TIDMGNC
RNS Number : 1587F
Greencore Group PLC
21 May 2013
HALF YEARLY FINANCIAL REPORT
for the half year ended 29 March 2013
GROUP CONDENSED FINANCIAL STATEMENTS
GREENCORE GROUP PLC
INTERIM RESULTS
Double-digit EPS growth despite challenging market
conditions
Greencore Group plc, a leading international convenience food
producer, today announces its unaudited interim results for the 26
weeks ended 29 March 2013
HIGHLIGHTS
-- Group revenue of GBP572.9m, up 0.9%;
-- Convenience Foods revenue of GBP542.1m, up 1.8%;
-- Group operating profit(1) up 6.3% to GBP33.7m;
-- Strong growth in adjusted EPS(2) , up 10.9%;
-- Interim dividend of 1.90 pence per share, an increase of 8.6%
versus H1 12;
-- Restructuring of Uniq desserts activity completed with
disposal of Minsterley chilled desserts facility; and
-- Roll out of food to go range in Starbucks USA successfully
commenced.
Summary Financial Performance
H1 13 Change
GBPm
Group revenue 572.9 +0.9%
Group operating profit(1) 33.7 +6.3%
Group operating margin(1) 5.9% +30bps
Adjusted PBT(2) 26.5 +9.9%
Adjusted EPS (pence)(2) 6.1 +10.9%
Net debt 272.6 +GBP14.6m
Convenience Foods Division
Revenue 542.1 +1.8%
Operating profit(1) 32.1 +4.7%
Operating margin(1) 5.9% +10 bps
Patrick Coveney, Chief Executive Officer, commented:
"We have made good progress on our strategic agenda during the
first half of the year, despite the fact that market conditions
throughout the period proved very challenging. In the UK, we have
completed the Uniq integration with the restructuring of the
desserts business and the disposal of the Minsterley facility, and
the integration of International Cuisine is progressing well. In
the US, MarketFare and Schau have been integrated and, since the
end of April, we are supplying Starbucks from four of our six
facilities there.
However the UK retail environment remains under severe pressure
and this was exacerbated in Q2 by the horsemeat scandal, which has
temporarily driven the ready meals market lower.
Although we expect market conditions to remain tough, we remain
confident in our ability to deliver adjusted EPS growth for the
financial year in line with expectations."
____________________________________________________
1 Operating profit and margin are stated before exceptional
items and acquisition related amortisation
2 Adjusted PBT and adjusted earnings measures 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
3 Market / category growth rates are based on Nielsen data for
the 26 weeks to 30 March 2013
____________________________________________________
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
Ireland number: +353 1 486 0921
UK number: +44 20 3364 5381
Pass code: 7084698
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 1 486 0902
UK replay number: +44 203 427 0598
Replay code: 7084698
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 1045
Rob Greening or Lisa Kavanagh Powerscourt Tel: +44 (0) 20 7250
1446
About Greencore
-- A leading manufacturer of convenience food in the UK and the US
-- Strong market positions in the UK convenience food market
across food to go, chilled prepared meals, chilled soups and
sauces, ambient sauces & pickles, cakes & desserts and
Yorkshire puddings
-- A fast growing food to go business in the US, serving both
the convenience and small store channel and the grocery channel
SUMMARY
Portfolio and Strategy
During H1 13, we have further cemented the transformation the
Group underwent in FY12 to form a business with clear scale and a
balanced customer mix:
- In the UK, we completed the integration of Uniq with the
transfer of all premium desserts production to the refurbished
Evercreech facility and the disposal of the Minsterley facility.
The integration of International Cuisine is progressing well.
- In the US, both MarketFare and Schau were integrated, the
product portfolio in the Newburyport facility was rationalised and
supply to Starbucks commenced under a multi-year, multi-site
contract.
This focused portfolio, together with good operating and
financial discipline, have enabled us to deliver strong growth in
adjusted EPS in the half despite the challenging market
conditions.
Financial and Operating Performance(1, 2)
Group revenue increased in the period by 0.9% to GBP572.9m with
growth in the Convenience Foods division of 1.8% to GBP542.1m.
Growth rates in our core markets in the UK were lower than in the
prior year, even before the impact of the horsemeat scandal on the
ready meals category. Despite this, Group operating profit
increased by 6.3% to GBP33.7m as we maintained good operating and
financial discipline and delivered improvements in returns in lower
margin businesses.
Adjusted earnings per share were 10.9% higher at 6.1 pence as a
result of the growth in operating profit combined with lower
year-on-year financing costs and a continued low effective tax rate
due to historic tax losses.
Interim Dividend
The Board of Directors is announcing an interim dividend of
1.90p. It remains the Board's intention to increase the total
dividend distribution for the financial year in line with the
growth in adjusted earnings per share.
OUTLOOK
We expect market conditions to remain tough during FY13,
particularly in the core UK market which shows little or no volume
growth and where the ready meals category, which represents c. 15%
of Group revenue, is still to recover fully from the horsemeat
scandal.
However, the Group is strategically well positioned to confront
these challenges given its balanced customer portfolio and exposure
to faster growing convenience categories. We continue to see
moderating input cost inflation and now expect this to be 2% or
below for the financial year. With the tight financial controls we
have in place, we remain confident in our ability to deliver
adjusted EPS growth for the financial year in line with
expectations.
OPERATING REVIEW (1,2,3)
Convenience Foods
Revenue and Operating Profit(*)
H1 13 H1 12 Change
GBPm GBPm
------------------ ------ ------ -------
Revenue 542.1 532.6 +1.8%
------------------ ------ ------ -------
Operating profit 32.1 30.7 +4.7%
------------------ ------ ------ -------
Operating margin 5.9% 5.8% +10bps
------------------ ------ ------ -------
*The impact of currency was not material
Reported revenue in the Convenience Foods division increased by
1.8% in the period to GBP542.1m. This was significantly impacted by
changes in the portfolio during the period.
In the UK, like-for-like revenue (that is excluding both the
International Cuisine acquisition and the Uniq desserts activities
which were exited or sold) was 1.3% lower. This was due mainly to
the impact of the horsemeat scandal on the ready meals business and
to lower market growth rates as economic conditions continue to
exert pressure on the consumer.
In the US, revenues more than doubled through the net impact of
the acquisitions of MarketFare and Schau, as well as portfolio
rationalisation in the 'legacy' business, particularly in
Newburyport.
Despite the challenging conditions, operating profit increased
by 4.7% to GBP32.1m as we maintained strong financial discipline
and delivered improvements in returns in lower margin
businesses.
UK Convenience Foods
Food to Go
The UK Food to Go business represents approximately 40% of
Convenience Foods revenues and comprises sandwiches, sushi, snack
and side of plate salads.
Both the sandwiches sub-category and the broader chilled food to
go market experienced lower growth than seen in recent periods. The
sandwich sub-category grew by 1.8% in the period while the broader
chilled food to go market (sandwiches, sushi and salads)
experienced a 0.2% decline. This was predominantly weather related
and compared to a period of strong growth in the prior year.
Against this backdrop, revenue in the combined Food to Go
business grew by 0.1%. Good gains in listings were made across the
Food to Go range in a major retail customer, although overall new
business wins were more modest than in the previous year.
Prepared Meals
The Prepared Meals business comprises chilled ready meals,
quiches, chilled soup and chilled sauces.
The chilled ready meals market saw growth moderate to 3.1% in
the period, while the Italian ready meals market, our major
sub-category, experienced a 1.8% decline. This was predominantly
driven by the impact of the horsemeat scandal which affected the
broader processed beef market from late January. Although all
industry tests on chilled products were negative for the presence
of horsemeat, the chilled ready meals market, in particular Italian
meals, was negatively impacted in Q2. The quiche market exhibited
more robust performance against a softer comparative with 4.5%
growth and the soups market benefitted from poor weather with 10.4%
growth.
The Prepared Meals business grew revenue by 10.7% in the period
due primarily to the acquisition of the International Cuisine
business. On a like-for-like basis (excluding the acquisition of
International Cuisine), revenue was 5.9% lower as a result of the
decline in ready meals. Across other product categories, namely
soup, sauces and quiche, the business performed well, growing in
line with, or exceeding, market growth rates. The integration of
the International Cuisine business, acquired in August 2012 is
progressing as planned. The business is performing well, albeit
with some impact from the horsemeat scandal.
More than 200 tests were conducted for the presence of horsemeat
on both Greencore finished products and ingredients. All tests were
negative at the Food Standards Agency's 1% threshold, except one
positive test carried out by Asda, who withdrew the product. A
thorough and detailed investigation, including further extensive
testing, concluded there was no evidence of contamination and the
product was subsequently put back on shelf by Asda. As a response
to the broader issue, additional species screening procedures were
introduced throughout the supply chain for beef-related ingredients
and we continue to work with our customers to rebuild consumer
confidence in the supply chain.
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 own label
cooking sauce market was flat in the period whilst Yorkshire
Puddings grew by 3.1% in value terms.
The businesses performed well with overall revenue growth of
4.5%. This was driven by gains in cooking sauces in the discounter
sub-channel and in Yorkshire Puddings in major multiples.
Cakes and Desserts
The Group's cakes and desserts activity includes the Hull
facility, the food service desserts facility in Taunton and the
chilled desserts facility in Evercreech. The largest sub-category
in which we participate, celebration cakes, declined by 3.6% in the
period. The cheesecake sub-category, in which we also participate,
continued to exhibit good growth.
Overall, Cakes and Desserts revenues were 2.9% lower on a
like-for-like basis. The Hull facility experienced modest growth in
the period and delivered stronger financial performance than in
recent periods due to operational improvements and a lower
inflationary environment.
The Food Service desserts business saw modest revenue decline in
a tough market; during the period, the business secured additional
volumes with a key customer which should underpin growth over the
next twelve months.
The refurbishment of the Evercreech facility was completed
during the period and the remaining premium desserts lines were all
successfully transferred from the Minsterley facility. The disposal
of the Minsterley facility was completed at the beginning of
January.
US Convenience Foods
The US business has been transformed with the acquisitions in H2
12 of MarketFare and Schau and with the addition of Starbucks as a
material new customer. Reported revenues were over 120% higher
following the acquisitions. The 'legacy' business in Newburyport
and Brockton experienced some planned revenue decline as we decided
to exit several unprofitable product lines. This has left a much
tighter product portfolio concentrated on food to go and salads.
The rationalisation at Newburyport reduced complexity prior to the
successful launch of a food to go range for Starbucks in January in
the Boston area. Subsequent to the period end, the business has
successfully commenced supply to Starbucks from the Jacksonville,
Fredericksburg and Chicago facilities.
The MarketFare and Schau businesses have been integrated and we
continue to build out capability in the combined business with a
blend of assignments from the UK business and local hires. Overall
financial performance was enhanced through a combination of the
acquired profit streams, tighter product portfolio and
combinational benefits.
Ingredients & Property
H1 13 H1 12 Change Actual Change Constant
GBPm GBPm Currency Currency
------------------ ------ ------ -------------- ----------------
Revenue 30.8 35.1 -12.4% -9.4%
------------------ ------ ------ -------------- ----------------
Operating profit 1.6 1.0 +53.4% +57.8%
------------------ ------ ------ -------------- ----------------
The Ingredients & Property division accounts for around 5%
of Group activity. The revenue decline in the period was driven by
the edible oils trading activity while the molasses feed business
benefitted from the poor weather, reducing grass growth. Despite
lower revenues overall, operating profit benefitted from better mix
in oils and the growth in molasses revenues.
The planning consent on the Littlehampton site is now definitive
and marketing will commence over the next few months as planned. As
detailed in the note to the financial statements on exceptional
items, the Group has recognised an exceptional charge of GBP9.2m in
the period related to its Irish property portfolio. This comprises
an impairment charge following the rezoning of one of the former
production facilities and reflecting the continued soft property
market, together with a charge for the expected costs to complete
the remediation of the former Irish sugar sites.
FINANCIAL REVIEW (1,2)
Revenue and Operating Profit
Revenue in the period was GBP572.9m, an increase of 0.9% versus
H1 12. Group operating profit of GBP33.7m was 6.3% ahead of the
prior year. Operating margin of 5.9% was 30 basis points higher
than H1 12.
The impact of currency in the period was a modest reduction in
revenue and operating profit, predominantly driven by the relative
strengthening of sterling against the euro compared with H1 12.
Interest Payable
The Group's bank interest payable in H1 13 was GBP7.7m compared
to GBP8.1m in H1 12. This was driven by a lower effective interest
rate on the Group's primary bank facilities. The composition of the
charge was GBP7.1m of interest payable, commitment fees for undrawn
facilities of GBP0.3m and an amortisation charge in respect of
facility fees of GBP0.3m.
Non-Cash Finance Charges/Credit
The Group's net non-cash finance charge in H1 13 was GBP0.1m
(GBP0.2m credit in H1 12). The change in the fair value of
derivatives and related debt adjustments was a non-cash credit of
GBP1.9m (GBP2.5m credit in H1 12) reflecting the impact of marking
to market the Group's interest rate swap portfolio. The non-cash
pension financing charge of GBP1.9m was lower than the GBP2.4m
charge in H1 12 and reflects a reduction in interest rates and
lower expected return on assets. The charge in respect of the
increase in the present value of assets and liabilities held was
GBP0.1m (GBP0.1m credit in H1 12).
Taxation
The Group's effective tax rate in H1 13 (including the tax
impact associated with pension finance items) was 1% compared to a
rate of 4% in FY12.
The Group's effective tax rate continues to benefit from
historic tax losses. The reduction in the period reflects the
enactment of changes in corporation tax rates in jurisdictions
where the Group operates and the net movement in current and
deferred tax provisions.
Exceptional Items
The Group recognised a net exceptional credit in the period of
GBP0.4m. The breakdown is as follows:
- a charge of GBP2.2m in connection with (i) the completion of
the integration of the Uniq business including the Chilled Desserts
restructuring and (ii) the integration of the International Cuisine
business acquired in August 2012;
- a charge of GBP1.1m in connection with the integration of the
acquisitions of MarketFare and Schau in the US;
- a charge of GBP9.2m related to the Group's Irish property
portfolio. This comprises an impairment charge of GBP4.3m following
the change in zoning of a large area owned by the Group together
with continued soft property market conditions, and an additional
charge of GBP4.8m in connection with the remediation of the former
sugar processing sites;
- a credit of GBP4.4m representing a curtailment gain in
connection with the Greencore Group pension scheme;
- a tax credit of GBP7.8m in connection with the resolution of a
number of tax positions, including the settlement of an overseas
tax case; and
- a tax credit of GBP0.7m in connection with the UK integration costs.
Earnings per Share
Adjusted earnings of GBP23.8m in the period were 12.9% ahead of
the prior year. Adjusted earnings per share of 6.1 pence were 10.9%
ahead of H1 12.
Cash Flow and Net Debt
A net cash inflow from operating activities of GBP5.3m was
recorded compared to an inflow of GBP7.8m in H1 12. The modest
reduction in inflow was primarily due to a larger seasonal working
capital outflow in the half than in H1 12 which benefitted from
reductions of working capital in the former Uniq businesses.
Capital expenditure of GBP18.4m was incurred in the period
compared to GBP14.1m in H1 12 with the increase driven
predominantly by the acquisition of the freehold of the Bristol
facility and expenditure in acquired businesses. Interest costs of
GBP7.5m were paid in the period with cash dividends to equity
holders of GBP4.8m.
The Group's net debt at 29 March 2013 was GBP272.6m, an increase
of GBP14.6m from 28 September 2012. This increase was driven by the
seasonal working capital outflow and higher capital expenditure,
together with an adverse movement in the translation of US dollar
debt of GBP5.0m. There were no movements on the Group's committed
debt facilities other than a movement in drawings under the Group's
revolving credit facility.
Pensions
The net pension deficit(before related deferred tax) increased
to GBP155.9m at 29 March 2013 from GBP141.8m at 28 September 2012.
The net pension deficit after related deferred tax was GBP126.0m,
an increase of GBP10.1m from 28 September 2012.
The fair value of total plan assets relating to the Group's
defined benefit pension schemes (excluding associates) increased to
GBP378.2m at 29 March 2013 from GBP345.7m at 28 September 2012. The
present value of the total pension liabilities for these schemes
increased to GBP533.5m from GBP486.9m over the same period.
Liabilities increased more quickly than asset values as there was a
material increase in UK inflation expectations despite a further
fall in discount rates.
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.
Subsequent to the period end, the Group entered into
arrangements with the Hazlewood Foods Defined Benefit Pension
Scheme Trustees to address GBP40m of the actuarial deficit in the
scheme through an asset backed structure. The substance of this
arrangement is to reduce the cash funding which would otherwise be
required based on the latest triennial valuation, whilst improving
the security of the pension scheme members' benefits. This
agreement is described in more detail in note 15 to the condensed
financial statements.
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. In
particular, the timing and pace of recovery in consumer demand in
the chilled ready meals market following the horsemeat scandal
remains uncertain. The Board considers the risks and uncertainties
described on pages 14 and 15 of the Annual Report and Accounts for
the year ended 28 September 2012 issued on 27 November 2012 to
remain applicable. 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.
P.G. Kennedy, Chairman
21 May 2013
GROUP CONDENSED INCOME STATEMENT
for the half year ended 29 March 2013
Half Year Ended 29 March Half Year ended 30 March
2013 2012
(Unaudited) (Unaudited)
Exceptional Exceptional
Notes Pre - exceptional (Note 5) Total Pre - exceptional (Note 5) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ----- ----------------- ----------- --------- ----------------- ----------- ---------
Revenue 3 572,886 - 572,886 567,681 - 567,681
Cost of sales (399,288) - (399,288) (396,457) - (396,457)
----------------------- ----- ----------------- ----------- --------- ----------------- ----------- ---------
Gross profit 173,598 - 173,598 171,224 - 171,224
Operating costs,
net (139,913) (8,133) (148,046) (139,533) (3,438) (142,971)
----------------------- ----- ----------------- ----------- --------- ----------------- ----------- ---------
Group operating
profit before
acquisition
related amortisation 3 33,685 (8,133) 25,552 31,691 (3,438) 28,253
Amortisation of
acquisition related
intangibles (4,128) - (4,128) (4,817) - (4,817)
----------------------- ----- ----------------- ----------- --------- ----------------- ----------- ---------
Group operating
profit 3 29,557 (8,133) 21,424 26,874 (3,438) 23,436
Finance income 11 8,673 - 8,673 9,160 - 9,160
Finance costs 11 (16,405) - (16,405) (17,085) - (17,085)
Share of profit
of associates after
tax 389 - 389 325 - 325
----------------------- ----- ----------------- ----------- --------- ----------------- ----------- ---------
Profit before taxation 22,214 (8,133) 14,081 19,274 (3,438) 15,836
Taxation 6 (198) 8,559 8,361 (658) 753 95
----------------------- ----- ----------------- ----------- --------- ----------------- ----------- ---------
Profit for the
financial
period 22,016 426 22,442 18,616 (2,685) 15,931
----------------------- ----- ----------------- ----------- --------- ----------------- ----------- ---------
Attributable to:
Equity shareholders 21,215 426 21,641 18,102 (2,685) 15,417
Non-controlling
interests 801 - 801 514 - 514
----------------------- ----- ----------------- ----------- --------- ----------------- ----------- ---------
22,016 426 22,442 18,616 (2,685) 15,931
Earnings per share
(pence)
Basic earnings per
share 8 5.5 4.0
----------------------- ----- ----------------- ----------- --------- ----------------- ----------- ---------
Diluted earnings
per share 8 5.4 4.0
----------------------- ----- ----------------- ----------- --------- ----------------- ----------- ---------
GROUP CONDENSED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the half year ended 29 March 2013
Half year
Half Year ended
ended
29 March 30 March
2013 2012
(Unaudited) (Unaudited)
GBP'000 GBP'000
Items of income and expense taken directly to
equity
Items that will not be reclassified to profit
or loss:
Actuarial (loss)/gain on Group defined benefit
pension schemes (21,559) 3,739
Deferred tax on Group defined benefit pension
schemes 4,259 (270)
--------------------------------------------------------- ------------ ------------
(17,300) 3,469
--------------------------------------------------------- ------------ ------------
Items that may subsequently be reclassified to
profit or loss:
Currency translation adjustment 3,568 (781)
Current tax on currency translation adjustment (127) 151
Hedge of net investment in foreign currency subsidiaries (4,884) 1,266
Cash flow hedges:
fair value movement taken to equity (625) (1,004)
deferred tax on fair value movement taken to
equity 144 241
transfer to Income Statement for the period 326 168
deferred tax on transfer to Income Statement
for the period (75) (40)
--------------------------------------------------------- ------------ ------------
(1,673) 1
--------------------------------------------------------- ------------ ------------
Net (expense)/income recognised directly within
equity (18,973) 3,470
Group result for the financial period 22,442 15,931
--------------------------------------------------------- ------------ ------------
Total recognised income and expense for the financial
period 3,469 19,401
--------------------------------------------------------- ------------ ------------
Attributable to:
Equity shareholders 2,466 18,983
Non-controlling interests 1,003 418
--------------------------------------------------------- ------------ ------------
Total recognised income and expense for the financial
period 3,469 19,401
--------------------------------------------------------- ------------ ------------
GROUP CONDENSED BALANCE SHEET
at 29 March 2013
March March Sept
2013 2012 2012
As re-presented As re-presented
(Unaudited) (Unaudited)
Notes (Unaudited)
GBP'000 GBP'000 GBP'000
-------------------------------------------- ----- ------------ ---------------- ----------------
ASSETS
Non-current assets
Intangible assets 9 503,587 478,568 503,025
Property, plant and equipment 9 226,322 209,487 226,301
Investment property 9 28,635 34,555 31,961
Investments in associates 918 882 548
Other receivables 941 2,836 2,817
Derivative financial instruments 11 13,811 12,877 11,888
Deferred tax assets 61,165 57,044 61,164
-------------------------------------------- ----- ------------ ---------------- ----------------
Total non-current assets 835,379 796,249 837,704
-------------------------------------------- ----- ------------ ---------------- ----------------
Current assets
Inventories 50,170 50,540 54,366
Trade and other receivables 100,232 113,510 107,304
Derivative financial instruments 11 2,665 - 170
Cash and cash equivalents 11 13,102 16,527 18,751
-------------------------------------------- ----- ------------ ---------------- ----------------
Total current assets 166,169 180,577 180,591
-------------------------------------------- ----- ------------ ---------------- ----------------
Total assets 1,001,548 976,826 1,018,295
-------------------------------------------- ----- ------------ ---------------- ----------------
EQUITY
Capital and reserves attributable to equity
holders of the Company
Share capital 10 117,637 120,864 120,920
Share premium 176,859 168,478 171,469
Reserves (102,265) (84,392) (95,116)
-------------------------------------------- ----- ------------ ---------------- ----------------
192,231 204,950 197,273
Non-controlling interests 4,047 3,160 3,246
-------------------------------------------- ----- ------------ ---------------- ----------------
Total equity 196,278 208,110 200,519
-------------------------------------------- ----- ------------ ---------------- ----------------
LIABILITIES
Non-current liabilities
Borrowings 11 251,332 291,600 288,647
Derivative financial instruments 5,728 8,288 9,017
Retirement benefit obligations 14 155,860 121,276 141,841
Other payables 2,252 2,643 3,089
Provisions for liabilities 12 15,852 14,676 12,112
Deferred tax liabilities 31,839 31,113 28,833
Government grants 64 77 70
-------------------------------------------- ----- ------------ ---------------- ----------------
Total non-current liabilities 462,927 469,673 483,609
-------------------------------------------- ----- ------------ ---------------- ----------------
Current liabilities
Borrowings 11 50,713 - -
Derivative financial instruments 1,876 28 -
Trade and other payables 258,580 252,385 282,993
Consideration payable on acquisitions 1,316 - 3,701
Provisions for liabilities 12 5,490 12,687 8,963
Current taxes payable 24,368 33,943 38,510
-------------------------------------------- ----- ------------ ---------------- ----------------
Total current liabilities 342,343 299,043 334,167
-------------------------------------------- ----- ------------ ---------------- ----------------
Total liabilities 805,270 768,716 817,776
-------------------------------------------- ----- ------------ ---------------- ----------------
Total equity and liabilities 1,001,548 976,826 1,018,295
-------------------------------------------- ----- ------------ ---------------- ----------------
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 29 March 2013
Half year Half year
ended ended
29 March 30 March
2013 2012
(Unaudited) (Unaudited)
GBP'000 GBP'000
--------------------------------------------------------- ------------- -------------
Profit before taxation 14,081 15,836
Finance income (8,673) (9,160)
Finance costs 16,405 17,085
Share of profit of associates (after tax) (389) (325)
Exceptional items 8,133 3,438
--------------------------------------------------------- ------------- -------------
Operating profit (pre-exceptional) 29,557 26,874
Depreciation 11,525 10,970
Amortisation of intangible assets 4,831 5,513
Employee share option expense 935 822
Amortisation of government grants (6) (6)
Difference between pension charge and cash contributions (6,300) (7,047)
Working capital movement (17,320) (12,210)
Other movements 442 171
--------------------------------------------------------- ------------- -------------
Net cash inflow from operating activities before
exceptional items 23,664 25,087
Cash outflow related to exceptional items (10,585) (10,083)
Interest paid (7,491) (7,046)
Tax paid (254) (163)
Net cash inflow from operating activities 5,334 7,795
--------------------------------------------------------- ------------- -------------
Cash flow from investing activities
Dividends received from associates 20 25
Purchase of property, plant and equipment (17,309) (11,531)
Purchase of investment property (237) (1,332)
Purchase of intangible assets (856) (1,188)
Acquisition of undertakings (1,984) (113,316)
Disposal of undertakings 10,393 185
Interest received 176 24
Net cash outflow from investing activities (9,797) (127,133)
--------------------------------------------------------- ------------- -------------
Cash flow from financing activities
Proceeds from/(costs of) issue of shares 125 (5)
Ordinary shares purchased - own shares (709) -
Increase in bank borrowings 3,107 58,561
Inception of finance lease liabilities 1,045 -
Dividends paid to equity holders of the Company (4,847) (4,082)
Dividends paid to non-controlling interests (202) (220)
--------------------------------------------------------- ------------- -------------
Net cash (outflow)/inflow from financing activities (1,481) 54,254
--------------------------------------------------------- ------------- -------------
Net decrease in cash and cash equivalents (5,944) (65,084)
--------------------------------------------------------- ------------- -------------
Reconciliation of opening to closing cash and
cash equivalents
Cash and cash equivalents at beginning of period 18,751 81,564
Translation adjustment 295 47
Decrease in cash and cash equivalents (5,944) (65,084)
--------------------------------------------------------- ------------- -------------
Cash and cash equivalents at end of period 13,102 16,527
--------------------------------------------------------- ------------- -------------
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
for the half year ended 29 March 2013
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 28 September
2012 120,920 171,469 (11,758) (83,358) 197,273 3,246 200,519
--------------- ------------- ------------- -------------- -------------- -------- --------------- ------------
Items of income
and expense
taken
directly to
equity
Currency
translation
adjustment - - 3,366 - 3,366 202 3,568
Current tax on
currency
translation
adjustment - - - (127) (127) - (127)
Net investment
hedge - - (4,884) - (4,884) - (4,884)
Actuarial loss
on Group
defined
benefit
pension
schemes - - - (21,559) (21,559) - (21,559)
Deferred tax on
Group defined
benefit
pension
schemes - - - 4,259 4,259 - 4,259
Cash flow
hedges
fair value
movement
taken to
equity - - (625) - (625) - (625)
deferred
tax on
fair value
movement
taken to
equity - - 144 - 144 - 144
transfer to
Income
Statement
for
the period - - 326 - 326 - 326
deferred
tax on
transfer
to the
Income
Statement
for the
period - - (75) - (75) - (75)
Profit for the
financial
period - - - 21,641 21,641 801 22,442
--------------- ------------- ------------- -------------- -------------- -------- --------------- ------------
Total
recognised
income and
expense
for the
financial
period - - (1,748) 4,214 2,466 1,003 3,469
--------------- ------------- ------------- -------------- -------------- -------- --------------- ------------
Employee share
option expense - - 935 - 935 - 935
Exercise, lapse
or forfeit of
share options - - (1,160) 1,160 - - -
Shares acquired
by Deferred
Share
Awards Trust - - (738) 29 (709) - (709)
Shares granted
to
beneficiaries
of the
Deferred Share
Awards Trust - - 839 (839) - - -
Cancellation of
deferred
shares (3,312) 3,312 - - - - -
Issue of
shares 2 123 - - 125 - 125
Dividends 27 1,955 - (9,841) (7,859) (202) (8,061)
--------------- ------------- ------------- -------------- -------------- -------- --------------- ------------
At 29 March
2013 117,637 176,859 (13,630) (88,635) 192,231 4,047 196,278
--------------- ------------- ------------- -------------- -------------- -------- --------------- ------------
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
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
--------------- ------------- ------------- -------------- --------------- ------- --------------- ------------
Currency
translation
adjustment - - - - - - -
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
--------------- ------------- ------------- -------------- --------------- ------- --------------- ------------
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 28 September 2012 4,218 (18,870) 804 (2,003) 4,093 (11,758)
--------------------------------- -------- ---------- ----------- -------- ------------ --------
Items of income and expense
taken
directly to equity
Currency translation
adjustment - - - - 3,366 3,366
Net investment hedge - - - - (4,884) (4,884)
Cash flow hedges
fair value movement
taken to equity - - - (625) - (625)
deferred tax on fair
value movement
taken to equity - - - 144 - 144
transfer to Income Statement
for the period - - - 326 - 326
deferred tax on transfer
to Income
Statement for the period - - - (75) - (75)
Total recognised income
and
expense for the financial
period - - - (230) (1,518) (1,748)
--------------------------------- -------- ---------- ----------- -------- ------------ --------
Currency translation
adjustment 222 - - - (222) -
Employee share option
expense 935 - - - - 935
Exercise, lapse or forfeit
of share options (1,160) - - - - (1,160)
Shares acquired by Deferred
Share Awards Trust - (738) - - - (738)
Shares granted to beneficiaries
of the
Deferred Share Awards
Trust - 839 - - - 839
At 29 March 2013 4,215 (18,769) 804 (2,233) 2,353 (13,630)
--------------------------------- -------- ---------- ----------- -------- ------------ --------
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
or the period - - - 168 - 168
deferred tax on transfer
to Income Statement for
the period - - - (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)
------------------------------------ -------- ---------- ----------- -------- ------------ --------
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 28 September 2012 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 28 September 2012 and are as set out in those
financial statements.
The adoption of new standards and interpretations (as set out in
the 2012 Annual Report) that became effective for the Group's
financial statements for the year ended 27 September 2013 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 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 below. Intersegment revenue is not
material.
Convenience Ingredients Total
Foods & Property
Half Half Half Half Half Half
Year year Year year Year year
2013 2012 2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 542,130 532,587 30,756 35,094 572,886 567,681
------------------------------------ -------- -------- -------- -------- -------- --------
Group operating profit before
exceptional items and
acquisition related amortisation 32,113 30,666 1,572 1,025 33,685 31,691
Amortisation of acquisition related
intangible assets (4,128) (4,817) - - (4,128) (4,817)
Group operating profit before
exceptional items 27,985 25,849 1,572 1,025 29,557 26,874
Exceptional items (8,133) (3,438)
------------------------------------ -------- -------- -------- -------- -------- --------
Group operating profit 27,985 25,849 1,572 1,025 21,424 23,436
Finance income 8,673 9,160
Finance costs (16,405) (17,085)
Share of profit of associates
after tax - - 389 325 389 325
------------------------------------ -------- -------- -------- -------- -------- --------
Profit before taxation 14,081 15,836
------------------------------------ -------- -------- -------- -------- -------- --------
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
2013 2012
GBP'000 GBP'000
------------------------------------- ----- --------- ---------
Integration cost of UK acquisitions (a) (2,248) (3,438)
Integration cost of US acquisitions (b) (1,101) -
Pension curtailment gain (c) 4,368 -
Property related charge (d) (9,152) -
------------------------------------- ----- --------- ---------
(8,133) (3,438)
Taxation on exceptional items (e) 724 753
Exceptional tax credit (e) 7,835 -
------------------------------------- ----- --------- ---------
Total exceptional credit/(charge) 426 (2,685)
-------------------------------------------- --------- ---------
(a) Integration cost of UK acquisitions
During the period, the Group incurred an exceptional charge of
GBP2.2 million in connection with (i) the completion of the
integration of the Uniq business, including the Chilled Desserts
restructuring, and (ii) the integration of the International
Cuisine business acquired in August 2012. In the prior period,
integration costs of GBP3.4 million were incurred in respect of the
Uniq acquisition.
(b) Integration cost of US acquisitions
During the period, the Group incurred an exceptional charge of
GBP1.1 million in connection with the integration of the
acquisitions of MarketFare Foods LLC ("MarketFare") and H.C. Schau
& Son Inc. ("Schau") in the US.
(c) Pension curtailment gain
During the period, the Group recognised a curtailment gain of
GBP4.4 million as the trustees of the Greencore Group pension
scheme resolved to pass on the cost of the Irish pensions levy to
beneficiaries of the pension scheme in the form of a reduction in
future pension payments. The cost of the levy has previously been
assumed to be borne by the scheme and had been treated as a
reduction in assets of the scheme when paid and as an increase in
scheme liabilities for future amounts payable.
(d) Property related charge
During the period, the Group recognised a property related
charge of GBP9.2 million arising on its Irish property portfolio
which comprises a property impairment charge together with a charge
for remediation costs relating to the former sugar processing
sites. The property impairment charge of GBP4.3 million arose due
to the rezoning of a large proportion of the Group's property
assets in Ireland, together with the continued softening of demand
for land and the related impact on prices being achieved on sales.
The Group also re-evaluated the expected costs to be incurred in
meeting the requirements of the Environmental Protection Agency
regarding the remediation of the former sugar processing sites and
an additional charge of GBP4.8 million was recognised in this
respect.
(e) Exceptional tax credit
During the period, a tax credit of GBP7.8 million arose as the
Group resolved a number of tax positions including the settlement
of an overseas tax case. A tax credit of GBP0.7 million was
recognised in respect of exceptional charges in the period.
6. Taxation
Interim period tax is accrued using the tax rate that is
estimated to be applicable to the 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 based on management's judgement applied to the
taxable income of the interim period.
7. Dividends Paid and Proposed
A dividend of 2.5 pence per share was approved at the Annual
General Meeting on 29 January 2013 as a final dividend in respect
of the year ended 28 September 2012 and a total of GBP5.8 million
was paid on 3 April 2013 to those shareholders that did not avail
of the Group scrip dividend scheme.
An interim dividend of 1.90 pence (2012: 1.75 pence) per share
is payable on 3 October 2013 to the shareholders on the Register of
Members as of 7 June 2013. The ordinary shares will be quoted
ex-dividend from 5 June 2013. 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 on the Balance Sheet of the Group as at 29 March 2013
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 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 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
2013 2012
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Profit attributable to equity holders of the
Company 21,641 15,417
Exceptional items (post tax) (426) 2,685
Fair value of derivative financial instruments
and related debt adjustments (2,159) (2,158)
FX on inter-company and external balances where
hedge accounting is not applied 240 (335)
Amortisation of acquisition related intangible
assets 4,128 4,817
Pension financing 1,884 2,363
Tax effect of pension financing and amortisation
of acquisition related intangibles (1,505) (1,713)
------------------------------------------------------- -------- --------
Numerator for adjusted earnings per share calculation 23,803 21,076
------------------------------------------------------- -------- --------
Half Half
year year
2013 2012
pence pence
------------------------------------------------------- -------- --------
Basic earnings per ordinary share 5.5 4.0
------------------------------------------------------- -------- --------
Adjusted basic earnings per ordinary share 6.1 5.5
------------------------------------------------------- -------- --------
Denominator for earnings per share and adjusted earnings per
share calculation
Half Half
year year
2013 2012
'000 '000
------------------------------------------------ -------- --------
Shares in issue at the beginning of the period 394,357 387,312
Treasury shares (3,905) (3,905)
Shares held by Deferred Share Awards Trust (1,641) (2,498)
Effect of shares issued in period 2,722 1,385
Weighted average number of ordinary shares in
issue during the period 391,533 382,294
------------------------------------------------ -------- --------
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
8,557,582 (2012: 8,644,081) 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 Year Half
2013 Year
2012
pence pence
---------------------------------------------- ---------- ------
Diluted basic earnings per ordinary share 5.4 4.0
---------------------------------------------- ---------- ------
Adjusted diluted basic earnings per ordinary
share 6.0 5.4
---------------------------------------------- ---------- ------
Denominator for diluted earnings per share and adjusted earnings
per share calculation
The reconciliation of the weighted average number of ordinary
shares used for the purpose of calculating the diluted earnings per
share amounts is as follows:
Half Half Year
Year 2012
2013
'000 '000
-------------------------------------------- -------- ----------
Weighted average number of ordinary shares
in issue during the period 391,533 382,294
Dilutive effect of share options 7,518 4,987
--------------------------------------------- -------- ----------
Weighted average number of ordinary shares
for diluted earnings per share 399,051 387,281
--------------------------------------------- -------- ----------
9. Intangible Assets, Property, Plant and Equipment, Investment
Property, Capital Expenditure and Commitments
During the six month period to 29 March 2013, the Group made
approximately GBP15.7 million (2012: GBP13.5 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 GBP4.0 million (2012: GBP0.5 million) for
proceeds of GBP4.0 million (2012: GBP4.1 million).
At 29 March 2013, the Group had entered into contractual
commitments for the acquisition of property, plant and equipment
amounting to GBP4.0 million (2012: GBP4.1 million).
10. Equity Share Capital
Issued capital as at 29 March 2013 amounted to GBP117.6 million
(28 September 2012: GBP120.9 million) of which GBP2.1 million (28
September 2012: GBP2.1 million) is attributable to treasury shares,
GBP0.02 million (28 September 2012: GBP0.02 million) is
attributable to shares held by the Deferred Share Awards Trust and
GBP111.5 million (28 September 2012: GBP114.9 million) is
attributable to deferred shares. During the six month period to 29
March 2013, 2,678,410 shares (2012: 1,408,619) were issued in
respect of the scrip dividend scheme and 181,125 shares (2012:
none) were issued in respect of the Group's Sharesave schemes. In
addition, 384,815,847 deferred shares in the Company were cancelled
on 4 January 2013.
Pursuant to the Deferred Bonus Plan Awards scheme, 727,885
shares were purchased by the Trustees of the Plan during the period
ended 29 March 2013. In addition, the Trustees utilised dividend
income of GBP0.03 million (2012: GBP0.03 million) to acquire 32,111
(2012: 69,490) shares in the Group with a nominal value of GBP0.001
million. In the period, 1,402,077 (2012: 1,292,223) shares with a
nominal value of GBP0.013 million were transferred to beneficiaries
of the Deferred Bonus Plan.
During the period, no share options were granted under the
Executive Share Option Scheme (2012: 575,000), no share options
were granted under the Sharesave schemes (2012: nil) and 2,473,607
shares were awarded under the Deferred Bonus Plan Awards scheme
(2012: 3,477,711).
Pursuant to the resolutions passed at the Company's Annual
General Meeting, the directors were authorised to adopt the
Greencore Group plc 2013 Performance Share Plan. During the period,
4,298,604 conditional share awards were granted in accordance with
the terms of this 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
2013 2012
GBP'000 GBP'000
------------------------------------------------- ---------- ----------
Net debt
Cash and cash equivalents 13,102 16,527
Bank borrowings (180,691) (175,178)
Private placement notes (120,309) (116,422)
Finance lease (1,045) -
Cross currency interest rate swaps - fair value
hedges 16,365 12,877
------------------------------------------------- ---------- ----------
Group net debt (272,578) (262,196)
------------------------------------------------- ---------- ----------
2013 2012
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Net finance costs
Net finance costs on interest bearing cash and
cash equivalents and borrowings (7,674) (8,147)
Net pension financing charge (1,884) (2,363)
Change in fair value of derivatives and related
debt adjustments 2,159 2,158
Foreign exchange on inter-company and external
balances where hedge accounting is not applied (240) 335
Unwind of present value discount on non-current
payables and receivables (93) 92
------------------------------------------------- --------- ---------
(7,732) (7,925)
------------------------------------------------- --------- ---------
Analysed as:
Finance income 8,673 9,160
Finance costs (16,405) (17,085)
------------------------------------------------- --------- ---------
(7,732) (7,925)
------------------------------------------------- --------- ---------
12. Provision for Liabilities
March
2013
GBP'000
--------------------------------------------------- ---------
At beginning of period, as previously reported 20,709
Adjustments to provisional fair values previously
recognised on business combinations 366
--------------------------------------------------- ---------
At beginning of period, as re-presented 21,075
Utilised in period (3,452)
Disposed of in period (760)
Provided in period 4,124
Currency translation differences 262
Unwind discount 93
--------------------------------------------------- ---------
At end of period 21,342
--------------------------------------------------- ---------
March
2013 Sept
2012
as re-presented
GBP'000 GBP'000
------------------------- --------- -----------------
Analysed as:
Non-current liabilities 15,852 12,112
Current liabilities 5,490 8,963
------------------------- --------- -----------------
21,342 21,075
------------------------- --------- -----------------
The significant provisions are as follows:
Leases
Lease provisions consist 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) 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
was established to cover the cost of withdrawal from yoghurt
production and exiting everyday desserts to focus on the premium
desserts and Müller/Cadbury desserts business.
Other
Other provisions primarily consist of provisions for litigation
and warranty claims arising from the sale and closure of
businesses, together with a provision for liabilities which are
self insured.
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 Greencore Group Pension Scheme ("the Scheme") has a mortgage
and charge relating to certain property assets of the Group with a
carrying value of GBP5.1m (2012: GBP11.3m) for use as a contingent
asset of the Scheme. Under the terms of the mortgage and charge,
should a disposal of these property assets occur that meets the
terms of the mortgage and charge, the Scheme is entitled to a
portion of the sale proceeds. The maximum amount recoverable by the
Trustees of the Scheme under the mortgage and charge is the amount
required for the Scheme to meet the minimum funding standard under
the Pension Acts 1990-2009. During the period GBP0.6m (2012:
GBPnil) was paid to the Scheme in accordance with this
arrangement.
14. Retirement Benefit Schemes
In consultation with the independent actuaries to the schemes,
the valuation of the 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 2013 September 2012
Ireland UK Ireland UK
-------------------------------------- -------- ------ --------- ------
Rate of increase in pension payments *0% 3.15% *0% 2.60%
Discount rate 3.65% 4.50% 4.00% 4.60%
Inflation rate 1.90% 3.35% 1.90% 2.70%
-------------------------------------- -------- ------ --------- ------
* The pension increase rate shown above applies to the majority
of the liability base, however, there are certain categories within
the schemes that have an entitlement to pension indexation and this
is allowed for in the calculation.
The financial position of the schemes was as follows:
March 2013 September 2012
Irish UK Irish UK
Schemes Schemes Total Schemes Schemes Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total market value of assets 230,985 147,247 378,232 209,386 136,322 345,708
Effect of paragraph 58(b) limit* - (567) (567) - (631) (631)
Present value of scheme liabilities (254,362) (279,163) (533,525) (235,767) (251,151) (486,918)
------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Deficit in schemes (23,377) (132,483) (155,860) (26,381) (115,460) (141,841)
------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Deferred tax asset - 29,901 29,901 - 25,982 25,982
------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Net liability (23,377) (102,582) (125,959) (26,381) (89,478) (115,859)
------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
* Restriction in IAS 19 on recognition of a surplus in a defined
benefit plan that cannot be recovered through refunds or reductions
in future contributions.
15. Subsequent Events
On 10 May 2013, the Group entered into arrangements with the
Hazlewood Defined Benefit Scheme Trustees to address GBP40m of the
actuarial deficit in the scheme. The substance of this arrangement
is to reduce the cash funding which would otherwise be required
based on the latest triennial valuation, whilst improving the
security of the pension scheme members' benefits. As part of these
arrangements, the Pension Scheme has acquired an interest in a
Group subsidiary which entitles it to a distribution from the
profits of the subsidiary of the Group semi-annually for 15 years
11 months. Under IAS 19, distributions to the Scheme will be
reflected in the Group Financial Statements as contributions paid
on a cash basis.
16. Acquisition of Undertakings
2012 Acquisitions
On 17 April 2012, the Group acquired 100% of MarketFare which is
a leading manufacturer of food to go products for convenience and
small stores in the US with facilities in Salt Lake City, Utah and
Fredericksburg, Virginia. The acquisition builds additional scale
with its key customer, 7-Eleven, and provides new competencies to
Greencore USA.
On 21 June 2012, the Group acquired 100% of Schau, a fresh food
manufacturer with facilities in Chicago, Illinois and Jacksonville,
Florida. The acquisition forms a critical part of the supply
network for a significant new multi-regional contract gain with
Starbucks in the food to go category.
On 23 August 2012, the Group acquired 100% of International
Cuisine Limited ("ICL"), a private label chilled ready meal
business with a facility in Consett, County Durham. The acquisition
provides additional capacity for the Group in the ready meals
category in the UK and complements our existing business.
The fair value of the assets acquired, determined in accordance
with IFRS, as previously reported at 28 September 2012 and
subsequently adjusted to reflect new information obtained about
facts and circumstances that existed as of the acquisition date
were as follows:
2012 Acquisitions
As previously Adjustments
reported to provisional As re-presented
fair values
GBP'000 GBP'000 GBP'000
------------------------------- -------------- ---------------- ------------------
Assets
Intangible assets 13,956 - 13,956
Property, plant and equipment 10,275 (707) 9,568
Inventory 5,304 42 5,346
Trade and other receivables 12,488 286 12,774
------------------------------- -------------- ---------------- ------------------
Total assets 42,023 (379) 41,644
------------------------------- -------------- ---------------- ------------------
Liabilities
Trade and other payables (13,814) 131 (13,683)
Provisions for liabilities (223) (366) (589)
Deferred tax liabilities (744) - (744)
------------------------------- -------------- ---------------- ------------------
Total liabilities (14,781) (235) (15,016)
------------------------------- -------------- ---------------- ------------------
Net assets acquired 27,242 (614) 26,628
Goodwill 16,698 879 17,577
------------------------------- -------------- ---------------- ------------------
Total enterprise value 43,940 265 44,205
------------------------------- -------------- ---------------- ------------------
Satisfied by:
Cash payments 41,538 - 41,538
Cash acquired (2,686) 12 (2,674)
------------------------------- -------------- ---------------- ------------------
Net cash outflow 38,352 12 38,864
Consideration payable 5,088 253 5,341
------------------------------- -------------- ---------------- ------------------
Total consideration 43,940 265 44,205
------------------------------- -------------- ---------------- ------------------
At 29 March 2013, the fair values of the acquired net assets of
Schau and ICL have been determined provisionally and are subject to
change, as the Group has yet to finalise the fair value of all the
identifiable net assets acquired. The fair values of the acquired
net assets of MarketFare have now been finalised. The fair value of
the acquired net assets of all acquisitions have been adjusted
retrospectively and the Group Balance Sheet at 28 September 2012
has been adjusted to reflect the effect of these adjustments.
2011 Acquisitions
On 23 September 2011, the Group's acquisition of Uniq was
declared unconditional in all respects. The acquisition provided
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.
The fair value of the assets acquired, determined in accordance
with IFRS, as previously reported at 30 March 2012 and subsequently
finalised in September 2012 to reflect new information obtained
about facts and circumstances that existed as of the acquisition
date were as follows:
Uniq
March 2012 Adjustments March 2012
As previously to provisional As re-presented
reported fair values
GBP'000 GBP'000 GBP'000
-------------------------------- --------------- ---------------- -----------------
Assets
Intangible assets 36,597 137 36,734
Property, plant and equipment 25,894 (734) 25,160
Deferred tax assets 19,744 - 19,744
Inventory 8,292 389 8,681
Trade and other receivables 28,501 269 28,770
-------------------------------- --------------- ---------------- -----------------
Total assets 119,028 61 119,089
-------------------------------- --------------- ---------------- -----------------
Liabilities
Borrowings (15,500) - (15,500)
Trade and other payables (49,558) 2,295 (47,263)
Provisions for liabilities (16,585) (4,890) (21,475)
Current taxes payable (5,833) (4,891) (10,724)
Retirement benefit obligations (2,446) (200) (2,646)
Deferred tax liabilities (9,149) - (9,149)
-------------------------------- --------------- ---------------- -----------------
Total liabilities (99,071) (7,686) (106,757)
-------------------------------- --------------- ---------------- -----------------
Net assets acquired 19,957 (7,625) 12,332
Goodwill 84,622 7,625 92,247
-------------------------------- --------------- ---------------- -----------------
Total enterprise value 104,579 - 104,579
-------------------------------- --------------- ---------------- -----------------
Satisfied by:
Cash acquired (8,123) - (8,123)
-------------------------------- --------------- ---------------- -----------------
Consideration payable 112,702 - 112,702
-------------------------------- --------------- ---------------- -----------------
Total consideration 104,579 - 104,579
-------------------------------- --------------- ---------------- -----------------
The Group Balance Sheet as at 30 March 2012 has been
re-presented to reflect the effect of changes to the fair values of
the Uniq acquisition balance sheet, which were processed in
September 2012.
17. Information
Copies of the Half Yearly Financial Report are available for
download from the Group's website at www.greencore.com.
18. 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 29 March 2013 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 29 March 2013 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
------------------------ ------------------------
21 May 2013 21 May 2013
------------------------ ------------------------
* * *
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KMGZKVGRGFZM
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