Slide 1: Results for the year ended 28 September 2012
Results For the year ended 28 September 2012 1
Slide 2: Agenda
AGENDA Highlights Patrick Coveney, CEO Financial Review Alan Williams, CFO Operating & Strategic Review Patrick Coveney, CEO Outlook Patrick Coveney, CEO Q&A Open to the Floor 2
Slide 3: Highlights
HIGHLIGHTS • Extensive reshaping of Group now complete • Focused and growing convenience food group with broad customer balance • Strong underlying momentum right across the portfolio • Integration of Uniq largely complete with targeted synergies fully delivered • Establishment of a larger scale foo
Slide 4: Financial Review
FINANCIAL REVIEW Alan Williams Chief Financial Officer
Slide 5: Financial Summary
FINANCIAL SUMMARY FY12 Versus FY11 Revenue Revenue £1,161.9m +44.5% Revenue Revenue –– continuing continuing activity activity11 £1,107.7m +10.4% Operating Operating profit profit22 £70.7m +37.3% Operating Operating margin margin22 6.1% -30 bps Adjusted Adjusted earnings earnings33 £49.2m +70.9% Adj
Slide 6: Convenience Foods
CONVENIENCE FOODS FY12 FY11 % £m £m change • Strong sales and profit performance despite continued challenging market conditions Revenue – 1,091.1 732.2 +49.0% • Continuing activity revenue growth as reported of 11.2% (7.4% excluding impact of Revenue – US and ICL acquistions) driven by good categor
Slide 7: Convenience Foods Margin
CONVENIENCE FOODS MARGIN • Reported operating margin Operating Margin % 40bps lower at 6.3% driven by 6.7 6.3 lower margin Uniq businesses 5.3 • Pro-forma operating margin +100 +100 bps bps 100bps ahead driven by: • Uniq acquisition cost synergy 1.9 delivery • Underlying performance improvement in t
Slide 8: Ingredients & Property
INGREDIENTS & PROPERTY • Good performance in ingredients FY12 FY11 % change businesses with sales growth on a % constant constant currency basis and £m £m change currency operating profit increase • Reduction in operating profit for Revenue 70.8 72.0 -1.7% +2.9% division explained by year-on-year de
Slide 9: Finance Costs
FINANCE COSTS Bank interest payable has decreased from FY11 despite incremental debt to part finance Uniq acquisition £m FY12 FY11 Bank interest payable (16.4) (16.9) Unwind of discount to present value 0.1 0.2 Net pension financing charge (4.7) (1.8) FX/Fair value of derivatives 2.8 4.6 Net finance
Slide 10: Tax Charge
TAX CHARGE • Group’s effective tax rate (“ETR”) has reduced to 4% (FY11: 13%) largely as a result of the Uniq acquisition • Uniq business possessed significant tax attributes • An income statement credit will be recognised each year in relation to the amortisation of the intangible assets identified
Slide 11: Exceptional Costs
EXCEPTIONAL COSTS Income FY12 Exceptionals Statement £m Integration costs of UK acquisitions (7.6) Integration costs of US acquisitions (3.1) Transaction costs (2.2) Onerous lease obligation on former business (1.1) Pre tax impact (14.0) Tax relief on exceptional items and resolution of overseas cas
Slide 12: EPS and Dividend
EPS AND DIVIDEND EPS FY12 FY11 Adjusted earnings3 £49.2m £28.8m EPS • Adjusted earnings 70.9% ahead Denominator for earnings per 385.0m 273.9m share • Adjusted earnings per share up 21.9% Adjusted earnings per share3 12.8p 10.5p Dividend FY12 FY11 Total dividend distribution £16.7m £13.4m* Dividend
Slide 13: Net Debt and Leverage
NET DEBT AND LEVERAGE Net Debt £152.2m £34.0m £258.0m £139.8m Sept 11 Acquisition spend Net cash inflow Sept 12 Debt • Net debt at 28 September 2012 of £258.0m • Increase of £118.2m driven by acquisition spend of £152.2m • Significant improvement in operating cashflow drives net cash inflow of £34.0
Slide 14: Cashflow
CASHFLOW Significant Significant improvement improvement in in operating operating cashflow cashflow £m FY12 FY11 Improvement EBITDA 93.5 69.9 +£23.6m Working capital movement 23.4 (1.6) +£25.0m Net capex (30.4) (23.0) Interest & tax (13.6) (22.2) Operating cashflow 72.9 23.1 +£49.8m Pension financi
Slide 15: Focus on Working Capital Improvement
FOCUS ON WORKING CAPITAL IMPROVEMENT Significant Significant improvement improvement in in working working capital capital -- £23.4m £23.4m inflow inflow in in FY12 FY12 FY12 movement Drivers • Targeted inventory reduction in former Uniq businesses, downsizing of Inventory £0.3m inflow Minsterley •
Slide 16: Summary - Financial Performance
SUMMARY - FINANCIAL PERFORMANCE • Strong financial and operating performance despite challenging market conditions • Substantial increase in revenue, operating profit and earnings • Substantial increase in operating cashflow • Covenant test leverage below 2.5 times • Adjusted EPS growth of 21.9% to
Slide 17: Operating & Strategic Review
OPERATING & STRATEGIC REVIEW PATRICK COVENEY CHIEF EXECUTIVE OFFICER
Slide 18: Delivering Strongly Against Our Economic Model
DELIVERING STRONGLY AGAINST OUR ECONOMIC MODEL LONG TERM DELIVERY DRIVERS TARGETS • Against total food market growth of 3.1%** and chilled prepared foods growth of 5.0%** • Thoughtful category selection and strong Revenue* LFL growth >5% 7.4% commercial relationships • Innovation to drive consumer a
Slide 19: FY12 Performance Priorities
FY12 PERFORMANCE PRIORITIES SUSTAIN strong like-for-like revenue 1 momentum across the portfolio 2 Flawlessly INTEGRATE the Uniq business RESHAPE our strategy, footprint and 3 performance trajectory in the US 19
Slide 20: Core Business Performance - Tackling Market Challenges
CORE BUSINESS PERFORMANCE 1 - TACKLING MARKET CHALLENGES Challenge Challenge Greencore Greencore action action Impact Impact •• Product Product and and packaging packaging solutions solutions to minimise impact to minimise impact •• ‘Total ‘Total Lowest Lowest Cost’ Cost’ and and •• ‘Cash ‘Cash marg
Slide 21: Core Business Performance - Food to Go
CORE BUSINESS PERFORMANCE 1 - FOOD TO GO • Represents c.40% of Convenience Foods revenues with broad customer and format exposure 37%* 37%* • Category includes sandwiches, baguettes, Market Marketshare share sandwiches sandwiches sushi, ready to eat salads and side of plate salads • Growth was volum
Slide 22: Core Business Performance - Prepared Meals
CORE BUSINESS PERFORMANCE 1 - PREPARED MEALS • Re-shaped business with strong market positions in chilled ready meals, quiche, 28%** 28%** pasta sauces and soups Market Marketshare share chilled chilledItalian Italian • Now manufacturing from five UK meals meals facilities, including newly acquired
Slide 23: Core Business Performance - Grocery & Frozen Foods
CORE BUSINESS PERFORMANCE 1 - GROCERY & FROZEN FOODS • Grocery activity focused on cooking 79%** 79%** sauces, table sauces and pickles; Frozen Market Marketshare share own ownlabel label Foods comprised of Yorkshire puddings cooking cooking sauces sauces and toad-in-the-hole • Good own label growth
Slide 24: Uniq Integration - Successfully Delivered
UNIQ INTEGRATION 2 - SUCCESSFULLY DELIVERED •• Performance Performance sustained sustained in in high high performing performing Northampton Northampton sandwich sandwich business business •• Successful Successful addition addition of of Marks Marks && Spencer Spencer as as aa material material new
Slide 25: Uniq Integration - Commercial Rebalancing
UNIQ INTEGRATION 2 - COMMERCIAL REBALANCING FY11 FY12 • A more balanced customer mix • Reflects the relative size of customer shares in UK convenience foods • Now serving full range of value to premium tiers Source: Estimated based on Greencore retail revenue for FY12, excluding Uniq activity exited
Slide 26: Evolution of Our US Business
3 EVOLUTION OF OUR US BUSINESS 2008 2010 2012 US USmarket marketentry entry Emergence Emergenceof offood foodto togo go Focused, Focused,scaled-up scaled-upbusiness business • Acquisition of Home • Addition of On A Roll • Acquisitions of Market Key Key Event Event Made Brand Foods Fare and Schau and
Slide 27: US Strategy - Strategy Driven by Key Learnings
US STRATEGY 3 - STRATEGY DRIVEN BY KEY LEARNINGS Strategy Rationale •• Role Role of of ‘day-part’ ‘day-part’ in in shopping/consumption shopping/consumption Develop Develop Market-specific Market-specific •• Portion Portion sizes sizes and and regional regional tastes tastes Consumer Consumer Propos
Slide 28: US Strategy - Channel, Customer and Category Focus
US STRATEGY 3 - CHANNEL, CUSTOMER AND CATEGORY FOCUS • A focused, channel specific business with over 85% of pro-forma revenues in food to go products • Pro-forma revenues of c. $200m+ with capacity to deliver c. $350m of revenue with existing customers from current sites • Business and economic mod
Slide 29: FY12 Performance Priorities
FY12 PERFORMANCE PRIORITIES SUSTAIN strong like-for-like revenue 1 momentum across the portfolio 2 Flawlessly INTEGRATE the Uniq business RESHAPE our strategy, footprint and 3 performance trajectory in the US DELIVER strong cashflow to deleverage the Group in an uncertain market 29
Slide 30: A Focused Growing Convenience Food Leader
A FOCUSED GROWING CONVENIENCE FOOD LEADER Revenue Revenue £1.2bn UK UK UK Prepared Prepared UK UK Grocery Grocery & & UK UK Cakes Cakes && US US Ingredients Ingredients & & UKFood FoodtotoGo Go Meals Meals Frozen Frozen Foods Foods Desserts Desserts Convenience Convenience Property Property % of run
Slide 31: Outlook
OUTLOOK • Market conditions remain challenging in the UK • Like for like volume pressures in the UK grocery market • Little economic growth • Consumers under considerable financial pressure • Continued input cost inflation in FY13 • The Group remains well positioned to deliver further progress in FY
Slide 32: Greencore
greencore bringing convenience to good food