28th Jul 2020 10:19
(Alliance News) - Greencore Group PLC on Tuesday said it has agreed to sell its interests in its molasses businesses to United Molasses Marketing (Ireland) Ltd and United Molasses Marketing Ltd for around GBP15.6 million in cash.
Shares in Greencore were up 6.8% at 119.16 pence in London in morning trading.
The convenience foods manufacturer said the core activities of its molasses trading businesses - namely Premier Molasses Co Ltd and United Molasses (Ireland) Ltd - are the import and distribution of animal feed across Ireland.
The approximately GBP15.6 million proceeds from the sale will help strengthen Greencore's balance sheet provided anti-trust authority approval is obtained.
In the year ended September 2019, Greencore's interests in its molasses trading businsses represented GBP6.0 million of its pretax profit. Net of all non-controlling interests, Greencore's share of profit after tax from these businesses came to GBP3.1 million.
As at March 27, 2002, Greencore's share of gross assets of Premier Molasses was GBP6.6 million and its associate investment in United Molasses (Ireland) had a GBP1.3 million carrying value.
Separately, Greencore issued a trading statement in which it said demand has made a "progressive improvement" in its third quarter.
The trading statement said that for the 13 weeks ended June 26, its third quarter, revenue fell 36% on a pro forma basis and down 34% year-on-year at GBP240.6 million. For the nine months to June, reported revenue was down 11% and was 12% lower on a pro forma basis at GBP953.3 million.
Greencore said: "Covid-19 has had a dramatic and volatile impact on UK food consumption patterns in the period. The group has partnered closely with its customers to develop and re-activate product ranges as they reopen formats and channels. In this context the group has recommenced production at its Bow, Atherstone and Heathrow facilities and has extended production at its Northampton site as demand trends improve."
The company achieved positive adjusted earnings before interest, tax, depreciation, and amortisation for its third quarter, it said. It also obtained a formal agreement with both its bank lending syndicate and private placement note holders to waive its net debt to Ebitda covenant condition for its September 2020 and March 2-21 test period.
Moreover, Greencore has also been given confirmation of its eligibility for funding under the UK's Covid Corporate Financing Facility, though has not issued under this facility as yet.
"Given the ongoing level of uncertainty around the possible duration and impact of Covid-19, the group's financial guidance for FY20 remains suspended, as announced on 30 March, and the group's outlook as included in the FY19 full rear results statement and FY20 Q1 trading update should no longer be considered current," Greencore added.
Greencore will report its 2020 financial results on November 24.
Chief Executive Patrick Coveney said: "I am hugely proud of the way in which our teams have responded during this extraordinarily challenging period. The decisive actions that we have taken are enabling us to keep our people safe, helping to feed the UK, and protecting our business.
"Our group has traded resiliently, with our deep customer relationships strengthened further, and we are encouraged to see a sustained improvement in demand and category mix. We remain confident in the relevance and attractiveness of the food to go channels and categories that we serve. In addition, we are well positioned for new business opportunities and a return to growth as the pandemic subsides."
By Anna Farley; [email protected]
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