TIDMGNC
RNS Number : 8479H
Greencore Group PLC
29 November 2022
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FULL YEAR RESULTS STATEMENT
For the year ended 30 September 2022
29 November 2022
Strong improvement in revenue and profitability in FY22
Greencore Group plc ('Greencore' or the 'Group'), a leading
manufacturer of convenience food in the UK, today issues its
results for the 53 weeks ended 30 September 2022.
PERFORMANCE (1,2)
-- Strong growth in food to go and other convenience categories
drove Group Revenue growth of 31.3% above FY21 levels to GBP1.7bn
and 20.3% above FY19 levels
-- Pro Forma Revenue growth in food to go categories increased
by 35.2% year on year, driven by a combination of strong underlying
volume growth, contribution from new wins, and increased pricing as
we continued to recover inflation
-- Pro Forma Revenue growth in other convenience categories
increased by 19.2%, driven by increased underlying pricing and
higher revenue in the Group's Irish ingredients trading
business
-- Significant growth in Adjusted Operating Profit, in line with
previous guidance, up GBP33.2m to GBP72.2m (FY21: GBP39.0m), with
Adjusted Operating Margin of 4.2% (FY21: 2.9%)
-- Group ROIC increased to 8.4% from 4.5% at the end of FY21 due
to the increase in Operating Profit
-- Adjusted EPS of 9.2p up 5.5p (FY21: 3.7p)
-- Net Debt (excluding lease liabilities) of GBP180.0m at year
end (FY21: GBP183.1m) after GBP33.1m strategic capex and GBP8.8m
share buyback completed during the year
-- Robust balance sheet with substantial liquidity headroom and
continued progress on deleveraging. Net Debt: EBITDA of 1.5x as
measured under financing agreements has now reached the Group's
target range of 1.0x - 1.5x. Committed facilities of GBP578.0m
(FY21: GBP433.6m)
-- Completed GBP10m share buyback programme in early October
which is the first phase of the GBP50m value return to shareholders
announced in May 2022. Intention to return a further GBP15m of
value to shareholders in the form of a share buyback in FY23
OPERATING & STRATEGIC UPDATE (1)
-- Maintained high operational service levels during the year,
working closely with our customers and supply partners to manage
ongoing supply-side challenges and disruptions
-- Completed onboarding of new business wins, expanding the
Group's product ranges and channel reach. New business wins
accounted for approximately 4.4% of the Group's pro forma revenue
growth in FY22
-- Recovered or mitigated all FY22 input cost and other inflation
-- Completed strategic capital investment programme to support
the delivery of previously announced business wins. There are some
commissioning challenges as we ramp up production and we are
working to resolve these in the first half of FY23
-- Launched Better Greencore, our change programme with the
first phase targeted to deliver annual recurring benefits of
approximately GBP30m in FY24. The second phase, focusing on
operational and technological excellence, will be launched in FY23.
The Group recognised an exceptional charge of GBP16.1m in respect
of the work carried out in the financial year
-- Advanced our sustainability agenda relating to the data and
systems framework to measure performance effectively. The Group
also commenced a collaboration project with a key customer on
category level eco-footprinting
OUTLOOK (1)
Revenue performance in the early weeks of FY23 has broadly held
up however, we do note some mix effect between categories. We
remain cautious about the potential impact of the recessionary
environment and cost-of-living factors on consumer spending through
the year ahead, the impact of which has not yet been fully absorbed
by the consumer.
We expect that FY23 will be a year of further substantial
inflation and are working closely with our customers on recovery
and mitigation. We remain focused on the execution of our change
programme, Better Greencore, and are planning for the second phase
which will focus on operational and technological excellence.
We continue to make decisions on customer contracts which are no
longer economic, with a heightened focus on our ability to recover
inflation.
The Board is confident that a continued focus on the strengths
of the business, underpinned by our resilient balance sheet and the
efficiency and productivity gains related to our Better Greencore
programme will support the further successful progress of the Group
in the years ahead.
SUMMARY FINANCIAL PERFORMANCE (1,2)
FY22 FY21 Change
GBPm GBPm
Group Revenue 1,739.6 1,324.8 +31.3%
Pro Forma Revenue Growth 29.4%
Adjusted EBITDA 126.9 92.3 +37.5%
Group Operating Profit 52.1 42.8 +21.7%
Adjusted Operating Profit 72.2 39.0 +GBP33.2m
Adjusted Operating Margin 4.2% 2.9% +130bps
Group Profit Before Tax 39.8 27.8 +GBP12.0m
Adjusted Profit Before Tax 59.8 22.6 +GBP37.2m
Basic EPS (pence) 6.2 5.0
Group Exceptional Items (after
tax) (13.5) 12.1
Adjusted EPS (pence) 9.2 3.7 5.5p
Free Cash Flow 58.7 72.2 -GBP13.5m
Net Debt 228.0 242.7 14.7m
Net Debt (excluding lease liabilities) 180.0 183.1 GBP3.1m
Return on Invested Capital
("ROIC") 8.4% 4.5%
Commenting on the results, Dalton Philips, Chief Executive
Officer (CEO), said:
"Greencore has made great progress in recovering from a very
challenging period with revenue, profits, leverage and returns all
improving significantly in FY22. I want to acknowledge and thank
our teams and colleagues who have done and continue to do a
fantastic job every day in driving the business forward.
My first few weeks in the CEO role have confirmed to me the
fantastic capability and potential of this business. Our leading
market positions, close customer relationships, well invested
facilities and intense focus on efficiencies give us confidence as
we continue to navigate our way through the challenges of the
current macroeconomic climate."
____________________________________________________________________________________________________
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 The financial year is the 53-week period ended 30 September
2022 with comparatives for the 52-week period ended 24 September
2021.
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, or may be deemed
to be, 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. The forward-looking
statements contained in this document include statements relating
to the financial condition, results of operations, business,
viability and future performance of the Group and certain of the
Group's plans and objectives. These forward-looking statements
include all statements that do not relate only to historical or
current 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, but their
absence does not mean that a statement is not forward-looking.
By their nature, forward-looking statements are prospective and
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, whether as a result of new information,
future events or otherwise, other than as required by law.
Presentation & Conference Call
A presentation of the results for analysts and institutional
investors will take place at 8.00am on 29 November 2022 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 that morning.
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:
Dalton Philips Chief Executive Officer Tel: +353 (0)
1 486 3326
Emma Hynes Chief Financial Officer Tel: +353 (0)
1 486 3307
Rob Greening/ Nick Hayns/ Powerscourt Tel: +44 (0) 20
Sam Austrums 7250 1446
Billy Murphy/ Claire Rowley/ Drury Communications Tel: +353 (0)
Cian Doherty 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 to all 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 FY22, we manufactured 795m sandwiches and other food to go
products, 127m chilled prepared meals, and 296m bottles of cooking
sauces, pickles, condiments and chilled soups. We carry out more
than 10,600 direct to store deliveries each day. We have 23
world-class manufacturing units across 16 locations in the UK, with
industry-leading technology and supply chain capabilities. We
generated revenues of GBP1.7bn in FY22 and employ approximately
14,000 people. We are headquartered in Dublin, Ireland. For further
information go to www.greencore.com or follow Greencore on social
media.
OPERATING REVIEW (1,2)
Strategic developments
We made strong progress against our strategic objectives in
FY22, delivering good year on year volume growth while recovering
significant levels of ongoing inflation and enhancing profit
conversion. This progress was underpinned by close customer
engagement in what has been, and continues to be, a very
challenging trading environment for the food industry. Overall
demand in the Group's categories has been very resilient, with
demand supported by robust service levels across the network,
despite having to navigate ongoing and challenging inbound supply
chain disruption.
Onboarding of previously announced new business wins continued
during the quarter, expanding the Group's product ranges and
channel reach. New business wins accounted for approximately 4.4%
of the Group's Pro Forma Revenue growth in FY22. The Group also
continued to work closely with customers on product and range
innovations to mitigate the impact of inflation at consumer
level.
Our strategic capital investment programme of approximately
GBP30m across three existing manufacturing sites, to support the
delivery of previously announced business wins, was completed in
Q4. There are some commissioning challenges as we ramp up
production in our new ready meals production unit. We are focused
on managing this disruption and driving operating efficiency and
improved output and conversion rates.
Better Greencore, our change programme, continues to progress
well. The first phase of the programme is expected to deliver an
annual recurring benefit of approximately GBP30m in FY24. To unlock
these improvements the Group will invest a total of approximately
GBP24m comprising operating and capital costs during FY22 and FY23
of which GBP16.1m has been incurred in 2022. The internal
operational and organisation model has changed fundamentally in
this first phase, realigning teams from a matrixed structure to a
functional model. While this is a complex task, it will deliver a
more customer-centric approach across the business. The new
structure is supported by the full deployment of an integrated
business management model that will make the Group more effective
across product development, operations and overall cost management.
The second phase of Better Greencore is focused on operational and
technological excellence. This phase will be launched internally in
FY22.
Trading Performance
FY22 FY21 Change Change
GBPm GBPm (As reported) (Pro Forma
basis)
Revenue 1,739.6 1,324.8 31.3% 29.4%
-------- -------- --------------- ------------
Group Operating Profit 52.1 42.8 21.7%
-------- -------- --------------- ------------
Adjusted Operating
Profit 72.2 39.0 GBP33.2m
-------- -------- --------------- ------------
Adjusted Operating
Margin % 4.2% 2.9% 130bps
-------- -------- --------------- ------------
Reported Group revenue increased by 31.3% to GBP1,739.6m in
FY22. Revenue Growth in FY22 was driven by a combination of
increased volumes, double digit percentage increase in underlying
pricing and increased revenue in the Group's Irish ingredients
trading business as well as the impact of a 53(rd) trading week in
FY23.
Adjusted Operating Profit rose from GBP39.0m to GBP72.2m and
Adjusted Operating Margin advanced by 130bps to 4.2%. Group Profit
Before Tax was GBP39.8m in FY22, compared to a Profit Before Tax of
GBP27.8m in FY21.
The UK trading environment, especially in food to go categories,
was resilient during FY22 notwithstanding some demand volatility
caused by COVID-19 related mobility restrictions in H1 22 and the
increasing impact of inflation on the UK consumer during H2 22. The
Group will continue to monitor the impact of increased prices at a
consumer level closely.
In FY22 the Group benefitted from its strong market position in
the grocery retail channel, its expanded customer and format mix,
and its portfolio across food to go and other convenience
categories. The new business wins onboarded in FY21 and FY22 also
contributed meaningfully to Group revenue performance. In H1 22,
the Group worked closely with one of its key food to go customers
to extend its offering into the store network of a leading UK
coffee shop retailer. The Group also completed the onboarding of a
significant business win in ready meals in H2 22, supported by a
strategic capital investment.
FY22 revenue in the Group's food to go categories (comprising
sandwiches, salads, sushi and chilled snacking) totalled
GBP1,161.3m and accounted for approximately 67% of reported
revenue. Reported revenue increased by 37.9% in these categories,
driven by a recovery in underlying demand as the year progressed,
strong execution on new business wins, and increased pricing.
Revenue for the distribution of third-party products accounted for
approximately 10% of Group revenue in FY22 (FY21: c.8%).
On a pro forma basis, revenue in food to go categories grew by
35.2% in FY22 driven by increased volumes due to the impact of new
business wins in 2021 and 2022 as well as ongoing recovery in
underlying volume towards pre COVID-19 levels, and double digit
inflation recovery.
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 categories increased by 19.8% to
GBP578.3m in FY22.
On a pro forma basis, revenue increased by 19.2%, driven by
increased underlying pricing, and higher revenue in the Group's
Irish ingredients trading business. Volumes were modestly up year
on year due to the Group's onboarding of new business wins in the
ready meals category.
There was a substantial increase in inflation in the Group's
main cost components in FY22, which led to a mid-teen rate of
inflation for the period. This inflation was fully recovered
through pricing and other mechanisms comprising product and range
innovations, alternative sourcing and operating efficiency
initiatives. The largest component of inflation was raw materials
and packaging, where we have explicit price recovery mechanisms in
place with a number of our customers. The other elements were
recovered through a combination of constructive direct dialogue
with our customers and operational efficiencies. We also work
collaboratively with our customers on multiple other initiatives to
manage inflation, including range alterations, packaging redesigns
and product reformulations.
In FY22, the Group experienced an IT security incident that
resulted in temporary unauthorised access to part of the Group's IT
systems. The Group responded rapidly and proactively to the
incident to protect the Group's infrastructure and data and to
restore the impacted part of the IT systems. From an operational
perspective, the impact on customers was minimised as the Group put
in place manual back up processes to ensure that production could
continue. The Group recognised net costs of GBP1.9m incurred as a
result of the incident. This included insurance recovery of GBP8.6m
against the business impact and costs relating to the incident.
Appropriate notification was also made to the relevant authorities.
In FY21 the Group incurred GBP5.3m of operating costs relating to
COVID-19.
Overall, Group Operating Profit in FY22 increased to GBP52.1m
(FY21: GBP42.8m). Adjusted Operating Profit increased to GBP72.2m
(FY21: GBP39.0m). The increase in Adjusted Operating Profit was
driven by a return to profitability in the Group's food to go
categories as profit conversion improved on an increased revenue
base. Underlying profitability in the Group's other convenience
categories was below FY21 levels as we incurred pre operating and
commissioning costs for the new ready meals production unit.
Group Cash Flow and Returns
FY22 FY21 Change
GBPm GBPm (as reported)
Free Cash Flow 58.7 72.2 (GBP13.5m)
------ ------ ---------------
Net Debt 228.0 242.7 GBP14.7m
------ ------ ---------------
Net Debt (excluding lease liabilities) 180.0 183.1 GBP3.1m
------ ------ ---------------
In FY22, we continued to manage cashflows and leverage closely,
balancing recovering profitability, seasonal working capital
outflows and capital investment requirements to support future
growth in the business.
Free Cash Flow was an inflow of GBP58.7m in FY22, a reduction of
GBP13.5m on FY21 which was GBP72.2m. The decrease primarily
reflects more normalised working capital inflow in 2022 post
COVID-19. Free Cash Flow Conversion was 46.3% compared with 78.2%
in FY21.
Net Debt at 30 September 2022 was GBP228.0m, a decrease of
GBP14.7m compared to 24 September 2021. Net Debt excluding lease
liabilities decreased to GBP180.0m from GBP183.1m in FY21. Net
Debt: EBITDA leverage, as measured under financing agreements, was
1.5x at period end which represents further progress on
deleveraging and has now reached our target range of 1.0x - 1.5x,
which was rebased from 1.5x to 2.0x post COVID-19.
In November 2021, the Group further strengthened its balance
sheet when it extended the maturity on its GBP340.0m revolving
credit facility by one year to January 2026. As at 30 September
2022, the Group had total committed debt facilities of GBP578.0m
and a weighted average maturity of 2.5 years. At 30 September 2022,
the Group had cash and undrawn committed bank facilities of
GBP398.0m.
Cash interest costs in FY22 were GBP16.7m down from GBP18.8m in
FY21. As rates are increasing, we anticipate cash interest to
increase to approximately GBP18m in FY23.
In May 2022, we announced a GBP50m value return to shareholders
over the coming two years and subsequent to the year-end, announced
that the first phase, a GBP10m share buyback programme that
commenced on 26 July 2022, had been completed. We plan to buyback a
further GBP15m of shares in FY23.
ROIC increased to 8.4% in FY22, compared to 4.5% in FY21. The
year-on- year increase was driven primarily by increased
profitability in the year. Average invested capital decreased
modestly year on year from GBP728.8m to GBP695.0m.
Better Future Plan
Greencore's sustainability strategy, the 'Better Future Plan',
was launched in November 2021 and 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 (scope 1 and scope 2)
-- Feeding with Pride: By 2030 we will have increased our
positive impact on society through our products
The Group advanced the Better Future Plan during FY22, with a
focus on progressing the data and systems framework to measure
performance effectively. The Group is building a substantial body
of data on the nutritional profile of its portfolio and is
currently trialling product foot-printing technology with one of
its customers. While this progress has not yet followed through to
absolute reductions in the Group's scope 1 and scope 2 carbon
footprint as increased production post COVID-19 has impacted the
Group's energy usage, the Group continues to look at ways to
accelerate delivery through focusing on collaboration with
customers to drive the systems level change required.
The Group's total carbon footprint is made up of emissions from
direct operations (Scope 1 and 2), which represents 6% of the
Group's total, while the Group's indirect emissions (Scope 3) from
the ingredients sourced and the products placed on the market by
the Group represent the majority (94%) of the Group's total
footprint. The most major reductions will therefore come from
collaborating with the Group's customers and suppliers to reduce
Scope 3, but we recognise the importance of Scope 1 and 2 and are
continuing to look to accelerate plans on energy reduction.
The Group has published its TCFD report conducting scenario
analysis as part of the FY22 Annual Report to estimate the
potential impact of climate risks and opportunities.
Food donation continues to be a central focus for the Group's
community engagement efforts with the equivalent of 1.63m meals
redistributed to food redistribution organisations in order to
ensure our surplus food reaches those who need it.
The Group's standalone sustainability report for FY22 on our
Better Future Plan will be released in January 2023.
FINANCIAL REVIEW (1,2)
Revenue and Operating Profit
Reported revenue in the period was GBP 1,739.6 m, an increase of
31.3% compared to FY21, primarily reflecting the recovery in demand
in food to go categories and the impact of new business wins. Pro
Forma Revenue increased by 29.4%.
Group Operating Profit increased from GBP42.8m to GBP52.1m as a
result of an improved revenue delivery in FY22 and notwithstanding
the movement from a net exceptional gain to a net exceptional
charge in FY22. Adjusted Operating Profit of GBP72.2m compared to
GBP39.0m in FY21, driven by an improvement in profit in food to go
categories partly offset by a lower underlying performance in the
Group's other convenience categories as we commissioned the new
ready meals facility. Adjusted Operating Margin was 4.2 %, 130
basis points higher than FY21.
Net finance costs
The Group's net bank interest payable was GBP11.1m in FY22, a
decrease of GBP3.9m versus FY21. The decrease was driven by lower
cost of debt during FY22. The Group also recognised a GBP1.2m
interest charge relating to the interest payable on lease
liabilities in the period (FY21: GBP1.3m).
The Group's non-cash finance charge in FY22 was a net GBPnil
(FY21: GBP2.7m charge). The change in the fair value of derivatives
and related debt adjustments including foreign exchange in the
period was a GBP1.1m credit (FY21: GBP0.9m charge) and the non-cash
pension financing charge of GBP1.1m was GBP0.6m lower than the FY21
charge of GBP1.7m.
Profit before taxation
The Group's Profit before taxation increased from GBP27.8m in
FY21 to GBP39.8m in FY22, driven by higher Group Operating Profit
and lower finance costs. Adjusted Profit Before Tax in the period
was GBP59.8m compared to GBP22.6m in FY21, primarily driven by an
improvement in Adjusted Operating Profit.
Taxation
The Group's effective tax rate in FY22 (adjusting
pre-exceptional profit for the change in fair value of derivatives)
was 19 % (FY21: 15%). 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 has been reconfirmed by Jeremy
Hunt, the newly appointed Chancellor of the Exchequer, in October
2022.
Exceptional items
The Group had a pre--tax exceptional charge of GBP16.5m in FY22,
and an after-tax charge of GBP13.0m, comprised as follows:
Exceptional Items GBPm
Reorganisation costs (16.1)
-------
Pension restructuring (0.4)
-------
Exceptional items (before tax) (16.5)
-------
Tax credit on exceptional items 3.0
-------
Exceptional items (after tax) (13.5)
-------
In H1 22 the Group commenced a change programme, Better
Greencore, to support the revitalisation of its excellence cost
efficiency programmes and to unlock further cost efficiencies by
reducing organisational complexity. The Group recognised a charge
of GBP16.1m in respect of work carried out in the period.
Earnings per share
The Group's basic earnings per share for FY22 was 6.2 pence
compared to 5.0 pence in FY21. This was driven by a GBP6.9m
increase in profit attributable to equity holders, partially offset
by an increase in the weighted average number of shares in issue in
FY22 to 523.4m (FY21: 511.8m).
Adjusted Earnings were GBP48.1m in the period, GBP29.3m ahead of
prior year levels largely due to an increase in Adjusted Operating
Profit. Adjusted earnings per share of 9.2 pence compared to
adjusted earnings per share of 3.7 pence in FY21.
Cash Flow and Net Debt
Adjusted EBITDA was GBP34.6m higher in FY22 at GBP126.9m. The
Group incurred a net working capital inflow of GBP2.0m. Maintenance
capital expenditure of GBP16.9m was incurred in the period (FY21:
GBP16.2m). The cash outflow in respect of exceptional charges was
GBP13.6m (FY21: GBP3.3m).
Interest paid in the period was GBP16.7m (FY21: GBP18.8m),
including interest of GBP1.2m on lease liabilities, a decrease on
FY21 reflecting lower average borrowings and interest costs as the
group exited the covenant waiver period and reduced leverage. The
Group recognised a cash tax credit of GBP2.2m reflecting a refund
received in the period. 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 GBP17.3m (FY21: GBP14.3m). The
Group's cash funding for defined benefit pension schemes was
GBP11.5m (FY21: GBP7.0m), reflecting the restoration of cash
contributions after an agreement with Trustees to defer cash
contributions for a period in FY21.
These movements resulted in a free cash inflow of GBP58.7m
compared to an inflow of GBP72.2m in FY21 when a working capital
benefit was realised as volume returned to the business post
COVID-19.
In FY22, the Group incurred strategic capital expenditure of
GBP33.1m (FY21: GBP24.0m).
The Group did not make any equity dividend cash payments in
either period. The Group made net share purchases of GBP11.8m in
FY22 reflecting the initiation of a GBP10m share buyback program
(which completed on 6 October 2022) and the implementation of a new
employee share ownership scheme introduced in the period. This
compared to net equity proceeds of GBP87.1m in FY21 when the Group
completed an equity placing.
In December 2020 (FY21), the Group also completed the sale of
its interests in its molasses trading businesses for a final cash
consideration of GBP16.3m.
The Group's Net Debt excluding lease liabilities at 30 September
2022 was GBP180.0m, a decrease of GBP3.1m compared to the end of
FY21.
Financing
In November 2021 the Group further strengthened its balance
sheet when it extended the maturity on its GBP340.0m revolving
credit facility by one year to January 2026. As at 30 September
2022, the Group had total committed debt facilities of GBP578.0m
and a weighted average maturity of 2.5 years. These facilities
comprised:
-- A GBP340.0m revolving credit bank facility with a maturity date of January 2026
-- A GBP75.0m revolving credit bank facility with a maturity date of March 2023
-- A GBP50.0m bilateral bank facility with a maturity date of January 2024
-- A GBP45.0m bank term loan facility with a maturity date of June 2024
-- GBP18.0m and $55.9m of outstanding Private Placement Notes
with maturities ranging between June 2023 and June 2026
At 30 September 2022 the Group had cash and undrawn committed
bank facilities of GBP398.0m.
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 30
September 2022 was GBP20.3m, GBP25.7m lower than the position at 24
September 2021. The net pension deficit after related deferred tax
was GBP10.4m (FY21: GBP29.3m), comprising a net deficit on UK
schemes of GBP44.5m (FY21: GBP65.3m) and a net surplus on Irish
schemes of GBP34.1m (FY21: GBP36.0m).
The decrease in the Group's net pension deficit was driven
principally by an actuarial gain on UK scheme liabilities arising
from an increase in the discount rates used to value these
liabilities. The movement in the discount rate is driven by the
corporate bond rate. The UK scheme is 77% hedged for movements in
gilt yields. Whilst there has been significant economic volatility
particularly in bond markets recently the liquidity position of the
scheme has been more than sufficient to manage collateral calls and
to maintain the hedged position of the scheme.
The Irish scheme is fully hedged for movements in gilt yields
and subsequent to the year end the Trustees of the scheme entered
into an annuity buy-in transaction in respect of pensioner
liabilities, representing approximately 80% of the liabilities in
the scheme.
Separate to this IAS 19 Employee Benefits valuation, 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
GBP15m.
Return of value to shareholders
In May 2022, we announced that we would return GBP50m of value
to shareholders over the next two years. The first phase of this
value return was a GBP10m share buyback programme which commenced
in July 2022 and completed in early October 2022. We plan to return
a further GBP15m of value to shareholders in FY23 in the form of a
share buyback.
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 30 September
2022 issued on 29 November 2022.
P.G. Kennedy
Chair
Date: 28 November 2022
GROUP INCOME STATEMENT
For year ended 30 September 2022
2022* 2021
Exceptional Exceptional
Pre - (Note Pre - (Note
Notes exceptional 4) Total exceptional 4) Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------------- ------------ ---------- --------------- ------------ -------------
Revenue 2 1,739.6 - 1,739.6 1,324.8 - 1,324.8
Cost of sales (1,216.6) - (1,216.6) (901.9) - (901.9)
--------------------------- ------------- ------------ ---------- --------------- ------------ -------------
Gross profit 523.0 - 523.0 422.9 - 422.9
Operating costs before
acquisition related
amortisation 3 (449.6) (16.5) (466.1) (383.3) 7.7 (375.6)
Impairment of trade
receivables (1.2) - (1.2) (0.6) - (0.6)
--------------------------- ------------- ------------ ---------- --------------- ------------ -------------
Group operating profit
before acquisition
related amortisation 72.2 (16.5) 55.7 39.0 7.7 46.7
Amortisation of
acquisition
related intangibles (3.6) - (3.6) (3.9) - (3.9)
--------------------------- ------------- ------------ ---------- --------------- ------------ -------------
Group operating profit 68.6 (16.5) 52.1 35.1 7.7 42.8
Finance income 5 0.2 - 0.2 0.1 - 0.1
Finance costs 5 (12.5) - (12.5) (19.1) - (19.1)
Profit on disposal
of associates - - - - 4.0 4.0
--------------------------- ------------- ------------ ---------- --------------- ------------ -------------
Profit/(loss) before
taxation 56.3 (16.5) 39.8 16.1 11.7 27.8
Taxation (10.5) 3.0 (7.5) (2.5) 0.4 (2.1)
--------------------------- ------------- ------------ ---------- --------------- ------------ -------------
Profit/(loss) for
the financial year 45.8 (13.5) 32.3 13.6 12.1 25.7
--------------------------- ------------- ------------ ---------- --------------- ------------ -------------
Attributable to:
Equity shareholders 45.8 (13.5) 32.3 13.3 12.1 25.4
Non-controlling interests - - - 0.3 - 0.3
--------------------------- ------------- ------------ ---------- --------------- ------------ -------------
45.8 (13.5) 32.3 13.6 12.1 25.7
--------------------------- ------------- ------------ ---------- --------------- ------------ -------------
Earnings per share (pence)
Basic earnings per
share 6 6.2 5.0
Diluted earnings per
share 6 6.1 5.0
--------------------------- ------------- ------------ ---------- --------------- ------------ -------------
* The financial year is the 53-week period ended 30 September
2022 with comparatives for the 52-week period ended 24 September
2021
GROUP STATEMENT OF COMPREHENSIVE INCOME
for year ended 30 September 2022
2022* 2021
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 14.4 36.3
Tax charge on Group legacy defined benefit pension
schemes (4.1) (1.1)
------------------------------------------------------ ------ ------
10.3 35.2
----------------------------------------------------- ------ ------
Items that may subsequently be reclassified to
profit or loss:
Currency translation adjustment 1.8 (3.2)
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 8.5 (0.5)
transferred to Income Statement (1.6) 1.2
8.7 (9.3)
----------------------------------------------------- ------ ------
Other comprehensive income for the financial
year 19.0 25.9
Profit for the financial year 32.3 25.7
------------------------------------------------------ ------ ------
Total comprehensive income for the financial
year 51.3 51.6
------------------------------------------------------ ------ ------
Attributable to:
Equity shareholders 51.3 57.3
Non-controlling interests - (5.7)
------------------------------------------------------ ------ ------
Total comprehensive income for the financial
year 51.3 51.6
------------------------------------------------------ ------ ------
* The financial year is the 53-week period ended 30 September
2022 with comparatives for the 52-week period ended 24 September
2021
GROUP STATEMENT OF FINANCIAL POSITION
at 30 September 2022
2022 2021
Notes GBPm GBPm
----------------------------------------------------- ------ -------- --------
ASSETS
Non-current assets
Goodwill and intangible assets 7 468.1 473.3
Property, plant and equipment 7 319.4 307.4
Right-of-use assets 44.4 54.1
Investment property 3.1 3.0
Retirement benefit assets 9 39.8 42.1
Derivative financial instruments 12.4 -
Deferred tax assets 37.1 48.1
Trade and other receivables 0.3 0.4
----------------------------------------------------- ------ -------- --------
Total non-current assets 924.6 928.4
----------------------------------------------------- ------ -------- --------
Current assets
Inventories 63.3 47.7
Trade and other receivables 248.7 196.3
Cash and cash equivalents 99.6 119.1
Derivative financial instruments 2.5 -
Total current assets 414.1 363.1
----------------------------------------------------- ------ -------- --------
Total assets 1,338.7 1,291.5
----------------------------------------------------- ------ -------- --------
EQUITY
Capital and reserves attributable to equity holders
of the Company
Share capital 5.2 5.3
Share premium 89.7 89.7
Reserves 370.7 328.2
----------------------------------------------------- ------ -------- --------
Total equity 465.6 423.2
----------------------------------------------------- ------ -------- --------
LIABILITIES
Non-current liabilities
Borrowings 8 209.8 209.1
Lease liabilities 33.6 42.0
Other payables 2.7 3.7
Derivative financial instruments - 2.7
Provisions 5.2 5.5
Retirement benefit obligations 9 60.1 88.1
Deferred tax liabilities 18.9 18.2
----------------------------------------------------- ------ -------- --------
Total non-current liabilities 330.3 369.3
----------------------------------------------------- ------ -------- --------
Current liabilities
Borrowings 8 69.8 93.1
Trade and other payables 445.1 375.8
Lease liabilities 14.4 17.6
Derivative financial instruments 0.1 2.9
Provisions 4.7 2.1
Current tax payable 8.7 7.5
Total current liabilities 542.8 499.0
----------------------------------------------------- ------ -------- --------
Total liabilities 873.1 868.3
----------------------------------------------------- ------ -------- --------
Total equity and liabilities 1,338.7 1,291.5
----------------------------------------------------- ------ -------- --------
GROUP STATEMENT OF CASH FLOWS
for the year ended 30 September 2022
2022* 2021
Notes GBPm GBPm
------------------------------------------------------ ------ ------- --------
Profit before taxation 39.8 27.8
Finance income 5 (0.2) (0.1)
Finance costs 5 12.5 19.1
Exceptional items 4 16.5 (11.7)
------------------------------------------------------ ------ ------- --------
Group operating profit before exceptional items 68.6 35.1
Depreciation and impairment of property, plant
and equipment and right-of-use assets 52.5 54.6
Amortisation of intangible assets 6.7 7.0
Employee share-based payment expense 2.7 2.1
Contributions to Group legacy defined benefit
pension scheme 9 (11.5) (7.0)
Working capital movement 2.0 33.2
Net cash inflow from operating activities before
exceptional items 121.0 125.0
Cash outflow related to exceptional items (13.6) (3.3)
Interest paid (including lease liability interest) (16.7) (18.8)
Tax received/(paid) 2.2 (0.2)
Net cash inflow from operating activities 92.9 102.7
------------------------------------------------------ ------ ------- --------
Cash flow from investing activities
Purchase of property, plant and equipment (48.6) (37.1)
Purchase of intangible assets (1.4) (3.1)
Disposal of undertakings - 16.3
Disposal of investment property - 6.3
------------------------------------------------------ ------ ------- --------
Net cash outflow from investing activities (50.0) (17.6)
------------------------------------------------------ ------ ------- --------
Cash flow from financing activities
Proceeds from issue of shares (net of transaction
costs) - 87.1
Ordinary shares purchased - own shares (3.0) -
Capital return via share buyback (8.8) -
Drawdown/(repayment) of bank borrowings 9.6 (130.9)
Repayment of Private Placement Notes (47.3) -
Settlement of swaps on maturity of Private Placement (2.6) -
Notes
Repayment of lease liabilities (17.3) (14.3)
Net cash outflow from financing activities (69.4) (58.1)
------------------------------------------------------ ------ ------- --------
Net (decrease)/increase in cash and cash equivalents
and bank overdrafts (26.5) 27.0
------------------------------------------------------ ------ ------- --------
Reconciliation of opening to closing cash and
cash equivalents and bank overdrafts
Cash and cash equivalents and bank overdrafts
at beginning of year 73.6 47.0
Translation adjustment (0.4) (0.4)
Net increase in cash and cash equivalents and
bank overdrafts (26.5) 27.0
------------------------------------------------------ ------ ------- --------
Cash and cash equivalents and bank overdrafts
at end of year** 46.7 73.6
------------------------------------------------------ ------ ------- --------
* The financial year is the 53-week period ended 30 September
2022 with comparatives for the 52-week period ended 24 September
2021
** Cash and cash equivalents and bank overdrafts is made up of
cash at bank and in hand of GBP99.6m (2021: GBP119.1m) and bank
overdrafts of GBP52.9m (2021: GBP45.5m)
Notes to the financial information for the year ended 30
September 2022
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 30
September 2022.
The financial information is based on the information included
in the audited Consolidated Financial Statements of Greencore Group
plc for the year ended 30 September 2022, to which an unqualified
audit opinion is provided. Full details of the basis of preparation
of the Group Financial Statements for the year ended 30 September
2022 are included in Note 1 of the FY22 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.
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 period, the UK trading environment, especially in
food to go categories, was resilient notwithstanding some demand
volatility caused by COVID-19 related mobility restrictions in H1
22 and the increasing impact of inflation on the UK consumer during
H2 22. Notwithstanding the inflationary challenges impacting the
broader UK food industry at present, there has been limited demand
impact to date in the Group's categories. The Group will continue
to monitor the potential impact of a recessionary environment and
cost of living factors on consumer spending through the year
end.
Accordingly, the Directors have considered a number of scenarios
for the next 18 months from the year end date. These scenarios
consider the potential impact of a recessionary environment
including the impact of inflation and interest rates on consumer
spending, along with consideration of under recovery of inflation,
supply chain disruption issues and further one off future events
linked to a reduction in consumer footfall during the winter
months. The Group is satisfied that there is sufficient headroom in
the financial covenants under current facilities under each
scenario.
The Group's scenarios assume:
-- A base case projection using internally approved forecast and
strategic plans, which reflect the external economic environment.
These plans incorporate the potential impact of climate change of
the Group's capital investment process;
-- A downside scenario which assesses the potential impact of a
recessionary environment including the impact of inflation and
interest rates on consumer spending, along with consideration of
under recovery of inflation and further one-off future events
linked to a reduction in consumer footfall during the winter
months; and
-- A severe downside scenario which assesses the further impact
of inflation under recovery, along with a further reduction in
sales to reflect the impact of changes in consumer spending through
any recessionary period. In this scenario, mitigating actions are
assumed including a reduction in non-business critical capital
expenditure and reductions in the amount of the share buyback
plan.
While the Group is in a net current liability position of
GBP128.7m (2021: GBP135.9m) at 30 September 2022, the Group
retained financial strength and flexibility as at the end of 2022.
The Group had cash and undrawn committed bank facilities of
GBP398.0m at 30 September 2022 (September 2021: GBP433.6m).
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 for the next
18 months from the year end date. Accordingly, the directors adopt
the going concern basis in preparing the financial information.
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 three customers in Convenience
Foods UK & Ireland of GBP316.0m, GBP261.0m and GBP196.3m
respectively represents more than 10% of the Group's revenue (2021:
Revenue earned individually from four customers in Convenience
Foods UK & Ireland of GBP278.1m, GBP168.1m, GBP145.0m and
GBP133.9m each 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:
2022 2021
GBPm GBPm
Revenue
Food to go categories 1,161.3 842.1
Other convenience categories 578.3 482.7
---------------------------------------------------- -------- --------
Total revenue for Convenience Foods UK and Ireland 1,739.6 1,324.8
---------------------------------------------------- -------- --------
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. IT security incident
In December 2021, the Group experienced an IT security incident
that resulted in temporary unauthorised access to part of the
Group's IT systems. The Group recognised gross costs of GBP10.5m
relating to this incident from disruption to operations and
professional fees and GBP8.6m of insurance income as a result of
insurance claims arising from the IT security incident resulting in
a net expense recognised in profit or loss of GBP1.9m.
4. Exceptional Items
Exceptional items are those which are 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:
2022 2021
GBPm GBPm
----------------------------------------- ----- ------- ------
Reorganisation costs (A) (16.1) -
Restructuring costs for legacy defined
benefit pension schemes (B) (0.4) (4.0)
Profit on disposal of Molasses trading
businesses (C) - 11.3
Non-core property related income (D) - 3.3
Legacy business provisions (E) - 1.1
Total exceptional items before taxation (16.5) 11.7
Tax credit on exceptional items 3.0 0.4
------------------------------------------------- ------- ------
Total exceptional items (13.5) 12.1
------------------------------------------------- ------- ------
(A) Reorganisation costs
In the current year, the Group commenced a change programme
"Better Greencore", which is to support revitalisation of its
excellence cost efficiency programmes and unlock cost efficiencies
by reducing organisational complexity. The Group recognised a
charge of GBP8.5m in respect of consultancy fees and GBP7.6m in
respect of personnel exit costs. Better Greencore is expected to
continue in FY23 with a focus on operational and technological
excellence as part of the next phase of the programme.
(B) Restructuring costs for legacy defined benefit pension schemes
The Group incurred a charge of GBP0.4m in the current year and
GBP4.0m in the prior year in relation to restructuring costs
associated with its legacy defined benefit pension schemes in
Ireland.
(C) Profit on disposal of Molasses trading businesses
In the prior year, the Group completed the disposal of its
interest in the Molasses trading businesses recognising a profit on
disposal of GBP11.3m.
(D) Non-core property related income
In the prior year, the Group recognised a reversal of an
impairment of GBP3.3m prior to the disposal of an investment
property in the UK.
(E) Legacy business provisions
During the prior year, the Group recognised a net credit of
GBP1.1m relating to legacy provisions on discontinued
operations.
Cash flow on exceptional items
The total net cash outflow during the year in respect of
exceptional charges was GBP13.6m (2021: GBP3.3m), of which GBP0.8m
was in respect of prior year exceptional charges
5. Finance income and finance costs
2022 2021
GBPm GBPm
-------------------------------------------------------------- ------- -------
Finance income
Interest on bank deposits 0.2 -
Foreign exchange on inter-company and external balances
where hedge accounting is not applied - 0.1
-------------------------------------------------------------- ------- -------
Total finance income 0.2 0.1
-------------------------------------------------------------- ------- -------
Finance costs
Finance costs on interest bearing cash and cash equivalents,
borrowings and other financing costs (11.3) (15.0)
Interest on lease obligations (1.2) (1.3)
Net pension financing charge (1.1) (1.7)
Unwind of discount on liabilities (0.1) (0.1)
Change in fair value of derivatives and related debt
adjustment 1.9 (1.0)
Foreign exchange on inter-company and external balances (0.7) -
where hedge accounting is not applied
-------------------------------------------------------------- ------- -------
Total finance costs (12.5) (19.1)
-------------------------------------------------------------- ------- -------
6. Earnings per Ordinary Share
In the current year, the Group repurchased 9,728,677 Ordinary
Shares in the Company, by way of a share buyback, costing GBP8.8m.
These shares were immediately cancelled. The effect of this on the
weighted average number of ordinary shares was a decrease of
774,827 shares.
Numerator for Earnings per Share Calculations
2022 2021
GBPm GBPm
------------------------------------------------------ ------ ------
Profit attributable to equity holders of the Company 32.3 25.4
------------------------------------------------------ ------ ------
Denominator for Basic Earnings Per Share Calculations
2022 2021
'000 '000
-------------------------------------------------------- -------- --------
Shares in issue at the beginning of the year 526,547 446,157
Effect of shares held by Employee Benefit Trust (2,403) (1,116)
Effect of shares issued in equity placing in the year - 66,707
Effect of shares issued during the year 13 16
Effect of share buyback and cancellation in the year (775) -
-------------------------------------------------------- -------- --------
Weighted average number of Ordinary Shares in issue
during the year 523,382 511,764
-------------------------------------------------------- -------- --------
Dilutive effect of share awards 2,123 660
-------------------------------------------------------- -------- --------
Weighted average number of Ordinary Shares for diluted
earnings per share 525,505 512,424
-------------------------------------------------------- -------- --------
2022 2021
pence pence
-------------------------------------------------------- -------- --------
Basic earnings per Ordinary Share 6.2 5.0
-------------------------------------------------------- -------- --------
Diluted earnings per Ordinary Share 6.1 5.0
-------------------------------------------------------- -------- --------
7. Impairment of goodwill, intangible assets and property, plant and equipment
At 30 September 2022, the Group's market capitalisation was
lower than the Group's net assets which is an indicator of
impairment and therefore an impairment review was performed. The
Group performed an impairment test on the carrying value of
goodwill (GBP449.4m) at 30 September 2022 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 (2021: GBPnil). There was also no
impairment of intangible assets (2021: GBPnil). There was an
impairment of GBP0.9m recorded on property, plant and equipment
following a review (2021: GBP4.4m).
8. Borrowings and cash and cash equivalents
2022 2021
GBPm GBPm
------------------------------------------------- -------- --------
Bank overdrafts (52.9) (45.5)
Bank borrowings (158.8) (150.1)
Private placement notes (67.9) (106.6)
--------------------------------------------------- -------- --------
Total borrowings (279.6) (302.2)
--------------------------------------------------- -------- --------
Cash and cash equivalents 99.6 119.1
--------------------------------------------------- -------- --------
Total borrowings and cash and cash equivalents (180.0) (183.1)
--------------------------------------------------- -------- --------
Total borrowings and cash and cash equivalents is used by the
Group for the purpose of calculating leverage under the Group's
financing agreements.
Bank borrowings
The Group's bank borrowings, net of finance fees comprised of
GBP158.8m at 30 September 2022 (2021: GBP150.1m) with maturities to
January 2026. The Group had GBP350.0m (2021: GBP360.0m) of undrawn
committed bank facilities in respect of which all conditions
precedent had been met. Uncommitted facilities undrawn at 30
September 2022 amounted to GBP9.5m (2021: GBP6.7m).
Private Placement Notes
The Group's outstanding Private Placement Notes net of finance
fees comprised of GBP67.9m (denominated as $55.9m and GBP18m) at 30
September 2022 (2021: GBP106.6m, denominated as $120.9m and
GBP18m). These were issued as fixed rate debt in June 2016.
The Group swapped the $55.9m 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.
During the year the Group repaid the fixed rate Private
Placement Note of $65m in full in October 2021.
9. Retirement Benefit Obligations
The Group operates one legacy defined benefit pension scheme and
one legacy defined benefit commitment in Ireland (the 'Irish
schemes') and one legacy defined benefit pension scheme and one
legacy defined benefit commitment in the UK (the 'UK schemes')
(collectively the "schemes"). These are all closed to future
accrual and there is an assumption applied in the valuation of the
schemes that there will be 0% 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 schemes,
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 GBP46.0m at 24 September 2021 to a net liability of
GBP20.3m at 30 September 2022. This reduction in the net liability
position is mainly driven by actuarial gains of GBP14.4m due to
change in financial assumptions. During the year, the Group paid
GBP12.6m (2021: GBP8.0m) 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 modestly below GBP15m in FY23.
The financial position of the schemes was as follows:
UK Irish 2022 UK Irish 2021
Schemes Schemes Total Schemes Schemes Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- --------- --------- -------- --------- --------- --------
Fair value of plan assets 168.7 170.3 339.0 260.6 220.7 481.3
Present value of scheme liabilities (228.0) (131.3) (359.3) (347.7) (179.6) (527.3)
------------------------------------- --------- --------- -------- --------- --------- --------
(Deficit)/surplus in schemes (59.3) 39.0 (20.3) (87.1) 41.1 (46.0)
Deferred tax asset 14.8 (4.9) 9.9 21.8 (5.1) 16.7
------------------------------------- --------- --------- -------- --------- --------- --------
Net (liability)/asset at end
of year (44.5) 34.1 (10.4) (65.3) 36.0 29.3
------------------------------------- --------- --------- -------- --------- --------- --------
Presented as:
Retirement benefit asset* 39.8 42.1
Retirement benefit obligation (60.1) (88.1)
------------------------------------- --------- --------- -------- --------- --------- --------
*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
2022 2021 2022 2021
-------------------------------------------------- -------- -------- ------------- ------------
Rate of increase in pension payments* 3.35% 3.35% 0.00% 0.00%
Discount rate 5.00% 1.90% 4.00% 1.13%
Inflation rate** 3.55% 3.45% 2.40% 1.80%
-------------------------------------------------- -------- -------- ------------- ------------
* 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.
** The assumption for RPI and CPI are derived from relative yields
of index-linked and fixed interest government bonds
10. Dividends Paid and Proposed
There were no dividends paid in the current or prior year and
there are no dividends proposed to be paid.
In the current year, the first phase of the value return to
shareholders completed with GBP8.8m value returned up to 30
September 2022 in the form of a share buyback, with GBP10.0m
buyback completed on 6 October 2022. As announced in May 2022, it
is the Group's intention to return GBP50.0m of value to
shareholders over the next two years, with the Group planning to
return GBP15.0m in FY23.
11. Subsequent Events
Pension plan asset
In November 2022, the Trustees of the Irish legacy defined
benefit pension scheme entered into an annuity buy-in transaction
to purchase an insurance policy for the pensioner liabilities
representing approximately 80% of the liabilities in the Irish
scheme. The insurance policy is treated as a plan asset and the
fair value of the policy is deemed to be the present value of the
related obligations.
Recommencement of share buyback programme
The Group will recommence a return of value to investors by way
of the share buyback programme which is expected to return a
further GBP15m to shareholders in FY23.
12. 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 focus on
the core business performance of the Group.
Pro Forma Revenue Growth
Pro Forma Revenue Growth FY22
The Group uses Pro Forma Revenue Growth as a supplemental
measure of its performance. The Group believes that Pro Forma
Revenue Growth provides a more 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 the period in FY21
up to the date of disposal. As the current year was a 53 week
period, Pro Forma Revenue adjusts the current year reported revenue
to exclude the additional revenue earned from the additional
trading week (FY21: 52 week period). It also presents the revenue
on a constant currency basis utilising FY21 FX rates on FY22
reported revenue.
2022
Convenience
Foods
UK & Ireland
%
------------------------------------------------- --------------
Reported revenue - % increase from FY21 to FY22 31.3%
Impact of disposals 0.4%
Impact of currency 0.2%
Impact of additional trading week (2.5%)
------------------------------------------------- --------------
Pro Forma Revenue Growth FY22 (%) 29.4%
------------------------------------------------- --------------
The table below shows the Pro Forma Revenue Growth split by food
to go categories and other convenience categories.
Food to go Other convenience
categories categories
H1 H2 Full H1 H2 Full
FY22 FY22 Year FY22 FY22 Year
% % % % % %
----------------------------------- ------ ------- ------- ------ ------- -------
Reported revenue- % increase from
FY21 to FY22 48.0% 31.1% 37.9% 12.9% 26.5% 19.8%
Impact of disposals - - - 2.0% - 1.0%
Impact of currency - - - 0.9% 0.2% 0.6%
Impact of additional trading week - (4.6%) (2.7%) - (4.2%) (2.2%)
-----------------------------------
Pro Forma Revenue Growth FY22
(%) 48.0% 26.5% 35.2% 15.8% 22.5% 19.2%
----------------------------------- ------ ------- ------- ------ ------- -------
Pro Forma Revenue Growth FY21
While Pro Forma Revenue Growth is not directly comparable year
on year, we have included the prior year disclosure for
completeness. This has been calculated by adjusting FY21 reported
revenue to reflect the disposal of Premier Molasses Company Limited
for FY20 and for the period 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 - % increase from FY20 to FY21 4.8%
Impact of disposals 1.3%
Impact of currency 0.1%
Pro Forma Revenue Growth FY21 (%) 6.2%
------------------------------------------------- --------------
The table below shows the Pro Forma Revenue Growth 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 - % increase from
FY20 to FY21 (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 FY21 (%) (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 the Group.
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:
2022 2021
GBPm GBPm
----------------------------------------------------------- ------- --------
Profit for the financial year 32.3 25.7
Taxation (A) 7.5 2.1
Exceptional items 16.5 (11.7)
Net finance costs (B) 12.3 19.0
Amortisation of acquisition related intangibles 3.6 3.9
----------------------------------------------------------- ------- --------
Adjusted Operating Profit 72.2 39.0
Depreciation and amortisation (C) 54.7 53.3
----------------------------------------------------------- ------- --------
Adjusted EBITDA 126.9 92.3
----------------------------------------------------------- ------- --------
4.2
Adjusted Operating Margin (%) % 2.9%
----------------------------------------------------------- ------- --------
(A) Includes tax credit on exceptional items of GBP3.0m (2021: GBP0.4m).
(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:
2022 2021
GBPm GBPm
--------------------------------------------------------- ------- --------
Profit before taxation 39.8 27.8
Exceptional items 16.5 (11.7)
Pension finance items 1.1 1.7
Amortisation of acquisition related intangibles 3.6 3.9
FX and fair value movements(A) (1.2) 0.9
--------------------------------------------------------- ------- --------
Adjusted Profit Before Tax 59.8 22.6
--------------------------------------------------------- ------- --------
(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:
2022 2021
GBPm GBPm
------------------------------------------------------------ -------- --------
Profit attributable to equity holders of the Group 32.3 25.4
Exceptional items (net of tax) 13.5 (12.1)
FX effect on inter-company and external balances where
hedge accounting is not applied 0.7 (0.1)
Movement in fair value of derivative financial instruments
and related debt adjustments (1.9) 1.0
Amortisation of acquisition related intangible assets
(net of tax) 2.7 3.2
Pension financing (net of tax) 0.8 1.4
------------------------------------------------------------ -------- --------
Adjusted Earnings 48.1 18.8
------------------------------------------------------------ -------- --------
2022 2021
'000 '000
------------------------------------------------------------ -------- --------
Weighted average number of ordinary shares in issue
during the year 523,382 511,764
------------------------------------------------------------ -------- --------
2022 2021
pence pence
------------------------------------------------------------ -------- --------
Adjusted Basic Earnings Per Share 9.2 3.7
------------------------------------------------------------ -------- --------
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:
2022 2021
GBPm GBPm
--------------------------------- ------ ------
Purchase of property, plant,
and equipment 48.6 37.1
Purchase of intangible assets 1.4 3.1
------------------------------------- ------ ------
Net cash outflow from capital
expenditure 50.0 40.2
------------------------------------- ------ ------
Strategic Capital Expenditure 33.1 24.0
Maintenance Capital Expenditure 16.9 16.2
------------------------------------- ------ ------
Net cash outflow from capital
expenditure 50.0 40.2
------------------------------------- ------ ------
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, acquisition and disposal of
undertakings, disposal of investment property and adjusting for
lease payments and 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:
2022 2021
GBPm GBPm
--------------------------------------------------------- ------- -------
Net cash inflow from operating activities 92.9 102.7
Net cash outflow from investing activities (50.0) (17.6)
--------------------------------------------------------- ------- -------
Net cash inflow from operating and investing activities 42.9 85.1
Strategic Capital Expenditure 33.1 24.0
Repayment of lease liabilities (17.3) (14.3)
Disposal of undertakings - (16.3)
Disposal of investment property - (6.3)
Free Cash Flow 58.7 72.2
--------------------------------------------------------- ------- -------
Adjusted EBITDA 126.9 92.3
--------------------------------------------------------- ------- -------
Free Cash Flow Conversion (%) 46.3% 78.2%
--------------------------------------------------------- ------- -------
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 30 September 2022 is as follows:
At Translation At
24 September Cash and non-cash 30 September
2021 flow adjustments 2022
GBPm GBPm GBPm GBPm
-------------------------------------- -------------- ------- -------------- --------------
Cash and cash equivalents and
bank overdrafts 73.6 (26.5) (0.4) 46.7
Bank borrowings (150.1) (9.6) 0.9 (158.8)
Private Placement Notes (106.6) 47.3 (8.6) (67.9)
Net debt excluding lease liabilities (183.1) 11.2 (8.1) (180.0)
-------------------------------------- -------------- ------- -------------- --------------
Lease liabilities (59.6) 18.5 (6.9) (48.0)
-------------------------------------- -------------- ------- -------------- --------------
Net Debt (242.7) 29.7 (15.0) (228.0)
-------------------------------------- -------------- ------- -------------- --------------
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)
-------------------------------------- -------------- ------ -------------- --------------
RETURN ON INVESTED CAPITAL ('ROIC')
The Group uses ROIC as a key measure to determine returns 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.
2022 2021
GBPm GBPm
---------------------------------------- ------- ------------------
Adjusted Operating Profit 72.2 39.0
Taxation at the effective tax rate (A) (13.7) (5.9)
---------------------------------------- ------- ------------------
Group NOPAT 58.5 33.1
---------------------------------------- ------- ------------------
2022 2021
GBPm GBPm
---------------------------------------------------- -------- --------
Invested Capital
Total assets 1,338.7 1,291.5
Total liabilities (873.1) (868.3)
Net Debt 228.0 242.7
Derivatives not designated as fair value hedges (14.8) 5.6
Retirement benefit obligation (net of deferred tax
asset) 10.4 29.3
Invested Capital for the Group(B) 689.2 700.8
---------------------------------------------------- -------- --------
Average Invested Capital for ROIC calculation for
the Group 695.0 728.8
---------------------------------------------------- -------- --------
ROIC (%) for the Group 8.4% 4.5%
---------------------------------------------------- -------- --------
(A) The effective tax rates for the Group for the financial year
ended 30 September 2022 and 24 September 2021 were 19% and 15%
respectively.
(B) The invested capital for the Group in 2020 was
GBP756.8m.
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