
("Greencore Water"). On 20 August 2010, the Group completed the
disposal of its Dutch based Convenience Foods business ("Greencore
Continental"). In accordance with IFRS 5 Non-Current Assets Held
for Sale and Discontinued Operations, the operations of Greencore
Malt, Greencore Water and Greencore Continental were deemed
discontinued. Comparatives have been re-presented to reflect
Greencore Continental as discontinued in the half year ended 26
March 2010.
Convenience Ingredients Malt
Foods & Property (discontinued) Total
Half Half Half Half Half Half Half Half
year year year year year year year year
2011 2010 2011 2010 2011 2010 2011 2010
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------- -------- --------- -------- -------- -------- --------- --------- ----------
Total revenue 402,369 406,967 39,465 37,481 - 90,581 441,834 535,029
Revenue from
discontinued - (34,945) - - - (90,581) - (125,526)
--------------- -------- --------- -------- -------- -------- --------- --------- ----------
Revenue -
continuing 402,369 372,022 39,465 37,481 - - 441,834 409,503
--------------- -------- --------- -------- -------- -------- --------- --------- ----------
Operating
profit before
exceptional
items and
acquisition
related
amortisation 26,014 24,528 1,032 1,792 - 9,550 27,046 35,870
Operating
loss/(profit)
from
discontinued
operations - 273 - - - (9,550) - (9,277)
---------------
Operating
profit before
exceptional
items and
acquisition
related
amortisation
- continuing 26,014 24,801 1,032 1,792 - - 27,046 26,593
Amortisation
of
acquisition
related
intangible
assets (1,433) (1,171) - - - - (1,433) (1,171)
Exceptional
items (17,652) -
Finance income 11,821 12,398
Finance costs (17,641) (27,423)
Share of
profit of
associates
after tax - - 338 338 - - 338 338
--------------- -------- --------- -------- -------- -------- --------- --------- ----------
Profit before
taxation 2,479 10,735
--------------- -------- --------- -------- -------- -------- --------- --------- ----------
Convenience Ingredients
Foods & Property Total
25
25 Mar 25 Sep Mar 25 Sep 25 Mar 25 Sep
2011 2010 2011 2010 2011 2010
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------ -------- -------- -------- -------- -------- --------
Segment assets
Assets 724,754 714,646 57,967 55,753 782,721 770,399
Investments in
associates - - 979 682 979 682
------------------ -------- -------- -------- -------- --------
Total assets 724,754 714,646 58,946 56,435 783,700 771,081
------------------ -------- -------- -------- --------
Reconciliation to Total Assets as reported in
the Group Condensed Balance Sheet
Deferred tax
assets 41,439 46,284
Cash and cash
equivalents 6,991 11,707
Derivative
financial
instruments 11,881 21,706
------------------ -------- -------- -------- -------- -------- --------
Total assets as reported in the Group
Condensed Balance Sheet 844,011 850,778
-------------------------------------- -------- -------- -------- --------
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 Half
year year
2011 2010
EUR'000 EUR'000
-------------------------------------- ----- --------- ---------
Continuing operations
Transaction costs (a) (13,552) -
Legal settlement (b) (4,100) -
-------------------------------------- ----- --------- ---------
(17,652) -
Taxation on exceptional items 125 -
-------------------------------------- ----- --------- ---------
Total continuing operations (17,527) -
-------------------------------------- ----- --------- ---------
Discontinued operations (net of tax)
Greencore Malt (c) - 14,342
Greencore Water (d) - (5,821)
-------------------------------------- ----- --------- ---------
Total discontinued operations - 8,521
--------------------------------------------- --------- ---------
Total exceptional (charge)/credit (17,527) 8,521
--------------------------------------------- --------- ---------
(a) Transaction costs
On 17 November 2010, the Boards of Greencore and of Northern
Foods plc 'Northern' announced that they had reached agreement on
the terms of a recommended merger of equals to create Essenta
Foods. The Greencore Board believe that the merger would have been
a compelling prospect for both companies, creating a business which
would offer substantial benefits for shareholders, customers and
employees and it was anticipated that the merger would complete in
the second quarter of 2011.
Subsequent to the announcement of the proposed merger, Greencore
and Northern commenced planning for the integration of the two
businesses, however, in late December 2010, a third party emerged
as a potential bidder for the acquisition of Northern. On 21
January 2011, the Board of Northern changed its recommendation in
favour of the merger to a recommendation in favour of an
alternative cash offer from this third party.
Following this announcement, the Group performed an assessment
of an acquisition of Northern and worked with a partner in order to
agree a simultaneous sale of certain branded businesses of
Northern. This approach was intended to provide significant funding
and allow Greencore to acquire only the parts of the Northern
business with the greatest synergy potential. This relatively
complex structure required a range of stakeholders to reach
agreement. However, after substantial investigation, the Board
determined that an improved offer could not be concluded on terms
which would deliver sufficiently strong returns to Greencore
shareholders and on 9 March 2011, the Board of Greencore announced
that it did not intend to make a revised offer for Northern.
On 7 December 2010, the Group announced the acquisition of On a
Roll Sales ("On a Roll"), a Convenience Foods business based in
Brockton, Massachusetts as set out in Note 17.
The EUR13.6 million exceptional charge includes the costs
incurred on the Essenta combination, the assessment of an
acquisition of Northern and transaction costs of EUR0.5 million
relating to the On a Roll acquisition. The costs are shown net of
recoveries payable to the Group by Northern through the Essenta
Implementation Agreement, dated 17 November 2010 comprising the
Break Fee and the Shared Costs. Of the costs incurred, the more
significant portion is comprised of professional advisory costs and
costs incurred to satisfy the provisions relating to conditionality
in making an announcement in accordance with Rule 2.5 of the
Takeover Code.
(b) Legal settlement
The Group settled an outstanding claim relating to its former
activities and recognised an exceptional charge of EUR4.1 million
in respect of both the settlement and related legal costs.
(c) Greencore Malt
The Group completed the disposal of its Malt businesses on 26
March 2010 and a profit on disposal of EUR14.3 million was
recognised in the Income Statement in the prior period. This
included the recycle of EUR4.1 million of cumulative foreign
currency translation losses and EUR0.1 million of cash flow hedge
losses, both of which were previously recognised in equity. The net
impact on the Group's equity at 26 March 2010 was an increase of
EUR18.5 million.
(d) Greencore Water
The Group completed the disposal of its bottled water business
on 26 March 2010 and a loss on disposal of EUR5.8 million was
recognised in the Income Statement in the prior period. This
included the recycle of EUR3.1 million of cumulative foreign
currency translation losses, previously recognised in equity. The
net impact on the Group's equity at 26 March 2010 was a decrease of
EUR2.7 million.
6. Taxation
Interim period tax is accrued using the tax rate that is
estimated to be applicable to expected total annual earnings based
on tax rates that were enacted or substantively enacted at the half
year end, 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 4.50 cent per share was approved at the Annual
General Meeting on 31 January 2011 as a final dividend in respect
of the year ended 24 September 2010 and a total of EUR7.3 million
was paid on 1 April 2011 to those shareholders that did not avail
of the Group scrip dividend scheme.
An interim dividend of 3.00 cent (2010: 3.00 cent) per share is
payable on 5 October 2011 to the shareholders on the Register of
Members as of 3 June 2011. The ordinary shares will be quoted
ex-dividend from 1 June 2011. 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 Group balance sheet for the half year ended 25
March 2011 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 earnings per ordinary share
Basic 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 in respect of the
Deferred Bonus Awards Scheme. 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 and external balances 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 Half
year year
2011 2010
*As re-presented
EUR'000 EUR'000
------------------------------------------------- -------- -----------------
(Loss)/profit attributable to equity holders
of the Company (657) 24,650
Exceptional items (post tax) 17,527 (8,521)
Fair value of derivative financial instruments
and related debt adjustments (3,749) (363)
FX on inter-company and external balances where
hedge accounting is not applied (182) 1,257
Amortisation of acquisition related intangible
assets 1,433 1,171
Pension financing 702 84
Tax effect of pension financing and amortisation
of acquisition related intangibles (995) (664)
Fair value of derivative financial instruments
and related debt adjustments and pension
financing included in discontinued operations - (345)
------------------------------------------------- -------- -----------------
Numerator for adjusted earnings per share
calculation 14,079 17,269
Result for the period from discontinued
operations (pre-exceptional) - (7,926)
Fair value of derivative financial instruments
and related debt adjustments and pension
financing included in discontinued operations - 345
------------------------------------------------- -------- -----------------
Numerator for continuing adjusted earnings per
share calculation 14,079 9,688
------------------------------------------------- -------- -----------------
Numerator for discontinued basic EPS
Discontinued profit for the year - 16,447
------------------------------------------------- -------- -----------------
Numerator for discontinued adjusted EPS
Result for the period from discontinued
operations (pre-exceptional) - 7,926
Fair value of derivative financial instruments
and related debt adjustments and pension
financing included in discontinued operations - (345)
------------------------------------------------- -------- -----------------
Numerator for discontinued adjusted EPS - 7,581
------------------------------------------------- -------- -----------------
Half Half
year year
2011 2010
*As re-presented
cent cent
------------------------------------------------- -------- -----------------
Basic (loss)/earnings per ordinary share
Continuing operations (0.3) 4.0
Discontinued operations - 8.1
------------------------------------------------- -------- -----------------
(0.3) 12.1
------------------------------------------------- -------- -----------------
Adjusted basic earnings per ordinary share
Continuing operations 6.8 4.8
Discontinued operations - 3.7
------------------------------------------------- -------- -----------------
6.8 8.5
------------------------------------------------- -------- -----------------
Half Half
year year
2011 2010
'000 '000
------------------------------------------------- -------- --------
Denominator for earnings per share and adjusted
earnings per share calculation
Shares in issue at the beginning of the period 210,574 208,333
Treasury shares (3,905) (3,905)
Shares held by Trust (1,651) (1,384)
Effect of shares issued in period 1,064 1,244
------------------------------------------------- -------- --------
Weighted average number of ordinary shares in
issue during the period 206,082 204,288
------------------------------------------------- -------- --------
Diluted earnings per ordinary share
Diluted 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
5,477,962 (2010: 4,818,180) shares were excluded from the diluted
EPS calculation as they were either antidilutive or contingently
issuable ordinary shares which had not satisfied the performance
conditions attaching at the end of the reporting period.
Half Half
year year
2011 2010
*As re-presented
cent cent
---------------------------------------------- ------ -----------------
Diluted (loss)/earnings per ordinary share
Continuing operations (0.3) 4.0
Discontinued operations - 8.0
---------------------------------------------- ------ -----------------
(0.3) 12.0
---------------------------------------------- ------ -----------------
Adjusted diluted earnings per ordinary share
Continuing operations 6.7 4.7
Discontinued operations - 3.7
---------------------------------------------- ------ -----------------
6.7 8.4
---------------------------------------------- ------ -----------------
The reconciliation of the weighted average number of ordinary
shares used for the purpose of calculating diluted earnings per
share is as follows:
Half Half
year year
2011 2010
'000 '000
------------------------------------------------ -------- --------
Denominator for diluted earnings per share and
adjusted earnings per share
Weighted average number of ordinary shares in
issue during the period 206,082 204,288
Dilutive effect of share options 3,227 2,202
------------------------------------------------ -------- --------
Weighted average number of ordinary shares for
diluted earnings per share 209,309 206,490
------------------------------------------------ -------- --------
9. Intangible Assets, Property, Plant and Equipment, Investment
Property, Capital Expenditure and Commitments
During the six month period to 25 March 2011, the Group made
approximately EUR10.6 million (2010: EUR15.9 million) of additions
to property, plant and equipment, investment property and
intangible assets. The Group also disposed of certain assets with a
carrying amount of EUR0.3 million (2010: EUR0.7 million) for
proceeds of EUR0.9 million (2010: EUR2.5 million).
In addition, EUR5.1 million of goodwill, EUR8.1 million of
intangible assets and EUR0.5 million of plant and equipment were
acquired as part of the acquisition of On a Roll Sales in the
period (Note 17).
At 25 March 2011, the Group had entered into contractual
commitments for the acquisition of property, plant and equipment
amounting to EUR1.2 million (2010: EUR3.2 million).
10. Equity Share Capital
Issued capital as at 25 March 2011 amounted to EUR133.3 million
(24 September 2010: EUR132.7 million) of which EUR2.5 million
(2010: EUR2.5 million) is attributable to treasury shares and
EUR0.8 million (24 September 2010: EUR1.1 million) is attributable
to shares held by the Deferred Bonus Plan Trust. During the six
month period to 25 March 2011, 1,072,797 shares (2010: 1,278,995)
were issued in respect of the scrip dividend scheme and 15,116
shares (2010: nil) were issued in respect of the Group's Sharesave
Schemes.
Pursuant to the Deferred Bonus Plan, 348,677 shares (2010:
1,425,832) were purchased by the Trustees of the Plan during the
period ended 25 March 2011 at a cost of EUR0.5 million (2010:
EUR2.0 million). The nominal value of these shares, on which
dividends have not been waived by the Trustees of the Plan, was
EUR0.2 million at 25 March 2011 (2010: EUR0.9 million). In
addition, the Trustees have, to date, availed of the scrip dividend
scheme and utilised dividend income with a combined value of
EUR0.152 million to acquire 114,241 shares in the Group with a
nominal value of EUR0.072 million. In the period, 989,502 shares
with a nominal value of EUR0.623 million were transferred to
beneficiaries of the Deferred Bonus Plan.
There were 80,000 (2010: 925,000) share options granted under
the Executive Share Option Scheme and no shares were granted under
the Sharesave Schemes in the period.
11. Components of Net Debt and Financing
During the period, the Group repaid EUR38.9 million of Private
Placement Notes which had reached their maturity dates. The cash
flows from financing activities are set out in the Group Condensed
Cash Flow Statement.
25 March 26 March
2011 2010
EUR'000 EUR'000
------------------------------------------------- ---------- ----------
Net Debt
Current assets
Cash and cash equivalents 6,991 199,105
Current liabilities
Borrowings before fair value adjustment - (36,857)
Non-current liabilities
Borrowings before fair value adjustment (243,295) (356,466)
------------------------------------------------- ---------- ----------
Comparable net debt (236,304) (194,218)
Borrowings - fair value hedge adjustment (12,186) (26,287)
Cross currency interest rate swaps - fair value
hedges 11,804 27,047
------------------------------------------------- ---------- ----------
Group net debt (236,686) (193,458)
------------------------------------------------- ---------- ----------
Half
Half year year
2011 2010
*As re-presented
EUR'000 EUR'000
----------------------------------------------- ---------- -----------------
Net Finance Costs
Net finance costs on interest bearing cash,
cash equivalents and borrowings (9,177) (13,877)
Net pension financing charge (702) (84)
Change in fair value of derivative and related
debt adjustments 3,749 363
Foreign exchange on inter-company and external
balances where hedge accounting is not
applied 182 (1,257)
Unwind of present value discount on
non-current payables and receivables 128 (170)
----------------------------------------------- ---------- -----------------
(5,820) (15,025)
----------------------------------------------- ---------- -----------------
Analysed as:
Finance income 11,821 12,398
Finance costs (17,641) (27,423)
----------------------------------------------- ---------- -----------------
(5,820) (15,025)
----------------------------------------------- ---------- -----------------
Comparable net debt is a non-IFRS measure used by the Group as a
key performance indicator.
12. Provision for Liabilities
Half year
2011
EUR'000
---------------------------------- ----------
Six months ended 25 March 2011
At beginning of period 12,247
Utilised in period (1,665)
Created in period 738
Currency translation differences (158)
Unwind discount 74
---------------------------------- ----------
At end of period 11,236
---------------------------------- ----------
25 Mar 24 Sep
2011 2010
EUR'000 EUR'000
------------------------- --------- ---------
Analysed as:
Non-current liabilities 3,830 3,950
Current liabilities 7,406 8,297
------------------------- --------- ---------
11,236 12,247
------------------------- --------- ---------
The significant provisions are as follows:
Remediation and closure
Remediation and closure obligations and related costs arise
primarily from the Ingredients & Property segment and have been
established to cover either a statutory or constructive obligation
of the Group to carry out remedial works. Remediation amounts
relate to irrevocable commitments in respect of programmes
commenced and committed to in the Ingredients & Property
segment, primarily related to the exit from sugar processing. A
significant portion of the balance provided is not contracted and
accordingly the timing of payments is subject to a degree of
uncertainty. Substantially all costs are expected to have been
incurred in the next twelve months.
Deferred contingent consideration
Deferred contingent consideration at 24 September 2010
represented the estimated amount payable in respect of the
acquisition of the minority interest of Trilby Trading Limited.
This was paid during the period ended 25 March 2011. Deferred
contingent consideration at 25 March 2011 represented the estimated
amount payable in respect of the acquisition of On A Roll Sales
Inc. as set out in Note 17.
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.
13. Contingencies
The Group and certain of its subsidiaries continue to be subject
to various legal proceedings relating to its current and former
activities. 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 EUR9.4
million (24 September 2010: EUR9.4 million). 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 likelihood of repayment of any restructuring aid
received is considered to be remote, therefore no provision has
been recognised in the Group Condensed Financial Statements in
respect of this guarantee.
As part of the agreement to dispose of Greencore Malt, the Group
provided a bank guarantee to Axereal Union de Cooperatives
Agricoles for an amount of EUR10.0 million to guarantee the
performance by the Group of its payment obligations in respect of
any breach of warranty, indemnity or covenant under the disposal
agreement in respect of any claim made by Axereal Union de
Cooperatives Agricoles up to 26 March 2014.
14. Discontinued Operations and Disposal of Undertakings
The Group disposed of its interest in its malt business, its
bottled water business and its Dutch based convenience foods
business in 2010. These operations were considered, in management's
judgement, to be discontinued operations in accordance with IFRS 5
Non-Current Assets Held for Sale and Discontinued Operations. The
respective profits and losses on the disposal of these businesses
have been recognised within discontinued operations in the period
in which the disposal occurred. The details of the profits and
losses on the disposal of the Malt business and the bottled water
business are set out in Note 5. A loss on disposal of the Dutch
based Convenience Foods business of EUR4.5 million was recognised
in the Income Statement of the Group Financial Statements for the
year ended 24 September 2010.
The revenue and results of the above mentioned discontinued
operations were as follows:
Half Half
year year
2011 2010
EUR'000 EUR'000
-------------------------------------------------------- -------- ---------
Revenue - 125,526
Cost of sales - (92,030)
Operating costs, net - (24,219)
-------------------------------------------------------- -------- ---------
Operating profit - 9,277
Finance income and costs (net) - 297
-------------------------------------------------------- -------- ---------
Profit before taxation and exceptional items - 9,574
Taxation on profit before exceptional items - (1,648)
-------------------------------------------------------- -------- ---------
Result from discontinued operations before exceptional
items - 7,926
Exceptional items (Note 5) - 8,521
-------------------------------------------------------- -------- ---------
Result from discontinued operations - 16,447
-------------------------------------------------------- -------- ---------
Half year Half year
2011 2010
EUR'000 EUR'000
----------------------------------------------------- ----------- ----------
Cash flows of Discontinued Operations
Profit before taxation and exceptional items - 9,574
Finance income and costs (net) - (297)
----------------------------------------------------- ----------- ----------
Operating profit - discontinued (pre-exceptional) - 9,277
Depreciation - 3,628
Amortisation of intangible assets - 53
Amortisation of government grants - (47)
Difference between pension charge and cash
contributions - (459)
Working capital movement - (29,931)
Other movements - 26
----------------------------------------------------- ----------- ----------
Net cash outflow from operating activities before
exceptional items - (17,453)
Cash inflow related to exceptional items - 5,595
Tax paid - (886)
----------------------------------------------------- ----------- ----------
Net cash outflow from operating activities - (12,744)
----------------------------------------------------- ----------- ----------
Cash flow from investing activities
Purchase of property, plant and equipment - (2,090)
----------------------------------------------------- ----------- ----------
Net cash outflow from investing activities - (2,090)
----------------------------------------------------- ----------- ----------
Net decrease in cash and cash equivalents - (14,834)
----------------------------------------------------- ----------- ----------
15. 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, actual investment returns and updated mortality
assumptions.
The principal actuarial assumptions are as follows:
25 Mar 24 Sep
2011 2010
------------------------------------- ------------ ------------
Rate of increase in pension payment 0%-3.30% 0%-3.00%
Discount rate 5.40%-5.60% 4.90%-5.20%
Inflation rate 1.90%-3.30% 1.80%-3.00%
------------------------------------- ------------ ------------
The financial position of the schemes was
as follows:
25 Mar 24 Sep
2011 2010
EUR'000 EUR'000
------------------------------------------- ---------- ----------
Total market value of assets 380,474 381,376
Present value of scheme liabilities (482,009) (499,280)
------------------------------------------- ---------- ----------
Deficit in schemes (101,535) (117,904)
Effect of paragraph 58(b) limit (645) (538)
------------------------------------------- ---------- ----------
Net deficit in schemes (102,180) (118,442)
Deferred tax asset 23,354 27,644
------------------------------------------- ---------- ----------
Net liability (78,826) (90,798)
------------------------------------------- ---------- ----------
16. Subsequent Events
Subsequent to the period end, the Group completed a refinancing
of its bank debt facilities. New facilities totalling EUR319
million, with a maturity date of May 2016, will replace existing
facilities of EUR324 million with a maturity of April 2012.
17. Acquisition of Undertakings
On 7 December 2010, the Group acquired a 100% interest in On A
Roll Sales Inc. ("On A Roll"), a manufacturer of fresh sandwiches
based in Brockton, south of Boston, Massachusetts. The Group
obtained control of On A Roll by way of asset purchase. This
acquisition provides an additional revenue stream to Greencore
USA's Food to Go category and complements our existing businesses
in Newburyport and Cincinnati.
The fair value of the assets acquired, determined in accordance
with IFRS were as follows:
Fair value
EUR'000
------------------------------- -----------
Assets
Intangible assets 8,147
Property, plant and equipment 488
Inventory 404
Trade and other receivables 879
------------------------------- -----------
Total assets 9,918
------------------------------- -----------
Liabilities
Trade and other payables (1,413)
------------------------------- -----------
Total liabilities (1,413)
------------------------------- -----------
Net assets acquired 8,505
Goodwill 5,087
------------------------------- -----------
Total enterprise value 13,592
------------------------------- -----------
Satisfied by:
Cash payments 13,188
Cash acquired (284)
------------------------------- -----------
Net cash outflow 12,904
Deferred consideration 688
------------------------------- -----------
Total consideration 13,592
------------------------------- -----------
The fair values of the assets acquired have been determined
provisionally as at 25 March 2011 and may be subject to change in
the Group Financial Statements for the year ended 30 September 2011
as the Group has yet to finalise the fair value of all the net
identifiable assets acquired.
The principal factors contributing to the recognition of
goodwill on this business combination is the expected realisation
of cost savings and operational synergies through the combination
of the activities of On A Roll with the existing operations in the
Group. The total amount of goodwill recognised of EUR5.1 million is
expected to be deductible for tax purposes.
The deferred consideration is revenue related and payable one
year following the acquisition date dependent on the performance of
On A Roll for the year ended 30 September 2011. The maximum amount
payable under the acquisition agreement has been provided for based
on management's judgement of the expected performance of On A Roll
for this period. There is no minimum amount payable.
As part of the acquisition, the Group acquired trade receivables
with a fair value of EUR0.841 million. The gross contractual amount
receivable was EUR0.845 million and management's estimate of the
contractual cash flows not expected to be collected was EUR0.004
million.
Transaction costs of EUR0.5 million associated with the
acquisition of On A Roll are presented as an exceptional item
within operating costs as set out in Note 5.
The post acquisition impact of On A Roll was to increase Group
revenue for the financial period by EUR5.9 million. The impact on
Group profit for the financial period was not material.
If the acquisition date of On A Roll was at the beginning of the
period, the Group revenue for the financial period would have been
EUR444.8 million. The profit of the Group for the financial period
determined as though the acquisition date of On A Roll had been the
beginning of the period would not be materially different.
The principal intangible assets acquired were customer related
intangible assets amounting to EUR8.0 million.
18. Constant currency calculations
Constant currency calculations are performed by retranslating
current year income statement revenue and profit of pound sterling
and US dollar functional currency businesses to euro using the
average exchange rate that was applicable to the prior comparative
period financial statements. The average GBP/EUR exchange rate for
the first half of 2011 was 0.857 (2010: 0.888) and the average
USD/EUR exchange rate for the first half of 2011 was 1.361 (2010:
1.415).
19. Information
Copies of the Group Condensed Financial Statements for the half
year ended 25 March 2011 are available for download from the
Group's website at www.greencore.com
* * *
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GMGZKVFFGMZM
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