It was a year of exceptional costs for Greencore (GNC). The biggest chunk of these one-offs was £29.7m of software impairments after management decided not to go ahead with the planned roll out of an "enterprise resource planning" platform across the UK. In second place was £16.5m of exit costs related to the phasing out of manufacturing at Greencore’s desserts facility in Evercreech, Somerset. Add in some transaction and reorganisational costs, and the total exceptional items bill was £78.2m, which hammered earnings (see table).
While it was a tough year, there is reason to be optimistic about the future of Greencore. If you can see past these exceptional costs, adjusted pre-tax profit was up 36 per cent to £117m, and the acquisition of Peacock Foods in the US, funded by the December 2016 rights issue, provided a boost to group revenue. Analysts at broker Numis believe business wins with new and existing US customers should ease concerns about sales there. Between the Peacock acquisition and a pipeline of UK investments set to complete next year, 2018 could prove to be an “inflection point” for free cash flow, they argue.
Broker Jefferies forecasts adjusted pre-tax profit of £142m in the year to September 2018, giving EPS of 16.1p (from £117m and 15.4p in FY2017).
| GREENCORE (GNC) | ||||
| ORD PRICE: | 213.2p | MARKET VALUE: | £1.51bn | |
| TOUCH: | 213.1-213.3p | 12-MONTH HIGH: | 265p | LOW: 180p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 112 | |
| NET ASSET VALUE: | 100p* | NET DEBT: | 73% | |
| Year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013** | 1.20 | 41.5 | 14.1 | 3.95 |
| 2014** | 1.27 | 44.4 | 9.7 | 4.52 |
| 2015** | 1.34 | 59.4 | 11.8 | 5.06 |
| 2016** | 1.48 | 48.2 | 9.5 | 5.47 |
| 2017 | 2.32 | 12.4 | 1.9 | 5.47 |
| % change | +57 | -74 | -80 | - |
| Ex-div: | 07 Dec | |||
| Payment: | 05 Apr | |||
| *Includes intangible assets of £1.1bn, or 153p a share **Restated EPS and DPS to reflect rights issue | ||||
