Slide 1: Results for the year ended 28 September 2018
Results For the year ended 28 September 2018
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: Agenda
AGENDA OVERVIEW Patrick Coveney, CEO FINANCIAL REVIEW Eoin Tonge, CFO OPERATING & STRATEGIC UPDATE Patrick Coveney, CEO Peter Haden, MD UK 3 Q&A
Slide 4: Overview
OVERVIEW Patrick Coveney, CEO
Slide 5: Key Messages
KEY MESSAGES 1 FY18 FINANCIAL 2 STRATEGIC HIGHLIGHTS PERFORMANCE* ▪ Results in line with guidance: ▪ Refocusing on core UK strengths Adjusted EPS of 15.1p following disposal of US business ▪ Pro forma revenue growth of ▪ Significant UK organisation and 8.7% in continuing business portfolio change se
Slide 6: Update on US Disposal & Capital Return
UPDATE ON US DISPOSAL & CAPITAL RETURN ▪ Transaction completed on 25 November ▪ High Court process for capital reduction completed ▪ Capital return of £509m; planned by way of tender offer 6
Slide 7: Financial Review
FINANCIAL REVIEW Eoin Tonge, CFO
Slide 8: FY18 Financial Performance in Line with Overall Guidance
FY18 FINANCIAL PERFORMANCE IN LINE WITH OVERALL GUIDANCE* ▪ Adjusted EPS of 15.1p ENHANCED FREE CASH FLOW GENERATION ▪ Free Cash Flow of £92.4m, up £14.4m STRONG RETURNS ▪ ROIC for continuing operations: 15.6% * In line with previous guidance of Adjusted EPS in the range of 14.7p-15.7p 8
Slide 9: Convenience Foods UK & Ireland
CONVENIENCE FOODS UK & IRELAND (CONTINUING OPERATIONS) £m FY18 FY17 Change Change (as reported) (pro forma) Revenue 1,498.5 1,438.4 +4.2% +8.7% Adjusted Operating Profit 110.6 106.8 +3.6% (before reallocated central costs) Adjusted Operating Profit 104.6 102.9 +1.7% Adjusted Operating Margin 7.0% 7.
Slide 10: Convenience Foods US
CONVENIENCE FOODS US (DISCONTINUED OPERATIONS) £m FY18 FY17 Change Change (as reported) (pro forma) Revenue 1,061.8 881.3 +20.5% +6.6% Adjusted Operating Profit* 48.0 37.2 +29.0% Adjusted Operating Margin 4.5% 4.2% +30bps ▪ US business results presented as discontinued operations ▪ Strong H2 perform
Slide 11: Other P&L Items
OTHER P&L ITEMS £m FY18 FY17 ▪ Interest costs increase on higher average Net Debt for full year Interest payable (26.2) (23.7) ▪ Effective tax rate for continuing Tax operations: 13% (FY17: 8%) (13.0) (7.4) (continuing operations) £m FY18 FY17 ▪ EPS impacted by increase in Adjusted EPS (pence) 15.1
Slide 12: Exceptional Items
EXCEPTIONAL ITEMS FY18 Income £m FY18 Cashflow Statement Continuing Operations Network rationalisation and optimisation (21.2) - Reorganisation and integration (15.9) (12.1) Business exit costs (13.9) 1.5 Pre-commissioning and start up costs (1.2) (1.0) Exceptional items (pre-tax) – continuing (52.2
Slide 13: Cash Flow
CASH FLOW £m FY18 FY17 Adjusted EBITDA 205.0 189.7 Movement in working capital (15.9) (3.0) Exceptional cashflow (15.0) (33.7) Maintenance capital expenditure (36.7) (39.7) Other operating cashflows (0.8) 4.5 Operating Cash Flow 136.6 117.8 Interest/tax/pensions (42.7) (38.8) Dividends to non-contro
Slide 14: Capital Expenditure
CAPITAL EXPENDITURE Capital expenditure – Total operations Capital expenditure – Continuing operations FY17 FY18 FY17 FY18 83.6 62.4 39.7 36.7 35.1 26.8 27.0 24.6 Maintenance Strategic Maintenance Strategic ▪ FY18 opening of extended and refurbished ready meals facility in Warrington ▪ Capital expen
Slide 15: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS £m FY18 FY17 Net Debt 501.1 519.2 Net Debt:EBITDA (x)* 2.3 2.4 Pension deficit (after tax) 73.6 103.1 ROIC (%) – continuing operations 15.6% 16.0% ▪ Reduction in absolute debt driven by free cash flow increase ▪ Net Debt:EBITDA ratio of 2.3x at end FY18; new leverage positio
Slide 16: Dynamic Capital Management
DYNAMIC CAPITAL MANAGEMENT Growth in free cash flow generation Organic Inorganic Return to investment investment shareholders ▪ Capacity ▪ Strategic acquisitions ▪ Share buybacks ▪ Capability ▪ Tactical bolt-ons ▪ Progressive dividend ▪ Efficiency policy ROIC discipline and Net Debt:EBITDA of 1.5-2.
Slide 17: Outlook
OUTLOOK ▪ Financial effects of US disposal ▪ Stronger and leaner business in UK ▪ Revenue growth in key categories ▪ Adjusted Operating Profit growth ▪ Manageable medium-term Brexit risks, understandable near-term uncertainty ▪ Well positioned to drive profitability, returns and free cash flow 17
Slide 18: Operating & Strategic Update
OPERATING & STRATEGIC UPDATE Patrick Coveney, CEO Peter Haden, MD UK
Slide 19: Operating & Strategic Update
OPERATING & STRATEGIC UPDATE 1▪ High relevance to consumer and retailer needs 2▪ Structural growth in UK market 3▪ Extension of our key customer relationships 4▪ Streamlined UK organisation with enhanced capabilities 5▪ Well-positioned for FY19 and the longer term 19
Slide 20: High Relevance to Consumer and Retailer Needs
HIGH RELEVANCE TO CONSUMER AND 1 RETAILER NEEDS Proliferation of meal and snacking Consumers seeking convenience occasions Fresher, healthier, ‘local’ product Food to go driving retailer growth 20 and returns
Slide 21: Structural Growth in UK Market
2 STRUCTURAL GROWTH IN UK MARKET Greencore portfolio growth well ahead of UK food market Revenue progress FY18, value growth (%) ▪ Good growth in food to go category ▪ Additional wins in café and UK food convenience formats 3.7% market1 ▪ Expansion of distribution offer Greencore continuing Portfoli
Slide 22: Extension of Our Key Customer Relationships
EXTENSION OF OUR KEY CUSTOMER 3 RELATIONSHIPS Long-term, sole-supply partnerships Doing more for our customers % of Greencore UK net sandwich sales in 3-yr+ contracts ▪ Capacity investments 90% 58% ▪ Collaboration on sourcing 23% ▪ End-to-end cost reduction ▪ Category management 2012 2015 2018 FY18
Slide 23: Streamlined UK Organisation
4 STREAMLINED UK ORGANISATION… Greencore UK Senior Leadership Team Managing Director Peter Haden Manufacturing Finance Purchasing Technical UK COO HR Director IT Director Director Director Director Director Kevin Moore Guy Dullage Tracy Costello Clare Rees Nigel Blakey Alwen Hill Martin Ford Benefit
Slide 24: …With Enhanced Capabilities
4 …WITH ENHANCED CAPABILITIES Greencore Manufacturing Excellence Key elements of programme ▪ Increased level of ambition ▪ One way of working across sites ▪ Specially designed frontline toolkit ▪ Continuous improvement teams ▪ Bespoke, simple technology ▪ Extensive communications Progress in FY18 ▪
Slide 25: …With Enhanced Capabilities
4 …WITH ENHANCED CAPABILITIES Improved labour efficiency example (one site) Widespread support and engagement Units per person hour by week 130 125 120 115 110 105 100 95 90 6wk Moving Average FY18 impact ▪ Continuous improvement delivery significantly higher than in previous years ▪ Reduced use of
Slide 26: Well-Positioned for FY19…
5 WELL-POSITIONED FOR FY19… ▪ Drive growth in food to go categories ▪ Improve ready meal performance ▪ Extend operational efficiency programme across the business ▪ Review and reduce central costs ▪ Navigate Brexit challenges 26
Slide 27: …and the Longer Term
5 …AND THE LONGER TERM Context Opportunities ▪ Attractive convenience ▪ Sustain demand for fresh, local food market of c.67m convenient food consumers ▪ Broaden reach of food to go as ▪ Proliferation of customers extend their reach channels and buying ▪ Leverage capabilities into adjacent behaviours
Slide 28: Q&A
y ] Q&A
Slide 29: Appendix
APPENDIX 29
Slide 30: Investment Case
INVESTMENT CASE We operate in a dynamic consumer market in the UK ▪ We participate in a vibrant and prosperous market of 67 million people ▪ We are a food manufacturer of scale in the UK with revenue of £1.5 billion and a well-invested network of 15 facilities ▪ We are relevant to key players across
Slide 31: What We Do
WHAT WE DO We Source… Greencore’s central purchasing team 3,600 We Adapt… sources from 3,600 different suppliers suppliers Product orders are placed just-in-time, requiring a We Innovate… Greencore’s skilled chefs and product developers create hundreds of new 35% high degree of agility and responsiv
Slide 32: Our Product Range
OUR PRODUCT RANGE ▪ SANDWICHES ▪ ITALIAN CHILLED ▪ WRAPS READY MEALS (CRM) ▪ AMBIENT ▪ BAGUETTES ▪ ASIAN CRM COOKING SAUCES ▪ ROLLS ▪ TRADITIONAL CRM ▪ PICKLES ▪ SUSHI ▪ QUICHE & TARTS ▪ DIPS ▪ FOOD TO GO ▪ CHILLED PASTA ▪ PASTES SALADS SAUCES ▪ YORKSHIRE ▪ SIDE OF PLATE ▪ CHILLED GRAVY PUDDINGS SAL
Slide 33: Our Business Model
OUR BUSINESS MODEL OUR MARKETS OUR BUSINESS WE’RE DIFFERENT KEY REVENUE & STAKEHOLDER RELIES ON: BECAUSE: PROFIT DRIVERS OUTCOMES We are a leader in We are focused on Helping our customers Exceptional people structurally advantaged attractive and outperform categories structurally growing categories
Slide 34: The Greencore Way Describes Who We Are and How We Succeed
THE GREENCORE WAY DESCRIBES WHO WE ARE AND HOW WE SUCCEED 34
Slide 35: 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 • Pro Forma Revenue Growth for continuing operations in FY18 adjusts reported reven
Slide 36: 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 37: IR Calendar & Contact
IR CALENDAR & CONTACT Q1 Trading Update 29 January 2019 Annual General Meeting 29 January 2019 Jack Gorman H1 19 Period End 29 March 2019 Head of Investor Relations H1 19 Results 21 May 2019 Q3 Trading Update 30 July 2019 investor.relations@greencore.com FY19 Period End 27 September 2019 +353 1 605