TIDMGNC
RNS Number : 9513T
Greencore Group PLC
30 November 2021
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FULL YEAR RESULTS STATEMENT
For the year ended 24 September 2021
30 November 2021
Return to revenue and profit growth - emerging strongly from a
challenging period
Greencore Group plc ('Greencore' or the 'Group'), a leading
manufacturer of convenience food in the UK, today issues its
results for the year ended 24 September 2021.
PERFORMANCE (1)
-- Group Revenue up 4.8% to GBP1,324.8m, driven by a return to
growth in food to go categories and solid growth in other
convenience categories
-- Adjusted Operating Profit up 20.0% to GBP39.0m, with Adjusted
Operating Margin of 5.2% in the second half of the year
-- Adjusted EPS of 3.7p
-- Strong free cash flow of GBP72.2m, driven by improved
profitability and working capital inflows as volumes rebounded
-- Significant reduction in net Debt (excluding lease
liabilities) to GBP183.1m, with Net Debt: EBITDA of 2.0x as
measured under financing agreements
-- Cash and undrawn committed bank facilities of GBP433.6m at
year end, and now exited from temporary covenant waiver period as
planned
STRATEGIC DEVELOPMENTS (1)
-- Executed strongly against new business wins, contributing
over a third of the 38% pro forma revenue growth in food to go
categories in Q4 21 and supporting continued diversification of the
Group's product and channel footprint
-- Renewed and extended several commercial relationships, in
line with the long term strategic partnership approach with
customers to support their food to go offerings and to secure
growth for the Group in key categories and open up new growth
opportunities in new categories and formats
-- Progressing well with the previously announced two year
capital investment of approximately GBP30m, supporting delivery of
new business wins across three manufacturing sites
-- Advanced on multiple sustainability goals including the
launch of fully recyclable, plastic free sandwich skillet trials
for customers in September 2021, and the establishment of emission
reduction targets, verified by the Science Based Targets
Initiative
-- Outlined new sustainability commitments for FY22 to transparently share data on the health and sustainability profile of our products with stakeholders, and to ensure all the Group's food surplus goes to feed those in need, and also to reduce by 2030 the average meat content across the Group's product portfolio by 30%, in line with the recommendations of the National Food Strategy
OUTLOOK (1,2)
-- Trading in early FY22 has been encouraging with continued
positive revenue momentum across the business. As mobility
increases towards pre-pandemic levels, there is strong demand in
food to go and other convenience categories
-- The Group is committed to recovering against ongoing input
cost and other inflation with customers and is progressing well in
this regard. The pace of profit conversion continues to be impacted
by supply chain and labour challenges that are affecting the
industry overall
-- Though these challenges remain ongoing, the Group expects to
generate an FY22 outturn in line with current market expectations.
This assumes no material resumption of mobility restrictions or
lockdowns arising from increases in COVID-19 infection rates in the
UK. Profitability will be weighted towards the second half of the
year, reflecting the seasonality of the Group's food to go
categories
-- The Board is committed to a dynamic capital management
policy. While the Group remains focused on deleveraging, it will
also balance the ongoing strategic and investment needs of the
business and the capacity to return surplus cash to shareholders.
The Board is currently assessing the specific capital allocation
strategy and is committed to recommencing value return to
shareholders in FY22.
SUMMARY FINANCIAL PERFORMANCE (1)
FY21 FY20 Change
GBPm GBPm
Group Revenue 1,324.8 1,264.7 +4.8%
Pro Forma Revenue Growth +6.2%
Adjusted EBITDA 92.3 85.0 +8.6%
Group Operating Profit 42.8 12.9 +231.8%
Adjusted Operating Profit 39.0 32.5 +20.0%
Adjusted Operating Margin 2.9% 2.6% +30bps
Group Profit/(Loss) Before
Tax 27.8 (10.8)
Adjusted Profit Before Tax 22.6 17.3 +30.6%
Basic EPS (pence) 5.0 (2.6)
Group Exceptional Items (after
tax) 12.1 (20.5)
Adjusted EPS (pence) 3.7 2.9 +27.6%
Total proposed dividend per -
share (pence) -
Free Cash Flow 72.2 (29.7) +GBP101.9m
Net Debt 242.7 411.2
Net Debt (excluding lease liabilities) 183.1 350.5
Net Debt:EBITDA as per financing
agreements 2.0x 4.4x
Return on Invested Capital
("ROIC") 4.5% 4.1%
Commenting on the results, Patrick Coveney, Chief Executive
Officer, said:
"Greencore has weathered the storm and emerged strongly from a
difficult period. Following a challenging first half in FY21, we
made good progress in rebuilding revenues, cashflows and
profitability in H2 and are confident of maintaining this positive
trajectory in the year ahead, particularly in the seasonally
important second half.
The strong recovery of the UK food to go market, as well as
solid performance in other convenience food categories, underpins
this confidence. New business wins achieved last year are
contributing to our momentum, and we anticipate delivery of profits
for the year ahead in line with current market expectations.
With strong free cashflow and a significant reduction in
leverage achieved in FY21, the Group enters the new financial year
on a robust financial footing. Greencore has a strong position in
the dynamic UK convenience food market and, with demand remaining
strong in the early stages of FY22, has confidence in its
medium-term prospects."
___________________________________________________________________________________________________________________
(1) The Group uses Alternative Performance Measures ('APMs')
which are non-IFRS measures to monitor the performance of its
operations and of the Group as a whole. These APMs along with their
definitions are provided in the Appendix to the Full Year Results
Statement.
(2) Consensus market expectations as compiled by Greencore from
available analyst estimates on 19 November 2021 and as reported in
the Investor Relations section of the Group website.
Basis of preparation
The financial information included within this Results Statement
is based on the audited consolidated financial statements of
Greencore Group plc. Details of the basis of preparation can be
found in Note 1 to the attached financial information.
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
statements on current expectations and projections about future
events based on information currently available to the Group. These
forward-looking statements include all statements that are not
historical facts and may generally, but not always, be identified
by the use of words such as 'will', 'aims', achieves',
'anticipates', 'continue', 'could', 'develop', 'should', 'expects',
'is expected to', 'may', maintain', 'grow', 'estimates', 'ensure',
'believes', 'intends', 'projects', 'sustain', 'targets', or the
negative thereof, or similar future or conditional expressions.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future and reflect
the Group's current expectations and assumptions as to such future
events and circumstances that may not prove accurate. A number of
material factors could cause actual results and developments to
differ materially from those expressed or implied by
forward-looking statements. There may be risks and uncertainties
that the Group is unable to predict at this time or that the Group
currently does not expect to have a material adverse effect on its
business. You should not place undue reliance on any
forward-looking statements. These forward-looking statements are
made as of the date of this announcement. The Group expressly
disclaims any obligation to publicly update or review these
forward-looking statements other than as required by law.
CONFERENCE CALL
A presentation of the results for analysts and institutional
investors will take place at 8.30am on 30 November 2021 at etc.
venues, 8 Fenchurch Place, London EC3M 4PB. The presentation slides
will be available on the Investor Relations section on
www.greencore.com from 7.00am on 30 November 2021.
This presentation can also be accessed live from the Investor
Relations section on www.greencore.com or alternatively via
conference call. Registration and dial in details are available at
www. greencore.com/investor-relations/
For further information, please contact:
Patrick Coveney Chief Executive Officer Tel: +353 (0)
1 486 3313
Emma Hynes Chief Financial Officer Tel: +353 (0)
1 486 3307
Jack Gorman Head of Investor Relations Tel: +353 (0)
1 486 3308
Rob Greening/ Nick Hayns/ Powerscourt Tel: +44 (0) 20
Sam Austrums 7250 1446
Billy Murphy/ Louise Walsh Drury Communications Tel: +353 (0)
1 260 5000
About Greencore
We are a leading manufacturer of convenience food in the UK and
our purpose is to make every day taste better. We supply all of the
major supermarkets in the UK. We also supply convenience and travel
retail outlets, discounters, coffee shops, foodservice and other
retailers. We have strong market positions in a range of categories
including sandwiches, salads, sushi, chilled snacking, chilled
ready meals, chilled soups and sauces, chilled quiche, ambient
sauces and pickles, and frozen Yorkshire Puddings.
In FY21 we manufactured 645m sandwiches and other food to go
products, 117m chilled prepared meals, and 256m bottles of cooking
sauces, pickles and condiments. We carry out more than 10,500
direct to store deliveries each day. We have 21 world-class
manufacturing units across 16 locations in the UK, with
industry-leading technology and supply chain capabilities. We
generated revenues of GBP1.3bn in FY21 and employ approximately
13,000 people. We are headquartered in Dublin, Ireland.
For further information go to greencore.com or follow Greencore
on social media.
EMERGING STRONGLY FROM A CHALLENGING PERIOD (1)
In a challenging year when demand was significantly impacted by
various COVID-19 related lockdowns and associated mobility
restrictions, the Group performed with resilience and benefitted
from a strong recovery in the second half. Throughout, the Group
focused on three priorities - keeping our people safe, feeding the
UK, and protecting our business. These priorities are aligned with
the Group's purpose and its distinctive, repeatable 'Greencore Way'
of working.
Greencore worked closely with customers to deliver strong
operational service levels in FY21 and to meet increasing demand,
notwithstanding the well documented supply chain and labour
challenges that intensified as the year progressed and which
continue to be faced.
Keeping our people safe
Greencore's people are at the core of its purpose and its
success and keeping colleagues safe remained the key priority
throughout the past year. The Group maintained a vigilant and
highly responsive approach to health and safety protocols to ensure
that all is being done within the business to mitigate the impact
of COVID-19 and to keep colleagues safe.
Building on the extensive range of new measures implemented in
FY20 to support colleague safety across the Group's network, the
Group has carried out many additional actions taken through FY21.
The Group conducted regular COVID-19 risk assessments and
implemented site-specific action plans across every manufacturing
location and distribution facility, implemented weekly lateral flow
testing across the main manufacturing sites and Direct-to-Store
depots, and developed a COVID-19 risk alert tool that uses a
variety of data to dictate what levels of control are required for
each site at any time.
Feeding the UK
The Group's mission to feed the UK throughout the pandemic is
fully aligned with the Group's purpose and its commitment to
producing Great Food. This involves close engagement with
customers, to respond quickly to volatile demand patterns
associated with the changing mobility restrictions and lockdowns
that were introduced across the UK during the year. These strong
customer relationships also enabled the Group to help drive
category growth and range launches as the economy reopened, as well
as to onboard new business successfully. The Group also continued
to scale up the work we do in support of local communities,
especially where food insecurity and hunger exists.
Protecting our business
In FY21 the Group implemented a comprehensive set of actions to
alleviate the material negative short-term impact on the business
caused by COVID-19, and to build back the business profitably as
the pandemic began to ease. This was underpinned by the Group's
purpose through the drive for excellence in all that it does, and
the responsibility to improve continuously the sustainability of
the business.
The combination of recovering demand and strict underlying cost
control allowed the Group to improve revenue, profitability, and
cash flow momentum progressively through FY21. In the first half of
FY21 the Group also launched a set of debt and equity initiatives
to strengthen the balance sheet, including amendments to its debt
agreements and a well-supported equity placing in November 2020,
raising net proceeds of GBP87.1m. These ensured the Group could
protect its operations through COVID-19 induced volatility while
also enable it to invest with customers to secure business and open
up new opportunities in additional categories and formats. The
Group continued to receive UK Government assistance under the
Coronavirus Job Retention Scheme until July 2021.
Strong underlying cash generation in the second half of the year
allowed the Group to deleverage further, ending the period with a
leverage ratio now approaching FY19 levels. The Group had cash and
undrawn committed bank facilities of GBP433.6m at 24 September 2021
(FY20: GBP232.0m)
SUSTAINABILITY
The Group's first standalone sustainability report in FY20
coincided with the launch of the corporate purpose 'Making every
day taste better' and the Group's new sustainability strategy, the
'Better Future Plan'. In addition the National Food Strategy,
published at the beginning of H2 21 and the first independent
review of British food policy in 75 years, highlighted the urgent
need for action in what is an increasingly unsustainable global
food system.
The Group's sustainability strategy is built around three
pillars and aspirations:
-- Sourcing with Integrity: By 2030 we will source our priority
ingredients from a sustainable and fair supply chain
-- Making with Care: By 2040 we will operate with net zero emissions
-- Feeding with Pride: By 2030 we will have increased our
positive impact on society through our products
Good progress was made on strategy in FY21, though COVID-19
continued to have a negative impact on manufacturing efficiencies
and on some of the performance measures that the Group tracks. In
September 2021 the Group launched fully recyclable, plastic free
sandwich skillet trials for customers. The Group also set emission
reduction targets, verified by the Science Based Targets
Initiative, pledging to reduce absolute Scope 1 and Scope 2
emissions by 46.2% by 2030 from a 2019 base year. The Group also
pledged to reduce Scope 3 emissions from purchased goods and
services, and upstream transport and distribution, by 42% per tonne
of product sold by 2030 from a 2019 base year. The Group continued
to advance how it measures and acts to improve the health and
environmental impacts of the product portfolio, including
initiatives in product footprinting and eco-labelling, while the
rollout of site-specific plans for engagement with local
communities was completed.
Transparency and engagement around the Group's sustainability
strategy was also enhanced. The Group now maps its activities
against both Global Reporting Initiative (GRI) Standards and the
Sustainable Accounting Standards (SASB) framework. Stakeholder
engagement on sustainability has increased markedly since the
launch of the Group's strategy in November 2020, including a
detailed presentation at a seminar for the investment community in
February 2021.
New commitments and action points have been established to
advance the Group's progress. In FY22, the Group will transparently
share data on the health and sustainability profile of its products
with its stakeholders and will also ensure all the Group's food
surplus goes to feed those in need. By 2030, the Group commits to
reduce the average meat content across the Group's product
portfolio by 30%, in line with the recommendations of the National
Food Strategy.
OPERATING REVIEW (1)
Convenience Foods UK & Ireland
FY21 FY20 Change Change
GBPm GBPm (As reported) (Pro Forma
basis)
Revenue 1,324.8 1,264.7 +4.8% +6.2%
-------- -------- --------------- ------------
Group Operating Profit 42.8 12.9 +231.8%
-------- -------- --------------- ------------
Adjusted Operating
Profit 39.0 32.5 +20.0%
-------- -------- --------------- ------------
Adjusted Operating
Margin % 2.9% 2.6% +30bps
-------- -------- --------------- ------------
Pro Forma Revenue Growth (versus FY20)
Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY21
--------- --------- -------- -------- -----
Group -15% -22% +53% +27% +6%
--------- --------- -------- -------- -----
Food to go categories -22% -30% +91% +38% +9%
--------- --------- -------- -------- -----
Other convenience
food categories -2% -9% +11% +8% +2%
--------- --------- -------- -------- -----
Pro Forma Revenue Growth (versus FY19)
Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY21
--------- --------- -------- -------- -----
Group -14% -23% -3% +1% -9%
--------- --------- -------- -------- -----
Food to go categories -21% -33% -9% -2% -16%
--------- --------- -------- -------- -----
Other convenience
food categories -1% -3% +13% +10% +4%
--------- --------- -------- -------- -----
Strategic developments
The Group delivered well against its strategic objectives in
what was a challenging period. Central to this delivery was the
Group's close engagement with customers.
In the first half of the year, during periods of mobility
restrictions, the Group worked with customers on effective range
management. Subsequently, as mobility restrictions were lifted in
the UK, the Group designed and implemented growth programmes with
customers, with a focus on building back rapidly in affected
categories, to reactivate product ranges and formats in spring and
early summer. As the year progressed the Group managed through the
operational service challenges arising from supply chain
disruptions and tight labour availability, working effectively with
customers to manage inflation and to align the network and product
ranges to deliver optimally.
The Group secured new business wins representing annualised
pre-COVID revenues of approximately GBP175m, across food to go and
other convenience categories and customers. This supported the
Group's diversification of its product and channel footprint. Many
of these customers were onboarded during the second half of the
year and the Group is encouraged by their performance to date. The
Group has committed to investing approximately GBP30m over FY21 and
FY22, across three existing Greencore manufacturing sites, to
support the delivery of this new business.
In FY21, the Group also expanded its product offering and
extended its category reach with existing customers, in the salads
and fresh meals categories. Furthermore, several commercial
relationships with key customers were renewed and extended in the
period, some of which became effective in FY21 - with the remainder
becoming effective from FY22 onwards. The Group has successfully
operated a model of long-term strategic partnering with customers
for several years. These multi-year, sole supply agreements
typically involve near term investment in capabilities, capital,
and terms that both secure and support growth in key categories and
also open up growth opportunities with these customers in
additional categories and formats.
The Group progressed its Excellence agenda through FY21, albeit
with some restrictions on the deployment of certain initiatives in
light of COVID-19 disruption. The Group commissioned and installed
modular robotic solutions across 15 production lines in three
locations. It also made good progress on the Group's Purchasing
Excellence agenda, implementing new IT solutions to support
analytics and reporting, including a shared portal for managing
packaging data with customers and suppliers. The Group continues to
engage with key suppliers in a structured way to simplify
ingredient supply chains, whilst enabling innovation and
maintaining rigorous quality standards.
Producing great tasting, quality food to the highest technical
and food safety standards is a hallmark of the Greencore business.
Throughout FY21, the Group launched over 1,300 new or reformulated
products with our customers, within the Group's total Stock Keeping
Unit (SKU) range of approximately 2,200 products. An example of
these new initiatives was a first-to-market innovation
transitioning all sandwich bread with one of the Group's largest
customers to a new fibre-enriched loaf, with no compromise on
either taste or shelf life. The Group was also responsive to
changes in consumer behaviour through the COVID-19 disruption and
developed a range of 'dine-at-home' meal boxes with a key customer
to create a premium, restaurant quality meal experience.
Performance
Reported Group revenue increased by 4.8% to GBP1,324.8m in FY21.
On a pro forma basis, revenue increased by 6.2%, after adjusting
for the disposal of the molasses businesses in Q1 21 and for
movements in foreign exchange. Adjusted Operating Profit rose by
20.0% to GBP39.0m and Adjusted Operating Margin advanced by 30bps
to 2.9%. Group Profit Before Tax was GBP27.8m in FY21, compared to
a Loss Before Tax of GBP10.8m in FY20.
The UK trading environment remained volatile during FY21. There
was a pronounced negative impact on demand in food to go categories
in the first half of the year, arising from a reduction in mobility
due to extensive lockdowns and tiered restrictions across the UK.
The trading environment improved markedly from Q3 as the economy
reopened and mobility restrictions were eased, supporting demand
growth in food to go categories in particular. In addition to the
underlying market recovery, the Group benefitted from its strong
market position in the grocery retail channel, its customer and
format mix, and its portfolio across food to go and other
convenience categories. New business increasingly contributed to
Group revenue performance as the year progressed.
As the economy reopened, supply-side challenges emerged across
the UK food industry. This has been primarily driven by tight
labour availability, with a marked impact on logistics and the
supply of inbound materials. Greencore has not been immune to these
impacts but delivered strong operational service levels in this
context, supported by its own Direct-to-Store distribution
network.
FY21 revenue in the Group's food to go categories (comprising
sandwiches, salads, sushi and chilled snacking) totalled GBP842.1m
and accounted for approximately 64% of reported revenue. Reported
and pro forma revenues increased by 9.0% in these categories,
driven by a recovery in underlying demand as the year progressed
and by strong execution on new business wins. Revenue for the
distribution of third party products accounted for approximately 8%
of Group revenue in FY21 and benefitted from new customer wins in
the period.
On a pro forma basis, revenue in food to go categories increased
by approximately 59% in the second half of FY21, and was
approximately 5% below the equivalent pre-COVID levels in H2 19. In
September 2021, the final month of the Group's fiscal year, pro
forma revenue in food to go categories increased by approximately
40% year on year and was only approximately 1% below the equivalent
pre-COVID levels in H2 19.
The Group's other convenience categories comprise activities in
the chilled ready meals, chilled soups and sauces, chilled quiche,
ambient sauces and pickles, and frozen Yorkshire Pudding
categories, as well as an Irish ingredients trading business.
Reported revenue across these businesses decreased by 1.9% to
GBP482.7m in FY21. Adjusting for movements in foreign exchange and
the disposal of the Irish molasses businesses in Q1 21, pro forma
revenue increased by 1.6%. This was driven by strong growth in the
Group's ready meals business through the second half of the year,
while FY21 revenue in the cooking sauce business was broadly
unchanged. Revenue in the Group's remaining Irish ingredients
trading business increased in FY21, recovering from a slower start
to the year.
Inflation trends in the Group's main UK cost components were
broadly as anticipated. Raw material and packaging costs rose by
approximately 1% in FY21. Direct labour inflation was approximately
5%. Both cost components have seen a marked increase in inflation
since early Q4 21.
The Group incurred GBP5.3m of operating costs relating to
COVID-19 (FY20:GBP10.8m). The Group also incurred non-recurring
costs of GBP4.4m relating to an impairment charge on fixed assets,
offset by a GBP4.8m non-recurring gain relating to an insurance
claim credit. These costs were recognised within operating
income.
Overall, Group Operating Profit increased from GBP12.9m to
GBP42.8m. Adjusted Operating Profit increased from GBP32.5m to
GBP39.0m. The increase in Adjusted Operating Profit was driven
primarily by an improvement in profitability in the Group's food to
go categories, as demand recovered in the second half of the year.
Underlying profitability in the Group's other convenience
categories was broadly unchanged in FY21.
In FY21 the Group received UK Government assistance of GBP8.7m
(FY20: GBP21.3m) under the Coronavirus Job Retention Scheme.
Brexit
The Trade and Cooperation Agreement negotiated between the EU
and the UK was applied provisionally from 1 January 2021 and
entered into force from 1 May 2021. While the direct financial
impact on the Group in FY21 was modest, the operational impact was
more challenging due to the additional impact of COVID-19 on labour
availability and the supply chain. The Group continues to work
through these challenges effectively with its customers and
suppliers.
Group Cash Flow and Returns
FY21 FY20 Change
GBPm GBPm (as reported)
Free Cash Flow 72.2 (29.7) +GBP101.9m
------ ------- ---------------
Net Debt (excluding lease
liabilities) 183.1 350.5
------ ------- ---------------
Net Debt:EBITDA as per financing
agreements 2.0x 4.4x
------ ------- ---------------
ROIC 4.5% 4.1%
------ ------- ---------------
Strategic developments
The Group implemented a comprehensive range of operational, debt
and equity measures in FY21 that protected and supported the
business, enabling it to exit the covenant waiver period as
planned, securely. As the business moved back into profitable
growth in the second half of the year, strong free cash generation
allowed the Group to deleverage rapidly.
The Group applied a range of mitigating actions to manage cash
outflows in FY21, particularly in the first half of the year.
Alongside this, the Group secured support from its bank lending
syndicate and its Private Placement Note Holders to a range of
initiatives, including the waiving of certain covenant test
conditions and the refinancing of various debt facilities. In
November 2020 the Group completed an equity placing of 80,357,142
new ordinary shares at 112 pence per share, to raise net proceeds
of GBP87.0m. The Group also completed the disposal of its interest
in its molasses trading businesses in December 2020, and the
disposal of an investment property in September 2021.
As a result of all these measures, in particular the successful
completion of the equity placing, the Group has had sufficient
financial flexibility to navigate through a volatile trading period
while continuing to invest to support future growth in the
business. At 24 September 2021 the Group had cash and undrawn
committed bank facilities of GBP433.6m, comfortably above minimum
liquidity requirements as stipulated in the conditions of the
Group's covenant waivers.
The Group's initiatives continue to be informed by modelling a
set of scenarios that reflect the Group's considered and
conservative view on short and medium term trading, and ensuring
the Group is efficiently and effectively funded through any of
these scenarios.
Performance
Free Cash Flow was an inflow of GBP72.2m in FY21 compared to an
outflow of GBP29.7m in FY20, the increase primarily reflecting
improved profitability and the working capital inflows associated
with the recovery in demand in the Group's food to go categories.
The conversion rate of Adjusted EBITDA was 78.2% in FY21 (FY20:
(34.9%)). Several other factors also supported the levels of net
cash inflow during FY21, principally the equity placing completed
in November 2020 and the disposal of the molasses businesses in
December 2020.
The Group's Net Debt at 24 September 2021 was GBP242.7m, a
reduction of GBP168.5m compared to the prior year period which
includes the impact of IFRS 16 lease obligations of GBP59.6m
(FY20:GBP60.7m). Net Debt excluding lease liabilities decreased to
GBP183.1m from GBP350.5m at the end of FY20. The Group's Net
Debt:EBITDA leverage as measured under financing agreements was
2.0x at year end. This compared to 7.2x at the end of March 2021
and 4.4x at the end of September 2020.
As at 24 September 2021, the Group had total committed debt
facilities of GBP616.4m and a weighted average maturity of 2.7
years. Following the maturing of the Private Placement Notes in
October 2021 and the extension of the maturity on the GBP340m
revolving credit facility in November 2021 , the Group has total
committed debt facilities of GBP568.8m with a weighted average
maturity of 3.4 years.
ROIC increased to 4.5 % for the 12 months ended 24 September
2021, compared to 4.1% for the 12 months ended 25 September 2020.
The increase was driven by increased profitability in the period,
partly offset by a higher effective tax rate and a modest increase
in the Group's average invested capital.
FINANCIAL REVIEW (1)
Revenue and Operating Profit
Reported revenue in the period was GBP 1,324.8 m, an increase of
4.8% compared to FY20, primarily reflecting the recovery in demand
in food to go categories as mobility restrictions eased in the UK
during the year. Pro Forma Revenue increased by 6.2%.
Group Operating Profit increased from GBP12.9m to GBP42.8m as a
result of an improved revenue outturn in FY21 and the movement from
a net exceptional charge to a net exceptional gain in FY21.
Adjusted Operating Profit of GBP 39.0 m was 20.0% higher than in
FY20, driven by an improvement in profits in food to go categories
in FY21 and a broadly unchanged underlying performance in the
Group's other convenience categories. Adjusted Operating Margin was
2.9 %, 30 basis points higher than the prior year.
Net finance costs
The Group's net bank interest payable was GBP 15.0 m in FY21, an
increase of GBP 0.3 m versus FY20. The increase was driven by the
higher cost of debt. The Group also recognised a GBP1.3m interest
charge relating to the interest payable on lease liabilities in the
year (FY20: GBP1.2m).
The Group's non-cash finance charge, before exceptional items,
in FY21 was GBP2.8m (FY20: GBP1.3m). The change in the fair value
of derivatives and related debt adjustments in the period was a
GBP1.0m charge (FY20: GBP1.1m credit) and the non-cash pension
financing charge of GBP 1.7 m was GBP 0.2 m lower than the FY20
charge of GBP1.9m.
Profit before taxation
The Group's Profit before taxation increased from a loss of
GBP10.8m in FY20 to a profit of GBP27.8m in FY21, driven by higher
Group Operating Profit and lower finance costs as compared to the
FY20 costs which included an exceptional finance charge. Adjusted
Profit Before Tax in the period was GBP 22.6 m (FY20: GBP17.3m),
primarily driven by an improvement in Adjusted Operating
Profit.
Taxation
The Group's effective tax rate in FY21 (adjusting
pre-exceptional profit for the change in fair value of derivatives)
was 15 % (FY20: 13%). In March 2021, the UK Government announced an
increase in the UK rate of corporation tax from 19% to 25%, to be
effective from 1 April 2023. This change results in a one-off
credit to the income statement, with a corresponding increase in
the Group's deferred tax asset. This credit is partially offset by
a charge arising from the reassessment of recoverability of
deferred tax assets previously recognised in respect of certain
buildings owned by the Group.
Exceptional items
The Group had a pre--tax exceptional gain of GBP11.7m in FY21,
and an after tax gain of GBP12.1m, comprised as follows:
Exceptional Items GBPm
Profit on disposal of Molasses trading
businesses 11.3
------
Legacy defined benefit pension schemes
restructuring charge (4.0)
------
Non-core property related income 3.3
------
Legacy business provisions 1.1
------
Exceptional items (before tax) 11.7
------
Tax on exceptional items 0.4
------
Exceptional items (after tax) 12.1
------
Earnings per share
The Group's basic earnings per share for FY21 was 5.0 pence
compared to basic loss per share in FY20 of 2.6 pence. This was
driven by a GBP 36.9 m increase in Earnings in FY21, partially
offset by an increase in the weighted average number of shares in
issue in FY21 to 511.8m (FY20: 443.9m).
Adjusted Earnings were GBP18.8m in the period, GBP5.8m ahead of
prior year levels largely due to an increase in Adjusted Operating
Profit. Adjusted earnings per share of 3.7 pence was 27.6% ahead of
FY20 levels.
Cash Flow and Net Debt
Adjusted EBITDA was GBP7.3m higher in FY21 at GBP92.3m. The
Group incurred a net working capital inflow of GBP33.2m.
Maintenance capital expenditure of GBP16.2m was incurred in the
period (FY20: GBP18.9m). The cash outflow in respect of exceptional
charges was GBP3.3m (FY20: GBP10.1m), of which GBP2.9m related to
prior year exceptional charges.
Interest paid in the period was GBP18.8m (FY20: GBP14.3m),
including interest of GBP1.3m on lease liabilities, an increase on
FY20 primarily reflecting the impact of higher debt costs
associated with higher leverage during the year. Cash tax fell by
GBP4.4m to GBP0.2m reflecting a higher FY20 charge relating to a
one-off change in rules for the timing of UK corporation tax
payments impacting FY20. The cash tax rate for the Group is
expected to rise towards the Group's effective rate in the medium
term as a result of increased profitability and a reduction in the
degree to which UK losses may be utilised in any one year. Cash
repayments on lease liabilities increased to GBP14.3m (FY20:
GBP11.2m). The Group's cash funding for defined benefit pension
schemes was GBP7.0m (FY20: GBP9.4m), reflecting the agreement with
Trustees to defer cash contributions in the first half of the
year.
These movements resulted in Free Cash Flow of GBP72.2m compared
to an outflow of GBP29.7m in FY20 driven primarily by higher
profitability and the substantial unwinding of working capital
outflows incurred in FY20.
In FY21, the Group incurred strategic capital expenditure of
GBP24.0m (FY20: GBP13.0m).
The Group did not make any equity dividend cash payments in FY21
(FY20: GBP16.7m in respect of final dividend in FY19) and in
November 2020 the Group completed an equity placing of 80,357,142
new ordinary shares at 112 pence per share, to raise net proceeds
of GBP87.0m. In December 2020 the Group also completed the sale of
its interests in its molasses trading businesses for a final cash
consideration of GBP16.3m. In September 2021 the Group completed
the sale of an investment property for cash consideration of
GBP6.3m.
The Group's Net Debt at 24 September 2021 was GBP242.7m, a
decrease of GBP168.5m compared to the prior year period, driven
primarily by the free cash outflows as described previously and the
cash proceeds from the equity placing in November 2020 and the sale
of the Group's molasses businesses in December 2020.
Financing
As previously announced, the Group secured agreement with its
bank lending syndicate in May 2020 and its Private Placement Note
Holders in July 2020 to waive the Net Debt: EBITDA covenant
condition for the September 2020 and March 2021 test periods.
In November 2020 the Group secured further support from its bank
lending syndicate and its Private Placement Note holders. Of the
key features, the Group:
-- Extended the maturity of its GBP75m revolving credit bank
facility by two years to March 2023;
-- Refinanced the Group's GBP50m bilateral loan for a new three
year term maturing in January 2024;
-- Amended the EBITDA: Interest covenant condition for the March
2021 test period from 3.0x to 2.0x;
-- Amended the Net Debt: EBITDA covenant test at June 2021 from 4.25x to 5.0x
-- Reduced the minimum liquidity requirement on cash and undrawn
facilities to GBP70m for FY21, from a range of GBP100m-GBP125m;
and
-- Increased the maximum net debt requirement to GBP550m to May
2021, and GBP500m to September 2021, from a range of GBP450m-
GBP550m
In July 2021, the Group successfully completed a refinancing of
its near-term debt with its lending syndicate that improves the
maturity profile of the Group's debt and lowers annual interest
costs. The Private Placement Notes of $65m, which matured in
October 2021, were replaced by a new three-year term loan facility
of GBP45m, maturing in June 2024.
In November 2021, the Group also extended the maturity on its
GBP340m revolving credit facility by one year to January 2026.
The Group had total committed debt facilities of GBP616.4m at 24
September 2021 and a weighted average maturity of 2.7 years.
Following the refinancing activities completed after year end, the
Group has total committed debt facilities of GBP568.8m with a
weighted average maturity of 3.4 years. These facilities
comprise:
-- A GBP340m revolving credit bank facility with a maturity date of January 2026
-- A GBP75m revolving credit bank facility with a maturity date of March 2023
-- A GBP50m bilateral bank facility with a maturity date of January 2024
-- A GBP45m bank term loan facility with a maturity date of June 2024
-- GBP18m and $55.9m of outstanding Private Placement notes with
maturities ranging between June 2024 and June 2026
The Group had cash and undrawn committed facilities of GBP433.6m
at 24 September 2021, compared to GBP232.0m as at 25 September
2020.
Pensions
All of the Group's legacy defined benefit pension schemes are
closed to future accrual. The net pension deficit relating to
legacy defined pension schemes, before related deferred tax, at 24
September 2021 was GBP46.0m, GBP36.1m lower than the position at 25
September 2020. The net pension deficit after related deferred tax
was GBP29.3m (FY20: GBP63.8m). The decrease in net pension deficit
was driven principally by an actuarial gain on assets and on
liabilities arising from an increase in the discount rates used to
value these assets and liabilities. The movement in the discount
rate is driven by the corporate bond rate.
In H1 21 the Group entered a formal agreement with the Trustees
of the legacy defined benefit pension scheme in the UK to defer
cash contributions to the pension for a further period of six
months which resulted in a reduction of cash contributions in FY21
of GBP5.1m. Since the beginning of the pandemic to the date of this
announcement, the Group has deferred cash contributions totalling
GBP10.0m.
The valuations and funding obligations of the Group's legacy
defined benefit pension schemes are assessed on a triennial basis
with the relevant Trustees. During H2 21 the Group concluded the
latest assessment of the valuation and funding plan for its
principal UK legacy defined benefit pension scheme. The Group
expects the annual cash funding requirement for all schemes to be
modestly below previously guided levels of GBP15m, inclusive of the
cash contributions that were deferred over the course of the
pandemic.
In FY21 the Group and Trustees of all three Irish defined
benefit schemes agreed a restructuring of its Irish pension schemes
which included the agreement to wind up the two smaller schemes and
to transfer certain assets and liabilities from those schemes to
the principal scheme. Details of the restructuring are detailed in
Note 9 to the Full Year Results Statement.
Dividends
The Group did not pay dividends to shareholders in the
period.
Principal risks and uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on future Group performance and could
cause actual results to differ materially from expected and
historical results. The risks and uncertainties are described in
detail in the section Risks and Risk Management in the Annual
Report and Financial Statements for the year ended 24 September
2021 issued on 30 November 2021.
P.G. Kennedy
Chair
Date: 29 November 2021
GROUP INCOME STATEMENT
For year ended 24 September 2021
2021 2020
Exceptional Exceptional
(Note Pre - (Note
Notes Pre - exceptional 4) Total exceptional 4) Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ------ ------------------ ------------ -------- ------------- ------------ --------
Revenue 2 1,324.8 - 1,324.8 1,264.7 - 1,264.7
Cost of sales (901.9) - (901.9) (859.5) (2.9) (862.4)
------------------------- ------ ------------------ ------------ -------- ------------- ------------ --------
Gross profit 422.9 - 422.9 405.2 (2.9) 402.3
Operating costs,
net (383.3) 7.7 (375.6) (372.2) (12.8) (385.0)
Impairment of trade
receivables (0.6) - (0.6) (0.5) - (0.5)
------------------------- ------ ------------------ ------------ -------- ------------- ------------ --------
Group operating profit
before acquisition
related amortisation 39.0 7.7 46.7 32.5 (15.7) 16.8
Amortisation of
acquisition
related intangibles (3.9) - (3.9) (3.9) - (3.9)
------------------------- ------ ------------------ ------------ -------- ------------- ------------ --------
Group operating profit 35.1 7.7 42.8 28.6 (15.7) 12.9
Finance income 5 0.1 - 0.1 0.1 - 0.1
Finance costs 5 (19.1) - (19.1) (17.3) (7.1) (24.4)
Share of profit of
associates after
tax - - - 0.6 - 0.6
Profit on disposal
of associates - 4.0 4.0 - - -
------------------------- ------ ------------------ ------------ -------- ------------- ------------ --------
Profit/(loss) before
taxation 16.1 11.7 27.8 12.0 (22.8) (10.8)
Taxation (2.5) 0.4 (2.1) (1.4) 2.3 0.9
------------------------- ------ ------------------ ------------ -------- ------------- ------------ --------
Profit/(loss) for
the financial year 13.6 12.1 25.7 10.6 (20.5) (9.9)
------------------------- ------ ------------------ ------------ -------- ------------- ------------ --------
Attributable to:
Equity shareholders 13.3 12.1 25.4 9.0 (20.5) (11.5)
Non-controlling
interests 0.3 - 0.3 1.6 - 1.6
------------------------- ------ ------------------ ------------ -------- ------------- ------------ --------
13.6 12.1 25.7 10.6 (20.5) (9.9)
------------------------- ------ ------------------ ------------ -------- ------------- ------------ --------
Earnings per share (pence)
Basic earnings per
share 6 5.0 (2.6)
Diluted earnings
per share 6 5.0 (2.6)
------------------------- ------ ------------------ ------------ -------- ------------- ------------ --------
GROUP STATEMENT OF COMPREHENSIVE INCOME
for year ended 24 September 2021
2021 2020
GBPm GBPm
----------------------------------------------------- ------ ------
Items of comprehensive income taken directly to equity
Items that will not be reclassified to profit
or loss:
Actuarial gain on Group legacy defined benefit
pension schemes 36.3 1.6
Tax (charge)/credit on Group legacy defined benefit
pension schemes (1.1) 2.3
------------------------------------------------------ ------ ------
35.2 3.9
----------------------------------------------------- ------ ------
Items that may subsequently be reclassified to
profit or loss:
Currency translation adjustment (3.2) 1.3
Translation reserve transferred to Income Statement
on disposal of subsidiary (1.0) -
Non-controlling interest transferred to Income
Statement on disposal of subsidiary (5.8) -
Cash flow hedges:
fair value movement taken to equity (0.5) 1.4
transfer to Income Statement for the year 1.2 0.1
(9.3) 2.8
----------------------------------------------------- ------ ------
Net income recognised directly within equity 25.9 6.7
Profit/(loss) for the financial year 25.7 (9.9)
------------------------------------------------------ ------ ------
Total comprehensive income for the financial year 51.6 (3.2)
------------------------------------------------------ ------ ------
Attributable to:
Equity shareholders 57.3 (4.9)
Non-controlling interests (5.7) 1.7
------------------------------------------------------ ------ ------
Total comprehensive income for the financial year 51.6 (3.2)
------------------------------------------------------ ------ ------
GROUP STATEMENT OF FINANCIAL POSITION
at 24 September 2021
2021 2020
Notes GBPm GBPm
----------------------------------------------------- ------ -------- --------
ASSETS
Non-current assets
Goodwill and intangible assets 7 473.3 478.5
Property, plant and equipment 7 307.4 313.2
Right-of-use assets 54.1 55.6
Investment property 3.0 6.1
Retirement benefit assets 9 42.1 42.9
Derivative financial instruments - 3.0
Deferred tax assets 48.1 46.1
Trade and other receivables 0.4 -
----------------------------------------------------- ------ -------- --------
Total non-current assets 928.4 945.4
----------------------------------------------------- ------ -------- --------
Current assets
Inventories 47.7 44.7
Trade and other receivables 196.3 157.7
Cash and cash equivalents 119.1 267.0
Derivative financial instruments - 0.6
Current tax receivable - 0.5
Assets held for sale - 11.2
----------------------------------------------------- ------ -------- --------
Total current assets 363.1 481.7
----------------------------------------------------- ------ -------- --------
Total assets 1,291.5 1,427.1
----------------------------------------------------- ------ -------- --------
EQUITY
Capital and reserves attributable to equity holders
of the Company
Share capital 10 5.3 4.5
Share premium 10 89.7 0.4
Reserves 328.2 271.6
----------------------------------------------------- ------ -------- --------
423.2 276.5
Non-controlling interests - 5.7
----------------------------------------------------- ------ -------- --------
Total equity 423.2 282.2
----------------------------------------------------- ------ -------- --------
LIABILITIES
Non-current liabilities
Borrowings 8 209.1 397.5
Lease liabilities 42.0 46.6
Other payables 3.7 3.7
Derivative financial instruments 2.7 2.5
Provisions 5.5 5.4
Retirement benefit obligations 9 88.1 125.0
Deferred tax liabilities 18.2 11.5
----------------------------------------------------- ------ -------- --------
Total non-current liabilities 369.3 592.2
----------------------------------------------------- ------ -------- --------
Current liabilities
Borrowings 8 93.1 220.0
Trade and other payables 375.8 302.0
Lease liabilities 17.6 14.1
Derivative financial instruments 2.9 -
Provisions 2.1 4.5
Current tax payable 7.5 10.4
Liabilities held for sale - 1.7
----------------------------------------------------- ------ -------- --------
Total current liabilities 499.0 552.7
----------------------------------------------------- ------ -------- --------
Total liabilities 868.3 1,144.9
----------------------------------------------------- ------ -------- --------
Total equity and liabilities 1,291.5 1,427.1
----------------------------------------------------- ------ -------- --------
GROUP STATEMENT OF CASH FLOWS
for the year ended 24 September 2021
2021 2020
Notes GBPm GBPm
------------------------------------------------------ ------ -------- -------
Profit/(loss) before taxation 27.8 (10.8)
Finance income 5 (0.1) (0.1)
Finance costs 5 19.1 17.3
Share of profit of associates after tax - (0.6)
Exceptional items 4 (11.7) 22.8
------------------------------------------------------ ------ -------- -------
Operating profit (pre-exceptional) 35.1 28.6
Depreciation and impairment of property, plant
and equipment (including right-of-use assets) 54.6 49.6
Amortisation of intangible assets 7.0 6.8
Employee share-based payment expense 2.1 2.0
Contributions to Group legacy defined benefit
pension scheme 9 (7.0) (9.4)
Working capital movement 33.2 (46.1)
Net cash inflow from operating activities before
exceptional items 125.0 31.5
Cash outflow related to exceptional items (3.3) (10.1)
Interest paid (including lease liability interest) (18.8) (14.3)
Tax paid (0.2) (4.6)
------------------------------------------------------ ------ -------- -------
Net cash inflow from operating activities 102.7 2.5
------------------------------------------------------ ------ -------- -------
Cash flow from investing activities
Dividends received from associates - 0.3
Purchase of property, plant and equipment (37.1) (29.8)
Purchase of intangible assets (3.1) (2.1)
Disposal of undertakings 16.3 -
Disposal of investment property 6.3 -
------------------------------------------------------ ------ -------- -------
Net cash outflow from investing activities (17.6) (31.6)
------------------------------------------------------ ------ -------- -------
Cash flow from financing activities
Proceeds from issue of shares (net of transaction
costs) 87.1 0.3
(Repayment)/drawdown of bank borrowings (130.9) 64.6
Repayment of lease liabilities (14.3) (11.2)
Dividends paid to equity holders of the Company - (16.7)
Dividends paid to non-controlling interests - (2.4)
Net cash (outflow)/ inflow from financing activities (58.1) 34.6
------------------------------------------------------ ------ -------- -------
Increase in cash and cash equivalents and bank
overdrafts 27.0 5.5
------------------------------------------------------ ------ -------- -------
Reconciliation of opening to closing cash and
cash equivalents and bank overdrafts
Cash and cash equivalents and bank overdrafts
at beginning of year 47.0 41.6
Translation adjustment (0.4) (0.1)
Increase in cash and cash equivalents and bank
overdrafts 27.0 5.5
------------------------------------------------------ ------ -------- -------
Cash and cash equivalents and bank overdrafts
at end of year* 73.6 47.0
------------------------------------------------------ ------ -------- -------
* Cash and cash equivalents and bank overdrafts is made up of cash
at bank and in hand of GBP119.1m (2020: GBP267.0m) and bank overdrafts
of GBP45.5m (2020: GBP220.0m).
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation
The financial information presented in this full year results
statement represents financial information that has been prepared
in accordance with the recognition and measurement principles of
International Financial Reporting Standards (IFRS) and IFRS
Interpretations Committee interpretations adopted by the European
Union (EU). The financial information does not include all the
information required for a complete set of financial statements
prepared in accordance with EU IFRS, however selected explanatory
notes are included to explain events and transactions that are
significant to an understanding of the changes in the Group's
financial position and performance during the year ended 24
September 2021. The financial information is based on the
information included in the audited Consolidated Financial
Statements of Greencore Group plc for the year ended 24 September
2021, to which an unqualified audit opinion is provided. Full
details of the basis of preparation of the Group Financial
Statements for the year ended 24 September 2021 are included in
Note 1 of the FY21 Annual Report.
The financial information is presented in GBP, which is the
functional currency of the Company and presentation currency of the
Group, rounded to the nearest million.
Adoption of IFRS and International Financial Reporting
Interpretations Committee
The Group assessed the impact of new IFRS and amendments to IFRS
that became effective for the current year and is satisfied that
their adoption did not have a material impact on the Group's
results.
The Group has set out further detail in relation to interest
rate benchmark reform in the Borrowings note (note 8).
Going Concern
The Directors, after making enquiries, have a reasonable
expectation that the Group has adequate resources to continue
operating as a going concern for the foreseeable future.
In the current year, the Group's performance continued to be
impacted by COVID-19. This was particularly evident in the first
half of the year with the mobility restrictions that were imposed
by the UK Government significantly impacting consumer demand. As
the UK began to ease mobility restrictions in March 2021, consumer
demand has continued to respond positively. Despite the increased
customer demand, the Group continues to expect ongoing uncertainty
regarding the duration and impact of COVID-19 on the Group's
trading environment and the impact of supply side disruption
arising from capacity constraints including labour availability and
inflation.
Accordingly, the Directors have considered a number of scenarios
for the next 18 months from the date of approval of the Annual
Report. These scenarios consider the estimated potential impact of
further winter restrictions arising from COVID-19 on the business
along with consideration of the impact of supply chain and service
level constraints. Based on current levels of trading and various
durations of mobility restrictions, the impact on revenue, profit
and cashflow are modelled, including the consequential impact on
working capital.
Under each scenario cost and cashflow mitigating actions are
modelled, including a reduction in non-business critical capital
projects and other discretionary cash flow items including no
payment of dividends. The Group has assumed that no significant
structural changes to the business will be needed in any of the
scenarios modelled.
The Group's scenarios assume:
-- A base case projection which is based on the Group's FY22 budget and strategic plan;
-- A downside scenario is applied to the base case, which
assumes the occurrence of winter restrictions arising as a result
of COVID-19 in H1 FY22 and the financial impact of several material
supply side disruptions; and
-- A severe downside scenario, assuming a longer period of
winter restrictions and more severe supply side disruptions. In
this scenario further mitigating actions are assumed including, but
not limited to, a further reduction in capital expenditure and
reduction of the indirect costs base.
While the Group is in a net current liability position, the
Group retained financial strength and flexibility at year end, with
cash and undrawn committed bank facilities of GBP433.6m at 24
September 2021 (September 2020: GBP232.0m). In addition, the
directors have taken steps to ensure adequate liquidity is
available to the Group including extending the maturity of the
GBP340m revolving credit facility by one year to January 2026.
Based on these scenarios and the resources available to the
Group, the directors believe the Group has sufficient liquidity to
manage through a range of different cashflow scenarios over the
next 18 months from the date of approval of the annual report. If
the Group were not to achieve these scenarios, the Directors could
consider further engagement with lenders. Accordingly, the
directors adopt the going concern basis in preparing the Group
Financial Statements.
2. Segment Information
Convenience Foods UK & Ireland is the Group's operating
segment, which represents its reporting segment. The segment
incorporates many UK convenience food categories including
sandwiches, salads, sushi, chilled snacking, chilled ready meals,
chilled soups and sauces, chilled quiche, ambient sauces and
pickles and, frozen Yorkshire Puddings as well as the Irish
ingredients trading business.
Revenue earned individually from four customers in Convenience
Foods UK & Ireland of GBP278.1m, GBP168.1m, GBP145.0m and
GBP133.9m respectively represents more than 10% of the Group's
revenue (2020: Revenue earned individually from four customers in
Convenience Foods UK & Ireland of GBP274.4m, GBP168.5m,
GBP146.6m and GBP128.9m respectively represents more than 10% of
the Group's revenue).
The following table disaggregates revenue by product categories
in the Convenience Foods UK and Ireland reporting segment:
2021 2020
GBPm GBPm
Revenue
Food to go categories 842.1 772.9
Other convenience categories 482.7 491.8
---------------------------------------------------- -------- --------
Total revenue for Convenience Foods UK and Ireland 1,324.8 1,264.7
---------------------------------------------------- -------- --------
Food to go categories includes sandwiches, salads, sushi and
chilled snacking while the other convenience categories include
chilled ready meals, chilled soups and sauces, chilled quiche,
ambient sauces and pickles, and frozen Yorkshire Puddings as well
as the Irish Ingredients trading business.
3. Seasonality
The Group's convenience foods portfolio is seasonal in nature
with the Group's business being weighted towards the second half of
the year. This weighting is primarily driven by weather and
seasonal buying patterns. While the split of revenue of the Group
in the current year is second half weighed and aligns to the
historic performance of the Group, the Group notes in the current
year that the weighting also aligns to the lifting of the
restrictions in the UK. In the prior year, due to the impact of
COVID-19, the normal seasonality of the business was significantly
impacted.
Total revenue Total revenue
H1 H2 Full H1 H2 Full
FY21 FY21 Year FY20 FY20 Year
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------ ------ -------- ------ ------ --------
Reported revenue 577.1 747.7 1,324.8 712.7 552.0 1,264.7
------------------ ------ ------ -------- ------ ------ --------
Food to go Other convenience
categories categories
H1 H2 Full H1 H2 Full
FY21 FY21 Year FY21 FY21 Year
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------ ------ ------ ------- ------- ------
Reported revenue 339.2 502.9 842.1 237.9 244.8 482.7
------------------ ------ ------ ------ ------- ------- ------
4. Exceptional Items
Exceptional items are those which should be disclosed separately
by virtue of their nature or amount. Such items are included within
the Group Income Statement caption to which they relate.
The Group reports the following exceptional items:
2021 2020
GBPm GBPm
---------------------------------------------- ----- ------ -------
Profit on disposal of Molasses trading (A)
businesses 11.3 -
Legacy defined benefit pension schemes (B)
restructuring charge (4.0) -
Non-core property related income/(charges) (C) 3.3 (8.2)
Legacy business provisions (D) 1.1 2.2
Transaction and integration costs (E) - (2.9)
Inventory and plant and equipment impairment (E) - (4.8)
Restructuring costs (E) - (2.0)
Debt restructuring and modification (E) - (7.1)
Total exceptional items before taxation 11.7 (22.8)
Tax on exceptional items 0.4 2.3
------------------------------------------------------ ------ -------
Total exceptional items 12.1 (20.5)
------------------------------------------------------ ------ -------
(A) Profit on disposal of Molasses trading businesses
On 2 December 2020, the Group completed the disposal of its
interest in the Molasses trading businesses recognising a profit on
disposal of GBP7.3m for Premier Molasses Company within operating
profit, and GBP4.0m for United Molasses (Ireland) Limited, which
has been recognised within profit on disposal of associates.
Further details on the disposal are set out in Note 11.
(B) Legacy defined benefit pension schemes restructuring charge
During the year, the Group reached agreement with the Trustees
of its three Irish legacy defined benefit pension schemes to
consolidate its Irish legacy defined benefit obligations into one
pension scheme. This required the wind up of the two smaller
schemes and transfer of deferred beneficiaries to the remaining
larger scheme. Gross pension liabilities of GBP15.0m were
eliminated due to the settlement of pensioner obligations through
the purchase of annuities. At 24 September 2021, the transfer
process had substantially completed and the Group recognised a
settlement charge of GBP2.8m for those deferred beneficiaries who
availed of the option to transfer out of the scheme. The Group also
incurred GBP1.2m of costs associated with the restructure. Details
of the restructure are set out at Note 9.
(C) Non-core property related income/(charges)
In September 2021, the Group disposed of an investment property
at Corby, Northamptonshire, UK. Prior to disposal, an assessment
was performed of the recoverable value being the fair value less
costs to sell versus the carrying value of the asset. This
assessment resulted in a reversal of an impairment taken in a
previous year with a credit of GBP3.3m being recognised in the
current year.
In the prior year, the Group completed a review of property
assets held across the Group to assess their recoverable value in
line with the requirements of IAS 36 Impairment of Assets. This
resulted in a charge of GBP8.2m being recorded for impairment of
investment properties and property, plant and equipment.
(D) Legacy business provisions
During the current year, the Group recognised a net credit of
GBP1.1m relating to legacy provisions and discontinued operations.
The net credit primarily related to a legacy US legal case which
settled in the period resulting in a provision release. In
addition, the Group recognised charges for remediation for certain
of the Group's properties.
In the prior year, the Group recognised a credit of GBP2.2m on
the settlement of a legacy US legal case, as an amount was
recovered under a group insurance policy.
(E) Other exceptional items
The disclosures in relation to exceptional items that occurred
in the prior year which have no comparative in the current year are
disclosed in the FY21 Annual Report.
Cash flow on exceptional items
The total net cash outflow during the year in respect of
exceptional charges was GBP3.3m (2020: GBP10.1m), of which GBP2.9m
was in respect of prior year exceptional charges. The net proceeds
from the disposal of the Molasses trading businesses of GBP16.3m
and the disposal of the investment property at Corby of GBP6.3m,
have been recognised separately on the Group Statement of Cash
Flows within investing activities.
5. Finance income and finance costs
2021 2020
GBPm GBPm
--------------------------------------------------------- ------- -------
Finance income
Interest on bank deposits - 0.1
Foreign exchange on inter-company and external balances 0.1 -
where hedge accounting is not applied
--------------------------------------------------------- ------- -------
Total finance income 0.1 0.1
--------------------------------------------------------- ------- -------
Finance costs
Finance costs on cash and cash equivalents, borrowings
and other financing costs (15.0) (14.8)
Interest on lease obligations (1.3) (1.2)
Net pension financing charge (1.7) (1.9)
Unwind of discount on liabilities (0.1) (0.1)
Change in fair value of derivatives and related debt
adjustment (1.0) 1.1
Foreign exchange on inter-company and external balances
where hedge accounting is not applied - (0.4)
--------------------------------------------------------- ------- -------
Total finance costs recognised in the Group Income
Statement before exceptional items (19.1) (17.3)
--------------------------------------------------------- ------- -------
Exceptional items
Debt restructuring and modification - (7.1)
--------------------------------------------------------- ------- -------
Total exceptional finance costs recognised in the Group
Income Statement - (7.1)
--------------------------------------------------------- ------- -------
Total finance costs (19.1) (24.4)
--------------------------------------------------------- ------- -------
6. Earnings per Ordinary Share
The Group raised GBP90m by way of an equity placing which
completed on 26 November 2020. The Group issued 80,357,142 Ordinary
Shares in the Company on the London Stock Exchange, at a placing
price of 112 pence per Ordinary Share. The effect of this on the
weighted average number of shares for FY21 was an increase of
66,707,436 shares.
Numerator for Earnings per Share Calculations
2021 2020
GBPm GBPm
----------------------------------------------------- ------ -------
Profit/(loss) attributable to equity holders of the
Company 25.4 (11.5)
----------------------------------------------------- ------ -------
Denominator for Basic Earnings Per Share Calculations
2021 2020
'000 '000
-------------------------------------------------------- -------- --------
Shares in issue at the beginning of the year 446,157 446,007
Effect of shares held by Employee Benefit Trust (1,116) (2,235)
Effect of shares issued in equity placing in the year 66,707 -
Effect of shares issued during the year 16 112
-------------------------------------------------------- -------- --------
Weighted average number of Ordinary Shares in issue
during the year 511,764 443,884
-------------------------------------------------------- -------- --------
Dilutive effect of share awards 660 1,180
-------------------------------------------------------- -------- --------
Weighted average number of Ordinary Shares for diluted
earnings per share 512,424 445,064
-------------------------------------------------------- -------- --------
2021 2020
pence pence
--------------------------------------- ------- -------
Basic earnings per Ordinary Share 5.0 (2.6)
--------------------------------------- ------- -------
Diluted earnings per Ordinary Share 5.0 (2.6)
--------------------------------------- ------- -------
7. Impairment of goodwill, intangible assets and property, plant and equipment
The Group performed an impairment test on the carrying value of
goodwill (GBP449.4m) at 24 September 2021 using a value in use
model to determine the recoverable amount. The recoverable amount
had significant headroom above the carrying value and therefore, no
impairment was recorded (2020: GBPnil). There was also no
impairment of intangible assets (2020: GBP0.2m). There was an
impairment of GBP4.4m recorded on property, plant and equipment
following a comprehensive review of assets during the year (2020:
GBP6.1m).
8. Borrowings
2021 2020
GBPm GBPm
-------------------------- -------- --------
Bank overdrafts (45.5) (220.0)
Bank borrowings (150.1) (283.5)
Private placement notes (106.6) (114.0)
---------------------------- -------- --------
Total borrowings (302.2) (617.5)
---------------------------- -------- --------
Bank Borrowings
The Group's bank borrowings, net of finance fees comprised of
GBP150.1m at 24 September 2021 (September 2020: GBP283.5m) with
maturities to January 2026. During the year, the Group refinanced
the GBP50m bilateral loan which had been due to mature in January
2022 to a new three- year term maturing in January 2024. The Group
had GBP360.0m (September 2020: GBP185.0m) of undrawn committed bank
facilities in respect of which all conditions precedent had been
met. Uncommitted facilities undrawn at 24 September 2021 amounted
to GBP6.7m (September 2020: GBP7.0m). The Group secured an
additional GBP45.0m three year committed bank facility in June
2021, which was drawndown in October 2021. The Group also extended
the maturity of its GBP340.0m revolving credit facility by one year
to January 2026.
Private Placement Notes
The Group's outstanding Private Placement Notes net of finance
fees comprised of GBP106.6m (denominated as $120.9m and GBP18m) at
24 September 2021 (2020: GBP114.0m, denominated as $120.9m and
GBP18m). These were issued as fixed rate debt in October 2013
($65m) and June 2016 ($55.9m and GBP18m).
The Group swapped the $120.9m Private Placement Notes from fixed
rate US Dollar to fixed rate sterling using cross-currency interest
rate swaps. The fixed rate US dollar to fixed rate sterling swaps
are designated as cash flow hedges.
Subsequent to the year end, the Group repaid the fixed rate debt
of $65m in October 2021.
Reconciliation of movements of liabilities to cash flows arising
from financing activities
The reconciliation of the movement in the Group's liabilities to
cash flows arising from financing activities is included below. In
addition, the Group has presented the movement in the Group's cash
and cash equivalents and bank overdrafts to present the movement in
the Group's overall net debt for the year.
At Translation At
25 September Cash and non-cash 24 September
2020 flow adjustments 2021
GBPm GBPm GBPm GBPm
-------------------------------------- -------------- ------ -------------- --------------
Bank borrowings (283.5) 130.9 2.5 (150.1)
Private Placement Notes (114.0) - 7.4 (106.6)
Lease liabilities (60.7) 15.6 (14.5) (59.6)
Total changes in liabilities arising
from financing activities (458.2) 146.5 (4.6) (316.3)
-------------------------------------- -------------- ------ -------------- --------------
Cash and cash equivalents and
bank overdrafts 47.0 27.0 (0.4) 73.6
-------------------------------------- -------------- ------ -------------- --------------
Net Debt (411.2) 173.5 (5.0) (242.7)
-------------------------------------- -------------- ------ -------------- --------------
Net debt excluding the impact of lease liabilities is used by
the Group for the purpose of calculating leverage under the Group's
financing agreements. The movement in net debt excluding lease
liabilities represents a decrease in net debt of GBP167.4m to
GBP183.1m at 24 September 2021 and is set out in the Alternative
Performance Measures section of this Results Statement on page
23.
Covenants
The Group secured agreement with its bank lending syndicate and
Private Placement Noteholders to waive the Net Debt to EBITDA
covenant condition for the March 2021 test period and amend the Net
Debt to EBITDA covenant condition for the June 2021 test period.
There was a return to normal operating covenant conditions at
September 2021 and the Group was in compliance with all
conditions.
IBOR Reform - Transition to new benchmark interest rates
In response to the transition to new benchmark interest rates,
the Group identified all contracts with reference to LIBOR within
the business and appointed a project team to ensure a smooth
transition to alternative benchmark rates. To date, the Group has
updated all of its floating rate bank borrowing facility agreements
to include appropriate transition language from GBP LIBOR to SONIA
and closed out all existing GBP LIBOR interest rate swaps
(GBP100.0m) and replaced them with SONIA interest rate swaps
(GBP90.0m). The Group no longer holds any derivatives or hedge
relationships that reference LIBOR. Furthermore in November 2021,
the Group updated all of its floating rate intercompany loan
documentation and other committed facilities to allow for
transition from LIBOR to SONIA. The work on transitioning other
contracts and arrangements that are linked to LIBOR is ongoing but
it expected to complete ahead of the cessation of the publication
of LIBOR.
9. Retirement Benefit Obligations
The Group operates three legacy defined benefit pension schemes
in the Republic of Ireland (the 'Irish schemes') and one legacy
defined benefit pension scheme and one legacy defined benefit
commitment in the UK (the 'UK schemes'). These are all closed to
future accrual and there is an assumption applied in the valuation
of the schemes that there will be no discretionary increases in
pension payments. The scheme assets are held in separate Trustee
administered funds. The Group continues to seek ways to reduce its
liabilities through various restructuring initiatives in
co-operation with the respective schemes.
In consultation with the independent actuaries to the scheme,
the valuation of pension obligations has been updated to reflect
current market discount rates, rates of increase in salaries,
pension payments and inflation, current market values of
investments and actual investment returns.
The Group's retirement benefit obligations moved from a net
liability of GBP82.1m at 25 September 2020 to a net liability of
GBP46.0m at 24 September 2021. This reduction in the net liability
position is mainly driven by an actuarial gain on assets of
GBP31.0m and actuarial gains on liabilities of GBP5.3m. During the
year, the Group paid GBP8.0m (2020: GBP10.4m) in contributions to
the pension schemes.
Where a funding valuation reveals a deficit in a scheme, the
Group will generally agree a schedule of contributions with the
trustees designed to address the deficit over an agreed future time
horizon. Full actuarial valuations were carried out between 31
March 2019 and 31 March 2020. In general, actuarial valuations are
not available for public inspection, however, the results of
valuations are advised to members of the various schemes. All of
the schemes are operating under the terms of current funding
proposals agreed with relevant pension authorities. Based on
current discussions with the Trustees of the scheme cash
contributions are expected to be approximately GBP15m in FY22.
In protecting the business and liquidity in response to the
COVID-19 pandemic, the Group entered a formal agreement with the
Trustees of the legacy defined benefit pension scheme in the UK to
defer cash contributions to the pension for a period of six months
which resulted in a reduction of cash contributions of GBP5.1m
(2020: GBP4.9m). In aggregate, GBP10.0m has been deferred over 2020
and 2021. This deferral is included in the funding plan as part of
the annual contribution from the Group.
In October 2020, the Trustees of two of the smaller Irish
defined benefit pension schemes purchased an insurance policy for
the scheme liabilities relating to pension members. The insurance
policy was treated as a plan asset and the fair value of the policy
is deemed to be the present value of the related obligations.
In January 2021, the Group and the Trustees of all three Irish
schemes reached agreement to wind up the two smaller schemes and
transfer deferred beneficiaries to the larger scheme. At 24
September 2021, the transfer process had substantially completed
and the Group recognised a settlement charge within exceptional
items of GBP2.8m for the members that transferred out of the
scheme, and GBP1.2m of transaction costs associated with the
restructure (Note 4). In addition, the Trustees agreed to complete
the buy-out of the scheme insurance policy in respect of pension
members which eliminated the Group's obligations under the scheme.
The carrying value of the plan assets and scheme liabilities prior
to settlement were GBP15.0m respectively.
The financial position of the schemes was as follows:
UK Irish 2021 UK Irish 2020
Schemes Schemes Total Schemes Schemes Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- --------- --------- -------- --------- --------- --------
Fair value of plan assets 260.6 220.7 481.3 232.8 270.0 502.8
Present value of scheme liabilities (347.7) (179.6) (527.3) (356.7) (228.2) (584.9)
------------------------------------- --------- --------- -------- --------- --------- --------
(Deficit)/surplus in schemes (87.1) 41.1 (46.0) (123.9) 41.8 (82.1)
Deferred tax asset 21.8 (5.1) 16.7 23.5 (5.2) 18.3
------------------------------------- --------- --------- -------- --------- --------- --------
Net (liability)/asset at end
of year (65.3) 36.0 (29.3) (100.4) 36.6 (63.8)
------------------------------------- --------- --------- -------- --------- --------- --------
Presented as:
Retirement benefit asset* 42.1 42.9
Retirement benefit obligation (88.1) (125.0)
------------------------------------- --------- --------- -------- --------- --------- --------
*The value of a net pension benefit asset is the value of any amount
the Group reasonably expects to recover by way of a refund of surplus
from the remaining assets of a plan at the end of the plan's life.
The principal actuarial assumptions are as follows:
UK Schemes Irish Schemes
2021 2020 2021 2020
-------------------------------------------------- ------------ ----------- ------------- ------------
Rate of increase in pension payments* 3.35% 2.85% 0.00% 0.00%
Discount rate 1.90% 1.70% 1.13% 0.95%
Inflation rate** 3.45% 2.95% 1.80% 1.50%
-------------------------------------------------- ------------ ----------- ------------- ------------
* The rate of increase in pension payments applies to the majority
of the liability base, however there are certain categories within
the Group's Irish Schemes that have an entitlement to pension indexation.
**Inflation is Retail Price Index (RPI) for UK Schemes, for reference
Consumer Price Index (CPI) is assumed to be 0.4% per annum lower than
RPI.
10. Share capital and share premium
As disclosed in Note 6, the Group completed an equity placing on
26 November 2020. The Group issued 80,357,142 ordinary shares with
a nominal value of GBP0.01 each on the London Stock Exchange at a
placing price of 112 pence per ordinary share. This resulted in
total proceeds of GBP90.0m being received with GBP0.8m being
recorded as part of share capital and GBP89.2m recorded as share
premium. Transaction costs of GBP3.0m relating to the issue were
deducted from retained earnings.
11. Disposal of undertakings
On 28 July 2020, the Group announced that it had entered into a
conditional agreement to sell its interest in its molasses trading
businesses Premier Molasses Company Limited ('Premier Molasses')
and United Molasses (Ireland) Limited ('UMI') to United Molasses
Marketing (Ireland) Limited and United Molasses Marketing Limited.
The final approval of the relevant anti-trust authorities and the
transaction settled on 2 December 2020. The total net assets
disposed of amounted to GBP13.1m with an overall profit on disposal
of GBP11.3m being generated and net cash inflow on disposal of
GBP16.3m.
12. Dividends Paid and Proposed
The Group did not proceed with any dividends in the current
financial year and there is no proposed final dividend for the
year. This is in line with previous announcements (2020: GBPnil).
The final dividend for the year ended 27 September 2019 of GBP16.7m
was paid in FY20.
13. Subsequent Events
Bank Refinancing
The Private Placement Notes of $65m, which matured in October
2021, were repaid and replaced by a three-year term loan facility
of GBP45m, maturing in June 2024.
Resignation of Chief Executive Officer
On 25 November 2021, the Group announced that Patrick Coveney is
stepping down from his role as Director and Chief Executive
Officer. He will resign from both positions effective 30 March
2022.
14. Information
Copies of the Annual Report and Group Financial Statements are
available for download from the Group's website at
www.greencore.com.
APPIX: ALTERNATIVE PERFORMANCE MEASURES
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 EBITDA, Adjusted Operating Profit, Adjusted
Operating Margin, Adjusted Profit before Tax ('PBT'), Adjusted
Earnings, Adjusted Earnings per Share, Maintenance and Strategic
Capital Expenditure, Free Cash Flow, Free Cash Flow Conversion, Net
Debt, Net Debt excluding lease liabilities and Return on Invested
Capital ('ROIC'). The APMs used in this results statement are
consistent with those used in the Annual Report and are consistent
year on year.
The Group believes that these APMs provide useful historical
information to help investors evaluate the performance of the
underlying business and are measures commonly used by certain
investors and security analysts for evaluating the performance of
the Group. In addition, the Group uses certain APMs which reflect
the underlying performance on the basis that this provides a more
relevant focus on the core business performance of the Group.
Pro Forma Revenue Growth
The Group uses Pro Forma Revenue Growth as a supplemental
measure of its performance. The Group believes that Pro Forma
Revenue Growth provides an accurate guide to underlying revenue
performance and is calculated by adjusting reported revenue for the
impact of acquisitions, disposals and foreign currency.
Pro Forma Revenue Growth adjusts reported revenue to reflect the
disposal of Premier Molasses Company Limited for FY20 and for
revenue in FY21 up to the date of disposal. It also presents the
revenue on a constant currency basis utilising FY20 FX rates on
FY21 reported revenue.
2021
Convenience
Foods
UK & Ireland
%
------------------------------ --------------
Reported revenue 4.8%
Impact of disposals 1.3%
Impact of currency 0.1%
------------------------------ --------------
Pro Forma Revenue Growth (%) 6.2%
------------------------------ --------------
The table below shows the Pro Forma Revenue split by food to go
categories and other convenience categories.
Food to go Other convenience
categories categories
H1 H2 Full H1 H2 Full
FY21 FY21 Year FY21 FY21 Year
% % % % % %
------------------------------ -------- ------ ------ --- ------- ------ -------
Reported revenue (25.6%) 58.6% 9.0% (7.4%) 4.2% (1.9%)
Impact of disposals - - - 2.1% 4.7% 3.4%
Impact of currency - - - (0.3%) 0.7% 0.1%
------------------------------
Pro Forma Revenue Growth (%) (25.6%) 58.6% 9.0% (5.6%) 9.6% 1.6%
------------------------------ -------- ------ ------ --- ------- ------ -------
ADJUSTED EBITDA, ADJUSTED OPERATING PROFIT AND ADJUSTED
OPERATING MARGIN
Adjusted EBITDA, Adjusted Operating Profit and Adjusted
Operating Margin are used by the Group to measure the underlying
and ongoing operating performance of each operating segment and of
the Group as a whole.
The Group calculates Adjusted Operating Profit as operating
profit before amortisation of acquisition related intangibles and
exceptional items. Adjusted EBITDA is calculated as Adjusted
Operating Profit plus depreciation and amortisation of intangible
assets. Adjusted Operating Margin is calculated as Adjusted
Operating Profit divided by reported revenue.
The following table sets forth a reconciliation from the Group's
profit for the financial year to Adjusted Operating Profit,
Adjusted EBITDA and Adjusted Operating Margin:
2021 2020
GBPm GBPm
----------------------------------------------------------- -------- -------
Profit/(loss) for the financial year 25.7 (9.9)
Taxation (A) 2.1 (0.9)
Exceptional items (11.7) 22.8
Share of profit of associates after tax - (0.6)
Net finance costs (B) 19.0 17.2
Amortisation of acquisition related intangibles 3.9 3.9
----------------------------------------------------------- -------- -------
Adjusted Operating Profit 39.0 32.5
Depreciation and amortisation (C) 53.3 52.5
----------------------------------------------------------- -------- -------
Adjusted EBITDA 92.3 85.0
----------------------------------------------------------- -------- -------
Adjusted Operating Margin (%) 2.9% 2.6%
----------------------------------------------------------- -------- -------
(A) Includes tax credit on exceptional items of GBP0.4m (2020: GBP2.3m).
(B) Finance costs less finance income.
(C) Excludes amortisation of acquisition related intangibles.
ADJUSTED PROFIT BEFORE TAX ('PBT')
Adjusted PBT is used as a measure by the Group to measure
overall performance before associated tax charge and other specific
items.
The Group calculates Adjusted PBT as profit before taxation,
excluding tax on share of profit of associates and before
exceptional items, pension finance items, amortisation of
acquisition related intangibles, FX on inter-company and certain
external balances and the movement in fair value of all derivative
financial instruments and related debt adjustments.
The following table sets out the calculation of Adjusted
PBT:
2021 2020
GBPm GBPm
-------------------------------------------------------- -------- --------
Profit/(loss) before taxation 27.8 (10.8)
Taxation on share of profit of associates - 0.2
Exceptional items (11.7) 22.8
Pension finance items 1.7 1.9
Amortisation of acquisition related intangibles 3.9 3.9
FX and fair value movements(A) 0.9 (0.7)
-------------------------------------------------------- -------- --------
Adjusted Profit Before Tax 22.6 17.3
-------------------------------------------------------- -------- --------
(A) FX on inter-company and certain external balances and the movement
in the fair value of all derivative financial instruments and related
debt adjustments.
ADJUSTED BASIC EARNINGS PER SHARE ('EPS')
The Group uses Adjusted Earnings and Adjusted EPS as key
measures of the overall underlying performance of the Group and
returns generated for each share.
Adjusted Earnings is calculated as Profit attributable to equity
holders (as shown on the Group Income Statement) adjusted to
exclude exceptional items (net of tax), the effect of foreign
exchange (FX) on inter-company and external balances where hedge
accounting is not applied, the movement in the fair value of all
derivative financial instruments and related debt adjustments, the
amortisation of acquisition related intangible assets (net of tax)
and the interest expense relating to legacy defined benefit pension
liabilities (net of tax). Adjusted EPS is calculated by dividing
Adjusted Earnings by the weighted average number of Ordinary Shares
in issue during the year, excluding Ordinary Shares purchased by
Greencore and held in trust in respect of the Annual Bonus Plan and
the Performance Share Plan. Adjusted EPS described as an APM here
is Adjusted Basic EPS.
The following table sets forth a reconciliation of the Group's
Profit attributable to equity holders of the Group to its Adjusted
Earnings for the financial years indicated:
2021 2020
GBPm GBPm
------------------------------------------------------------ -------- --------
Profit/(loss) attributable to equity holders of the
Group 25.4 (11.5)
Exceptional items (net of tax) (12.1) 20.5
FX effect on inter-company and external balances where
hedge accounting is not applied (0.1) 0.4
Movement in fair value of derivative financial instruments
and related debt adjustments 1.0 (1.1)
Amortisation of acquisition related intangible assets
(net of tax) 3.2 3.2
Pension financing (net of tax) 1.4 1.5
------------------------------------------------------------ -------- --------
Adjusted Earnings 18.8 13.0
------------------------------------------------------------ -------- --------
2021 2020
'000 '000
------------------------------------------------------------ -------- --------
Weighted average number of ordinary shares in issue
during the year 511,764 443,884
------------------------------------------------------------ -------- --------
2021 2020
pence pence
------------------------------------------------------------ -------- --------
Adjusted Basic Earnings Per Share 3.7 2.9
------------------------------------------------------------ -------- --------
CAPITAL EXPITURE
Maintenance 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 to comply with applicable
laws and regulations. It includes continuous improvement projects
of less than GBP1m that will generate additional returns for the
Group.
Strategic Capital Expenditure
The Group defines Strategic Capital Expenditure as the
expenditure required for the purpose of facilitating growth and
developing and enhancing relationships with existing and new
customers. It includes continuous improvement projects of greater
than GBP1m that will generate additional returns for the Group.
Strategic Capital Expenditure is generally expansionary expenditure
creating additional capacity beyond what is necessary to maintain
the Group's current competitive position and enables the Group to
service new customers and/or contracts or to enter into new
categories and/or new manufacturing competencies.
The following table sets forth the breakdown of the Group's
purchase of property, plant and equipment and purchase of
intangible assets between Strategic Capital Expenditure and
Maintenance Capital Expenditure:
2021 2020
GBPm GBPm
--------------------------------- ------ ------
Purchase of property, plant,
and equipment 37.1 29.8
Purchase of intangible assets 3.1 2.1
------------------------------------- ------ ------
Net cash outflow from capital
expenditure 40.2 31.9
------------------------------------- ------ ------
Strategic Capital Expenditure 24.0 13.0
Maintenance Capital Expenditure 16.2 18.9
------------------------------------- ------ ------
Net cash outflow from capital
expenditure 40.2 31.9
------------------------------------- ------ ------
FREE CASH FLOW AND FREE CASH FLOW CONVERSION
The Group uses Free Cash Flow to measure the amount of
underlying cash generation and the cash available for distribution
and allocation.
The Group calculates the Free Cash Flow as the net cash
inflow/outflow from operating and investing activities before
Strategic Capital Expenditure, repayment of lease liabilities,
acquisition and disposal of undertakings, disposal of investment
property and adjusting for dividends paid to non-controlling
interests.
The Group calculates Free Cash Flow Conversion as Free Cash Flow
divided by Adjusted EBITDA.
The following table sets forth a reconciliation from the Group's
net cash inflow from operating activities and net cash outflow from
investing activities to Free Cash Flow:
2021 2020
GBPm GBPm
-------------------------------------------- ------- --------
Net cash inflow from operating activities 102.7 2.5
Net cash outflow from investing activities (17.6) (31.6)
------------------------------------------------ ------- --------
Net cash inflow/(outflow) from operating
and investing activities 85.1 (29.1)
Strategic Capital Expenditure 24.0 13.0
Repayment of lease liabilities (14.3) (11.2)
Disposal of undertakings (16.3) -
Disposal of investment property (6.3) -
Dividends paid to non-controlling interest - (2.4)
------------------------------------------------ ------- --------
Free Cash Flow 72.2 (29.7)
------------------------------------------------ ------- --------
Adjusted EBITDA 92.3 85.0
------------------------------------------------ ------- --------
Free Cash Flow Conversion (%) 78.2% (34.9%)
------------------------------------------------ ------- --------
NET DEBT AND NET DEBT EXCLUDING LEASE LIABILITIES
Net Debt is used by the Group to measure overall cash generation
of the Group and to identify cash available to reduce borrowings.
Net Debt comprises current and non-current borrowings less net cash
and cash equivalents.
Net Debt excluding Lease Liabilities is a measure used by the
Group to measure Net Debt excluding the impact of IFRS 16 Leases.
Net Debt excluding lease liabilities is used for the purpose of
calculating leverage under the Group's financing agreements.
The reconciliation of opening to closing net debt for the year
ended 24 September 2021 is as follows:
At Translation At
25 September Cash and non-cash 24 September
2020 flow adjustments 2021
GBPm GBPm GBPm GBPm
-------------------------------------- -------------- ------ -------------- --------------
Cash and cash equivalents and
bank overdrafts 47.0 27.0 (0.4) 73.6
Bank borrowings (283.5) 130.9 2.5 (150.1)
Private Placement Notes (114.0) - 7.4 (106.6)
Net debt excluding lease liabilities (350.5) 157.9 9.5 (183.1)
-------------------------------------- -------------- ------ -------------- --------------
Lease liabilities (60.7) 15.6 (14.5) (59.6)
-------------------------------------- -------------- ------ -------------- --------------
Net Debt (411.2) 173.5 (5.0) (242.7)
-------------------------------------- -------------- ------ -------------- --------------
At IFRS 16 Translation Transferred At
27 September transition Cash and non-cash to held 25 September
2019 adjustment flow adjustments for sale 2020
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- -------------- ------------ ------- -------------- ------------ --------------
Cash and cash equivalents
and bank overdrafts 41.6 - 5.5 (0.1) - 47.0
Bank borrowings (213.9) - (64.6) (5.0) - (283.5)
Private Placement Notes (116.2) - - 2.2 - (114.0)
Net debt excluding lease
liabilities (288.5) - (59.1) (2.9) - (350.5)
--------------------------- -------------- ------------ ------- -------------- ------------ --------------
Lease liabilities - (54.1) 12.4 (19.7) 0.7 (60.7)
--------------------------- -------------- ------------ ------- -------------- ------------ --------------
Net Debt (288.5) (54.1) (46.7) (22.6) 0.7 (411.2)
--------------------------- -------------- ------------ ------- -------------- ------------ --------------
RETURN ON INVESTED CAPITAL ('ROIC')
The Group uses ROIC as a key measure to determine returns from
each business unit and for the Group as a whole as well as
measuring the financial quality of potential new investments.
The Group uses invested capital as a basis for this calculation
as it reflects the tangible and intangible assets the Group has
added through its capital investment programme, the intangible
assets the Group has added through acquisition, as well as the
working capital requirements of the business. Invested Capital is
calculated as net assets (total assets less total liabilities)
excluding Net Debt, the carrying value of derivatives not
designated as fair value hedges and retirement benefit obligations
(net of deferred tax assets). Average Invested Capital is
calculated by adding together the invested capital from the opening
and closing Statement of Financial Position and dividing by
two.
The Group calculates ROIC as Net Adjusted Operating Profit After
Tax ('NOPAT') divided by average Invested Capital. NOPAT is
calculated as Adjusted Operating Profit plus share of profit of
associates before tax, less tax at the effective rate in the Income
Statement.
The following table sets forth the calculation of Net Operating
Profit After Tax ('NOPAT') and invested capital used in the
calculation of ROIC for the financial years.
2021 2020
GBPm GBPm
------------------------------------------ ------ ------
Adjusted Operating Profit 39.0 32.5
Share of profit of associates before tax - 0.8
Taxation at the effective tax rate (A) (5.9) (4.3)
------------------------------------------ ------ ------
Group NOPAT 33.1 29.0
------------------------------------------ ------ ------
2021 2020
GBPm GBPm
------------------------------------------------------- -------- ----------
Invested Capital
Total assets 1,291.5 1,427.1
Total liabilities (868.3) (1,144.9)
Net Debt 242.7 411.2
Lease liability transferred to held for sale - 0.7
Derivatives not designated as fair value hedges 5.6 (1.1)
Retirement benefit obligation (net of deferred tax
asset) 29.3 63.8
Invested Capital for the Group(B) 700.8 756.8
------------------------------------------------------- -------- ----------
Average Invested Capital for ROIC calculation for the
Group 728.8 712.0
------------------------------------------------------- -------- ----------
ROIC (%) for the Group 4.5% 4.1%
------------------------------------------------------- -------- ----------
(A) The effective tax rates for the Group for the financial year
ended 24 September 2021 and 25 September 2020 were 15% and 13%
respectively.
(B) The invested capital for the Group in 2019 was
GBP667.2m.
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