Greencore Group Plc · LSE:GNC
Greencore — FY2020 Earnings Presentation
32 slides from Greencore's earnings presentation, Nov 24, 2020
Slide 1: For the year ended 25 September 2020
For the year ended 25 September 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 Gary Kennedy, Introduction Chairman Patrick Coveney, FY20 Highlights CEO Emma Hynes, Financial Review CFO Patrick Coveney, Strategic Update CEO Q&A Note: The Group uses Alternative Performance Measures ('APMs') which are non-IFRS measures to monitor the performance of its operations a
Slide 4: Introduction - Gary Kennedy, Chairman
INTRODUCTION Greencore® Gary Kennedy, Chairman
Slide 5: FY20 Highlights - Patrick Coveney, CEO
FY20 HIGHLIGHTS Greencore® Patrick Coveney, CFO Making every day mheYer /
Slide 6: Executive summary
Executive summary • Delivered against strategic, organisational and financial objectives pre arrival of COVID-19 in March • Acted quickly in H2 FY20 to keep people safe, continue feeding the UK and protect our business despite material COVID-19 impact • Implemented further new operational, debt and
Slide 7: Delivered a comprehensive H2 response to an unprecedented business environment
Delivered a comprehensive H2 response to an unprecedented business environment Keeping our people safe Feeding the UK Protecting our business • Immediate physical protection • Swift range resets and strong ‘build back’ • Tightened production footprint & shift measures & PPE, and protocol for through
Slide 8: Emma Hynes, CFO
Nee he, Be Emma Hynes, CFO _. Making every day heer f
Slide 9: FY20 P&L negatively impacted by COVID-19
FY20 P&L negatively impacted by COVID-19 £m unless otherwise stated FY20 FY19 Change Group Revenue 1,264.7 1,446.1 -12.5% Pro Forma Revenue Growth (%) -14.3% Adjusted EBITDA 85.0 142.0 Adjusted Operating Profit 32.5 105.5 -69.2% Adjusted Operating Margin (%) 2.6% 7.3% -470 bps Adjusted Profit Before
Slide 10: Second half revenue weakness in food to go drove in-year decline
Second half revenue weakness in food to go drove in-year decline Revenue Growth composition Highlights FTG categories Other convenience categories Group • Pro forma revenue -14.3% • 22.6% pro forma decline in food to go categories £484m £492m FY20 FY19 ─ Most severe impact in early £1,264.7m £1,446.
Slide 11: Profit performance impacted by COVID-19 despite mitigating actions
Profit performance impacted by COVID- 19 despite mitigating actions Highlights Profit performance • Profit outturn impacted by charging approximately £10m of COVID-19 £m FY19 FY20 related operating costs 150 -69.2% • Significant profit reduction in food to 100 go categories as demand declined 142.0
Slide 12: Comprehensive set of cost, cash and capital actions delivered in H2
Comprehensive set of cost, cash and capital actions delivered in H2 Agile range and network management • Tightened production footprint in April; recommenced through early summer • Managed temporary cessation of production in Northampton • Optimised production shifts in light of changed demand Proac
Slide 13: Free cash outflow of £29.7m in FY20
Free cash outflow of £29.7m in FY20 £m FY20 FY19 Opening Net Debt (excluding lease liabilities) 288.5 501.1 Highlights Adjusted EBITDA 85.0 142.0 Working capital (46.1) (1.6) • Free cash outflow driven by: ─ reduced EBITDA Maintenance capex (18.9) (30.6) ─ working capital outflows with Exceptional c
Slide 14: Challenging trading conditions from start of FY21
Challenging trading conditions from start of FY21 • Tiered regional restrictions introduced in October (in response to COVID-19 resurgence) hampered the summer rebound in food to go categories • Four-week national lockdown introduced in early November further impacted food to go demand, but less sev
Slide 15: Immediate actions to improve liquidity profile and leverage headroom
Immediate actions to improve liquidity profile and leverage headroom Debt profile, by source of funds • 2-year maturity extension of £75m RCF to March 2023 Revolving Credit Facilities £50m Other Bank • 2-year maturity extension of £50m bilateral loan to Private Placement Notes January 2024 £113m £57
Slide 16: Successful equity placing to further mitigate FY21 uncertainty
Successful equity placing to further mitigate FY21 uncertainty and facilitate post-COVID build back • 80.4m shares raised via cash box structure at a price of £1.12 per share, raising gross proceeds of £90m • Directors and senior management, including CEO and CFO, participated alongside equity placi
Slide 17: Strategic Update - Patrick Coveney, CEO
STRATEGIC UPDATE Greencore® Patrick Coveney, CFO Making every day whe Yer
Slide 18: Committed to the strategy launched in September 2019
Committed to the strategy launched in September 2019 Growth Relevance • Market and channel positions in food to go • COVID-19 response has helped to deepen ensure we are primed to return to growth trust and build customer relationships • Continued focus on category and channel diversification • Dive
Slide 19: Recent experience builds confidence in food to go recovery as restrictions ease
Recent experience builds confidence in food to go recovery as restrictions ease… Food to go market sales vs UK transit index FTG volumes1 Transit index2 • FTG and transit index strongly correlated pre-COVID FTG sales iOS transit Social distancing Construction / Hospitality Education volumes, index (
Slide 20: …with further recovery projected in Greencore channels through 2022
…with further recovery projected in Greencore channels through 2022 Total food to go market projections by channel, 2019-2022 Revenue, £bn • Food to go negatively impacted by 18.8 COVID but retail channels, formats Coffee 3.3 CAGR 16.8 and selected locations holding up specialists +24% ‘relatively w
Slide 21: Greencore and our customers well-positioned to capture share as we transition out of COVID
Greencore and our customers well-positioned to capture share as we transition out of COVID Shopper insight gives Our customers’ format & location Positioning Greencore to grow share ‘reason to believe’ strategies set them up to win across food to go • Sandwiches still the • Critical economic and tra
Slide 22: We have a tangible pipeline of opportunities for FY21 and beyond
We have a tangible pipeline of opportunities for FY21 and beyond New business wins already secured • Several ex-Adelie customers already secured with >£75m of pre-COVID revenue • Continued category extension with existing customers in salads & snacking • Additional new business secured across ready
Slide 23: We are stepping up our sustainability commitments
We are stepping up our sustainability commitments, with a more purposeful approach to how we do business Our Oursustainability Sustainabilityambition Ambition “We will make every day taste better by making great food for all, that’s accessible, healthy and sustainable” By 2030 we will be a business
Slide 24: Outlook
Outlook • Grateful for strong support from all stakeholders in such a challenging year • Continued uncertain impact of COVID-19 pandemic on FY21 trading environment • Comprehensive set of operational, debt and equity measures in place to mitigate this uncertainty and to deliver specific value creati
Slide 25: Q&A
Q&A
Slide 26: Supplementary financial information
Supplementary financial information
Slide 27: FY20 exceptional items
FY20 exceptional items Exceptional Items £m Debt restructuring and modification (7.1) Non-core property related charges (8.2) Inventory and plant and equipment impairment (4.8) Transaction and integration costs (2.9) Restructuring costs (2.0) Legacy US legal matters 2.2 Exceptional items (before tax
Slide 28: IFRS16
IFRS16 • On 28 September 2019 the Group adopted Measure IFRS 16 Leases, the new accounting standard for leases. Adjusted EBITDA (£m) +12.9 • Group used the modified retrospective Adjusted Operating Profit (£m) Immaterial approach, which does not require the restatement of comparative periods. Adjust
Slide 29: FY20 balance sheet highlights
FY20 balance sheet highlights £m FY20 FY19 Net Debt 411.2 288.5 Net Debt (excluding lease liabilities) 350.5 288.5 Net Debt: EBITDA (x)1 4.4 1.8 Pension deficit (net of deferred tax) 63.8 74.8 Average Invested Capital 712.0 628.3 ROIC (%) 4.1 14.4 1 as measured under financing agreements FY20 RESULT
Slide 30: 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 31: 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 32: IR calendar & contacts
IR calendar & contacts AGM & Q1 Trading Update 26 January 2021 Jack Gorman H1 21 Results 25 May 2021 Head of Capital Markets Q3 Trading Update 27 July 2021 investor.relations@greencore.com FY21 Period End 24 September 2021 +353 1 605 1000 FY21 Results 30 November 2021 FY20 RESULTS | NOVEMBER 2020 32