- Part 2: For the preceding part double click ID:nRSA5421Qa
year 43,615 21,572
________ ________
Cash and cash equivalents at the end of the year 42,915 43,615
======= =======
Cash flow statement - cash generated from operations
2015 2014
£'000 £'000
Profit for the financial year 57,600 37,556
Amortisation 454 100
Depreciation 39,687 37,463
Impairment 66 414
Loss on sale of property, plant and equipment 2,952 3,576
Release of government grants (484) (473)
Share-based payment expenses 3,662 529
Finance expense / (income) 85 (175)
Income tax expense 15,428 12,187
(Increase) / decrease in inventories (154) 115
Increase in receivables (1,555) (1,079)
Increase in payables 2,875 17,089
(Decrease) / increase in provisions (979) 1,250
________ ________
Cash from operating activities 119,637 108,552
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Greggs plc
Notes
1. Basis of preparation and accounting policies
The preliminary announcement has been prepared in accordance with the
recognition and measurement principles of International Financial Reporting
Standards as adopted by the EU ("adopted IFRSs"), IFRIC interpretations and
the Companies Act 2006 applicable to companies reporting under IFRS. It does
not include all the information required for full annual accounts.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 2 January 2016 or 3 January 2015 but is
derived from these accounts. Statutory accounts for the 53 weeks ended 3
January 2015 have been delivered to the registrar of companies, and those for
the 52 weeks ended 2 January 2016 will be delivered in due course. The
auditor has reported on those accounts; the audit reports were (i)
unqualified, (ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The preliminary announcement has been prepared using the accounting policies
published in the Group's accounts for the 53 weeks ended 3 January 2015, which
are available on the Company's website www.greggs.co.uk, with the exception of
the adoption of the following relevant standards, amendments and
interpretations:
· Defined Benefit Plans: Employee Contributions - Amendments to IAS 19
· Annual Improvements to IFRSs - 2010-2012 Cycle
· Annual Improvements to IFRSs - 2011-2013 Cycle
The adoption of the above has not had a significant impact on the Group's
profit for the year or equity.
Restatement of comparatives
During the current year the Group has continued to expand its franchise
operations. Certain of these arrangements include up-front payments from
franchisees receivable in respect of the capital fit-out of the franchise
operators' shops. Due to these up-front payments becoming material in the
year, the Directors have reconsidered the application of IAS 18 to these
specific transactions. They have now determined that the Group is acting as a
principal in these transactions whilst previously these had been presented as
if they were acting as agents. The prior year figures have been restated for
this change in presentation. For the 53 weeks ended 3 January 2015 both
turnover and cost of sales have increased by £2,135,000. There is no impact
on profit, balance sheet or cash flows for this change in presentation.
In addition, a review of income statement categorisations was carried out
which identified two re-categorisations. Firstly it was determined that it was
more appropriate for all wage costs associated with bakery and distribution
centre despatch activities to be included in distribution and selling costs,
rather than some being included in cost of sales. The net impact of this for
the 53 weeks ended 3 January 2015 has been a decrease in cost of sales and a
corresponding increase in distribution and selling costs of £7,294,000.
Secondly, early settlement discounts should have been included in
administrative costs rather than cost of sales. The net impact for the 53
weeks ended 3 January 2015 has been an increase in cost of sales and a
decrease in administrative costs of £80,000. There is no impact on profit,
balance sheet or cash flows arising from these changes in categorisation.
2. Segmental analysis
The Board is considered to be the "chief operating decision maker" of the
Group in the context of the IFRS 8 definition. In addition to its retail
activities, the Group generates revenues from franchise and wholesale.
However, these elements of the business are not sufficiently significant to be
"Reportable Segments" in the context of IFRS 8.
Products and services - the Group sells a consistent range of fresh bakery
goods, sandwiches and drinks in its shops. The Group also provides frozen
bakery products to its wholesale customers.
Major customers - the majority of sales are made to the general public on a
cash basis. A small proportion of sales are made on credit to certain
organisations, including wholesale customers, but these are immaterial in a
Group context.
Geographical areas - all results arise in the UK.
The Board has carefully considered the requirements of IFRS 8 and concluded
that, as there is only one reportable segment whose revenue, profits, assets
and liabilities are measured and reported on a consistent basis with the Group
accounts, no additional numerical disclosures are necessary.
3. Exceptional items
2015 2014
£'000 £'000
Cost of sales
Closure of in-store bakeries - redundancy and disruption costs - 3,190
- loss on disposal of assets - 664
- dilapidations - 2,078
________ ________
- 5,932
Distribution and selling
Shop asset impairment reversal - (149)
Onerous leases - 431
________ ________
- 282
Administration expenses
Restructuring of support functions - 2,302
________ ________
Total exceptional items - 8,516
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The judgements made in calculating the provisions which arose as prior year
exceptional items have been revisited. No additional amounts have been charged
or reversed in the current year in respect of these. There remains some
uncertainty in relation to these provisions which will be re-assessed in
future periods, with any movements being classified as exceptional.
Closure of in-store bakeries
The charge arose from the decision to consolidate the Company's in-store
bakeries into its regional bakery network and comprised of redundancy costs,
disruption costs arising on the transfer of production from stores to regional
bakeries, asset write-offs and the costs of making good the shops
(dilapidations) as bakery equipment is removed.
3 Exceptional items (continued)
Shop impairment and onerous leases
The charges arose from the decision to focus on reshaping the Group's existing
estate through closure and resite of shops and withdrawal from the Greggs
moment brand.
Restructuring of support functions
The charge related to the redundancy costs incurred in respect of
restructuring within the support functions.
4. Taxation
Recognised in the income statement
Total Excluding exceptional items Exceptional items Total
2015 2014 2014 2014
£'000 £'000 £'000 £'000
Current tax expense
Current year 17,970 15,776 (1,534) 14,242
Adjustment for prior years (530) (229) - (229)
________ ________ ________ ________
17,440 15,547 (1,534) 14,013
Deferred tax credit
Origination and reversal of temporary differences (1,038) (1,471) (276) (1,747)
Reduction in tax rate (254) - - -
Adjustment for prior years (720) (79) - (79)
________ ________ ________ ________
(2,012) (1,550) (276) (1,826)
________ ________ ________ ________
Total income tax expense in income statement 15,428 13,997 (1,810) 12,187
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5. Earnings per share
Basic earnings per share
Basic earnings per share for the 52 weeks ended 2 January 2016 is calculated
by dividing profit attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the 52 weeks ended 2
January 2016 as calculated below.
Diluted earnings per share
Diluted earnings per share for the 52 weeks ended 2 January 2016 is calculated
by dividing profit attributable to ordinary shareholders by the weighted
average number of ordinary shares, adjusted for the effects of all dilutive
potential ordinary shares (which comprise share options granted to employees)
outstanding during the 52 weeks ended 2 January 2016 as calculated below.
5. Earnings per share (continued)
Profit attributable to ordinary shareholders
2015 2014 2014 2014
Total Excluding Exceptional Total
exceptional items
items
£'000 £'000 £'000 £'000
Profit for the financial year attributable to equity holders of the Parent 57,600 44,262 (6,706) 37,556
======= ======= ======= ======
Basic earnings per share 57.3p 44.0p (6.6p) 37.4p
Diluted earnings per share 55.8p 43.4p (6.6p) 36.8p
Weighted average number of ordinary shares
2015 2014
Number Number
Issued ordinary shares at start of year 101,155,901 101,155,901
Effect of own shares held (551,314) (638,815)
__________ __________
Weighted average number of ordinary shares during the year 100,604,587 100,517,086
Effect of share options on issue 2,616,364 1,517,722
__________ __________
Weighted average number of ordinary shares (diluted) during the year 103,220,951 102,034,808
========= =========
6. Dividends
The following tables analyse dividends when paid and the year to which they
relate:
2015 2014
Per share Per share
pence pence
2013 final dividend - 13.5p
2014 interim dividend - 6.0p
2014 final dividend 16.0p -
2015 interim dividend 7.4p -
2015 special dividend 20.0p
________ ________
43.4p 19.5p
======= =======
6. Dividends(continued)
The proposed final dividend in respect of 2015 amounts to 21.2 pence per share
(£21,264,000). This proposed dividend is subject to approval at the Annual
General Meeting and has not been included as a liability in these accounts.
2015 2014
£'000 £'000
2013 final dividend - 13,530
2014 interim dividend - 6,040
2014 final dividend 16,090 -
2015 interim dividend 7,463 -
2015 special dividend 20,161
________ ________
43,714 19,570
======= =======
7. Related parties
The Group has a related party relationship with its subsidiaries, associates
and its Directors and executive officers.
There have been no related party transactions in the year which have
materially affected the financial position or performance of the Group. There
have been no related party transactions in the year which have materially
affected the financial position or performance of the Group.
8. Events after the reporting period
As noted in the Chief Executive's report on pages 9-10 the Group has completed
a detailed review of its manufacturing and distribution operations. As a
result of this, subsequent to the year end, the Board has agreed a proposal to
invest substantially to reshape its supply chain over the next five years,
which includes the proposed closure of three bakery sites. Alongside an
increased level of capital expenditure the proposals would lead to one-off
costs of around £7 million in 2016, of which £6 million would be a cash cost.
No costs arising from this plan has been recognised in these accounts in
accordance with IAS 10.
9. Principal risks and uncertainties
The Board has carried out a robust assessment of the principal risks facing
the company, including those that would threaten its business model, future
performance, solvency and liquidity. These risks are described below,
together with a brief description of mitigating activity.
Greggs is exposed to a wider range of risks than those listed. However, these
are the risks which are considered to be the most important to the business'
future development, performance or position. The risks identified are those
to which the Board considers there is a disproportionate exposure, relative to
the food-on-the-go sector. The impact of these risks occurring has been
considered in developing the scenarios tested as part of the financial
viability statement.
The risks are not set out in any particular order.
9 Principal risks and uncertainties (continued)
Area of principal risk or uncertainty Mitigating actions and controls Risk rating
Business changeGreggs is implementing a strategic plan to transform the business from a decentralised traditional bakery to a The project delivery is overseen by the Operating Board, under the guidance of a project sponsor, providing robust governance. Regular updates are provided to the Board, to monitor progress against clearly defined timelines and financial forecasts. No change
centralised modern food-on-the-go brand. This involves a major programme of business change involving restructuring, new
systems, increased capital investment and a major overhaul of every aspect of the business.Progress may not be in line with
plans, disruption could occur and financial returns may fall short of expectation.
Product quality and safetyGreggs is unusual in the food-on-the-go sector in that it is vertically integrated, owning its own Procedures are in place throughout our operations to ensure that food safety is maintained. These procedures are supported by robust audit processes, both internally, and by regulatory bodies. No change
manufacturing and supply chain operations. In addition, we freshly prepare food on the premises. This exposes us to greater risk
in ensuring good food safety than many of our competitors.
Food scareGreggs may suffer from a loss of customer confidence due to a major food scare beyond its control. Dependent upon the The majority of products for sale in our shops have been manufactured by our staff in our bakeries. Checks are carried out to confirm the integrity of our products and ingredients as part of routine processes. No change
nature of this, it may have a disproportionate impact on Greggs.
Loss of productionSome of our products are produced in one location and distributed nationwide. Any disruption to supply would Contingency plans are in place for our supply sites, and these are regularly tested. Our property insurers carry out annual site inspections, which help to protect our facilities from loss. We have alternative supply sources for key products, and these are periodically tested. No change
have a significant impact on our customers.
Market pressuresChanging shopping habits driven by the convenience of new customer channels and locations may have a greater Greggs operates a leasehold shop estate with typically 5 year break provisions, allowing us to change locations in line with customer traffic trends. In addition, new shops are predominantly opened in non- shopping locations to offer our services to customers who are away from home for reasons other than shopping. Improving
impact on Greggs due to our historical bias to shops located in high streets.
Consumer trendsIncreasing customer concern with health and nutrition may affect demand for some of our traditional bakery We have a proactive programme to improve the nutritional qualities of our traditional products where possible without impacting taste. In addition we are extending range choice to include healthier options branded `Balanced Choice` which is growing rapidly. No change
product ranges.
This information is provided by RNS
The company news service from the London Stock Exchange