Slide 1: Results for the half year ended 31 March 2017
Results For the half year ended 31 March 2017
Slide 2: Highlights
HIGHLIGHTS CONVENIENCE FOODS UK & IRELAND • Strong growth • Significant project activity to enable new commercial wins • Raw material and labour inflation fully mitigated CONVENIENCE FOODS US • Peacock transaction completed successfully • Strong volume growth • Integration on track GROUP • Organisat
Slide 3: Financial Review
FINANCIAL REVIEW Eoin Tonge Chief Financial Officer
Slide 4: Financial Summary
FINANCIAL SUMMARY H1 17 H1 16 Versus H1 16 +41.6% Group Revenue1 £1,010.3m £691.6m Pro forma +7.3% EBITDA2 £79.1m £60.3m +31.2% Operating Profit2 £55.3m £43.5m +27.1% Operating Margin2 5.5% 6.3% -80bps Adjusted PBT3 £44.7m £36.5m +22.5% Adjusted Earnings3 £37.8m £33.4m +13.2% Adjusted EPS3 6.3p 6.7p
Slide 5: Acquisition of Peacock Foods and New Reporting Segments
ACQUISITION OF PEACOCK FOODS AND NEW REPORTING SEGMENTS • Completed the acquisition of Peacock Foods for £604.7m on 30 December 2016, results consolidated for one quarter • Pro forma revenue used to show underlying growth of Peacock Foods business • Financed via rights issue (£427.0m, net of associa
Slide 6: Convenience Foods UK & Ireland
CONVENIENCE FOODS UK & IRELAND H1 17 H1 16 Versus H1 16 +16.1% Revenue1 £685.7m £590.4m pro forma +10.6% Operating Profit2 £46.8m £46.7m - Operating Margin2 6.8% 7.9% -110bps • Food to Go pro forma growth of 19.7%, through strong category growth of 7% and new business wins • Significant customer lau
Slide 7: Convenience Foods US
CONVENIENCE FOODS US H1 17 H1 16 Versus H1 16 +220.8%, Revenue1 £324.6m £101.2m pro forma +2.5% Operating Profit2 £8.5m -£3.2m n/a Operating Margin2 2.6% -3.2% +580bps • Peacock Foods performing in line with expectations, volume growth of c. 9% on a pro forma basis, driven by good category growth an
Slide 8: Exceptional Items, Financing & Tax
EXCEPTIONAL ITEMS, FINANCING & TAX EXCEPTIONAL ITEMS • £15.1m charge relating to transaction costs associated with the acquisition of Peacock Foods • £5.3m charge relating to the integration of Peacock Foods and The Sandwich Factory • £2.5m charge due to the pre-commissioning and start-up costs from
Slide 9: EPS & Dividend
EPS & DIVIDEND EARNINGS PER SHARE H1 17 H1 16 • Adjusted Earnings driven by higher Operating Profit, partially offset by increases in financing charge and overall Adjusted Earnings £37.8m £33.4m tax rate • Weighted average number of shares for Denominator for EPS3 603.4m 496.6m period; H1 16 restate
Slide 10: Cashflow
CASHFLOW £m H1 17 H1 16 KEY FEATURES OF NET DEBT EBITDA2 79.1 60.3 MOVEMENT Working capital movement (20.2) (17.1) • Increase in underlying Pension financing (4.7) (6.9) operating cashflow Other operating movements 2.0 3.3 • Acquisition of Peacock Foods Net operating cash inflow 56.2 39.6 • Exceptio
Slide 11: Debt & Pensions
DEBT & PENSIONS DEBT PENSIONS • New 5 year $249m bank facility to finance the acquisition of Peacock Foods • IAS 19 pension deficit of £109.9m, net of related deferred tax asset • Extended the maturity of primary committed bank facility of £300m for a • Decrease of £24.8m from September further year
Slide 12: Summary Financial Performance
SUMMARY FINANCIAL PERFORMANCE • Significant change to the business as a result of the acquisition of Peacock Foods • Growth in revenue, EBITDA and Operating Profit • Strong volume led growth driven by Food to Go and Peacock Foods • Group operating margin impacted by significant commercial launches •
Slide 13: Operating Review and Outlook
OPERATING REVIEW AND OUTLOOK Patrick Coveney Chief Executive Officer
Slide 14: Today's Discussion
TODAY'S DISCUSSION A TRANSFORMATIONAL PERIOD 1 Significant project activity delivering strong growth in UK 2 Peacock Foods performance and US integration on track 3 Organisation strengthened to deliver strategy and growth 4 Set up for progress in FY17 and beyond 14
Slide 15: Strong Underlying Growth in Challenging Market
STRONG UNDERLYING GROWTH IN CHALLENGING 1 MARKET Growth RETAIL CUSTOMERS 10.6% • Challenging and competitive environment 3.8% • Closer supplier partnerships • Inflation mitigation • Growth of convenience formats, -1.6% particularly food to go Total Food Chilled Convenience Greencore pro forma CONSUM
Slide 16: Network & Commercial Investment
1 NETWORK & COMMERCIAL INVESTMENT SIGNIFICANT SANDWICH WIN MATERIAL RANGE EXTENSIONS AT PARK ROYAL & BOW AT NORTHAMPTON THE SANDWICH FACTORY READY MEAL NETWORK INTEGRATION ENHANCEMENT 16
Slide 17: Mitigating the Impact of Inflation
1 MITIGATING THE IMPACT OF INFLATION RAW MATERIALS & PACKAGING LABOUR +2% +4% • Impact of weaker sterling and • Indirect effect of National Living specific moves in certain markets, Wage such as dairy • Recovering through multiple • Worked with customers to cost and innovation initiatives mitigate i
Slide 18: Combined US Business Delivering
2 COMBINED US BUSINESS DELIVERING BUSINESS CASE ON TRACK UNDERLYING GROWTH • Operating scale in the US • Volume growth of 9% in Peacock • Leading market positions Foods on a proforma basis • New channels and new customers • Driven by good category growth • Enhanced manufacturing footprint across por
Slide 19: Integration on Track
2 INTEGRATION ON TRACK • Integration progressing well and in line with plans • New management team in place and broader organisation structure being rolled out • Consolidation of head office expected to complete in second half • Cost synergy delivery on track • Encouraging pipeline of commercial and
Slide 20: Key Investments in the Period in the US
2 KEY INVESTMENTS IN THE PERIOD IN THE US SIGNIFICANT EXPANSION AT FURTHER EXPANSION AT CAROL STREAM ROMEOVILLE 20
Slide 21: Organisational Strengthening
3 ORGANISATIONAL STRENGTHENING PEOPLE AT THE CORE Board appointments New US senior leadership Continued investment in our people and culture 21
Slide 22: Summary and Outlook
4 SUMMARY AND OUTLOOK • Transformational year • Strong growth in the UK and US • Significant investment activity • Confidence to deliver in line with market expectations 22
Slide 23: Appendices (Financial)
APPENDICES (Financial)
Slide 24: New Reporting Structure
NEW REPORTING STRUCTURE CONVENIENCE FOODS UK & IRELAND CONVENIENCE FOODS US FOOD TO GO PREPARED MEALS GROCERY US Ready meals, Cooking Sauces, Sandwiches, Sushi Sandwiches, Meal Quiche, Soups & Yorkshire Puddings, & Salads Kits & Salad Kits Sauces Cakes & Desserts • Atherstone • Bristol • Evercreech
Slide 25: Tax Rate Reconciliation
TAX RATE RECONCILIATION Adjusted earnings reconciliation HY17 HY16 £m Pre- Adjusted Pre- Adjusted Adjustments Adjustments exceptional earnings exceptional earnings Operating profit (pre amortisation of intangibles) 55.3 - 55.3 43.5 - 43.5 Amortisation of intangibles (7.9) 7.9 - (4.5) 4.5 - Finance c
Slide 26: EPS & DPS Restatement
EPS & DPS RESTATEMENT EARNINGS PER ORDINARY SHARE AS REPORTED RESTATED* (PENCE) FY 2016 HY 2016 FY 2016 HY 2016 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
Slide 27: Appendices (General)
APPENDICES (General)
Slide 28: Greencore Today
GREENCORE TODAY • Fast-growing, international convenience food leader • Leading UK manufacturer of sandwiches to grocery retailers; complementary positions in other convenience food categories • Leading US manufacturer of sandwiches, meal kits and salads to CPG, convenience retail and food service l
Slide 29: From Agribusiness to Convenience Food
FROM AGRIBUSINESS TO CONVENIENCE FOOD Origins & Transition Focus Transformation Broad agribusiness centred around Scale business in both UK and US Irish Sugar; diversification into Focus on food to go in the UK and with significant growth through convenience foods through US achieving growth mainly
Slide 30: Our Vision Is to Be a Fast-Growing, International Convenience Food Leader
OUR VISION IS TO BE A FAST-GROWING, INTERNATIONAL CONVENIENCE FOOD LEADER Fast-growing... …international... FY16 revenue growth Pro forma FY16 sales* 45% 55% +10.6% +15.3% …convenience food… …leader Market share UK pre- packed sandwiches** 40% Others 60% Greencore *Pro forma figures for 12 months to
Slide 31: Our Strategy Is to Win in Convenience Food
OUR STRATEGY IS TO WIN IN CONVENIENCE FOOD Focus on attractive market Invest in long-term Build distinctive positions where we are partnerships with leading capabilities advantaged customers • Build leading positions in • Focus on leading players • World-class delivery of fast-growing convenience in
Slide 32: We Work with Leading Customers in UK and US
WE WORK WITH LEADING CUSTOMERS IN UK AND US Convenience Foods US* Convenience Foods UK £1.0bn ($1.2bn) £1.3bn *Proforma figures for 12 months to end of September 2016; US figures translated using GBP/USD rate of 1.2577; Peacock Foods consolidated from 30 December 2016 32
Slide 33: We Are Investing in Capacity and Capability
WE ARE INVESTING IN CAPACITY AND CAPABILITY • Capability • Capacity • HR, leadership development & • New builds talent • Acquisitions • IT and systems • Site investments • Culture & communication • Lean Greencore • Consumer & shopper insight • Distribution network 33
Slide 34: Our Strategy Is Underpinned by the Greencore Way
OUR STRATEGY IS UNDERPINNED BY THE GREENCORE WAY The Greencore Way defines who we are and how we will succeed 34