SIGNIFICANT GROWTH AND PROGRESS IN A CHALLENGING YEAR
HIGHLIGHTS
- Completed the acquisition of Peacock Foods in the US, the Group’s largest ever acquisition, funded in part through a rights issue
- Enhanced the Group’s leadership position in the UK through strong organic growth, supported by a substantial investment and rigorous cost management programme
- Group Pro Forma Revenue growth of 9.4%
- Operating leverage impacted by challenges associated with delivering the significant change and transformation programme, with considerable investment and restructuring charges also incurred
- Improved profit delivery and cash generation in second half of the year
- Overall investment and change in the year positions the Group well to drive profitable growth and returns in a dynamic marketplace
SUMMARY FINANCIAL PERFORMANCE1, 2
| FY17 | FY16 | Change | |
| £m | £m | ||
| Group Revenue | 2,319.7 | 1,481.9 | +56.5% |
| Adjusted EBITDA | 189.7 | 138.4 | +37.1% |
| Adjusted Operating Profit | 140.1 | 102.0 | +37.4% |
| Adjusted Operating Margin | 6.0% | 6.9% | -90bps |
| Adjusted Profit Before Tax | 116.7 | 85.9 | +35.9% |
| Adjusted EPS (pence) | 15.4 | 16.0 | -3.8% |
| Proposed dividend per share (pence) | 5.47 | 5.47 | – |
| Exceptional Items | (78.2) | (17.4) | |
| Group Operating Profit | 42.7 | 75.4 | -43.4% |
| Profit before taxation | 12.4 | 48.2 | -74.3% |
| Basic EPS (pence) | 1.9 | 9.5 | -80.0% |
| Operating Cash Flow | 117.8 | 113.9 | +£3.9m |
| Net Debt | (519.2) | (331.8) | -£187.4m |
| Net Debt:EBITDA as per financing agreements | 2.4x | 2.4x | – |
| Return on Invested Capital (‘ROIC’) | 12.2% | 13.8% | -160bps |
Commenting on the results, Patrick Coveney, Chief Executive Officer, said:
“Greencore has been substantially transformed this year and the decisions made and work undertaken in FY17 have set us up very well for further progress.
The acquisition of Peacock Foods and the significant UK network investments made to support large new business wins have reshaped our business. Group pro forma revenue growth was strong at 9.4% – driven in large part by 18.8% growth in UK Food to Go. We are pleased with the progress of the US integration to-date and with the development of our US commercial pipeline, as illustrated by a recently extended long term, strategic partnership with one of our largest and most important customers.
While we have delivered good financial and operating progress in the year, the transformation has not been without its challenges. However, we are confident that our strategy, portfolio, business model and momentum positions Greencore well to drive profitability, cash flows and returns in FY18 and beyond.”
STRATEGIC DEVELOPMENTS
Convenience Foods UK & Ireland
- Strong Pro Forma Growth of 18.8% in Food to Go driven by the Group’s sole supply customer partnership model
- Strengthened the Group’s leadership position in the food to go category with several significant business wins and commercial launches delivered to plan, plus contracts extended with core customers
- Capacity now in place for medium term growth in Food to Go, following a phase of intense network investment and the addition of further capacity through the acquisition of the Heathrow facility and the integration of the Atherstone facility
- Substantial investment in the UK ready meals network, and further rationalisation of the UK portfolio with the exit from the desserts manufacturing business in Evercreech
- Streamlining and strengthening of UK divisional and cost structures, and a review of technology investment plans to align with the Group’s strategic objectives
Convenience Foods US
- Completed the acquisition of Peacock Foods at the end of December 2016, transforming the Group’s US business
- US integration proceeding to plan, focussed on reducing overheads, optimising procurement and improving network efficiencies
- First business wins from the combined US commercial pipeline were delivered in the period, driven by new and existing Consumer Packaged Goods (‘CPG’) customers across the enlarged network
- Group recently extended its long-term, strategic partnership with one of its largest and most important customers
Cash flow and returns
- Increased focus on Group cash flow generation and capital discipline, targeting increased profit conversion from the existing asset base
OUTLOOK
Greencore anticipates delivering a year of strong growth in FY18 and is well positioned to drive improved profitability, cash flow and returns over the medium term. Building on what has been an intense phase of strategic progress and network investment, Greencore will now take advantage of its exposure to higher growth categories in the UK and US convenience food markets.
The Group anticipates good revenue growth in FY18, driven by a full year contribution from Peacock Foods and organic growth in both the UK and the US. Further new business wins are expected in the US, the financial impact of which will be determined by the phasing of commercial execution. The Group anticipates that the UK business will see a modest improvement in operating leverage despite continued inflationary pressures, and that the US division will benefit from the delivery of further cost synergies. The rate of EPS growth is expected to be moderated by an increasing tax rate. The Group also anticipates that by the end of the year it will be approaching its benchmark leverage ratio of approximately 2x Net Debt to EBITDA.
Basis of preparation
The financial information included within this full year results statement has been extracted from 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 risks and uncertainties. The Group has based these forward‐looking statements on current expectations and projections about future events. These forward-looking statements may generally, but not always, be identified by the use of words such as “will”, “anticipates”, “should”, “expects”, “is expected to”, “estimates”, “believes”, “intends” or similar 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. You should not place undue reliance on any forward-looking statements. These forward-looking statements are made as of the date of this full year results statement. The Group expressly disclaims any obligation to update these forward-looking statements other than as required by law.
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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 APM’s along with their definitions are provided in the appendix
2 Earnings per share and Dividend per share figures for FY16 have been restated to reflect the impact of the bonus element of the rights issue and are set out in notes 4 and 5.
3 Market/category growth rates are based on Nielsen data for the 52 weeks to 9 September 2017, 7 October 2017 or 4 November 2017
