Greggs Regulatory News (GRG)

11 Mar 2008 07:01

Greggs PLC11 March 2008 11 March 2008 GREGGS plc PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 29 DECEMBER 2007 KEY FINANCIALS+---------+----------------------------------+---------------------------------+| | Before property gains and | After property gains and || | restructuring costs | restructuring costs |+---------+------------+---------------------+------------+--------------------+| | 2007| Change YOY| 2007| Change YOY|+---------+------------+---------------------+------------+--------------------+|Sales | £586m| +6.4%| £586m| +6.4%|+---------+------------+---------------------+------------+--------------------+|Operating| £47.7m| +13.0%| £49.9m| +28.8%||profit | | | | |+---------+------------+---------------------+------------+--------------------+|Pre-tax | £49.0m| +11.9%| £51.1m| +27.1%||profit | | | | |+---------+------------+---------------------+------------+--------------------+|Diluted | 319.9p| +22.3%| 340.4p| +41.9%||earnings | | | | ||per share| | | | |+---------+------------+---------------------+------------+--------------------+|Dividends| 140.0p| +20.7%| 140.0p| +20.7%||per share| | | | |+---------+------------+---------------------+------------+--------------------+ • Record operating profit and earnings per share • Twenty-third consecutive year of dividend growth • Further £25.7m returned to shareholders through ongoing share buyback programme • Like-for-like sales up 5.3%, including core volume growth of 0.9% • Good progress in building new organisational structure for more unified Greggs brand • Initial benefits from extended shop trading hours and strategic marketing programme • 32 net new shops opened, exceeding initial target • Like-for-like sales in ten weeks to 8 March 2008 up 6.2% "Like every other business in our sector, we are continuing to face substantialpressure from rises in the cost of energy and in our key ingredients, includingflour, vegetable oils, and protein. We will work hard to mitigate the impact ofcost increases through greater efficiency and, in recovering higher costs in themarket place, shall take account of consumer confidence and the competitiveenvironment. We remain determined to continue offering outstanding value to ourcustomers. "Having laid firm foundations in 2007 for the growth of Greggs as a nationalbrand, we will implement our plans to improve our products, shops and serviceduring the current year. Progressive harmonisation of our offer, and theroll-out of best practice across the business, will help us both to drive salesgrowth and reduce costs in the medium and longer term. "Overall, I expect that 2008 will be another year of steady progress for theGroup, and will confirm that we have established a strong platform for futuregrowth." - Derek Netherton, Chairman ENQUIRIES:Greggs plc Hudson SandlerSir Michael Darrington, Managing Director Wendy Baker / Jessica RouleauRichard Hutton, Financial Director Tel: 020 7796 4133Raymond Reynolds, Retail DirectorTel: 020 7796 4133 on Tuesday, 11 March only 0191 281 7721 thereafterHigh resolution images are available for the media to view and download fromwww.vismedia.co.uk CHAIRMAN'S STATEMENT This was a year of significant change for Greggs, as we re-shaped our way ofworking in line with the conclusions of the strategic review we completed inlate 2006. Encouragingly, we have already achieved a much improved performance,setting new records for both operating profit and earnings per share. Even moreimportantly, we have made good progress in building the organisational structurewe require to drive the future growth of the Greggs business as a morecustomer-focused operation with a unified national brand. Results Total Group sales for the 52 weeks ended 29 December 2007 increased by 6.4 percent to £586 million (2006: £551 million). Like-for-like sales rose by 5.3 percent, including core volume growth of 0.9 per cent. Operating profit, excluding property gains in 2007 and the costs ofrestructuring the Bakers Oven business in the North and Scotland in 2006,increased by 13.0 per cent to £47.7 million (2006: £42.2 million), a new recordfor the Group. Excluding these items the operating margin improved to 8.1 percent (2006: 7.7 per cent). Net finance income was reduced by 17 per cent to £1.2 million (2006: £1.5million) as we reduced our average cash balances through our continuingprogramme to return surplus cash to our shareholders through increased dividendsand ongoing share buybacks. Pre-tax profit, excluding property gains in 2007 and the costs of restructuringthe Bakers Oven business in the North and Scotland in 2006, increased by 11.9per cent to £49.0 million (2006: £43.7 million). There was a one-off propertyprofit in 2007 of £2.2 million, arising from the disposal of bakery sites inNewcastle upon Tyne, Glasgow and Manchester; while in 2006 we bore non-recurringrestructuring costs, related to the closure of Bakers Oven in the North andScotland, of £3.5 million. Including these items, pre-tax profit was £51.1million (2006: £40.2 million), an increase of 27.1 per cent. The Group tax charge for the year benefited from one-off credits relating to therevaluation of deferred taxation at the new Corporation Tax rate of 28 per centand the abolition of balancing charges in respect of previously recognisedIndustrial Buildings Allowances on the property disposals in the year. Weanticipate that next year will see a further tax credit which is likely toresult in a below-average rate of taxation. Beyond this we expect the Group'saverage rate of taxation to steadily rise over the following 3 years asIndustrial Building Allowances are phased out and settle in the region of 31 percent. Before the property gains and restructuring costs, diluted earnings per sharegrew by 22.3 per cent to 319.9 pence (2006: 261.6 pence). This represents a newrecord for the Group, the previous best being a figure of 278.9 pence in 2005.This reflects improved profitability, the benefits of our share buybackprogramme and the impact of changes to corporate taxation. Including thenon-recurring items in each year, there was a 41.9 per cent increase in dilutedearnings per share to 340.4 pence (2006: 239.9 pence). Dividend and share buyback programme In line with our previously stated intention to strengthen cash returns toshareholders the Board recommends a final dividend of 94 pence per share (2006:78 pence), an increase of 20.5 per cent. Together with the interim dividend of46 pence (2006: 38 pence), paid in October 2007, this makes a total for the yearof 140 pence (2006: 116 pence), an increase of 20.7 per cent. This new recorddividend for the Group makes 2007 our twenty-third consecutive year of dividendgrowth since Greggs came to the stock market in 1984. Subject to the approval of the Annual General Meeting, the final dividend willbe paid on 23 May 2008 to shareholders on the register at 25 April 2008. In addition to delivering value to shareholders through increased dividends, theCompany has continued to return surplus cash by making market purchases of itsown shares for cancellation. During the year we spent a total of £25.7 millionon the purchase of 526,472 shares at an average price of £48.41 per share. Sincethe beginning of the current financial year, we have purchased for cancellationa further 118,500 shares at an average price of £43.77 and an aggregate cost of£5.2 million. It is the Board's intention to renew its authority to buy backshares at the Annual General Meeting, and to continue to buy back shares when itconsiders it to be in the interests of shareholders to do so. Business highlights We made good sales progress throughout the year, with like-for-like sales growthof 4.6 per cent during the first half (24 weeks) improving to 5.8 per cent inthe second half. We have already seen some initial benefits from our longer termdrive to make the business more responsive to the needs of our customers,including an increase in the number of our shops trading on Sundays and theextension of our weekday opening hours in appropriate locations. We were alsopleased with the initial results of our three-year, strategic, integratedmarketing campaign, designed to build awareness of the Greggs brand. The shop opening programme accelerated during the second half, enabling us toexceed our initial target by adding a net 32 new shops during the year. At thecentre, we have now put in place the Retail, Marketing and Supply Chain teams weneed to drive Greggs forward as a unified, national brand, in line with theconclusions of our strategic business review. This change programme is intendedto deliver a progressive acceleration of both top and bottom line growth, withprofitability also expected to benefit from the implementation of best practiceacross the business. Mike Darrington discusses these developments in more detailin his report. The Board Mike Darrington is now 66 and has been managing director of Greggs for 24 verysuccessful years. We have in place a process to determine his successor and wewill make a further announcement in due course. Stephen Curran, our Senior Independent Director, will retire at the AGM in May.He joined the Board of Greggs in 1981 when it was still a private company with aturnover of £29 million and 236 shops. Throughout this period of major changesand considerable growth Stephen has been a source of invaluable help and advice,supportive but challenging, drawing on his experience with a wide range ofbusinesses. Stephen has shown huge commitment to the Company over 27 years andI, and Ian Gregg before me, have greatly appreciated all that he has done. BobBennett will take on Stephen's role as Senior Independent Director after theAGM. Sir Ian Gibson, a Non-Executive Director since 2006, resigned from the Boardwith effect from 29 February 2008 to focus on his increasing commitments at WmMorrison Supermarkets PLC. I would like to record our appreciation of his wiseadvice and assistance through a period in which we completed a comprehensivebusiness review and embarked on a process of significant change. I am pleased to report that Roger Whiteside (49) will join the Board as anadditional Non-Executive Director with effect from 17 March 2008. Roger wasChief Executive of the Thresher Group off-licence chain from 2004-2007, prior towhich he was a co-founder of Ocado, the innovative online grocer operating inpartnership with Waitrose, and served as its Joint Managing Director from2000-2004. He began his career at Marks & Spencer, where he spent 20 years,ultimately becoming head of its Food Business. I am sure that we will derivesignificant benefits from his very extensive experience of the food and retailindustries. People All our people have continued to work effectively through a period of majorchange within the business, and I would like to express the thanks of the Boardto every member of the team for their very positive approach, and for theirindividual contributions to our progress during 2007. Prospects Like every other business in our sector, we are continuing to face substantialpressure from rises in the cost of energy and in our key ingredients, includingflour, vegetable oils and protein. We will work hard to mitigate the impact ofcost increases through greater efficiency and, in recovering higher costs in themarket place, shall take account of consumer confidence and the competitiveenvironment. We remain determined to continue offering outstanding value to ourcustomers. Against this background I am pleased to report a positive start tothe current year, with like-for-like sales in the ten weeks to 8 March 2008increasing by 6.2 per cent. Having laid firm foundations in 2007 for the growth of Greggs as a nationalbrand, we will implement our plans to improve our products, shops and serviceduring the current year. Progressive harmonisation of our offer, and theroll-out of best practice across the business, will help us both to drive salesgrowth and reduce costs in the medium and longer term. Overall, I expect that 2008 will be a year of steady progress for the Group, andwill confirm that we have established a strong platform for future growth. Derek Netherton Chairman 11 March 2008 MANAGING DIRECTOR'S REPORT It is pleasing to report much improved results after the disappointingperformance of 2006. This was not a 'quick fix', but the first phase of ourthree year plan designed to transform Greggs from a devolved and divisionalisedbusiness into a much more unified, centrally driven national operation, with agreatly enhanced capability to understand and meet the needs of its customers.We are encouraged by our progress to date, but there is much more potential forthe future as we work to enhance our products and shops, spread best practicethrough the business and build awareness of our brand and all that it has tooffer. Trading performance Although we continue to operate in an extremely competitive market place,trading conditions during the year proved more benign than in 2006. As a dailypurchase business, we are sensitive to the effects of climatic extremes, andlike-for-like sales growth slowed as a result of the exceptionally wet period inJune, but benefited from very favourable conditions in August and September.Accordingly, over the year as a whole, we regard the weather impact on ourbusiness as broadly neutral. Like-for-like sales increased by 4.6 per cent in the first half (24 weeks) andthe rate of growth improved to 5.8 per cent in the second half, despite therather more demanding 2006 comparatives encountered in the final weeks of theyear. As the Chairman has noted, this made an increase in Group like-for-likesales for the year of 5.3 per cent, including core volume growth of 0.9 percent. Customer growth, as measured by the number of transactions, was a littleover one per cent. We benefited from some of our initial actions to make the business moreresponsive to customer needs, including the opening of more of our shops onSundays, and the extension of weekday opening hours in locations where weidentified sufficient demand. Wage costs increased as the result of our general pay settlement of just underfour per cent, and the recruitment of additional senior personnel at the centreto drive the development of the Greggs brand. Energy costs, after a £4.5 millionincrease in 2006, rose by a further £0.5 million. We experienced significantcost pressure on a number of key ingredients, including flour, dairy productsand vegetable oils, particularly in the second half. We continue to enter intoforward contracts for certain key inputs with the aim of achievingpredictability in our cost base in the short term. Greggs brand UK Like-for-like sales under the Greggs brand increased by 5.5 per cent, includingcore volume growth of 0.9 per cent. Management. Following the appointment of Raymond Reynolds as Retail Director inDecember 2006, we have given priority during the year to building strong centralteams to lead the growth and development of the Greggs brand in the areas ofRetail, Marketing and the Supply Chain. These teams have been assembled both byexternal recruitment and the transfer of suitably qualified divisionalmanagement. The appropriate capability is now in place and gaining steadily inexperience. Having created this new structure during 2007, we expect to deliverprogressively increasing benefits from the implementation of a more unifiedapproach in the current year and beyond. Customers. We are committed to constant improvement of our understanding of themillion customers who visit Greggs each day, and to providing them with whatthey want, when they want it. We also seek to extend our appeal to new groups ofconsumers by increasing the variety of locations in which we trade, adapting ouropening hours to meet their lifestyle needs, and developing our product range.Increased investment in research to aid understanding of our customers and thefast-moving market place in which we operate is a continuing feature of our newstrategic approach. Products. We are determined to meet consumer demand for innovative and moreaspirational products, while retaining our traditional strength in iconic bakeryproducts such as sausage rolls and doughnuts, which deliver great taste andenjoyment at competitive prices. We have begun the process of harmonisingproducts and practices across our divisions, aiming to identify the best recipesand working methods, for example in sandwich production in our shops, and toensure that they are adopted nationwide. The implementation of unified trainingprogrammes across the business will bring even more consistency to our productoffer throughout the country. Shops. We have continued to develop our range of outlets and their openingtimes, to ensure that they are appropriately geared to each meal occasion and tolocal demand for food on the go. Our new shop openings in 2007 included a numberof units in non-traditional locations away from the high street, such asindustrial estates. Developments of this type will be an increasing feature ofour opening programme in 2008 and beyond. We have increased the number of ourshops trading on Sundays by around 150, and extended weekday opening hours wherelocal demand exists, for example to meet the early morning needs of officeworkers or to cater for customers of retail centres or leisure attractionsseeking early evening food on the go. Early results from our experimental shopformats have provided us with some valuable learning which is beingprogressively applied across the business as a whole. We continue our rollingprogramme of capital investment to enhance the appeal of our shops throughrefits and refurbishments. During the first half, we also refreshed some 350shops to soften the somewhat strident colours of our previoustakeaway-orientated design, and to re-emphasise our key point of difference asbakers. This has helped to create a significantly more attractive shoppingenvironment at a relatively modest cost per unit. Marketing. There has been a significant expansion of our central marketingdepartment during the year, and we are applying greater resources andprofessional expertise to this area than ever before. During the year weundertook a £3 million integrated marketing campaign, which included two majorbursts of national TV and radio advertising as well as the use of posters andthe internet. The advertisements, fronted by TV comedian Paddy McGuinness,achieved good consumer recognition and we have been pleased by the initialresponse, though the real objective is to build awareness of the Greggs brandnationally over the longer term. We will continue this strategic marketing pushover the next two years, emphasising the freshness, quality and sheerenjoyability of our products. Now that we have established the right management infrastructure at the centre,we are well placed to build up the momentum of our drive to ensure the adoptionof best practice in all areas of the Greggs business. This will help us toimprove efficiency by driving down costs, at the same time as facilitatingdevelopment of our reputation as a consistent, high quality, national brand. Bakers Oven brand Our Baker's Oven business now operates from 164 shops in the Midlands and theSouth following the restructuring changes made in 2006. Like-for-like salesunder the Bakers Oven brand grew by 4.3 per cent, including core volume growthof 1.2 per cent. Bakers Oven Midlands successfully absorbed an additional 15shops transferred to it following the restructuring of the brand in the Northand Scotland. The projected ongoing cost savings from this restructuring havebeen delivered in full, enhancing Group profits by £1.25 million. The BakersOven operations in the Midlands and South now have a stable and profitableestate, generating good returns on our investment. Greggs brand Continental Europe Our Belgian business now trades from a total of 11 shops in Antwerp, Leuven andBrussels, following the acquisition of a small chain of five shops in theBelgian capital early in the second half. All of the acquired shops have beenre-branded as Greggs, and a rolling programme of comprehensive refurbishment isin hand to bring them all up to the standards of the rest of the chain. Thebusiness as a whole continues to make satisfactory progress, achieving good coresales growth and providing us with valuable learning about the market place. Retail profile We opened 56 new shops during the year and closed 24, giving us a net increaseof 32 units and a total of 1,368 at 29 December 2007. The pace of new openingsaccelerated in the final months of the year, enabling us to exceed our initialestimate of a net addition of 20 - 25 units during 2007. The Greggs brand in theUK continued to account for some 87 per cent of our total retail portfolio, with1,193 shops trading at the year end (2006: 1,165), an increase of 28. The BakersOven estate was relatively stable at 164 shops (2006: 165), while our smallacquisition in Belgium expanded the Greggs chain there to 11 shops (2006: six),an addition of five. We completed 29 comprehensive shop refurbishments and 53 minor refits during theyear. We expect to achieve a net addition of at least 40 shops to our portfolio during2008, with significant numbers of new openings planned in both Scotland and theSouth West to exploit the new bakery capacity we have recently created in theseregions. Capital investment Capital expenditure for the year totalled £42.3 million, exceeding our statedbudget of £39 million, mainly as a result of the increased number of shopopenings compared with our original projections. Our largest single investmentwas in our new Glasgow bakery, which was completed on time and to budget, and ismeeting all our expectations; we also completed a smaller scale expansion of ourproduction facility in South Wales. During 2008 we plan to invest a total of £44million; this will include the development of a new bakery in Manchester, anincreased number of new shop openings and the continuation of our drive to raisestandards in our existing shops through refits and refurbishments. Cash flow and balance sheet The Group is consistently and strongly cash generative, providing the basis forour progressive dividend policy over the last 23 years and underpinning theBoard's more recent strategic decision to reduce dividend cover and conduct acontinuing share buyback programme. During the year we returned a total of £38.9million to shareholders, comprising £13.2 million in dividend payments and afurther £25.7 million through share buybacks. Despite these substantialoutflows, we ended the year with net cash on the balance sheet of £11.6 million(2006: £19.6 million). Community and the environment Greggs continues to pride itself on being a socially responsible business, and Iam pleased to be able to announce that we have now underlined that commitment bythe appointment of a new Social Responsibility Director: Graham Randell,formerly managing director of Greggs North East. Reporting directly to me,Graham brings to his new role seniority and experience which will ensure that hecan exercise real authority, and I look forward to working with him to ensurethat our social and environmental strategies are better co-ordinated and drivenforward, with the backing of the Board and all our colleagues. We have continued to support the communities in which we operate through bothcorporate donations to charity and the voluntary fund-raising efforts of ouremployees. In total the Company gave £730,000 to charities during the year(2006: £540,000), amounting to 1.4 per cent of our pre-tax profit. This wasdirected principally through the Greggs Trust and our Greggs Breakfast Clubs,which operate in 124 primary schools in disadvantaged areas across the country.In addition to this our staff raised an impressive £175,000 for the BBC Childrenin Need Appeal and a further £310,000 for children's cancer charities throughour long-established programme of regional fun runs. We have continued our business-wide drive to improve energy efficiency andreduce carbon emissions. This is an area where the financial interests of thebusiness are perfectly aligned with the protection of the environment. We arealso pursuing a wide range of initiatives designed to reduce our environmentalimpact by increasing recycling and reducing the amount of food waste going tolandfill. People After coping with a difficult year in 2006, our people were faced with extensivechanges in the way we run the business from early 2007. These naturally made aparticularly strong impact in an organisation such as Greggs, which has enjoyeda high degree of stability over many years. I know how difficult it can be tomaintain operational effectiveness and sustain morale through a period of majorchange, which inevitably creates unfamiliarity and uncertainty. It is thereforea real tribute to the quality and character of our people that the necessarychanges to the way we work have all been made remarkably smoothly, and adoptedin such a positive manner. I am grateful to every member of the team throughoutthe business for the exceptional way they have responded to these challenges.The future Our year of change in 2007 was merely the start of a longer term strategicprogramme designed to increase our responsiveness to our customers, and to buildan even stronger and more unified national Greggs brand. We have now laid firmfoundations which we believe will significantly enhance the longer term growthprospects of the Group. We continue to see significant potential for furtherretail expansion in the UK, and feel confident that we can increase the rate ofshop openings in the coming years. We will make further progress towards ourgoals by ensuring that we remain true to our core values and focusing on thedelivery of great products and excellent service. I am confident that we are ontrack to realise our vision of sustained, long term growth as Europe's finestretail baker. Sir Michael Darrington Managing Director 11 March 2008 Greggs plcConsolidated income statementfor the 52 weeks ended 29 December 2007(2006: 52 weeks ended 30 December 2006) 2007 2007 2007 2006 2006 2006 £'000 £'000 £'000 £'000 £'000 £'000 Excluding Profits on Excluding Bakers Oven profits on disposal of Bakers Oven restructuring disposal of properties restructuring costs properties (Note 4) Total costs (Note 5) Total Revenue 586,303 - 586,303 550,849 - 550,849Cost of sales (220,849) 2,193 (218,656) (209,455) (68) (209,523) ________ ________ ________ ________ ________ ________ Gross profit 365,454 2,193 367,647 341,394 (68) 341,326Distribution and selling costs (278,708) - (278,708) (262,917) (2,947) (265,864)Administrative expenses (39,030) - (39,030) (36,232) (483) (36,715) ________ ________ ________ ________ ________ ________ Operating profit 47,716 2,193 49,909 42,245 (3,498) 38,747Finance income 1,234 - 1,234 1,579 - 1,579Finance expenses - - - (87) - (87) ________ ________ ________ ________ ________ ________ Profit before tax 48,950 2,193 51,143 43,737 (3,498) 40,239Income tax (14,792) - (14,792) (14,227) 1,049 (13,178) ________ ________ ________ ________ ________ ________ Profit for the financial year attributable to equity holders of the parent 34,158 2,193 36,351 29,510 (2,449) 27,061 ======== ======== ======== ======== ======== ======== Basic earnings per share 342.8p 241.2pDiluted earnings per share 340.4p 239.9p Dividends 2007 2006 Interim dividend paid (pence per share) 46p 38pFinal dividend proposed (pence per share) 94p 78p Greggs plcConsolidated statement of recognised income and expensefor the 52 weeks ended 29 December 2007(2006: 52 weeks ended 30 December 2006) 2007 2006 £'000 £'000 Actuarial gains on defined benefit pension plans 1,410 2,741Tax on items taken directly to equity (456) (822) ________ ________Net income recognised directly in equity 954 1,919 Profit for the financial year 36,351 27,061 ________ ________ Total recognised income and expense for the financial yearattributable to equity holders of the parent 37,305 28,980 ======= ======= Greggs plcConsolidated balance sheetat 29 December 2007(2006: 30 December 2006) 2007 2006 £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 196,783 184,325 Current assetsInventories 9,908 8,429Trade and other receivables 19,934 16,026Cash and cash equivalents 11,581 19,585Asset held for sale - 275 ________ ________ 41,423 44,315 ________ ________Total assets 238,206 228,640 ________ ________LIABILITIESCurrent liabilitiesTrade and other payables (68,183) (61,295)Current tax liabilities (9,008) (5,467) ________ ________ (77,191) (66,762)Non-current liabilitiesDefined benefit pension liability (680) (1,883)Other payables (426) (90)Deferred tax liability (14,315) (15,014) ________ ________ (15,421) (16,987) ________ ________Total liabilities (92,612) (83,749) ________ ________Net assets 145,594 144,891 ======= =======EQUITYCapital and reservesIssued capital 2,127 2,232Share premium account 13,533 13,533Capital redemption reserve 312 207Retained earnings 129,622 128,919 ________ ________Total equity attributable to equity holders of the parent 145,594 144,891 ======= ======= Greggs plcConsolidated statement of cashflowsfor the 52 weeks ended 29 December 2007(2006: 52 weeks ended 30 December 2006) 2007 2006 £'000 £'000Operating activitiesCash generated from operations (see below) 74,685 66,185Income tax paid (12,585) (13,600) ________ ________Net cash inflow from operating activities 62,100 52,585 ________ ________Investing activitiesAcquisition of property, plant and equipment (42,343) (30,023)Proceeds from sale of property, plant and equipment 7,625 1,599Interest received 1,234 1,579 ________ ________Net cash outflow from investing activities (33,484) (26,845) ________ ________Financing activitiesDefined benefit pension scheme special contribution - (5,500)Interest paid - (74)Proceeds from issue of share capital - 93Sale of own shares 1,952 1,809Purchase of own shares - (16,436)Shares purchased and cancelled (25,688) (39,544)Dividends paid (13,242) (12,105)Government grants received 358 - ________ ________Net cash outflow from financing activities (36,620) (71,757) ________ ________Net decrease in cash and cash equivalents (8,004) (46,017) Cash and cash equivalents at the start of the year 19,585 65,602 ________ ________Cash and cash equivalents at the end of the year 11,581 19,585 ======= ======= Cash flow statement - cash generated from operations 2007 2006 £'000 £'000 Profit for the financial year 36,351 27,061Depreciation 24,548 23,884(Profit) / loss on sale of property, plant and equipment (1,951) 753Release of government grants (16) (8)Share based payment expenses 555 687Finance income (1,234) (1,579)Finance expenses - 87Income tax expense 14,792 13,178Increase in inventories (1,479) (716)Increase in debtors (3,908) (165)Increase in creditors 6,820 2,609Increase in pension liability 207 394 ________ ________Cash from operating activities 74,685 66,185 ======== ======== Greggs plc NOTES: 1. Status of financial information The financial information set out above does not constitute the company'sstatutory accounts for the years ended 29 December 2007 or 30 December 2006. Thefinancial information for 2006 is derived from the statutory accounts for 2006which have been delivered to the registrar of companies. The auditors havereported on the 2006 accounts; their report was (i) unqualified, (ii) did notinclude a reference to any matters to which the auditors drew attention by wayof emphasis without qualifying their report and (iii) did not contain astatement under section 237(2) or (3) of the Companies Act 1985. The statutoryaccounts for 2007 will be finalised on the basis of the financial informationpresented by the directors in this preliminary announcement and will bedelivered to the registrar of companies in due course. 2. Dividends The following tables analyse dividends when paid and the year to which theyrelate: 2007 2006 Per share Per share pence pence 2005 final dividend - 70.0p2006 interim dividend - 38.0p2006 final dividend 78.0p -2007 interim dividend 46.0p - ________ ________ 124.0p 108.0p ======== ======== The proposed final dividend in respect of 2007 amounts to 94.0 pence per share(£9,886,000). This proposed dividend is subject to approval at the AnnualGeneral Meeting and has not been included as a liability in these accounts. 2007 2006 £'000 £'000 2005 final dividend - 8,0132006 interim dividend - 4,0922006 final dividend 4,855 -2007 interim dividend 8,387 - ________ ________ 13,242 12,105 ======= ======= 3. Reconciliation of movement in capital and reserves Issued Share Capital Retained 2007 2006 capital premium redemption earnings Total Total reserve £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 December 2006 2,232 13,533 207 128,919 144,891 181,475Shares issued in the year - - - - - 93Shares purchased and cancelled (105) - 105 (25,688) (25,688) (39,544)Total recognised income and expense - - - 37,305 37,305 28,980Purchase of own shares - - - - - (16,436)Sale of own shares - - - 1,952 1,952 1,809Share-based payments - - - 555 555 687Dividends - - - (13,242) (13,242) (12,105)Tax items taken directly to reserves - - - (179) (179) (68) ________ ________ ________ ________ ________ ________ Balance at 29 December 2007 2,127 13,533 312 129,622 145,594 144,891 ======== ======== ======== ======== ======== ======== 4. Earnings per share Basic earnings per share The calculation of basic earnings per share at 29 December 2007 was based onprofit attributable to ordinary shareholders of £36,351,000 (2006: £27,061,000)and a weighted average number of ordinary shares outstanding during the yearended 29 December 2007 of 10,604,188 (2006: 11,220,493). Diluted earnings per share The calculation of diluted earnings per share at 29 December 2007 was based onprofit attributable to ordinary shareholders of £36,351,000 (2006: £27,061,000)and a weighted average number of ordinary shares outstanding during the yearended 29 December 2007 of 10,679,147 (2006: 11,280,902). Adjusted earnings per share Basic and diluted earnings per share have been calculated for the year ended 29December 2007 which exclude the profit on disposal of properties. These havebeen calculated by dividing profit attributable to ordinary shareholdersexcluding the profit on disposal of properties by the relevant weighted averagenumber of ordinary shares as set out above. Basic and diluted earnings per share were calculated for the year ended 30December 2006 which exclude the effect of the Bakers Oven restructuring costs.These were calculated by dividing profit attributable to ordinary shareholdersexcluding Bakers Oven restructuring costs by the relevant weighted averagenumber of ordinary shares as set out above. Profit attributable to ordinary shareholders 2007 2007 2007 2006 2006 2006 Total Total Excluding Profits on Excluding Bakers Oven profits on disposal of Bakers Oven restructuring disposal of properties restructuring costs properties (Note 5) Total costs (Note 6) Total £'000 £'000 £'000 £'000 £'000 £'000 Profit for the financial year attributable to equity holders of the parent 34,158 2,193 36,351 29,510 (2,449) 27,061 ======== ======== ======== ======== ======== ========Basic earnings per share 322.1p 20.7p 342.8p 263.0p (21.8p) 241.2pDiluted earnings per share 319.9p 20.5p 340.4p 261.6p (21.7p) 239.9p This information is provided by RNS The company news service from the London Stock Exchange