Slide 1: Results for the year ended 29 September 2017
Results For the year ended 29 September 2017
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 risks and uncertainties. The Group has based these forward‐looking statements on current expectations and projections about future
Slide 3: Agenda
AGENDA CONTEXT & HIGHLIGHTS Patrick Coveney, CEO FINANCIAL REVIEW Eoin Tonge, CFO OPERATIONAL REVIEW & OUTLOOK Patrick Coveney, CEO Q&A 3
Slide 4: Context & Highlights
CONTEXT & HIGHLIGHTS Patrick Coveney, CEO
Slide 5: Growth & Progress in a Challenging Year
GROWTH & PROGRESS IN A CHALLENGING YEAR Important progress… …but challenges too • Creation of exciting, strong, scale US • Substantial investment, restructuring business and one-off costs • Enhanced capacity, capability, market • Performance challenges in smaller position and momentum in UK parts of
Slide 6: Greencore Today
GREENCORE TODAY Fast-growing convenience food leadership in both UK Vision and US Commercial Collaborative, long-term, strategic partnerships with relationships majority of large UK and US customers Capacity, capability & Significant investment in these areas to deliver medium culture term growth Re
Slide 7: Financial Review
FINANCIAL REVIEW Eoin Tonge, CFO
Slide 8: FY17 Financial Performance
FY17 FINANCIAL PERFORMANCE CHANGE Acquisition of Peacock Foods and substantial investment programme in UK REVENUE GROWTH Strong underlying volume-led growth in Food to Go and US division PROFIT CONVERSION Lower operating leverage reflecting the operational investments and change Considerable
Slide 9: P&L Summary
P&L SUMMARY 1,2 Change £m FY17 FY16 (as reported) Group Revenue 2,319.7 1,481.9 +56.5% (pro forma +9.4%) Adjusted Operating Profit 140.1 102.0 +37.4% Adjusted Operating Margin 6.0% 6.9% -90bps Exceptional Items (78.2) (17.4) Adjusted Profit Before Tax 116.7 85.9 +35.9% Adjusted EPS (pence) 15.4 16.0
Slide 10: Convenience Foods UK & Ireland
CONVENIENCE FOODS UK & IRELAND Change Change £m FY17 FY16 (as reported) (pro forma) Revenue 1,438.4 1,258.8 +14.3% +11.9% Adjusted Operating Profit 106.8 104.1 +2.6% Adjusted Operating Margin 7.4% 8.3% -90bps Phase of intense operational change and development Food to Go pro forma revenue growth
Slide 11: Convenience Foods US
CONVENIENCE FOODS US Change Change £m FY17 FY16 (as reported) (pro forma) Revenue 881.3 223.1 +295.0% +5.9% Adjusted Operating Profit 33.3 (2.1) n/a Adjusted Operating Margin 3.8% -0.9% +470bps Acquisition of Peacock Foods on 30 December 2016 Underlying pro forma volume growth of approximately 7
Slide 12: Exceptional Items
EXCEPTIONAL ITEMS £m FY17 Intangible asset impairment (29.7) Business exit (16.5) Transaction costs (15.6) Integration and reorganisation (11.2) Pre-commissioning / Start up costs (4.1) Legal settlement (1.1) Total pre-tax (78.2) Tax credit on exceptional items 8.9 Total (69.3) Cash outflows of £3
Slide 13: Cash Flow
CASH FLOW £m FY17 FY16 EBITDA 189.7 138.4 Working capital (3.0) 13.2 Maintenance Capital Expenditure (39.7) (31.9) Exceptional cash flow (33.7) (9.9) Other 4.5 4.1 Operating Cash Flow 117.8 113.9 Strategic Capital Expenditure (83.6) (71.2) Pension, Tax & Interest (38.8) (29.8) Acquisitions & Disposa
Slide 14: Capital Expenditure
CAPITAL EXPENDITURE £m 83.6 71.2 39.7 31.9 Maintenance Strategic FY16 FY17 As expected, Maintenance Capital Expenditure increased with expanded business Strategic Capital Expenditure increased by 17% in FY17 – Capacity investments to support new business wins – Cost efficient capacity delivery i
Slide 15: Balance Sheet & Returns
BALANCE SHEET & RETURNS £m FY17 FY16 Change Net Debt (519.2) (331.8) -187.4 Net Debt:EBITDA (x)* 2.4 2.4 - Pension deficit (after tax) (103.1) (134.7) +31.6 ROIC 12.2% 13.8% -160bps Balance sheet reconfigured with the acquisition of Peacock Foods Valuation agreed for primary UK legacy defined be
Slide 16: Securing Profitable Growth
SECURING PROFITABLE GROWTH REVENUE GROWTH Positioned well for both market and customer growth in UK and US PROFIT CONVERSION Focus on leveraging recent investments CASH GENERATION, CAPITAL STRUCTURE AND RETURNS Clear path to improved cash flows and returns 16
Slide 17: Operational Review & Outlook
OPERATIONAL REVIEW & OUTLOOK Patrick Coveney, CEO
Slide 18: Operational Review & Outlook
OPERATIONAL REVIEW & OUTLOOK 1 STRATEGY & BUSINESS MODEL 2 UK & IRELAND DIVISION 3 US DIVISION 4 OUTLOOK 18
Slide 19: Our Strategy & Business Model Shaped by Structural Trends
OUR STRATEGY & BUSINESS MODEL SHAPED BY 1 STRUCTURAL TRENDS ‘Convenience’ driving consumer growth Changes in Fragmented labour . competitive markets set New customer partnership model 19
Slide 20: Strong Growth in UK – Driven by Food to Go
2 STRONG GROWTH IN UK – DRIVEN BY FOOD TO GO Market growth FY17 11. 9% KEY DRIVERS Growing underlying market, across channels, customers and 2.9% 3.0% formats Total UK Food UK Chilled Greencore pro New business wins especially in Convenience forma* Food to Go Food to go growth FY17 18.8% New c
Slide 21: A Food to Go Network to Support Future Growth
A FOOD TO GO NETWORK TO SUPPORT 2 FUTURE GROWTH Significant expansion at Two new facilities at Park Royal & Bow Northampton Integration of Atherstone facility Acquisition of Heathrow facility 21
Slide 22: Selective Choices in the Rest of UK
2 SELECTIVE CHOICES IN THE REST OF UK Substantial investments at Managed Evercreech exit, Warrington & Wisbech to consistent with category & support customer growth in capital strategy chilled ready meals 22
Slide 23: Reshaping Organisation, Model & Cost Base
2 RESHAPING ORGANISATION, MODEL & COST BASE Streamlined UK organisation Revised technology agenda Two-division structure, with New IT team, structure and revised leadership team investment model Upgraded operational Stopped development of new capability common ERP platform in UK Standardis
Slide 24: US Strategy Reflects Convergence of Consumer & Supply Chain Trends
US STRATEGY REFLECTS CONVERGENCE OF 3 CONSUMER & SUPPLY CHAIN TRENDS DEMAND FOR FRESH GREENCORE US DEMAND FOR PREPARED FOOD OUTSOURCING Particular recent Momentum in FY17, with demand for ‘high 6% ~7% pro forma volume care’ outsourcers growth 5-7% 4% Complementary CPG & retail customer set 3%
Slide 25: Integration of Peacock Foods on Track
3 INTEGRATION OF PEACOCK FOODS ON TRACK Progressing in line with plans Single central office Procurement optimisation Overhead reduction Systems integration (e.g. salad kits) 25
Slide 26: Positive Commercial Momentum
3 POSITIVE COMMERCIAL MOMENTUM Market growth with brands and categories we serve • Strengthened CPG Building share with existing customers across channels relationships • Strong salad New outsourced solutions with existing customers kits growth More innovation with existing customers • Challenges in
Slide 27: Outlook
4 OUTLOOK “Anticipate delivering a year of strong growth in FY18 …. ….. will approach benchmark leverage ratio of c. 2x net debt to EBITDA by end of year. Well positioned to drive improved profitability, cashflow and returns over the medium term.” 27
Slide 28: Q&A
Q&A Patrick Coveney, CEO & Eoin Tonge, CFO
Slide 29: Appendix - Financial
APPENDIX - FINANCIAL 29
Slide 30: Tax Rate Reconciliation
TAX RATE RECONCILIATION FY17 FY16 Pre Adjusted Pre Adjusted Adjustments Adjustments Exceptional Earnings Exceptional Earnings Adjusted Operating Profit 140.1 - 140.1 102.0 - 102.0 Amortisation of intangibles (19.2) 19.2 - (9.2) 9.2 - Finance costs* (24.3) - (24.3) (17.0) - (17.0) Pension financing (
Slide 31: Per Share Restatements
PER SHARE RESTATEMENTS EARNINGS PER ORDINARY SHARE (PENCE) As reported Restated* FY16 HY16 FY16 HY16 Basic earnings per ordinary share 11.6 4.9 9.5 4.0 Adjusted earnings per ordinary share 19.5 8.2 16.0 6.7 Diluted earnings per ordinary share 11.4 4.8 9.4 4.0 Adjusted diluted earnings per ordinary s
Slide 32: 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 Sales Growth • Pro Forma Sales Growth for FY17 adjusts reported revenue to reflect ownership of bo
Slide 33: Definitions of APMs
DEFINITIONS OF APMS Capital Expenditure • The Group defines Maintenance Capital Expenditure as the expenditure required for the purpose of sustaining the operating capacity and asset base of the Group, and of complying with applicable laws and regulations. It includes continuous improvement projects
Slide 34: IR Calendar & Contact
IR CALENDAR & CONTACT Q1 Trading Update 30 January 2018 Annual General Meeting 30 January 2018 FY18 Interim Results 22 May 2018 Q3 Trading Update 24 July 2018 FY18 Full Year Results 27 November 2018 Jack Gorman Head of Investor Relations investor.relations@greencore.com Tel. +353 1 605 1000