Results For the year ended 27 September 2013 1
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
HIGHLIGHTS ‐ STRONG DELIVERY 1.Resilient performance 2.Strategic progress 3.Building momentum 3
FINANCIAL REVIEW Alan Williams Chief Financial Officer
FINANCIAL SUMMARY FY13 Versus FY12 £1,197.1m +3.0% Revenue £1,197.1m +3.0% Revenue £76.5m +8.1% Operating profit 1 £76.5m +8.1% Operating profit 1 6.4% +30 bps Operating margin 1 6.4% +30 bps Operating margin 1 £61.6m +11.8% Adjusted PBT 2 £61.6m +11.8% Adjusted PBT 2 14.5p +13.3% Adjusted earnings per share 2 14.5p +13.3% Adjusted earnings per share 2 4.8p +12.9% Dividend per share 4.8p +12.9% Dividend per share £232.8m ‐ £25.2m Net debt £232.8m ‐ £25.2m Net debt 12.9% +100 bps ROIC 12.9% +100 bps ROIC Operating profit and margin are stated before exceptional items and acquisition related amortisation 1. Adjusted profit before tax and adjusted earnings measures are stated before exceptional items, pension finance items, acquisition related amortisation, FX on inter ‐ company and certain external 2. 5 balances and the movement in the fair value of all derivative financial instruments and related debt adjustments
CONVENIENCE FOODS FY13 FY12 • UK like for like revenue* growth of % change 0.2% ‐ lower market growth than PY £m £m and exacerbated by horsemeat Revenue 1,129.2 1,091.1 +3.5% scandal Operating 73.9 69.1 +7.0% • US revenue growth in excess of 60% profit 1 Impact of MarketFare and Schau • Operating 6.5% 6.3% +20 bps acquisitions margin 1 Rollout of Starbucks contract • UK like for like revenue growth* • Operating profit growth and margin 1.7% expansion Q4 Q4 +4.7% +4.7% Strong operating and financial • 0.2% discipline ‐ 1.3% Improvements in lower margin • businesses H1 H2 FY13 6 * Like for Like revenue excludes both the International Cuisine acquisition for the period October to August and the Uniq desserts activities which were exited or sold
INGREDIENTS & PROPERTY • Strong performance in molasses % feed business benefitting from FY13 FY12 % change poor weather in winter and spring change constant £m £m currency • Revenue decline but improved mix in edible oils trading activity 67.9 70.8 ‐ 4.1% ‐ 5.3% Revenue • Marketing of Littlehampton site commenced during the year Operating 2.5 1.6 +59.4% +57.4% Expressions of interest have • profit 1 been received and are under consideration Division represents c. 6% of Group activity Division represents c. 6% of Group activity 7
FINANCING AND TAX Financing • Bank interest payable fell to £15.6m (FY12: £16.4m) ‐ lower net debt and lower effective interest rate • Net finance charge taking into account non cash adjustments* £15.1m (FY12: £18.1m) Tax • Income statement effective tax rate remains very low at 1% (FY12: 4%) • Movement in year reflects net movement in current and deferred tax provisions and changes in corporation tax rates • Low ETR reflects the considerable tax attributes assumed as part of the Uniq acquisition *Pension financing charge, fair value of derivatives and related debt adjustments and charge related to present value of assets and liabilities. 8
PENSIONS • IAS19 pension deficit of £114.3m, net of related deferred tax asset, a decrease of £1.6m from September 2012 • An asset backed structure was put in place during FY13 to address £40m of the actuarial deficit in the primary UK scheme • Cash requirement for FY14 expected to remain between £14 ‐ £15m • From FY14, IAS19 (Revised) to be applied • No impact to cash funding requirement or deficit • Further details on IAS19 (Revised) in appendix 9
EXCEPTIONAL ITEMS Income Statement FY13 Exceptional Items £m (2.7) Integration costs of UK acquisitions (1.5) Integration costs of US acquisitions (9.2) Property related charges 4.4 Pension curtailment gain (8.9) Pre tax impact 8.1 Tax relief on exceptional items and resolution of tax positions 18.9 Reassessment of the utilisation of deferred tax assets Net exceptional credit 18.1 10
EPS AND DIVIDEND EPS EPS FY13 FY12 • Adjusted earnings 15.6% ahead • Adjusted earnings per share up Adjusted earnings 2 £56.9m £49.2m 13.3% Denominator for earnings per 393.6m 385.0m share Adjusted earnings per share 2 14.5p 12.8p Dividend Dividend FY13 FY12 • Final dividend proposed of 2.9 pence per share Total dividend distribution £19.3m £16.7m • Growth in dividend per share of Interim dividend per share 1.9p 1.75p 12.9%, in line with growth in adjusted Final dividend per share 2.9p 2.5p EPS Dividend per share 4.8p 4.25p • Approximately one third of adjusted earnings distributed 11
CASHFLOW AND NET DEBT Net debt at 27 September 2013 of £232.8m Net debt at 27 September 2013 of £232.8m – equivalent to 2.3 times Net Debt/EBITDA – equivalent to 2.3 times Net Debt/EBITDA £m FY13 FY12 EBITDA 101.3 93.5 Working capital movement 9.9 23.4 Net capex (34.9) (30.4) Interest & tax (14.5) (13.6) Operating cashflow 61.8 72.9 Pension financing (13.7) (14.8) Exceptionals (20.0) (19.4) Dividends paid (11.7) (9.1) Other including FX 1.6 4.2 Cash inflow before M&A activity 17.9 33.8 Disposals/acquisitions 7.3 (152.0) Decrease/(Increase) in net debt 25.2 (118.2) 12
BORROWINGS PROFILE • Total committed facilities of £430m – weighted average debt maturity of 3.2 years as at 26 November 2013 • £50m bilateral loan facility extended by two years to 2018 • Refinanced $65m of US private placement notes with new 8 year facility subsequent to year end £m 280 60 50 40 October 2015 May 2016 October 2018 October 2021 Bilateral Bank Facility Private Placement Notes Bank Primary Facility 13
SUMMARY ‐ FINANCIAL PERFORMANCE • Resilient operational performance in a challenging market • Strong adjusted EPS growth of 13.3% to 14.5p • Strong dividend per share growth of 12.9% to 4.8p with final proposed dividend of 2.9p • Net debt decrease of £25.2m to £232.8m. Net Debt/EBITDA 2.3 times 14
OPERATING & STRATEGIC REVIEW PATRICK COVENEY CHIEF EXECUTIVE OFFICER
FY13 PERFORMANCE PRIORITIES DRIVE revenue and margin momentum of UK 1 1 business Complete INTEGRATION of UK portfolio and set 2 2 up organisation for further growth 3 3 SCALE up US food to go business 16
UK CONVENIENCE PERFORMANCE 1 1 ‐ MARKET CONTEXT H1 H2 H1 H2 Challenging Improving Challenging Improving volume consumer volume consumer environment confidence environment confidence Chilled convenience* 3.2% 2.5% Horsemeat Horsemeat Horsemeat Horsemeat scandal impact scandal impact 1.2% H1 H2 FY Endless Great British Endless Great British winter summer winter summer * Source, Nielsen, pre ‐ defined chilled convenience foods categories H1 : 26 w/e 30 March 2013 H2: 26 w/e 28 September 2013 17 FY: 52 w/e 28 September 2013
UK CONVENIENCE PERFORMANCE 1 1 ‐ TACKLING MARKET CHALLENGES Challenge Greencore Actions in FY13 Greencore Actions in FY13 Delivering • Driving ‘Lean Greencore’, operational efficiencies and waste • Driving ‘Lean Greencore’, operational efficiencies and waste margins reduction across portfolio reduction across portfolio in • Tackling specific challenges in lower margin divisions and sites • Tackling specific challenges in lower margin divisions and sites low growth • Fully recovering input price inflation • Fully recovering input price inflation market • Working closely with customers to ensure they win along with us • Working closely with customers to ensure they win along with us Seeding through service, innovation, insight and collaboration through service, innovation, insight and collaboration future • Balanced exposure to all UK retailers including fast ‐ growing • Balanced exposure to all UK retailers including fast ‐ growing growth in a convenience and discounter channels convenience and discounter channels challenging • Driving innovation to deliver ‘provenance’, drive health and build • Driving innovation to deliver ‘provenance’, drive health and build environment value for us and our customers value for us and our customers 18
UK CONVENIENCE PERFORMANCE 1 1 ‐ DIVISIONAL HIGHLIGHTS • Slow H1 but very strong H2 helped by good summer weather, share 37%* 37%* Food to Go wins and successful range re ‐ Food to Go launches Market share Market share c. 40% of Group c. 40% of Group Pre ‐ packed Pre ‐ packed • Revenue growth: sandwiches revenue + sandwiches revenue + H1 H2 FY 0.1% 8.1% 4.4% • Reported revenue up 9.1% but 5.2% Prepared Prepared decline on a like for like basis** 30%* 30%* Meals Meals • Chilled ready meals revenues heavily Market share Market share impacted by horsemeat scandal c. 20% of Group c. 20% of Group Italian CRM Italian CRM revenue + revenue + • Investments delivering good performance in quiche and chilled soups • Good revenue growth in Grocery and Frozen of 2.6% driven in large by 79%* 79%* Grocery Grocery cooking sauce and discount channel Market share Market share c. 20% of Group c. 20% of Group O/L cooking • During the year, management of our O/L cooking revenue + revenue + sauces sauces retail cakes business was transferred to our Grocery category * Nielsen 52 w/e 28 September 2013 ** Excludes the impact of the International Cuisine acquisition from October to August 19 + Category shares rounded to the nearest 5%
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