TIDMGNC
RNS Number : 7860D
Greencore Group PLC
22 May 2012
HALF YEARLY FINANCIAL REPORT
for the half year ended 30 March 2012
GREENCORE GROUP PLC
INTERIM RESULTS
Strong performance despite continued challenging market
conditions
Greencore Group plc, a leading international convenience food
producer, today announces its unaudited interim results for the 26
weeks ended 30 March 2012.
HIGHLIGHTS
-- Growth of 49.9% in revenue to GBP567.7m, due to the Uniq
acquisition and business momentum;
-- Revenue from continuing activity(1) up by 9.3% with the
Convenience Foods division ahead by 9.7%;
-- Group operating profit(2) up 36.7% to GBP31.7m, reflecting
the addition of Uniq and business momentum;
-- Group operating margin of 5.6%, an expected 50bps decline
resulting from the incorporation of Uniq;
-- Strong growth in adjusted EPS(3) , up 19.6%;
-- Interim dividend of 1.75 pence per share, an increase in
total distribution of 26% versus H1 11;
-- The integration of Uniq is progressing well and delivery is
in line with our business case;
-- Further progress in developing a business of scale in the US
with the acquisition of MarketFare Foods, LLC.
Summary Performance
H1 12 Change
GBPm
--------------------------------------- ----- ----------
Group revenue - as reported 567.7 +49.9%
Group revenue - continuing activity(1) 541.7 +9.3%
Group operating profit(2) 31.7 +36.7%
Group operating margin 5.6% -50 bps
Adjusted EPS (pence)(3) 5.5p +19.6%
Net debt 262.2 +GBP122.4m
Convenience Foods Division
Revenue - continuing activity(1) 506.6 +9.7%
Operating profit(2) 30.7 +37.6%
Operating margin(2) 5.8% -70 bps
--------------------------------------- ----- ----------
Patrick Coveney, Chief Executive Officer, commented:
"Our business has performed strongly in the first half of 2012.
The acquisition of Uniq last year has reshaped our Group and we are
on track to deliver all of the targeted integration benefits. Group
revenues are up 50% on last year with like-for-like revenues ahead
by almost 10%. When combined with good underlying margin
performance across the enlarged group and the reduction in our
effective tax rate, we have delivered an increase in Group adjusted
earnings of 75% and adjusted EPS up almost 20%. Furthermore, we
have continued to reshape our portfolio, in particular in the US
with the acquisition of MarketFare Foods in April. This acquisition
represents the next step in building a business of real scale in
the US and strengthens our position in the food to go / convenience
store channel.
Despite the tough market conditions, which show no signs of
abating, we continue to target strong growth in adjusted EPS for
the financial year."
_________________________________________________________________________________
1 Continuing activity revenue growth assumes Uniq had formed
part of the Group throughout the prior year and excludes Desserts
product lines in Uniq which have been or are being exited
2 Operating profit and margin are stated before exceptional
items and acquisition related amortisation
3 Adjusted earnings are stated before exceptional items, pension
finance items, acquisition related amortisation, FX on
inter-company and certain external balances and the movement in the
fair value of all derivative financial instruments and related debt
adjustments. The H1 11 number of shares has been adjusted for the
bonus element of the rights issue
4 Market growth rates are based on Kantar data for the 24 weeks
to 18 March 2012
5 Market growth rates are based on Nielsen data for the 24 weeks
to 31 March 2012 and Greencore retail sales figures
_________________________________________________________________________________
Presentation
A presentation of the interim results will be held for analysts
and institutional investors at 8.30am today at Investec Bank plc, 2
Gresham Street, London EC2V 7QP.
This presentation can be accessed live through the following
channels:
-- Webcast - details on www.greencore.com
-- Conference call
+353 (0) 1 659
Ireland number: 0423
+44 (0) 20 7784
UK number: 1036
Pass code: 4691051#
A replay of the presentation will be available on
www.greencore.com. It will also be available through a conference
call replay facility which will be available for one week - to dial
into the replay:-
Ireland replay
number: +353 (0) 1 486 0902
+44 (0) 20 7111
UK replay number: 1244
Replay code: 4691051#
For further information, please contact:
Patrick Coveney Chief Executive Tel: +353 (0) 1 605
Officer 1045
Alan Williams Chief Financial Tel: +353 (0) 1 605
Officer 1018
Rob Greening or Lisa Kavanagh Powerscourt Tel: +44 (0) 20 7250
1446
About Greencore
-- 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
Financial and Operating Performance(1, 2, 3)
The Group delivered a strong financial and operating performance
in the period.
Group revenue increased by 49.9% to GBP567.7m, reflecting both
strong underlying momentum in the legacy Greencore business and
good performance in the Uniq businesses. In the Convenience Foods
division, underlying growth (assuming Uniq had formed part of the
Group throughout the prior year and excluding the Desserts product
lines in Uniq which have been or are being exited) increased by
9.7% reflecting strong volume performance as we benefitted from
good category momentum and market share gains.
Group operating profit increased by 36.7% versus H1 11 to
GBP31.7m reflecting the addition of the Uniq businesses. Within the
Convenience Foods division, operating profit of GBP30.7m was ahead
of H1 11 by GBP8.4m or 37.6% and operating margin was 5.8%, 70
basis points lower than H1 11. The decline was anticipated
following the Uniq acquisition. It reflects the mix of profits in
the enlarged Group, the timing of delivery of integration benefits
during the year and the impact of pronounced input cost inflation
where we mitigate the cash margin impact in the period, but rebuild
the percentage margin over time.
Adjusted earnings of GBP21.1m were 74.7% ahead of H1 11. This
earnings growth was driven not only by the operating contribution
from the acquisition of Uniq but also by highly effective
management of financing and tax charges. Bank interest payable is
only GBP0.3m higher than in H1 11 despite an increase in net debt
to part fund the Uniq acquisition. The effective tax rate for the
business in the half was 4%, in part due to the tax attributes
acquired with Uniq. Adjusted earnings per share taking into account
the effect of the bonus element of the rights issue increased by
19.6%.
Uniq Integration Update
The integration of the Uniq business is progressing well. The
Spalding salads business has been fully integrated into the
Greencore Food to Go category business. The Northampton sandwiches
business is operating as a separate category business within UK
Convenience Foods. The chilled desserts activity is being operated
as a single category business. The majority of the planned contract
exits in Minsterley in yoghurts and in everyday desserts have now
been completed. We have commenced the transfer of production of
premium dessert lines from Minsterley to Evercreech and this
process will be completed by the end of December. Synergy delivery
is progressing in line with our expectations - we have now realised
the HQ and divisional cost reductions and are progressing well with
the realisation of procurement benefits from our increased scale
and with supply chain efficiencies.
US Development
In April 2012, we announced the acquisition of MarketFare Foods
LLC, a leading manufacturer of food to go products for convenience
and small stores. The acquisition represents the next step in our
strategy to build a business of real scale in the US.
Dividend and FTSE UK Series Inclusion
The Board of Directors is announcing an interim dividend of
1.75p. This represents a total distribution of approximately
GBP6.8m, an increase of GBP1.4m or around 26% on prior year. It is
the Board's intention to increase the total dividend distribution
for the financial year in line with the growth in adjusted earnings
per share.
During the period, the listing of the Group's shares on the
Irish Stock Exchange was cancelled and the shares now trade in
London. This has been well received and there has been an increase
in liquidity in the Group's shares since the announcement of the
listing transfer. The shares have also been redenominated to
sterling.
OUTLOOK
The Group has delivered a strong financial performance in the
first half against a backdrop of challenging market conditions. The
Uniq integration is progressing well and we have undertaken further
steps to deliver a business of real focus and scale in the US.
We do not expect to see any material improvement in the trading
environment in the UK in the second half and we have yet to see a
material easing in inflationary pressure. Notwithstanding these
pressures, we continue to target good underlying revenue growth and
strong growth in adjusted earnings per share.
OPERATING REVIEW (1,2,3,4,5)
Convenience Foods
Revenue Analysis
(GBPm) Greencore Former Uniq Total business Former Uniq Total Division
businesses - continuing - continuing - activity - as reported
- pre-Uniq activities to be exited
---------- ------------ -------------- --------------- -------------- ---------------
Revenue 383.4 123.2 506.6 26.0 532.6
---------- ------------ -------------- --------------- -------------- ---------------
% growth +11.2% +5.4% +9.7% -21.3% +54.5%
---------- ------------ -------------- --------------- -------------- ---------------
Revenue and Operating Profit(*)
H1 12 H1 11 Change
GBPm GBPm
------------------------------- ------ ------ --------
Revenue - as reported 532.6 344.8 +54.5%
------------------------------- ------ ------ --------
Revenue - continuing activity 506.6 461.7 +9.7%
------------------------------- ------ ------ --------
Operating profit 30.7 22.3 +37.6%
------------------------------- ------ ------ --------
Operating margin 5.8% 6.5% -70 bps
------------------------------- ------ ------ --------
*The impact of currency was not material
Despite the challenging market conditions, the Convenience Foods
division delivered a strong performance across the portfolio during
the first half while also integrating the Uniq business. Reported
revenue increased by 54.5%, with revenue from continuing activities
9.7% higher. Operating profit was up GBP8.4m or 37.6% resulting in
an operating margin of 5.8%, a decline of 70 bps. This decline was
anticipated and reflects the mix of profits in the new enlarged
Group, the timing of the delivery of integration benefits during
the year and the ongoing impact of pronounced input cost inflation
where we mitigate the cash margin impact in the period, but rebuild
the percentage margin over time.
UK Convenience Foods
Food to Go, including Greencore Northampton
The Food to Go category, including the Northampton and Spalding
businesses acquired as part of the Uniq transaction, represents
approximately 40% of Convenience Foods revenues and comprises
sandwiches, sushi, snack and side of plate salads. The sandwich
category again proved resilient with growth in the period of
7.9%(5) . The combined Food to Go activity grew by 12.4% on an
underlying basis. The legacy Greencore Food to Go business grew by
14.4% in the period benefitting from the annualisation of new
customer wins from FY11 together with further additional business
gained in the period. We continued to transition more sandwich
volumes to cardboard skillets improving the visual appeal of the
offer. The acquired Uniq businesses also performed strongly with
growth of 9.5%. In the Northampton sandwich business, growth was
underpinned by the premium Ultimate range together with a
significant upgrade of the core range to "best-in-class". The
Spalding salads activity was fully integrated into Greencore Food
to Go and grew strongly through customer business gains in both
retail and food service.
Prepared Meals
The Prepared Meals category comprises chilled ready meals,
quiches, chilled soup and chilled sauces. The chilled ready meals
category again exhibited strong growth, up 9.2%(4) while the quiche
market was ahead by 3.0%(4) . Whilst chilled soups were moderately
ahead, the chilled sauce market was in modest decline. Prepared
Meals delivered a good revenue performance with growth of 8.0%. We
delivered growth in ready meals across our customer and product
portfolio, particularly in traditional ready meals. We also
delivered strong growth in chilled soups through an extension of
business with an existing customer. The business experienced
significant input cost inflation both in primary proteins and in
egg and undertook a significant number of initiatives to partially
mitigate this impact. We also invested in further soup capacity to
better meet demand during peak periods.
Grocery and Frozen
The Grocery and Frozen business provides meal components with
Grocery activity focused on cooking sauces, table sauces and
pickles and Frozen supplying Yorkshire puddings. The categories are
under common management. Combined revenues were ahead by 9.0%. In
private label cooking sauce, the largest sub-category, the market
continues to exhibit strong growth and was up 6.5%(4) in the
period. Our business grew significantly ahead of the market. In
Yorkshire puddings, the market experienced modest decline. Our
revenue was also in modest decline in the face of significant
branded promotional activity.
Cakes and Desserts, including Foodservice Desserts
Our Cakes and Desserts business delivered strong revenue growth
of 12.7%. The retail cakes market was modestly ahead in value
terms, reflecting a partial recovery of input cost inflation with
volumes marginally lower. Our Cakes and Desserts business delivered
strong growth across the customer portfolio. Despite this growth
and some input cost recovery, returns were lower than H1 11 as the
category continues to suffer both through input cost inflation and
industry over capacity.
The Foodservice Desserts business delivered good volume led
growth in the half picking up additional business with both new and
existing customers.
Chilled Desserts
The Chilled Desserts category business comprises the Minsterley
and Evercreech facilities acquired as part of the Uniq transaction.
The portfolio has been radically reshaped in the period. Following
the exit of cottage cheese production in Evercreech under Uniq
management in August 2011, the business has now also exited all
yoghurt manufacturing and a number of everyday desserts
arrangements in Minsterley with the final portion of that business
due to terminate in June 2012. A significant investment is being
undertaken in the Evercreech site to facilitate the transfer of
premium desserts products from Minsterley. This transfer will be
complete by the end of 2012 and will leave Minsterley focused on
the contract packing of chocolate desserts under the Cadbury brand
with Evercreech operating as a larger scale premium desserts
facility. Against this background, revenue in continuing activities
was marginally lower.
US Convenience Foods
US revenues in the period increased by 14.3%, primarily
reflecting the impact of the On a Roll acquisition in December
2010. The mix of sales continues to evolve towards both food to go
products and convenience / small store channels. During the period,
the business exited the Cincinnati test facility following the
termination of the lease.
Ingredients & Property(*)
H1 12 H1 11 Change
GBPm GBPm
------------------ ------ ------ -------
Revenue 35.1 33.8 +3.8%
------------------ ------ ------ -------
Operating profit 1.0 0.9 +16.0%
------------------ ------ ------ -------
*The impact of currency was not material
The Ingredients & Property division represented around 6% of
Group revenue in the period and a smaller proportion of Group
profits.
The ingredients businesses performed well in the period with
operating profit growth more than offsetting a decline in property
trading profits in the division.
In December 2011, outline planning permission was obtained in
Littlehampton for a mixed use development and substantial progress
was made in the period on the planning agreement. A number of sales
of agricultural land in Ireland on the periphery of the Group's
larger land banks are being progressed.
FINANCIAL REVIEW (1,2,3)
Revenue and Operating Profit
Reported revenues in the period were GBP567.7m, an increase of
49.9% versus H1 11. Underlying revenue (assuming Uniq had formed
part of the Group throughout the prior year and excluding Desserts
product lines in Uniq which have been or are being exited)
increased by 9.3%.
Group operating profit of GBP31.7m was ahead of the prior year
by 36.7%. Group operating margin was 5.6%, 50 basis points behind
the prior year. This decline was anticipated and reflects the mix
of profits in the new enlarged Group, the timing of delivery of
integration benefits during the year and the impact of pronounced
input cost inflation where we mitigate the cash margin impact in
the period, but rebuild the percentage margin over time.
Following the change in reporting currency to sterling to align
external reporting with the profile of the Group, the impact of
movement in currency is immaterial.
Interest Payable
The Group's bank interest payable in H1 12 was GBP8.1m, compared
to GBP7.9m in H1 11 despite the increase in net debt to fund the
Uniq acquisition. The composition of the charge in H1 12 was
interest payable of GBP7.4m, commitment fees for undrawn facilities
of GBP0.4m and an amortisation charge in respect of facility
arrangement fees of GBP0.3m.
Non-Cash Finance Charges / Credit
The Group's net non-cash finance credit in H1 12 was GBP0.2m
(GBP2.9m credit in H1 11). The change in the fair value of
derivatives and related debt adjustments was a non cash credit of
GBP2.5m (GBP3.4m credit in H1 11) reflecting the impact of marking
to market the Group's fixed interest rate swaps. The non cash
pension financing charge of GBP2.4m was greater than the charge in
H1 11 of GBP0.6m reflecting an increase in interest rates and the
lower expected returns on pension assets. The credit in respect of
the increase in the present value of assets and liabilities held
was GBP0.1m (H1 11: credit GBP0.1m).
Taxation
The Group's effective tax rate in H1 12 was 4% compared to an
FY11 rate of 13% and cash tax paid was GBP0.2m (H1 11:
GBP1.5m).
The effective tax rate has decreased largely as a result of the
Uniq acquisition. As part of the assessment of fair values upon the
acquisition of Uniq, the Group recognised significant intangible
assets and an associated deferred tax liability with a provisional
value of GBP9.1m. As the intangible asset is amortised, this
deferred tax liability is proportionately credited to the Income
Statement. The Uniq businesses also brought considerable tax
attributes to the Group, the carrying value of which is reassessed
periodically and can have a significant impact on the overall
effective tax rate. Notwithstanding this, the Group anticipates
having an effective tax rate of this order for the foreseeable
future.
Exceptional Costs
During the period, the Group incurred a pre-tax exceptional
charge of GBP3.4m in connection with the integration of the Uniq
business. There were no other exceptional charges in the
period.
Earnings per Share
Adjusted earnings of GBP21.1m in the period were 74.7% ahead of
the prior year. Adjusted earnings per share were 5.5 pence. This
compares to 4.6 pence in H1 11 after taking into account the effect
of the bonus element of the rights issue to part fund the Uniq
acquisition, resulting in an increase of 19.6%.
Cash Flow and Net Debt
A net cash inflow from operating activities of GBP7.8m was
recorded compared to an outflow of GBP11.8m in H1 11. Capital
expenditure of GBP14.1m was incurred in the period compared to
GBP13.0m in H1 11. Interest costs of GBP7.0m were paid in the half
with cash dividends to equity holders of GBP4.1m.
The Group's net debt at 30 March 2012 was GBP262.2m, an increase
of GBP122.4m from 30 September 2011 with GBP112.7m attributable to
the payment of consideration for the acquisition of Uniq. The
seasonal working capital outflow in the half was GBP12.2m versus an
outflow of GBP17.6m in H1 11. This reflects tight management of
working capital together with the realisation of working capital
reduction initiatives in the Uniq businesses.
During the period, the Group drew down the bilateral debt
facility of GBP60m which was arranged as part of the financing of
the Uniq acquisition. As at 30 March 2012, the weighted average
maturity of available committed debt facilities of GBP443m was 3.9
years.
Pensions
The net pension deficit (before related deferred tax) decreased
to GBP121.1m at 30 March 2012 from GBP130.2m at 30 September 2011.
The net pension deficit after related deferred tax was GBP96.6m, a
reduction from GBP105.7m at 30 September 2011.
The fair value of total plan assets relating to the Group's
defined benefit pension schemes (excluding associates) increased to
GBP348.8m at 30 March 2012 from GBP314.8m at 30 September 2011. The
present value of the total pension liabilities for these schemes
increased to GBP469.5m from GBP444.9m over the same period.
All defined benefit pension scheme plans are closed to future
accrual and the Group's pension policy with effect from 1 January
2010 is that future service for current employees and new entrants
is provided under defined contribution pension arrangements.
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.
Principal Risks and Uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remainder of the financial year and could cause actual results to
differ materially from expected and historical results. The Board
considers these risks and uncertainties to be the same as described
on pages 24 and 25 of the Annual Report and Accounts for the year
ended 30 September 2011 issued on 6 December 2011. These risks are
as follows:
Strategic risks
-- Competitor activity
-- Expansion
Commercial risks
-- Changes in consumer behaviour and demand
-- Loss of key customer relationships
-- Commodity price / input cost fluctuations
Operational risks
-- Food safety, environmental and health and safety
-- Loss of manufacturing capability
-- Loss of key personnel
Financial risks
-- Interest rates, foreign exchange rates, liquidity and
credit
-- Employee retirement obligations
Other
-- Property development
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
22 May 2012
GROUP CONDENSED INCOME STATEMENT
for the half year ended 30 March 2012
Half Year ended 30 March Half Year ended 25 March
2012 2011
(#) As re-presented
(Unaudited) (Unaudited)
Exceptional Exceptional
Note Pre - exceptional (Note 5) Total Pre - exceptional (Note 5) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ---- ----------------- ----------- --------- ----------------- ----------- ---------
Revenue 3 567,681 - 567,681 378,630 - 378,630
Cost of sales (396,457) - (396,457) (256,228) - (256,228)
----------------------- ---- ----------------- ----------- --------- ----------------- ----------- ---------
Gross profit 171,224 - 171,224 122,402 - 122,402
Operating costs,
net (139,533) (3,438) (142,971) (99,225) (15,127) (114,352)
----------------------- ---- ----------------- ----------- --------- ----------------- ----------- ---------
Group operating
profit/(loss) before
acquisition related
amortisation 3 31,691 (3,438) 28,253 23,177 (15,127) 8,050
Amortisation of
acquisition related
intangibles (4,817) - (4,817) (1,228) - (1,228)
----------------------- ---- ----------------- ----------- --------- ----------------- ----------- ---------
Group operating
profit/(loss) 3 26,874 (3,438) 23,436 21,949 (15,127) 6,822
Finance income 11 9,160 - 9,160 10,130 - 10,130
Finance costs 11 (17,085) - (17,085) (15,117) - (15,117)
Share of profit
of associates after
tax 325 - 325 290 - 290
----------------------- ---- ----------------- ----------- --------- ----------------- ----------- ---------
Profit/(loss) before
taxation 19,274 (3,438) 15,836 17,252 (15,127) 2,125
Taxation 6 (658) 753 95 (2,447) 107 (2,340)
----------------------- ---- ----------------- ----------- --------- ----------------- ----------- ---------
Profit/(loss) for
the financial period 18,616 (2,685) 15,931 14,805 (15,020) (215)
Attributable to:
Equity shareholders 18,102 (2,685) 15,417 14,457 (15,020) (563)
Non-controlling
interests 514 - 514 348 - 348
----------------------- ---- ----------------- ----------- --------- ----------------- ----------- ---------
18,616 (2,685) 15,931 14,805 (15,020) (215)
Earnings/(loss)
per share (pence) 8
Basic earnings/(loss)
per share 4.0 (0.2)
----------------------------- ----------------- ----------- --------- ----------------- ----------- ---------
Diluted earnings/(loss)
per share 4.0 (0.2)
----------------------------- ----------------- ----------- --------- ----------------- ----------- ---------
(#) As re-presented to reflect the change in reporting currency
as set out in Note 17
GROUP CONDENSED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the half year ended 30 March 2012
Half year Half year
ended ended
30 March 25 March
2012 2011
(#) As re-
presented
(Unaudited) (Unaudited)
GBP'000 GBP'000
--------------------------------------------------------- ------------ ------------
Items of income and expense taken directly to
equity
Currency translation adjustment (781) 2,592
Current tax on currency translation adjustment 151 646
Hedge of net investment in foreign currency subsidiaries 1,266 4,729
Actuarial gain on Group defined benefit pension
schemes 3,739 7,680
Deferred tax on Group defined benefit pension
schemes (270) (2,863)
Cash flow hedges:
fair value movement taken to equity (1,004) -
deferred tax on fair value movement taken to equity 241 -
transfer to Income Statement for the period 168 -
deferred tax on transfer to Income Statement (40) -
Net income recognised directly within equity 3,470 12,784
Group result for the financial period 15,931 (215)
--------------------------------------------------------- ------------ ------------
Total recognised income and expense for the financial
period 19,401 12,569
--------------------------------------------------------- ------------ ------------
Attributable to:
Equity shareholders 18,983 12,129
Non-controlling interests 418 440
--------------------------------------------------------- ------------ ------------
Total recognised income and expense for the financial
period 19,401 12,569
--------------------------------------------------------- ------------ ------------
GROUP CONDENSED BALANCE SHEET
at 30 March 2012
March March Sept
2012 2011 2011
(#) As As re-presented
re-presented
(Unaudited) (Unaudited)
Notes (Unaudited)
GBP'000 GBP'000 GBP'000
-------------------------------------------- ----- ------------ -------------- -----------------
ASSETS
Non-current assets
Intangible assets 9 470,806 361,034 476,284
Property, plant and equipment 9 210,221 184,572 211,158
Investment property 9 34,555 33,105 34,087
Investments in associates 882 859 582
Other receivables 2,836 2,762 2,818
Derivative financial instruments 11 12,877 10,358 16,364
Deferred tax assets 57,044 36,363 56,474
-------------------------------------------- ----- ------------ -------------- -----------------
Total non-current assets 789,221 629,053 797,767
-------------------------------------------- ----- ------------ -------------- -----------------
Current assets
Inventories 50,151 39,536 49,422
Trade and other receivables 113,241 65,828 99,416
Derivative financial instruments - 68 -
Cash and cash equivalents 11 16,527 6,135 81,564
-------------------------------------------- ----- ------------ -------------- -----------------
Total current assets 179,919 111,567 230,402
-------------------------------------------- ----- ------------ -------------- -----------------
Total assets 969,140 740,620 1,028,169
-------------------------------------------- ----- ------------ -------------- -----------------
EQUITY
Capital and reserves attributable to equity
holders of the Company
Share capital 10 120,864 117,013 117,004
Share premium 168,478 106,927 171,010
Reserves (84,392) (68,934) (96,376)
-------------------------------------------- ----- ------------ -------------- -----------------
204,950 155,006 191,638
Non-controlling interests 3,160 2,884 2,962
-------------------------------------------- ----- ------------ -------------- -----------------
Total equity 208,110 157,890 194,600
-------------------------------------------- ----- ------------ -------------- -----------------
LIABILITIES
Non-current liabilities
Borrowings 11 291,600 224,185 222,216
Derivative financial instruments 8,288 - -
Retirement benefit obligations 14 121,076 89,663 130,167
Other payables 2,643 4,015 3,538
Provisions for liabilities 12 9,611 3,361 10,575
Deferred tax liabilities 31,113 38,125 33,673
Government grants 77 89 83
-------------------------------------------- ----- ------------ -------------- -----------------
Total non-current liabilities 464,408 359,438 400,252
-------------------------------------------- ----- ------------ -------------- -----------------
Current liabilities
Borrowings 11 - - 15,500
Derivative financial instruments 28 8,605 9,442
Trade and other payables 254,680 184,625 254,513
Consideration payable on acquisitions 16 - - 113,344
Provisions for liabilities 12 12,862 6,499 13,489
Current taxes payable 29,052 23,563 27,029
-------------------------------------------- ----- ------------ -------------- -----------------
Total current liabilities 296,622 223,292 433,317
-------------------------------------------- ----- ------------ -------------- -----------------
Total liabilities 761,030 582,730 833,569
-------------------------------------------- ----- ------------ -------------- -----------------
Total equity and liabilities 969,140 740,620 1,028,169
-------------------------------------------- ----- ------------ -------------- -----------------
As re-presented to reflect adjustments to provisional fair
values previously recognised on business combinations as set out in
Note 16
GROUP CONDENSED CASH FLOW STATEMENT
for the half year ended 30 March 2012
Half year Half year
ended ended
30 March 25 March
2012 2011
(#) As re-presented
(Unaudited) (Unaudited)
GBP'000 GBP'000
--------------------------------------------------------- ------------- ---------------------
Profit before taxation 15,836 2,125
Finance income (9,160) (10,130)
Finance costs 17,085 15,117
Share of profit of associates (after tax) (325) (290)
Exceptional items 3,438 15,127
--------------------------------------------------------- ------------- ---------------------
Operating profit - (pre-exceptional) 26,874 21,949
Depreciation 10,970 8,569
Amortisation of intangible assets 5,513 1,806
Employee share option expense 822 828
Amortisation of government grants (6) (7)
Difference between pension charge and cash contributions (7,047) (4,195)
Working capital movement (12,210) (17,623)
Other movements 171 (149)
--------------------------------------------------------- ------------- ---------------------
Net cash inflow from operating activities before
exceptional items 25,087 11,178
Cash outflow related to exceptional items (10,083) (12,311)
Interest paid (7,046) (9,157)
Tax paid (163) (1,470)
Net cash inflow/(outflow) from operating activities 7,795 (11,760)
--------------------------------------------------------- ------------- ---------------------
Cash flow from investing activities
Dividends received from associates 25 -
Purchase of property, plant and equipment (11,531) (12,468)
Purchase of investment property (1,332) (578)
Purchase of intangible assets (1,188) (3)
Acquisition of undertakings (113,316) (11,220)
Disposal of undertakings 185 403
Interest received 24 33
Net cash outflow from investing activities (127,133) (23,833)
--------------------------------------------------------- ------------- ---------------------
Cash flow from financing activities
(Costs of)/ proceeds from issue of shares (5) 14
Ordinary shares purchased - own shares - (428)
Increase in bank borrowings 58,561 73,906
Repayment of loan notes - (33,299)
Cash outflow arising from derivative financial
instruments - (3,950)
Dividends paid to equity holders of the Company (4,082) (4,145)
Dividends paid to non-controlling interests (220) -
--------------------------------------------------------- ------------- ---------------------
Net cash inflow from financing activities 54,254 32,098
--------------------------------------------------------- ------------- ---------------------
Net decrease in cash and cash equivalents (65,084) (3,495)
--------------------------------------------------------- ------------- ---------------------
Reconciliation of opening to closing cash and
cash equivalents
Cash and cash equivalents at beginning of period 81,564 9,931
Translation adjustment 47 (301)
Decrease in cash and cash equivalents (65,084) (3,495)
--------------------------------------------------------- ------------- ---------------------
Cash and cash equivalents at end of period 16,527 6,135
--------------------------------------------------------- ------------- ---------------------
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
for the half year ended 30 March 2012
Retained Non-controlling
Share capital Share premium Other reserves earnings Total interests Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------------- ------------- -------------- --------------- ------- --------------- ------------
At 30 September
2011 117,004 171,010 (14,792) (81,584) 191,638 2,962 194,600
Items of income
and expense
taken directly
to equity
Currency
translation
adjustment - - (685) - (685) (96) (781)
Current tax on
currency
translation
adjustment - - - 151 151 - 151
Net investment
hedge - - 1,266 - 1,266 - 1,266
Actuarial gain
on Group
defined
benefit
pension
schemes - - - 3,739 3,739 - 3,739
Deferred tax on
Group defined
benefit
pension
schemes - - - (270) (270) - (270)
Cash flow
hedges
fair value
movement
taken to
equity - - (1,004) - (1,004) - (1,004)
deferred
tax on
fair value
movement
taken to
equity - - 241 - 241 - 241
transfer to
Income
Statement
for
the period - - 168 - 168 - 168
deferred
tax on
transfer
to the
Income
Statement
for the
period - - (40) - (40) - (40)
Profit for the
financial
period - - - 15,417 15,417 514 15,931
--------------- ------------- ------------- -------------- --------------- ------- --------------- ------------
Total
recognised
income and
expense for
the financial
period - - (54) 19,037 18,983 418 19,401
--------------- ------------- ------------- -------------- --------------- ------- --------------- ------------
Employee share
option expense - - 822 - 822 - 822
Exercise, lapse
or forfeit of
share
options - - (632) 632 - - -
Shares acquired
by Deferred
Share
Awards Trust - - (36) 36 - - -
Shares granted
to
beneficiaries
of the
Deferred Share
Awards Trust - - 1,575 (1,575) - - -
Issue of
shares 3,848 (3,848) - - - - -
Costs
associated
with the issue
of
shares - (5) - - (5) - (5)
Dividends 12 1,321 - (7,821) (6,488) (220) (6,708)
--------------- ------------- ------------- -------------- --------------- ------- --------------- ------------
At 30 March
2012 120,864 168,478 (13,117) (71,275) 204,950 3,160 208,110
--------------- ------------- ------------- -------------- --------------- ------- --------------- ------------
Share Share Other Retained Non-controlling
capital premium reserves earnings Total interests Total equity
(#) As (#) As re- (#) As (#) As (#) As (#) As (#) As
re-presented presented re-presented re-presented re-presented re-presented re-presented
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------ ------------ ------------ ------------- ------------- --------------- -------------
At 24
September
2010 112,536 102,782 (14,109) (51,906) 149,303 2,444 151,747
Items of
income and
expense taken
directly to
equity
Currency
translation
adjustment - - 2,500 - 2,500 92 2,592
Current tax on
currency
translation
adjustment - - - 646 646 - 646
Net investment
hedge - - 4,729 - 4,729 - 4,729
Actuarial gain
on Group
defined
benefit
pension
schemes - - - 7,680 7,680 - 7,680
Deferred tax
on Group
defined
benefit
pension
schemes - - - (2,863) (2,863) - (2,863)
(Loss)/profit
for the
financial
period - - - (563) (563) 348 (215)
-------------- ------------ ------------ ------------ ------------- ------------- --------------- -------------
Total
recognised
income and
expense for
the financial
period - - 7,229 4,900 12,129 440 12,569
-------------- ------------ ------------ ------------ ------------- ------------- --------------- -------------
Currency
translation
adjustment 3,888 3,552 (7,440) - - - -
Employee share
option
expense - - 828 - 828 - 828
Exercise,
lapse or
forfeit of
share
options - - (1,086) 1,086 - - -
Shares
acquired by
Deferred
Share
Awards Trust - - (558) 130 (428) - (428)
Shares granted
to
beneficiaries
of the
Deferred
Share Awards
Trust - - 1,389 (1,389) - - -
Issue of
shares 10 4 - - 14 - 14
Dividends 579 589 - (8,008) (6,840) - (6,840)
-------------- ------------ ------------ ------------ ------------- ------------- --------------- -------------
At 25 March
2011 117,013 106,927 (13,747) (55,187) 155,006 2,884 157,890
-------------- ------------ ------------ ------------ ------------- ------------- --------------- -------------
Other Reserves
Capital Foreign
conversion currency
Share reserve Hedging translation
options Own shares fund reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- ---------- ----------- -------- ------------ --------
At 30 September 2011 3,230 (20,387) 804 - 1,561 (14,792)
Items of income and expense
taken directly to equity
Currency translation
adjustment - - - - (685) (685)
Net investment hedge - - - - 1,266 1,266
Cash flow hedges
fair value movement taken
to equity - - - (1,004) - (1,004)
deferred tax on fair
value movement
taken to equity - - - 241 - 241
transfer to Income Statement - - - 168 - 168
deferred tax on transfer
to Income
Statement - - - (40) - (40)
--------------------------------- -------- ---------- ----------- -------- ------------ --------
Total recognised income
and
expense for the financial
period - - - (635) 581 (54)
--------------------------------- -------- ---------- ----------- -------- ------------ --------
Currency translation
adjustment (111) - - - 111 -
Employee share option
expense 822 - - - - 822
Exercise, lapse or forfeit
of share
options (632) - - - - (632)
Shares acquired by Deferred
Share
Awards Trust - (36) - - - (36)
Shares granted to beneficiaries
of the
Deferred Share Awards
Trust - 1,575 - - - 1,575
At 30 March 2012 3,309 (18,848) 804 (635) 2,253 (13,117)
--------------------------------- -------- ---------- ----------- -------- ------------ --------
Capital Foreign
conversion currency
reserve translation
Share fund Hedging reserve
options Own shares (#) As reserve (#) As Total
(#) As (#) As re- (#) As re- (#) As
re-presented re-presented presented re-presented presented re-presented
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------------- ------------- ----------- ------------- ------------ -------------
At 24 September 2010 2,598 (19,887) 792 - 2,388 (14,109)
Items of income and
expense
taken directly to equity
Currency translation
adjustment - - - - 2,500 2,500
Net investment hedge - - - - 4,729 4,729
------------------------------- ------------- ------------- ----------- ------------- ------------ -------------
Total recognised income
and
expense for the financial
period - - - - 7,229 7,229
------------------------------- ------------- ------------- ----------- ------------- ------------ -------------
Currency translation
adjustment 84 (665) 28 - (6,887) (7,440)
Employee share option
expense 828 - - - - 828
Exercise, lapse or forfeit
of share
options (1,086) - - - - (1,086)
Shares acquired by Deferred
Share
Awards Trust - (558) - - - (558)
Shares granted to beneficiaries
of the
Deferred Share Awards
Trust - 1,389 - - - 1,389
------------------------------- ------------- ------------- ----------- ------------- ------------ -------------
At 25 March 2011 2,424 (19,721) 820 - 2,730 (13,747)
------------------------------- ------------- ------------- ----------- ------------- ------------ -------------
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 30 September 2011 represents an abbreviated version
of the Group Financial Statements for that year. Those financial
statements, upon which the auditor issued an unqualified audit
report, have been filed with the Registrar of Companies.
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue
operating for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the Group
Condensed Financial Statements.
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 30 September 2011 and are as set out in those
financial statements. The Group has reviewed its accounting policy
for Derivative Financial Instruments and is making the following
clarification: 'Derivative instruments which are held for trading
and are not designated as effective hedging instruments are
classified as a current asset or liability (as appropriate)
regardless of maturity if the Group expects that they may be
settled within 12 months of the balance sheet date. All other
derivative instruments that are not designated as effective hedging
instruments are classified by reference to their maturity
date'.
The adoption of new standards and interpretations (as set out in
the 2011 Annual Report) that become effective for the Group's
financial statements for the year ended 28 September 2012 do 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 Convenience
Foods US. 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 specifies that, where the external revenue of reportable segments
exceeds 75% of the total Group revenue, it is permissible to
aggregate all other segments into one reportable segment). The
Ingredients & Property reportable segment derives its revenue
from the distribution of edible oils, molasses and the management
of the Group's surplus property assets.
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. Exceptional
items, 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 presented. Intersegment revenue is not
material.
Convenience Ingredients Total
Foods & Property
Half Half Half Half Half Half
year year year year year year
2012 2011 2012 2011 2012 2011
(#) As (#) As (#) As
re-presented re-presented re-presented
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------- -------------- ------- -------------- -------- --------------
Revenue 532,587 344,810 35,094 33,820 567,681 378,630
------------------------------------ ------- -------------- ------- -------------- -------- --------------
Group operating profit before
exceptional items and
acquisition related amortisation 30,666 22,293 1,025 884 31,691 23,177
Amortisation of acquisition related
intangibles (4,817) (1,228) - - (4,817) (1,228)
Exceptional items (3,438) (15,127)
------------------------------------ ------- -------------- ------- -------------- -------- --------------
Group operating profit 25,849 21,065 1,025 884 23,436 6,822
Finance income 9,160 10,130
Finance costs (17,085) (15,117)
Share of profit of associates
after tax - - 325 290 325 290
------------------------------------ ------- -------------- ------- -------------- -------- --------------
Profit before taxation 15,836 2,125
------------------------------------ ------- -------------- ------- -------------- -------- --------------
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
2012 year
2011
(#) As
re-presented
GBP'000
GBP'000
------------------------------- -------- --------- ---------------
Integration costs (a) 3,438 -
Transaction costs (b) - 11,614
Legal settlement (c) - 3,513
------------------------------- -------- --------- ---------------
3,438 15,127
Taxation on exceptional items (753) (107)
----------------------------------------- --------- ---------------
Total exceptional charge 2,685 15,020
----------------------------------------- --------- ---------------
(a) Integration costs
During the period, the Group incurred an exceptional charge of
GBP3.4 million in connection with the integration of the Uniq
business.
(b) Transaction costs
In 2011, the GBP11.6m exceptional charge included the costs
incurred on the aborted Essenta combination, the assessment of an
acquisition of Northern Foods plc and transaction costs of GBP0.4m
relating to the acquisition in December 2010 of On a Roll Sales, a
convenience foods business based in Brockton, Massachusetts.
(c) Legal settlement
In 2011, the Group settled an outstanding claim relating to its
former activities and recognised an exceptional charge of GBP3.5m
in respect of both the settlement and related legal costs.
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, in management's judgement, the estimated average
annual effective income tax rate which is applied to the taxable
income of the interim period.
7. Dividends Paid and Proposed
A dividend of 2.4 cent per share was approved at the Annual
General Meeting on 9 February 2012 as a final dividend in respect
of the year ended 30 September 2011 and a total of GBP4.3 million
was paid on 2 April 2012 to those shareholders that did not avail
of the Group scrip dividend scheme.
An interim dividend of 1.75 pence (2011: 3.00 cent) per share is
payable on 3 October 2012 to the shareholders on the Register of
Members as of 8 June 2012. The ordinary shares will be quoted
ex-dividend from 6 June 2012. The dividend will be subject to
dividend withholding tax, although certain classes of shareholders
may qualify for exemption.
The liability in respect of this interim dividend is not
recognised in the Balance Sheet of the Group for the half year
ended 30 March 2012 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
profit/(loss) 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 Plan and after adjusting the weighted average number
of shares for the effect of the bonus issue related to the Rights
Issue in 2011 on the average number of shares in issue during the
prior period. 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
2012 2011
(#) As
re-presented
GBP'000 GBP'000
------------------------------------------------------- -------- ------------------
Profit/(loss) attributable to equity holders
of the Company 15,417 (563)
Exceptional items (post tax) 2,685 15,020
Fair value of derivative financial instruments
and related debt adjustments (2,158) (3,213)
FX on inter-company and external balances where
hedge accounting is not applied (335) (156)
Amortisation of acquisition related intangible
assets 4,817 1,228
Pension financing 2,363 602
Tax effect of pension financing and amortisation
of acquisition related intangibles (1,713) (853)
Numerator for adjusted earnings per share calculation 21,076 12,065
------------------------------------------------------- -------- ------------------
Half Half
year
2012
year
2011
(#++)
As re-presented
pence pence
------------------------------------------------------- -------- ------------------
Basic earnings/(loss) per ordinary share 4.0 (0.2)
------------------------------------------------------- -------- ------------------
Adjusted basic earnings per ordinary share 5.5 4.6
------------------------------------------------------- -------- ------------------
Denominator for earnings per share and adjusted earnings per
share calculation
Half Half
year
2012 year
2011
(#++)
As re-presented
------------------------------------------------ -------- ------------------
'000 '000
------------------------------------------------ -------- ------------------
Shares in issue at the beginning of the period 387,312 210,574
Treasury shares (3,905) (3,905)
Shares held by Deferred Share Awards Trust (2,498) (1,651)
Effect of shares issued in period 1,385 1,064
Effect of bonus issue related to Rights Issue - 54,145
------------------------------------------------ -------- ------------------
Weighted average number of ordinary shares in
issue during the period 382,294 260,227
------------------------------------------------ -------- ------------------
(++) As re-presented to include the effect of the bonus issue of
shares incorporated in the 2011 Rights Issue as described in the
2011 Annual Report.
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
8,644,081 ((++) 2011: 6,902,232) 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
2012
year
2011
(#++)
As re-presented
pence pence
---------------------------------------------- ------ ------------------
Diluted earnings/(loss) per ordinary share 4.0 (0.2)
---------------------------------------------- ------ ------------------
Adjusted diluted basic earnings per ordinary
share 5.4 4.6
---------------------------------------------- ------ ------------------
Denominator for diluted earnings per share and adjusted earnings
per share
The reconciliation of the weighted average number of ordinary
shares used for the purpose of calculating basic diluted earnings
per share is as follows:
Half Half
year
2012 year
2011
(#++)
As re-presented
'000 '000
------------------------------------------------ -------- ------------------
Weighted average number of ordinary shares in
issue during the period 382,294 260,227
Dilutive effect of share options 4,987 4,066
------------------------------------------------- -------- ------------------
Weighted average number of ordinary shares for
diluted earnings per share 387,281 264,293
------------------------------------------------- -------- ------------------
9. Intangible Assets, Property, Plant and Equipment, Investment
Property, Capital Expenditure and Commitments
During the six month period to 30 March 2012, the Group made
approximately GBP13.5 million (2011: GBP9.1 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 GBP0.5m (2011: GBP0.3 million) for proceeds of
GBP0.2 million (2011: GBP0.8 million).
At 30 March 2012, the Group had entered into contractual
commitments for the acquisition of property, plant and equipment
amounting to GBP4.1 million (2011: GBP1.0 million).
10. Equity Share Capital
Issued capital as at 30 March 2012 amounted to GBP120.9 million
(30 September 2011: GBP117.0 million) of which GBP2.1 million (30
September 2011: GBP2.1 million) is attributable to treasury shares,
GBP0.02 million (30 September 2011: GBP0.03 million) is
attributable to shares held by the Deferred Share Awards Trust and
GBP114.9 million (30 September 2011: GBP111.6 million) is
attributable to deferred shares. During the six month period to 30
March 2012, 1,408,619 shares (2011: 1,072,797) were issued in
respect of the scrip dividend scheme and no shares (2011: 15,116
shares) were issued in respect of the Group's Sharesave
schemes.
Pursuant to the resolutions passed at the Company's Annual
General Meeting on 9 February 2012, the Company's share capital was
redenominated to sterling. In order to effect this change, a bonus
issue was made whereby 384,815,847 new Ordinary Shares of GBP0.01
each were issued on the basis of one share for every Ordinary Share
of EUR0.01 each held and 384,815,847 Ordinary Shares of EUR0.01
each were converted into deferred shares.
Pursuant to the Deferred Bonus Plan, no shares (2011: 348,677)
were purchased by the Trustees of the Plan during the period ended
30 March 2012 (2011: cost of GBP0.4 million). The nominal value of
these shares acquired in 2011, on which dividends have not been
waived by the Trustees of the Plan, is GBP0.003 million. In
addition in the period, the Trustees utilised dividend income of
GBP0.04 million to acquire 69,490 shares in the Group with a
nominal value of GBP0.001 million. In the period, 1,292,223 shares
with a nominal value of GBP0.013 million were transferred to
beneficiaries of the Deferred Bonus Plan.
During the period, 575,000 (2011: 80,000) share options were
granted under the Executive Share Option Scheme, no share options
were granted under the Sharesave schemes (2011: nil) and 3,477,711
shares were awarded under the Deferred Bonus Plan.
11. Components of Net Debt and Financing
The cash flows from financing activities are set out in the
Group Condensed Cash Flow Statement.
March March
2012 2011
(#) As
re-presented
Net debt GBP'000 GBP'000
Cash and cash equivalents 16,527 6,135
Bank borrowings (175,178) (110,461)
Private placement notes (116,422) (113,724)
Cross currency interest rate swaps - fair value
hedges 12,877 10,358
------------------------------------------------- ---------- --------------
Group net debt (262,196) (207,692)
------------------------------------------------- ---------- --------------
Half
Half year year
2012 2011
(#) As
re-presented
Net finance costs GBP'000 GBP'000
Net finance costs on interest bearing cash and
cash equivalents and borrowings (8,147) (7,864)
Net pension financing charge (2,363) (602)
Change in fair value of derivatives and related
debt adjustments 2,158 3,213
Foreign exchange on inter-company and external
balances where hedge accounting is not applied 335 156
Unwind of present value discount on non-current
payables and receivables 92 110
------------------------------------------------- ---------- --------------
(7,925) (4,987)
------------------------------------------------- ---------- --------------
Analysed as:
Finance income 9,160 10,130
Finance costs (17,085) (15,117)
------------------------------------------------- ---------- --------------
(7,925) (4,987)
------------------------------------------------- ---------- --------------
12. Provision for Liabilities
Half
year
2012
GBP'000
At beginning of period, as previously reported 27,089
Adjustments to provisional fair values previously recognised
on business combinations (3,025)
-------------------------------------------------------------- --------
At beginning of period, as re-presented 24,064
Utilised in period (1,542)
Currency translation differences (142)
Unwind discount 93
-------------------------------------------------------------- --------
At end of period 22,473
-------------------------------------------------------------- --------
March Sept
2012 2011
As re-presented As re-presented
GBP'000 GBP'000
------------------------- ----------------- -----------------
Analysed as:
Non-current liabilities 9,611 10,575
Current liabilities 12,862 13,489
------------------------- ----------------- -----------------
22,473 24,064
------------------------- ----------------- -----------------
The significant provisions are as follows:
Leases
Lease provisions consist of (a) provisions for leasehold
dilapidations 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) provisions for onerous contractual obligations for properties
held under operating lease. It is anticipated that these will be
payable within seven years.
Remediation and closure
Remediation and closure obligations were established to cover
either a statutory, contractual or constructive obligation of the
Group.
In the Ingredients & Property segment, remediation and
closure obligations primarily relate to the closure of Irish Sugar
and the exit from sugar processing.
In the Convenience Foods segment, the restructuring provision
has been established to cover the cost of withdrawal from yoghurt
production and exiting everyday desserts to focus on the premium
desserts and Muller/Cadbury desserts businesses as announced by the
board of Uniq plc in 2011.
Other
Other provisions primarily consist of provisions for litigation
and warranty claims arising from the sale and closure of
businesses. 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.
As part of the agreement to dispose of Greencore Malt, the Group
provided to Axereal Union de Cooperatives Agricoles a bank
guarantee for an amount of GBP8.6 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. The security was released during the period.
14. Retirement Benefit Schemes
In consultation with the independent actuaries to the schemes,
the valuation of the Group's pension obligations has been updated
to reflect current market discount rates, rates of increase in
salaries, pension payments and inflation, current market values of
investments and actual investment returns.
The principal actuarial assumptions are as follows:
March 2012 Sept 2011
Ireland UK Ireland UK
------------------------------------- -------- ------ -------- ------
Rate of increase in pension payment 0% 3.15% 0% 3.10%
Discount rate 4.50% 5.05% 5.20% 5.25%
Inflation rate 1.90% 3.25% 1.90% 3.10%
------------------------------------- -------- ------ -------- ------
The financial position of the schemes was as follows:
March Sept
2012 2011
GBP'000 GBP'000
------------------------------------- ---------- ----------
Total market value of assets 348,793 314,849
Present value of scheme liabilities (469,540) (444,859)
Deficit in schemes (120,747) (130,010)
Effect of paragraph 58 (b) limit (329) (157)
------------------------------------- ---------- ----------
Net deficit in schemes (121,076) (130,167)
Deferred tax asset 24,451 24,498
------------------------------------- ---------- ----------
Net liability (96,625) (105,669)
------------------------------------- ---------- ----------
15. Subsequent Events
On 17 April 2012, the Group announced the acquisition of
MarketFare Foods LLC ("MarketFare"), a leading manufacturer of Food
to Go products for convenience and small stores with facilities in
Fredericksburg, Virginia and Salt Lake City, Utah, for a
consideration of $36.0 million (GBP22.6 million). The consideration
is on a debt-free, cash-free basis with a normalised level of
working capital. The Group obtained 100% control of MarketFare by
way of a trade and asset purchase.
The initial accounting for the business combination is
incomplete at the date of approval of the Half Yearly Financial
Report due to the timing of the acquisition and, as a result,
information is not available in respect of the amount of goodwill
to be recognised and the fair value of assets acquired and
liabilities assumed at the acquisition date.
16. Acquisition of Undertakings
On 23 September 2011, the Group's acquisition of Uniq plc
('Uniq') was declared unconditional in all respects. The
acquisition provided the Group with further critical mass in the
Food to Go market and exposure to the premium chilled desserts
market, in both cases with a major retail customer with which the
Group previously had little trade.
On 6 December 2010, the Group acquired a 100% interest in On A
Roll Sales ('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 a trade and asset purchase. The
acquisition provided an additional revenue stream to US Convenience
Foods in food to go and complemented our existing businesses in the
US.
The fair value of the assets acquired, determined in accordance
with IFRS, as previously reported at 30 September 2011 and
subsequently adjusted to reflect new information obtained about
facts and circumstances that existed as of the acquisition date
were as follows:
Uniq On A Roll
------------------------------- -------------------------------------------------- -------------- -----------------
As previously Adjustments As re-presented As previously Total
reported to provisional reported As re-presented
fair values
------------------------------- -------------- ---------------- ---------------- -------------- -----------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------------- ---------------- ---------------- -------------- -----------------
Assets
Intangible assets 38,297 (1,700) 36,597 6,907 43,504
Property, plant and equipment 29,583 (3,689) 25,894 404 26,298
Deferred tax assets 19,744 - 19,744 - 19,744
Inventory 10,780 (2,488) 8,292 342 8,634
Trade and other receivables 28,418 83 28,501 746 29,247
------------------------------- -------------- ---------------- ---------------- -------------- -----------------
Total assets 126,822 (7,794) 119,028 8,399 127,427
------------------------------- -------------- ---------------- ---------------- -------------- -----------------
Liabilities
Borrowings (15,500) - (15,500) - (15,500)
Trade and other payables (48,072) (1,486) (49,558) (1,198) (50,756)
Provisions for liabilities (19,610) 3,025 (16,585) - (16,585)
Current taxes payable (5,833) - (5,833) - (5,833)
Retirement benefit obligations (2,446) - (2,446) - (2,446)
Deferred tax liabilities (9,574) 425 (9,149) - (9,149)
------------------------------- -------------- ---------------- ---------------- -------------- -----------------
Total liabilities (101,035) 1,964 (99,071) (1,198) (100,269)
------------------------------- -------------- ---------------- ---------------- -------------- -----------------
Net assets acquired 25,787 (5,830) 19,957 7,201 27,158
Goodwill 78,792 5,830 84,622 4,322 88,944
------------------------------- -------------- ---------------- ---------------- -------------- -----------------
Total enterprise value 104,579 - 104,579 11,523 116,102
------------------------------- -------------- ---------------- ---------------- -------------- -----------------
Satisfied by:
Cash payments - 11,116 11,116
Cash acquired (8,123) (241) (8,364)
------------------------------- -------------- ---------------- ---------------- -------------- -----------------
Net cash outflow (8,123) 10,875 2,752
Consideration payable 112,702 648 113,350
------------------------------- -------------- ---------------- ---------------- -------------- -----------------
Total consideration 104,579 11,523 116,102
------------------------------- -------------- ---------------- ---------------- -------------- -----------------
At 30 March 2012, the fair values of the acquired net assets of
Uniq as at the acquisition date have been determined provisionally
and are subject to change as the Group has yet to finalise the fair
value of all the net identifiable assets acquired due to the size
and complexity of the acquisition. The fair values of the acquired
net assets of On A Roll are final and there were no adjustments
required to the fair values of the acquired net assets as reported
at 30 September 2011. The fair value of the acquired net assets of
Uniq as at the acquisition date have been adjusted retrospectively
and the Group Balance Sheet as at 30 September 2011 has been
re-presented to reflect the effect of these adjustments.
The consideration payable on both the acquisition of Uniq and On
A Roll was paid in full during the period, resulting in a cash
outflow of GBP113.3 million.
17. Change in presentation currency
As set out in the 2011 Annual Report, the Group changed its
reporting currency from euro to sterling following the acquisition
of Uniq. This change aligns the Group's external financial
reporting with the currency profile of the Group. The change in
presentation currency was applied retrospectively.
In restating the Group Condensed Financial Statements for the
half year ended 25 March 2011, the reported information was
converted to sterling from euro using the following procedures:
-- Assets, liabilities and equity were translated to sterling at
the closing rate of exchange at the balance sheet date of
0.8775.
-- Income and expenses were translated to sterling at actual
rates of exchange for the transactions (or the average rate of
0.8569 where this was a reasonable approximation).
-- Differences resulting from the retranslation were taken to
reserves.
18. Information
Copies of the Half Yearly Financial Report are available for
download from the Group's website at www.greencore.com.
19. Auditor Review
This half yearly financial report has not been audited or
reviewed by the auditor of the Group pursuant to the Auditing
Practice Board guidance on Review of Interim Financial
Statements.
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 30 March 2012 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 30 March 2012 and a
description of the principal risks and uncertainties for the
remaining six months; and
-- 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.
On behalf of the Board
P.F. Coveney A.R. Williams
------------------------ ------------------------
Chief Executive Officer Chief Financial Officer
------------------------ ------------------------
22 May 2012
------------------------ ------------------------
* * *
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMGZKKMGGZZM
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