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Greencore Reports Operating Profits of Euro 42m for the Six Months Ended March 31, 2006

Posted on: Wednesday, 7 June 2006, 09:00 CDT

DUBLIN, Ireland, June 7 /PRNewswire-FirstCall/ -- Greencore Group plc, a major manufacturer of convenience foods and ingredients, announces results for 6 months to March 31, 2006.

HIGHLIGHTS -- Adjusted EPS up 2.2% to 13.7 cent -- Profit after tax up 14.3% to euro 30.5m (pre-exceptionals) -- Group operating profit (pre-exceptionals) of euro 42.1m in line with the first half of FY05 -- Continued progress in Convenience Foods division: - 72% of Group operating profits - Turnover growth of 8.1% to euro 442m - Operating profit growth of 2.2% to euro 30.3m; achieved against a very strong comparative period - Positive outlook for second half of FY06 -- Reconfigured Ingredients, Agribusiness and Related Property division: - Operating profit decrease of 5.4% to euro 11.8m - Decision taken to exit sugar processing in Ireland - Significant restructuring of malt business - Greater focus on management of Group property assets -- Comparable net debt of euro 423m, up only euro 4m on March 2005, despite Oldfields acquisition and Sugar restructuring costs -- Net exceptionals of euro 45.7m - principally due to sugar processing exit -- Interim dividend maintained at 5.05 cent

Commenting on the results, Greencore Group Chief Executive David Dilger said:

"These results represent a solid underlying performance against a background of a competitive convenience foods environment and EU sugar reform that has led us to exit sugar processing in Ireland. The future for Greencore now lies in Convenience Foods. I am pleased by the continued progress of and future prospects for that division. We have high performing businesses right across the range of our operations -- with nine of the ten Convenience Foods businesses growing at or above market growth rates. Against this background, we are confident that we will deliver a good performance for the full year."

SUMMARY

The half year under review has been a critical period in the evolution of Greencore. The decision to exit sugar processing in Ireland means that Greencore is now completing its transition from a predominantly agri-business entity into a convenience foods company. The Convenience Foods division continues to perform well, driven by:

-- leading positions in the categories and segments where we compete, with nine of our ten businesses growing at or above market growth rates; -- a relentless focus on Total Lowest Cost ("TLC"), driving more than 2% per annum of real operational cost reduction; -- broad channel exposure, with successful integration of Oldfields helping to drive more than 30% of our revenues in the first half of FY06 outside of the 'multiple channel'; -- excellent product development and mix management, with almost 40% of our products now less than one year old; and -- an emerging set of licensed brands which, over time, will become more central to our business.

The division delivered a solid financial performance with turnover up 8.1% to euro 442m and operating profits up 2.2% to euro 30.3m. This profit growth was achieved against a very strong comparative period - a period in which profits were substantially enhanced by a short-term contract to supply a competitor following a fire at one of their facilities.

In the six months under review, our Ingredients, Agribusiness and Related Property division has been subjected to unprecedented challenges. The competitive pricing behavior throughout the European sugar industry which preceded the implementation of the new EU sugar regime significantly reduced Greencore Sugar's profitability. Continued over-capacity in European malt markets also placed significant pressures on the division, and we are restructuring our core UK and Irish locations to better position Greencore Malt for this new environment. The cost of this restructuring is included in these accounts. A strong final sugar campaign, good operational performance in our malt facilities and profits from property sales enabled the division to earn profits of euro 11.8m, a decline of 5.4% from the first half of FY05.

Given the anticipated negative impact of the sugar processing exit on Group operating profit and cashflows in FY06 and FY07 and the importance that the Board continues to place on improving the capital structure of the Group post Sugar, the interim dividend for the current year will be maintained at the prior year level of 5.05 cent.

REVIEW OF OPERATIONS (1) CONVENIENCE FOODS

The Convenience Foods division has continued to perform well. In a challenging environment, nine of our ten businesses are growing at least as quickly as their markets, operational performance has continued to improve and our key objectives in the areas of Total Lowest Cost, channel diversification and innovation are being achieved. This business performance has delivered solid financial results with sales growth of 8.1% and operating profit growth of 2.2%. Operating margins are at 6.9%. This represents an improvement of 0.6% points on last year's first half margin, but a decline of 0.4% points on the margin from continuing operations in the first half of FY05.

There are two important points of context in comparing the sales, margin and profit levels of the first half of FY06 to the first half of FY05:

-- The Group acquired Oldfields in August 2005 and it has been successfully integrated into our sandwich business. We are delighted with the progress and prospects of the business. However, its cost base at acquisition was well above that of our core sandwich business, and it will take twelve months to bring these costs in line with our operational best practice and to enable Oldfields to benefit fully from Group synergies. -- Sales and profits in the comparative period were substantially enhanced by our successful response to a fire at a competitor's facility in October 2004. Our Grocery business secured a short-term, but highly profitable, supply contract while that facility was rebuilt. This contract, the benefit of which was earned in the first half of FY05, helped deliver a level of sales and profits well in excess of any previously delivered at our Grocery business. At a Group level, the profit impact of this contract broadly offset the losses incurred at our Pizza business (now discontinued) in the first half of FY05.

These two factors entirely explain the relative fall in percentage margin from continuing operations between the first half of FY06 and the first half of FY05. In the Convenience Foods division, the second half of the year has always been the biggest generator of divisional sales and profit, with categories such as Sandwiches, Quiche, Water, and Chilled Desserts experiencing significant summer uplifts. Against this background, the Board is pleased with the financial performance of Convenience Foods in the first half of FY06. The underlying performance continues to reflect the clear choices Greencore has made on where it competes and the strong capability that it has built across the businesses.

1. Well Chosen Categories

Greencore believes in the fundamental attractiveness of the chilled convenience foods market - it is at the core of our strategy. Growth in this market has improved modestly over the last six months, with annual growth now running at 4.5%. Greencore's success to date has been driven by the specific market, segment and format choices that the Group has made. For example, in Chilled Sauces, where Greencore leads the industry with a 41% market share, annual market growth is now 15%. In Cakes, where the overall market grew at 6%, our two key segments, Celebration Cakes and Christmas Cakes, had growth of 16% and 10%, respectively.

2. Balanced Channel Exposure

Over the last six months, we have further strengthened our non-multiple business, which accounts for more than 30% of Convenience Foods sales. In January, we launched a new business unit, Greencore Food Service, to enable us to better serve the catering sector. It works across our categories to deliver 'integrated solutions' to large food-service customers and has already achieved a number of notable account successes. In addition, the acquisition and integration of Oldfields has significantly enhanced our presence in the coffee shop channel. These two initiatives, along with a sustained focus on the convenience store channel across our business, have driven a 27% increase in non- multiple sales over the first half of FY05.

3. A Commitment to Being the Lowest Cost Competitor

An essential part of Greencore's operating and economic model is our commitment to being the lowest cost competitor. This imperative is as much about culture and leadership as it is about process and efficiency. We currently have over 160 individual TLC initiatives running across the division and continue to deliver operational cost improvements that total in excess of 2% of sales. These efficiency improvements are vital to helping our businesses both to offset input price inflation and to improve terms to our customers.

4. Aggressive Innovation, Especially in the Areas of Premium and Health

Innovation is the lifeblood of this business, delivering excitement to consumers and customers and enabling us to sustain margins in a price deflationary environment. In the 12 months to March 2006, almost 40% of our portfolio comprised products that are less than one year old. In two of our strongest performing categories, Chilled Sauces and Chilled Desserts, the level of new product introductions sits at 81% and 53% of their respective product portfolios.

Health is important to the Group's innovation agenda. Our license agreement with WeightWatchers(R) has been an important initiative. Greencore launched a range of chilled prepared meals produced under license from WeightWatchers(R) last summer and is now supplying this range to all major UK and Irish retailers. In less than 12 months, it has grown into a retail brand delivering sales of approximately euro 25m a year at a margin above that earned in our customer branded prepared meals. Already we have the number one selling individual SKU in the healthy chilled prepared meals category. We have the opportunity to further develop this brand over the next few years.

5. A Decentralized Model that Bestows 'True Ownership' to the Businesses

Greencore businesses 'own' their income statement - that is the 'Greencore way'. This enables our front-line leaders to make the daily trade-offs between commercial, operational and financial demands necessary to drive profit performance. It is a critical organizational choice from which we will not depart.

6. Robust Financial Discipline

Rigorous disciplines on fixed and working capital investments are a core feature of how Greencore operates. We have invested nearly euro 16m in capital projects in Convenience Foods in the first half of FY06 (122% of depreciation). This spend is tightly managed and focuses on driving efficiency improvement projects, such as the line automation initiatives in Cakes and Sandwiches, or facilitating entry into new market sectors, such as our move into the snack salads market.

These elements continue to drive our business. The Group has also had to deal with three significant market challenges in the period under review:

-- Consumer Health Trends Consumers have become increasingly concerned regarding the wholesomeness of processed food. In particular, this has contributed to a slowdown in the growth of the Prepared Meals category, with category growth now at 4.7% per annum. We have responded with a comprehensive new range of customer branded meals (launched in March 2006), a more wholesome set of ingredients and the development of the WeightWatchers(R) prepared meals range. -- A Price Deflationary Retail Environment UK multiples continue to drive retail price deflation across many categories, placing even greater importance on our cost reduction and innovation processes. -- Input Price Inflation As expected, energy prices increased further in the first half of FY06. While significant, we have built these increases (which totalled more than euro 2m in the first half of FY06) into our plans for FY06 and FY07 and continue to manage energy efficiency and energy pricing tightly. Our TLC agenda is critical to enabling us to absorb these increases and to date has been successful. REVIEW OF OPERATIONS (2) INGREDIENTS, AGRIBUSINESS AND RELATED PROPERTY

The Ingredients, Agribusiness and Related Property division has been subjected to unprecedented challenges. The new EU sugar regime (which effectively ended the sugar industry in Ireland), the pricing and capacity pressure across EU sugar markets that preceded it, and continued over-capacity in European malt markets, have placed significant pressures on the division. However, a strong final sugar campaign, good operational performance in our malt facilities and a contribution from property sales enabled the division to earn profits of euro 11.8m, a fall of 5.4% from the first half of FY05.

While the importance of this division as a source of earnings to the Greencore Group will diminish over time, focused and effective management of the Group's property assets, now led centrally at Group Board level, has the potential to create long term value for shareholders.

1. Decision to Exit Sugar Processing

On March 15, 2006, Greencore announced its intention to exit sugar processing. The decision of the EU Council of Ministers in November 2005 effectively brought an end to the sugar industry in Ireland. Greencore had hoped to be able to undertake 'one more campaign' in 2006/2007 but unfortunately, and despite considerable efforts by many parties, it was not feasible to do so. Greencore will not process sugar again, and as determined by the EU sugar regime reform mechanism, the Group intends to renounce its quota and present a restructuring plan to the Irish Government to secure the restructuring aid to which it is entitled.

As detailed in the announcement of March 15, 2006, the financial effects of exiting sugar are severe:

-- Profit Impact Approximately euro 10m fall in profits in FY06 and an elimination of sugar processing profits thereafter (versus FY05 profits of approximately euro 25m). -- Costs of Exit Gross exit costs of euro 168m (approximately one third of which are cash costs), partially offset by Greencore's legal entitlement to euro 131m (Present Value equates to euro 124m) of EU restructuring aid, resulting in an exceptional charge to the first half of FY06 accounts of euro 44m. Note 3 to the accounts sets out the accounting treatment for the costs and the risks to the receipts and payments arising from the exit.

Greencore has advised the Irish Government of its intention to cease processing and renounce quota. As required by EU regulation, Greencore intends to submit a comprehensive restructuring plan. Under this regulation, this plan needs to be submitted by July 31, 2006, and a decision to approve or reject the Greencore restructuring plan is required from Government by September 30, 2006. All parties are still awaiting the publication of the final EU 'Implementing Rules' which will set out the operational elements that underpin the EU Regulation of February 20, 2006.

In operating terms, our Sugar business has performed well. The final campaign at the reconfigured Mallow factory was very successful. Despite the dramatic falls in EU sugar prices, the morale blow associated with the exit decision and aggressive competition with other suppliers at our core customers, the business has held up well. Greencore Sugar remains committed to serving its customers. It has sufficient stocks of sugar to fully service Irish industrial sugar and retail customers until November 2006 and has now put in place plans to supply these customers for the long term, preserving the value of the Siucra and McKinney brands.

2. Malt Restructuring

International malt prices reached a low point in the cycle at the end of 2005, driven, in large part, by industry over-capacity. That pricing impact, allied to energy increases of more than 50% year on year, had a negative impact on the profitability of the Group's malt business. During the period, the business benefited from a legal settlement of euro 4.9m. Last year, we took the step of closing three maltings; this year, the focus is on restructuring our core operations in the UK and Ireland, the net costs of which are euro 4.6m. This work is ongoing, and we believe it will ultimately leave us well placed to benefit from the anticipated improvement in the malt cycle.

3. Property

Greencore has always been involved in trading and developing surplus property assets within the Ingredients and Agribusiness area and still has significant property assets in the UK and Ireland. In recognition of the potential value of our property assets and the skills needed to access it, all significant property activity is now under the responsibility of the Group Development Director.

FINANCIAL REVIEW

The results have been prepared in accordance with International Financial Reporting Standards ("IFRS"). The Group issued its restatement of its 2005 financial information to IFRS on May 5, 2006. IFRS has resulted in the following key changes to the Group income statement:

-- Discontinued operations are now shown as one line item below taxation. -- Pension accounting charges result in the Group recognizing current service costs as part of operating profit, with returns on assets and the finance costs of liabilities being recognized in the finance income and finance costs lines, respectively. -- Financial derivatives must be marked-to-market, with most movements in mark-to-market from one period to the next being recognized in the income statement. -- Goodwill is no longer amortized. -- Dividends are no longer recognized until such point as they have been approved.

Group operating profit (pre-exceptional) of euro 42.1m was in line with the first half of last year. Convenience Foods operating profit grew by 2% to euro 30.3m. Ingredients, Agribusiness and Related Property operating profit declined by 5.4% to euro 11.8m. Strong profit after tax growth of 14.3% (to euro 30.5m) principally reflected the strong positive impact of marking-to- market our trading derivatives within the finance income category. This impact is stripped out of Adjusted EPS of 13.7 cent, an increase of 2.2% over the first half of FY05.

Net debt at March 31, 2006 was euro 423m (before the impact of marking-to- market our fair value hedges and trading derivatives), an increase of euro 4m from the comparable March 2005 figure (see Note 7 for fuller explanation). However, this twelve month debt movement reflects approximately euro 40m of one-off items, which include the cash costs associated with the fundamental restructuring of Greencore Sugar in 2005 and the acquisition costs of Oldfields. The rise in comparable net debt of euro 24m from September 2005 is principally explained by a seasonal working capital uplift in Sugar that totalled approximately euro 45m by end March. Importantly, the underlying trajectory of cash generation remains in place.

The Group incurred exceptional charges (net of tax) of euro 45.7m in the period under review (full details of which are contained in Note 3 to the accounts). This total charge comprises four separate areas:

(i) Sugar: euro 43.8m (net cost) related to the exit from sugar processing in Ireland. (ii) Malt: euro 4.9m (net benefit) from legal settlement; euro 4.6m (net cost) from restructuring of UK and Irish operations (iii) Chilled Sauces: euro 2.0m (net cost) related to the exit from the Chesterfield facility and the consolidation of that business into a single site. (iv) Foreign Exchange: euro 0.2m (net cost)

Significant capital investment was made in the period. Capital expenditure amounted to euro 23.6m, compared to depreciation charges of euro 19.4m. Of this figure, 67% was invested in Convenience Foods.

The tax charge on continuing operations of euro 5.1m equates to an effective tax rate of 16% (see Note 8 for fuller explanation).

OUTLOOK

The performance and prospects for Convenience Foods are encouraging; it is the future of Greencore. Despite the fact that FY05 was a strong comparative year, we expect to generate good performance in Convenience Foods this year and believe the division is well positioned for further growth in the years to come.

Market conditions remain difficult for our Ingredients and Agribusiness operations. The guidance we issued in our March 2006 statement on Sugar remains appropriate. Malt remains a challenge but the anticipated upturn in malt prices, which is taking longer to materialize than we had hoped, is expected to assert itself in late FY06 and FY07.

Greencore is successfully completing its transition into a convenience foods company. We are confident that we will deliver a good performance for the full year.

E F Sullivan June 7, 2006 Consolidated Income Statement for half year ended March 31, 2006 Half year to Half year to March 31, 2006 March 25, 2005 (Unaudited) (Unaudited) Pre- Pre- except- Except- except- Except- ional ional Total ional ional Total euro euro euro euro euro euro Continuing Notes '000 '000 '000 '000 '000 '000 operations 2 Revenue 658,052 - 658,052 630,441 - 630,441 Cost of sales (464,799) (9,150) (473,949) (443,961) - (443,961) Gross profit 193,253 (9,150) 184,103 186,480 - 186,480 Distribution, administration and other expenses (151,158) (37,735) (188,893) (144,361) (73,703) (218,064) Profit /(loss) before financing, associates and tax 2 42,095 (46,885) (4,790) 42,119 (73,703) (31,584) Finance income 7 24,748 - 24,748 16,727 - 16,727 Finance costs 7 (32,620) - (32,620) (28,754) - (28,754) Share of profit of associates 1,387 - 1,387 1,797 - 1,797 Profit/(loss) before taxation 35,610 (46,885) (11,275) 31,889 (73,703) (41,814) Tax expense 8 (5,066) 1,190 (3,876) (4,145) 8,290 4,145 Result for the period from continuing operations 3 30,544 (45,695) (15,151) 27,744 (65,413) (37,669) Discontinued operations Loss from discontinued operations - - - (1,011) - (1,011) Result for the financial period 30,544 (45,695) (15,151) 26,733 (65,413) (38,680) Earnings per share for the period Notes euro cent euro cent Continuing operations Basic earnings per share 6 (8.0) (20.1) Diluted earnings per share 6 (7.8) (19.9) Discontinued operations Basic earnings per share 6 - (0.5) Diluted earnings per share 6 - (0.5) Year to September 30, 2005 (Audited) Pre- exceptional Exceptional Total Notes euro'000 euro'000 euro'000 Continuing operations 2 Revenue 1,325,042 - 1,325,042 Cost of sales (930,733) - (930,733) Gross profit 394,309 - 394,309 Distribution, administration and other expenses (292,356) (74,255) (366,611) Profit /(loss) before financing, associates and tax 2 101,953 (74,255) 27,698 Finance income 7 33,179 - 33,179 Finance costs 7 (58,274) - (58,274) Share of profit of associates 3,559 - 3,559 Profit/(loss) before taxation 80,417 (74,255) 6,162 Tax expense 8 (12,412) 8,289 (4,123) Result for the period from continuing operations 3 68,005 (65,966) 2,039 Discontinued operations Loss from discontinued operations (3,643) (38,263) (41,906) Result for the financial period 64,362 (104,229) (39,867) Attributable to: Equity shareholders 62,822 (104,229) (41,407) Minority interests 1,540 - 1,540 64,362 (104,229) (39,867) Earnings per share for the period Notes euro cent Continuing operations Basic earnings per share 6 0.3 Diluted earnings per share 6 0.3 Discontinued operations Basic earnings per share 6 (21.7) Diluted earnings per share 6 (21.5) Consolidated Balance Sheet as at March 31, 2006 March 31, March 25, September 30, 2006 2005 2005 (Unaudited) (Unaudited) (Audited) euro'000 euro'000 euro'000 ASSETS Non-current assets Intangible assets 352,989 338,958 353,814 Property, plant and equipment 372,614 492,380 484,595 Investment property 1,052 1,150 1,101 Investments in associates 8,766 5,946 6,012 Financial assets - 1,783 645 Trade and other receivables 123,699 - - Available for sale - financial assets 624 - - Retirement benefit assets 38,951 - 6,598 Deferred tax assets 30,420 33,659 34,962 Total non-current assets 929,115 873,876 887,727 Current assets Inventories 167,936 187,972 132,981 Trade and other receivables 75,912 92,862 135,460 Cash and cash equivalents 57,110 97,492 74,102 Total current assets 300,958 378,326 342,543 Total assets 1,230,073 1,252,202 1,230,270 EQUITY Share capital 125,648 123,841 125,116 Share premium 99,767 93,149 97,489 Other reserves 3,655 2,287 2,574 Retained earnings (30,094) (12,686) (31,685) 198,976 206,591 193,494 Minority interest 4,713 5,344 4,382 Total equity 203,689 211,935 197,876 LIABILITIES Non-current liabilities Borrowings 460,998 505,166 473,541 Derivative financial instruments 22,277 - - Retirement benefit obligations 68,948 68,290 88,486 Trade and other payables 11,482 7,802 8,836 Government grants 1,439 1,741 1,452 Provisions for other liabilities and charges 16,990 961 14,732 Deferred tax liabilities 49,243 49,115 41,373 Total non-current liabilities 631,377 633,075 628,420 Current liabilities Borrowings 3 11,258 325 Derivative financial instruments 1,471 - - Trade and other payables 369,901 362,066 375,741 Taxes payable 23,632 33,868 27,908 Total current liabilities 395,007 407,192 403,974 Total liabilities 1,026,384 1,040,267 1,032,394 Total equity and liabilities 1,230,073 1,252,202 1,230,270 Condensed Consolidated Cash Flow Statement for half year ended March 31, 2006 Half year to Half year to March 31, 2006 March 25, 2005 (Unaudited) (Unaudited) euro'000 euro'000 Cash flows from operating activities Operating profit pre-exceptionals 42,095 42,119 Operating profit - discontinued operations - (1,404) Share based compensation charge 259 68 Depreciation (net of grants) 19,437 20,237 Amortization of intangible assets 623 380 Net exceptional costs (3,449) (11,567) Changes in working capital (43,078) (41,156) Other movements 37 958 Cash generated from operations 15,924 9,635 Finance cost paid (16,055) (16,494) Taxes paid/(received) 628 (123) Net cash from operating activities 497 (6,982) Cash flows from investing activities Finance income received 895 869 Dividends received from associates 59 1,835 Acquisitions of intangible fixed assets (54) (511) Purchase of property, plant and equipment (23,564) (20,479) Net cash used in investing activities (22,664) (18,286) Net cash inflow before financing activities (22,167) (25,268) Cash flows from financing activities Proceeds from the issue of share capital 175 212 Movement in borrowings 12,879 46,342 Repayment of finance lease liabilities (170) (166) Dividends paid to minorities (87) (118) Dividends paid (7,185) (8,925) Net cash used in financing activities 5,612 37,345 Net increase/(decrease) in cash and cash equivalents in period (16,555) 12,077 Cash and cash equivalents at beginning of period 74,102 86,278 Currency translation differences (437) (863) Cash and cash equivalents at end of period 57,110 97,492 Statement of Changes in Equity Share Share Retained Minority Total capital premium earnings Interests & other reserves euro'000 euro'000 euro'000 euro'000 euro'000 Balance at September 30, 2005 125,116 97,489 (29,111) 4,382 197,876 First time adoption adjustments in respect of IAS 39* - - (7,645) - (7,645) Restated balance at October 1, 2005 125,116 97,489 (36,756) 4,382 190,231 Group defined benefit pension schemes: - Actuarial gain - - 48,417 - 48,417 Loss relating to cash flow hedges - - (354) - (354) Currency translation effects - - 1,007 - 1,007 Fair value available for sale financial assets - - (9) - (9) Tax on items taken directly to equity - - (8,581) - (8,581) Net income/(expense) - - 40,480 - 40,480 Loss for the period - - (15,569) 418 (15,151) Total recognized income and expense for the period - - 24,911 418 25,329 Share-based compensation charge - - 259 - 259 Dividends paid - - (14,853) (87) (14,940) Issue of shares 532 2,278 - - 2,810 Balance at March 31, 2006 (unaudited) 125,648 99,767 (26,439) 4,713 203,689 Share Share Retained Minority Total capital premium earnings Interests & other reserves euro'000 euro'000 euro'000 euro'000 euro'000 Balance at September 24, 2004 123,647 92,459 60,419 4,519 281,044 Group defined benefit pension schemes: - Actuarial loss - - (18,479) - (18,479) Currency translation effects - - 734 - 734 Tax on items taken directly to equity - - 1,058 - 1,058 Net income/(expense) recognized in equity - - (16,687) - (16,687) Loss for the period - - (39,623) 943 (38,680) Total recognized income and expense for the period - - (56,310) 94 (55,367) Share-based compensation charge - - 68 - 68 Dividends paid - - (14,576) (118) (14,694) Issue of shares 194 690 - - 884 Balance at March 25, 2005 (unaudited) 123,841 93,149 (10,399) 5,344 211,935 Share Share Retained Minority Total capital premium earnings Interests & other reserves euro'000 euro'000 euro'000 euro'000 euro'000 Balance at September 24, 2004 123,647 92,459 60,419 4,519 281,044 Group defined benefit pension schemes: - Actuarial loss - - (32,622) - (32,622) Currency translation effects - - 766 - 766 Tax on items taken directly to equity - - 6,884 - 6,884 Net income/(expense) recognized in equity - - (24,972) - (24,972) Loss for the period - - (41,407) 1,540 (39,867) Total recognized income and expense for the period - - (66,379) 1,540 (64,839) Share-based compensation charge - - 152 - 152 Dividends paid - - (24,378) (1,452) (25,830) Acquisition of minority interest - - - (225) (225) Reissue of own shares - - 1,075 - 1,075 Issue of shares 1,469 5,030 - - 6,499 Balance at September 30, 2005 (audited) 125,116 97,489 (29,111) 4,382 197,876 * As disclosed in note 1, the Group deferred the adoption of IAS 32 'Financial Instruments: Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition and Measurement' to October 1, 2005. NOTES HALF YEAR ENDED MARCH 31, 2006 1. Basis of Preparation of Financial Statements under IFRS

This interim statement for the six months ended March 31, 2006 is unaudited and was approved by the board of directors on June 6, 2006.

Greencore Group plc ("the Group") previously prepared its financial statements under Irish/UK GAAP. Following a directive issued by the EU in July 2002, the Group is required to prepare its FY05/06 consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS").

Accordingly, in preparing this interim statement, management has used its best knowledge of the expected standards and interpretations, facts and circumstances and accounting policies that will be applied when the Group prepares its first set of financial statements, in accordance with IFRS, being those accounting standards adopted for use in the EU, as of September 29, 2006. The preparation of financial information in conformity with IFRS requires management to make judgments and estimates that impact the application of policies and the reported amounts of assets, liabilities, income and expenses. Estimates and associated assumptions are based on historical experience and all other relevant available information. As a result, this information, while based on management's best knowledge of expected standards and interpretations, current facts and circumstances, may change. For example, IFRS standards and International Financial Reporting Interpretations Committee interpretations are subject to ongoing review and possible amendment or interpretative guidance and, therefore, are still subject to change. Consequently, until the Group prepares its first set of full year financial statements in accordance with accounting standards adopted for use in the EU, the possibility cannot be excluded that the accompanying financial information may have to be adjusted.

The Group's first consolidated financial statements prepared in accordance with IFRS will be for the year ended September 29, 2006. Consequently, the comparative figures for 2005 have been restated in accordance with IFRS, with the exception of IAS 32 'Financial Instruments: Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition and Measurement' which have been applied prospectively from October 1, 2005, as permitted by IFRS 1 'First-time Adoption of IFRS'.

The accounting policies followed in this interim statement are consistent with those published by the Group on May 5, 2006 as part of the Greencore Group restatement of financial information under IFRS, a copy of which is available on the Group website at http://www.greencore.com/.

2. Segmental Reporting

The Group's primary reporting segment, for which more detailed disclosures are made, is by class of business. The Group has two primary reporting segments: (i) Convenience Foods and (ii) Ingredients, Agribusiness & Related Properties.

Revenue - half year Operating profit - half year 2006 2005 2006 2005 euro'000 euro'000 euro'000 euro'000 Continuing Convenience Foods 441,694 408,444 30,341 29,688 Ingredients, Agri & Related Properties 216,358 221,997 11,754 12,431 Discontinued Convenience Foods - 38,889 - (1,404) Total Group 658,052 669,330 42,095 40,715 3. Exceptional Items

Exceptional items are those that, in management's judgment, need to be disclosed by virtue of their size or incidence. Such items are included within the income statement caption to which they relate and are separately disclosed either in the notes to the consolidated financial statements or on the face of the consolidated income statement. IAS 1 'Presentation of Financial Statements' includes restructuring and litigation settlements as items which would give rise to separate disclosure.

The Group reports the following exceptional items (net of tax): 2006 2005 euro'000 euro'000 Fundamental reorganization of Greencore Sugar - (66,010) Exit from sugar processing (43,753) - Chilled Sauce business restructuring (2,069) - Malt business restructuring (4,643) - Malt legal settlement 4,930 - Gain/(loss) on foreign exchange (160) 597 (45,695) (65,413) (a) Fundamental reorganization of Greencore Sugar & exit from sugar processing In January 2005, the Group announced its decision to consolidate all sugar processing at Mallow and to close the Carlow facility. The Carlow facility was closed during FY05. In March 2006, Greencore announced its intention to exit sugar processing entirely, renounce its quota and apply for the EU restructuring aid which is available under the Council Regulation (EC) No 320/2006 ("the Regulation"). The total EU restructuring aid available for the sugar quota renounced by Greencore is euro 146m. The Regulation sets out that at least 10% of the total euro 146m of restructuring aid shall be reserved for growers of sugar beet and machinery contractors, principally in respect of redundant machinery. After consultation of the interested parties, the Member State shall determine if this percentage is to be increased, provided that an economically sound balance between the elements of the restructuring plan (to be submitted by Greencore) is ensured. Given the Member State's role in determining the amount of restructuring aid, there is a risk to the level of aid that Greencore will finally receive. If Greencore received a lower amount to that recognized in these accounts, it would take a charge in its income statement for the shortfall between the amount received and the amount now recognized in its accounts. Similarly, should the ultimate tax treatment of this matter differ from our current estimate (based on professional advice), or should the final costs of exiting sugar processing differ from current estimates, such financial impacts will be dealt with in the income statement. The Greencore Board, having taken independent legal, economic and financial advice has determined that it is entitled to 90% of the restructuring aid and has recognized a receivable of euro 124 million (the present value equivalent of euro 131 million) in the accounts for the half year ended March 31, 2006. The current year exceptional loss represents the net cost (after taking account of the above-mentioned restructuring aid) of the decision to exit sugar processing in Ireland. (b) Chilled Sauces business restructuring Following a strategic review at Greencore Chilled Sauces, a decision was made to consolidate all chilled sauce manufacturing at the Bristol facility and to close the Chesterfield factory. The current year exceptional loss represents the costs associated with this decision. (c) Malt business restructuring Following on from the closure of three maltings during 2005, Greencore Malt is now focused on restructuring its core operations in both Ireland and the UK. The current year exceptional loss represents the costs associated with this business restructuring. (d) Legal settlement The Group settled an outstanding claim related to Greencore Malt at euro 4.9m (net of costs). (e) Gain/(loss) on foreign exchange Under IFRS, an intra-group monetary asset (or liability), whether short-term or long-term, cannot be eliminated against the corresponding intra-group liability (or asset) without showing the results of currency fluctuations in the consolidated income statement, unless the exchange differences arise on a monetary item that forms part of a net investment in a foreign operation. The financial impact of this requirement is an additional pre-tax loss of euro 0.160m for the half year ended March 31, 2006 (gain of euro 0.597m for H1 2005). 4. Related Party Transaction

During the period, the Group disposed of a property to its associate, Odlum Group. A profit of euro 3.7m was recognized on this disposal, being the portion of the gain on disposal realized as a result of this transaction.

5. Dividends

An interim dividend of 5.05 cent (2005: 5.05 cent) per share is payable on October 5, 2006 to the shareholders on the Register of Members as of June 16, 2006. The ordinary shares will be quoted ex-dividend from June 14, 2006. 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 recognized in the balance sheet of the Group for the half year ended March 31, 2006 because the interim dividend had not been approved at this balance sheet date (but was subsequently declared by the directors of the Company).

6. Earnings per Ordinary Share

The calculation of the Group's earnings per ordinary share for continuing operations is based on a loss of euro 15.6m (H1 2005: loss of euro 38.6m; full year 2005: profit of euro 0.5m) and on 195.5m ordinary shares (H1 2005: 192.3m; full year 2005: 193.3m) being the weighted average number of ordinary shares in issue in the period. The calculation of earnings per ordinary share from discontinued operations is based on a loss of euro 1.0m for the period ended March 25, 2005 and a loss of euro 41.9m for the year ended September 30, 2005.

The calculation of the diluted earnings per ordinary share for continuing operations is based on a loss of euro 15.3m (H1 2005: loss of euro 38.6m; full year 2005: profit of euro 0.6m) and on 197.2m ordinary shares (H1 2005: 193.4m; full year 2005: 194.7m) being the weighted average number of ordinary shares in issue in the period. The calculation of diluted earnings per ordinary share from discontinued operations is based on a loss of euro 1.0m for the period ended March 25, 2005 and a loss of euro 41.9m for the year ended September 30, 2005.

The Group's adjusted earnings per share is after the elimination of the exceptional items reported in Note 3 and the mark-to-market of all derivatives which do not form part of a hedging relationship, as defined by IAS 39 'Financial Instruments: Recognition and Measurement' (i.e. trading derivatives).

The calculation of adjusted earnings per ordinary share is based on a pre- exceptional profit of euro 30.1m (H1 2005: euro 25.8m; full year 2005 euro 62.8m) adjusted for a gain of euro 3.4m recognized on trading derivatives (H1 2005: nil; full year 2005: nil). The weighted average number of ordinary shares in issue during the period was 195.5m (H1 2005: 192.3m; full year 2005: 193.3m).

Half year Half year Full year 2006 2005 2005 cent cent cent Adjusted EPS 13.7 13.4 32.5 7. Components of Net Debt and Financing Half year Half year 2006 2005 Net Debt euro'000 euro'000 Current assets Cash and cash equivalents 57,110 97,492 Current liabilities Borrowings (3) (11,258) Non-current liabilities Borrowings before fair value adjustment (480,420) (505,166) Comparable net debt (423,313) (418,932) Derivative financial instruments (current (1,064) N/a liabilities) Borrowings - fair value adjustment (non- 19,422 N/a current liabilities) Derivative financial instruments (non- (22,277) N/a current liabilities) (427,232) N/a Finance Costs Net finance costs on interest bearing cash and cash equivalents and borrowings (15,202) (14,810) Net pension financing credit 3,749 2,783 Change in fair value of derivatives 3,581 - (7,872) (12,027) Analyzed as: Finance income 24,748 16,727 Finance costs (32,620) (28,754) (7,872) (12,027) 8. Effective Tax Rate

The tax charge on pre-exceptional continuing operations of euro 5.1m equates to an effective tax rate of 16% (on trading income excluding the impact of marking-to-market of financial derivatives).

9. Information

The interim statement is being sent to registered shareholders by post or electronically to those who have elected for the Electronic Shareholder Communications Option.

Copies are also available from the Company's registered office at St Stephen's Green House, Earlsfort Terrace, Dublin 2, Ireland, and from its registrar, Computershare Investor Services (Ireland) Limited, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland. The statement will also be available on the Company's website at http://www.greencore.com/.

Contact: Eoin Tonge, Group Capital Markets Director Greencore Group 011-353-1-605-1036 eoin.tonge@greencore.com - or - Brian Rafferty Taylor Rafferty 212-889-4350 tra@taylor-rafferty.com

Greencore Group plc

CONTACT: Eoin Tonge, Group Capital Markets Director, Greencore Group,+011-353-1-605-1036, eoin.tonge@greencore.com; Brian Rafferty, TaylorRafferty, +1-212-889-4350, tra@taylor-rafferty.com, for Greencore Group plc

Web site: http://www.greencore.com/

Source: PRNewswire-FirstCall

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