Slide 1: Results for the half year ended 27 March 2020
RESULTS For the half year ended 27 March 2020
Slide 2: Disclaimer ─ Forward Looking Statements
DISCLAIMER ─ FORWARD LOOKING STATEMENTS Certain statements made in this document are forward‐looking. These represent expectations for the Group’s business, and involve known and unknown risks and uncertainties, many of which are beyond the Group’s control. The Group has based these forward‐looking
Slide 3: Today's Agenda
TODAY’S AGENDA Introduction Gary Kennedy COVID-19 Update Patrick Coveney Financial Review Emma Hynes Building Back for Better Patrick Coveney Q&A Note: The Group uses Alternative Performance Measures ('APMs') which are non-IFRS measures to monitor the performance of its operations and of the Group a
Slide 4: Introduction
INTRODUCTION Gary Kennedy H1 20 RESULTS | MAY 2020 4
Slide 5: Thank You to our food heroes
Thank You to our food heroes #feedingthenation H1 20 RESULTS | MAY 2020 5
Slide 6: COVID-19 Update
COVID-19 UPDATE Patrick Coveney H1 20 RESULTS | MAY 2020
Slide 7: Key Highlights
KEY HIGHLIGHTS H1 profitability and cashflow in line with plan until mid March Comprehensive and rapid response to COVID-19 Conserving balance sheet strength; while building liquidity Planning with customers to build back our business H1 20 RESULTS | MAY 2020 7
Slide 8: Decisive, Clear and Rapid Response to COVID-19
DECISIVE, CLEAR AND RAPID RESPONSE TO COVID-19 KEEPING OUR PEOPLE FEEDING THE UK PROTECTING OUR 1 2 3 SAFE BUSINESS H1 20 RESULTS | MAY 2020 8
Slide 9: Keeping Our People Safe
1 KEEPING OUR PEOPLE SAFE COMPREHENSIVE SET OF ACTIONS TO INDUSTRY CONTEXT SUPPORT SAFETY • Sustaining food supply is critical component of UK’s COVID-19 response • Food manufacturing designated as ‘key workers’ • Greencore engaging widely with peers and Government agencies to shape effective safety
Slide 10: Feeding the UK
2 FEEDING THE UK INTENSIVE ONGOING CUSTOMER … AND COMMUNITY SUPPORT INITIATIVES ENGAGEMENT… • Moved immediately to simplify product ranges to match consumer demand (and where needed enhance capacity) • Maintained supply chain integrity and customer service • Reinforced joint initiatives on waste, av
Slide 11: Protecting Our Business: Revenue Performance Since Period End
3 PROTECTING OUR BUSINESS… REVENUE PERFORMANCE SINCE PERIOD END • Marked impact on demand in first 6 weeks of H2 • Lockdown demand patterns stabilising and improving into May • Food to go categories • Weekly demand declines of up to 70% on prior year • Currently less than 60% below prior year and on
Slide 12: Protecting Our Business: Measures to Defend Profitability
3 …PROTECTING OUR BUSINESS MEASURES TO DEFEND PROFITABILITY • Tightened food to go production network and shift profile • Furloughing of colleagues • Eliminated non-essential overheads and operating costs • Temporary fee and salary reductions for Board, Executive Directors, and wider senior teams Im
Slide 13: Planning for Build Back
PLANNING FOR BUILD BACK BUSINESS STRONGLY POSITIONED • Reset organisation to prosper in an uncertain food landscape • Capability, resources, flexibility and leadership to meet different shapes of recovery • Working collaboratively with customers and suppliers on all elements of build back programme
Slide 14: Financial Review
FINANCIAL REVIEW Emma Hynes H1 20 RESULTS | MAY 2020 14
Slide 15: H1 20 Summary
H1 20 SUMMARY £m unless otherwise stated H1 20 H1 19 Change HIGHLIGHTS Group Revenue 712.7 701.4 +1.6% • Broadly in line with plan until Pro Forma Revenue Growth (%) +0.1% mid March Adjusted EBITDA 63.8 62.5 +2.1% • Revenue and profitability Adjusted Operating Profit 38.3 44.7 -14.3% negatively impa
Slide 16: Strong Liquidity Position
STRONG LIQUIDITY POSITION DEBT COMPOSITION AND CONSERVING BALANCE SHEET STRENGTH MATURITY PROFILE • Cash and undrawn committed bank facilities of £267.5m at 27 March 2020, including a newly agreed £75m committed debt facility maturing in March 2021 £125m £580m • Secured agreements with bank lenders
Slide 17: Relentless Focus on Cashflow Management
RELENTLESS FOCUS ON CASHFLOW MANAGEMENT OUR MITIGATING ACTIONS • Deferred non-essential capital expenditure • No interim FY20 dividend payment and today announcing that we will not proceed with payments for FY 20 and H1 21 • Closely managing working capital • Engaging to defer cash pension contribut
Slide 18: Performance Since Period End
PERFORMANCE SINCE PERIOD END • Successfully managed period of rapid adjustment in April • Current trajectory of improving revenue and EBITDA • Modelling a range of scenarios for different shapes of recovery • Liquidity and resources more than sufficient H1 20 RESULTS | MAY 2020 18
Slide 19: Building Back for Better
BUILDING BACK FOR BETTER Patrick Coveney H1 20 RESULTS | MAY 2020
Slide 20: Where We Sit Today
WHERE WE SIT TODAY Reset business now returning to modestly positive EBITDA levels Flexibility and insight to adjust network and cost base rapidly in dynamic environment Customer relevance enhanced, with joint build back plans in place Liquidity, resources and leadership in place for lockdown and bu
Slide 21: The Changing Food Landscape
THE CHANGING FOOD LANDSCAPE Food shoppers UK grocers Wider food industry ▪ Shift from basket to trolley shopping ▪ Marked increase in trust for grocery ▪ Prioritising colleague safety ▪ Reduced ‘on the go’ shopping sector ▪ Scale and breadth of portfolio occasions (penetration drop from ▪ Significan
Slide 22: Longer Term Impacts; Some New and Some Enduring
LONGER TERM IMPACTS; SOME NEW AND SOME ENDURING Changing meaning of ‘on the go’ Increased importance of value Elevation of hygiene alongside health & wellness Higher penetration of digital and low contact channels Reassessment of the value of frontline colleagues Recognition for Purposeful & sustain
Slide 23: Strategy Remains Relevant in New Context
STRATEGY REMAINS RELEVANT IN NEW CONTEXT GROWTH RELEVANCE ▪ Primed to capitalise on return to growth in food to go ▪ Continuing investment in distribution ▪ Executing category and channel diversification ▪ Leveraging diverse convenience portfolio ▪ Proactive stance to capture opportunities in ▪ Work
Slide 24: Well Positioned to 'Build Back for Better'
WELL POSITIONED TO ‘BUILD BACK FOR BETTER’ ▪ Reduce complexity in our Reset business now returning to modestly model as we rebuild positive EBITDA levels ▪ Optimise production and capacity to deliver long-term Flexibility and insight to adjust network and social distancing cost base rapidly in dynam
Slide 25: Key Highlights
KEY HIGHLIGHTS H1 profitability and cashflow in line with plan until mid March Comprehensive and rapid response to COVID-19 Conserving balance sheet strength; while building liquidity Planning with customers to build back our business H1 20 RESULTS | MAY 2020 25
Slide 26: Q&A
Q&A group ple
Slide 27: Appendix: Supplementary Financials
APPENDIX 1 SUPPLEMENTARY FINANCIALS H1 20 RESULTS | MAY 2020
Slide 28: H1 20 P&L Summary
H1 20 P&L SUMMARY £m unless otherwise stated H1 20 H1 19 Change Group Revenue 712.7 701.4 +1.6% Pro Forma Revenue Growth (%) +0.1% Adjusted Operating Profit 38.3 44.7 -14.3% Adjusted Operating Margin (%) 5.4% 6.4% -100 bps Group Operating Profit 35.6 41.3 -13.8% Adjusted Profit Before Tax 31.1 37.7
Slide 29: Pro Forma Revenue
PRO FORMA REVENUE Pro Forma Revenue Growth composition H1 20 PERFORMANCE FTG categories Other convenience categories Group • Pro forma revenue +0.1% • 2.1% pro forma decline in food 6 to go categories 4.0% 4 ─ COVID-19 effect at end of period £257m 2 £258m 0.1% • Freshtime performed well +0.1% £447m
Slide 30: Profit Performance
PROFIT PERFORMANCE Profit performance H1 20 PERFORMANCE £m H1 19 H1 20 • Reduced profits in food to go 70 +2.1% categories, as deteriorating 60 performance in the second half of -14.3% 50 62.5 63.8 March occurred before any 40 44.7 mitigating measures applied 38.3 30 Adj EBITDA Adj Op Profit • The p
Slide 31: H1 20 P&L: Other Financial Items
H1 20 P&L: OTHER FINANCIAL ITEMS £m H1 20 H1 19 Net interest payable (before exceptional items) (8.7) (10.8) Tax (before exceptional items) (3.5) (5.4) Discontinued operations (before exceptional items) - 8.9 Group exceptional items (after tax) 0.4 28.8 Pence per share H1 20 H1 19 Adjusted EPS 5.8 6
Slide 32: Free Cash Flow
FREE CASH FLOW £m 63.8 60 50 40 -21.8 30 -11.2 -2.6 20 -11.7 10 -7.8 2.6 0 -4.9 -1.2 Adj EBITDA Net WC Maintenance Exceptional Interest/tax Pension Leases Other Free Cash Flow (Cont Ops) Capex Cashflows H1 20 RESULTS | MAY 2020 32
Slide 33: H1 20 Balance Sheet Highlights
H1 20 BALANCE SHEET HIGHLIGHTS £m H1 20 H1 19 Net Debt 374.4 284.1 Net Debt (excluding lease liabilities) 311.1 284.1 Net Debt:EBITDA (x)1 2.1 1.9 Pension deficit (net of deferred tax) 39.2 79.9 Average Invested Capital 695.9 628.2 ROIC (%) 12.3 14.6 1 as measured under financing agreements H1 20 RE
Slide 34: Net Debt
NET DEBT 0 -100 -200 2.6 -300 -288.5 1.4 -16.7 -9.9 -311.1 -63.3 -374.4 -400 £m Net Debt FY19 Free Cash Flow Dividends Strategic Capex FX/Other Net Debt H1 20 Lease liabilities Net Debt H1 20 (excluding lease liabilities) H1 20 RESULTS | MAY 2020 34
Slide 35: IFRS16
IFRS16 Measure • On 28 September 2019 the Group adopted IFRS 16 Leases, the new accounting Adjusted EBITDA (£m) +6.3 standard for leases. Adjusted Operating Profit (£m) +0.3 • Group used the modified retrospective approach, which does not require the Adjusted Profit Before Tax (£m) -0.2 restatement
Slide 36: Definitions of APMs
DEFINITIONS OF APMS The Group uses the following Alternative Performance Measures (‘APMs’) which are non-IFRS measures to monitor the performance of its operations and of the Group as a whole PRO FORMA REVENUE GROWTH ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE (‘EPS’) Pro Forma Revenue Growth
Slide 37: Definitions of APMs (continued)
DEFINITIONS OF APMS (CONTINUED) CAPITAL EXPENDITURE NET DEBT AND NET DEBT EXCLUDING LEASE LIABILITIES The Group defines Maintenance Capital Expenditure as the expenditure Net Debt is used by the Group to measure overall cash generation of the Group required for the purpose of sustaining the operatin
Slide 38: Appendix: About Greencore
APPENDIX 2 ABOUT GREENCORE H1 20 RESULTS | MAY 2020 38
Slide 39: Our Strategy
OUR STRATEGY WINNING IN UK CONVENIENCE FOOD GROWTH RELEVANCE Drive growth in expanding food to go market Deepen customer relevance DIFFERENTIATION Adopt a distinctive and repeatable Greencore Way of working GREAT PEOPLE AT GREENCORE SUSTAINABLE FOOD THE CORE EXCELLENCE BUSINESS H1 20 RESULTS | MAY 2
Slide 40: Driving Long-Term Value Creation
DRIVING LONG-TERM VALUE CREATION SUSTAINABLE REVENUE GROWTH STRONG INHERENT DISCIPLINED INVESTMENT FREE CASHFLOW AND CAPITAL ALLOCATION PROFIT GROWTH AT / ABOVE REVENUE GROWTH H1 20 RESULTS | MAY 2020 40
Slide 41: IR Contacts & Calendar
IR CONTACTS & CALENDAR Jack Gorman Q3 Trading Update 28 July 2020 Head of Investor Relations FY20 Period End 25 September 2020 investor.relations@greencore.com +353 1 605 1000 FY20 Results 24 November 2020 H1 20 RESULTS | MAY 2020 41