Greencore value boosted by currency switch

08-Feb-2012 - Last updated on 08-Feb-2012 at 14:13 GMT

Greencore's decision to switch its currency denomination from euros to sterling could spark interest from UK investors

The decision by chilled foods group Greencore to transfer its share currency denomination from euros to sterling has further increased its value to potential investors, according to city analysts.

Following the firm’s announcement that its shares will now be listed in sterling from February 13, experts agreed that the decision could spark further acquisition interest, particularly from UK investors.

The move is the latest step in the firm’s quest to be included on the FTSE UK series after its decision to cancel its ordinary shares on the Irish Stock Exchange in December last year.

Nicola Mallard, an analyst from Investec, told FoodManufacture.co.uk that the change was “necessary” if the firm was seeking further investment in the UK. She also confirmed that it was likely to make Greencore a more attractive option.

Unnecessary hurdle

She said: “Greencore is predominantly a UK business now, especially since the acquisition of Uniq.

“I think the change to sterling was necessary. They are now vying for a place on the FTSE and I think previously being listed in euros may have put some investors off. Some investors can’t hold stock unless a business is listed in sterling and, for some, this may have been seen as an unnecessary hurdle.”

Mallard also described the main reason behind the decision as “basically about putting it [Greencore] on the same footing as where it makes its money”. Something that was likely to appeal to investors, she added.

Her views were shared by Julian Wild, food group director at law firm Rollits. He told Food Manufacture.co.uk that the decision would give potential investors more clarity on what they were investing in.

He said: “Ultimately it will make them slightly more attractive as it will give investors a clearer understanding of what they are investing in. The move equates them with other sterling denominated stock.”

Wild also said that the decision was “a reflection that Greencore is very much a UK business now".

Business interests

“For all intents and purposes, it is operating like a UK plc and has very little business interests remaining in Ireland,” he said.

“This will be easier for an investor to view them as such."

Greencore confirmed the switch yesterday (February 6) and said the changes were “the next process” as it edges closer to FTSE UK status.

“As of 6 December 2011, the reporting currency of Greencore was changed to sterling (GBP) and going forward, dividends will be declared in sterling,” a statement from the firm revealed.

“Existing procedures regarding currency elections will remain in force. Additionally, as of 20 January 2012, Greencore’s Ordinary Shares listed on the London Stock Exchange have been trading in sterling pence rather than in euros. All of these steps have been put into place as the Company moves to inclusion in the FTSE UK Index Series.”

Subject to the independent deliberations of the FTSE committees, Greencore is expecting to be included in the FTSE All-Share and the FTSE Small-Cap Indices from the start of business on March 19 2012.

Experts have said that since the firm announced its decision to switch to the FTSE it has had a positive effect on the its share price.

Darren Greenfield, an analyst at financial specialist NCB, told FoodManufacture.co.uk: “The firm’s share price has performed very well since it cancelled the listing on the Irish Stock Exchange. There is certainly an argument to say that this is likely to attract interest from UK brokers.”

At the time of publication Greencore’s share price was 65.50p.