TIDMGNC
RNS Number : 8259U
Greencore Group PLC
28 November 2023
http://www.rns-pdf.londonstockexchange.com/rns/8259U_1-2023-11-27.pdf
28 November 2023
Performance stabilised, business well positioned for the
future
Greencore Group plc ('Greencore' or the 'Group'), a leading
manufacturer of convenience food in the UK, today issues its
results for the 52 week period ended 29 September 2023.
SUMMARY FINANCIAL PERFORMANCE
FY23 FY22 Change
GBPm GBPm
Group Revenue 1,913.7 1,739.6 +10.0%
Pro Forma Revenue Growth +13.5%
Adjusted EBITDA 132.8 126.9 +4.6%
Group Operating Profit 66.0 52.1 +26.7%
Adjusted Operating Profit 76.3 72.2 +5.7%
Adjusted Operating Margin 4.0% 4.2% -20 bps
Group Profit before taxation 45.2 39.8 +13.6%
Adjusted Profit Before Tax 58.1 59.8 -2.8%
Basic EPS (pence) 7.2 6.2 +16.1%
Adjusted EPS (pence) 9.3 9.2 +1.1%
Group Exceptional Items (after
tax) (5.5) (13.5) +59.3%
Free Cash Flow 56.8 58.7 -GBP1.9m
Net Debt (excluding lease liabilities) 154.0 180.0
Net Debt: EBITDA as per financing
agreements 1.2x 1.5x
Return on Invested Capital
("ROIC") 8.9% 8.4% +50bps
FINANCIAL HIGHLIGHTS(1,2)
-- Volume growth ahead of the wider market(3) , despite exiting low margin business
-- Strong second half, supporting delivery of Adjusted Operating
Profit of GBP76.3m in FY23, up 5.7%
-- Recovery of inflation, supported by cost reductions and other mitigations
-- Net Debt (excluding leases) to Adjusted EBITDA reduced to 1.2x
-- ROIC increased to 8.9%, up from 8.4% in FY22
-- Continued share buyback programme will deliver on commitment of GBP50m value return
STRATEGIC & OPERATIONAL HIGHLIGHTS(1)
-- Stabilisation of business completed through delivery of
"Horizon 1" objectives, moving to "Horizon 2", rebuilding
profitability and returns
-- Proactive management of contract profitability and manufacturing capacity utilisation
-- Continued outstanding operational service levels of 98.5% achieved in FY23
-- Refocused sustainability agenda
-- Disposal of Trilby Trading Limited, increasing our focus on the convenience food market
-- New five year GBP350m sustainability linked revolving credit
facility providing significant financial flexibility for future
growth
-- Appointment of Catherine Gubbins as Chief Financial Officer and Executive Director
Commenting on the results, Dalton Philips, Chief Executive
Officer, said
" In a challenging market environment, we have stabilised the
business, and made good strategic progress. The Group delivered
above-market volume growth(3) , despite exiting a number of low
margin contracts. We also successfully mitigated and recovered the
majority of our input cost inflation through effective operational
and commercial initiatives. We are encouraged by our FY23
performance and the progress across the business. That performance
is testament to the strength of our relationships with our
customers and suppliers and, in particular, to the hard work and
dedication of the entire Greencore team.
The Group continues to focus on improving profitability and is
investing in a number of initiatives focused on both optimising our
network and our IT infrastructure, to give us the platform for
future growth. Our stronger balance sheet provides the financial
flexibility to underpin this growth. We are pleased with the start
to the year and although it's early days, the Group remains
confident in delivering FY24 within the range of current market
expectations(4) ."
____________________________________________________________________________________________________
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 Financial Year Results Statement.
2 The financial year is the 52-week period ended 29 September
2023 with comparatives for the 53-week period ended 30 September
2022.
3 Kantar grocery market performance for the 52 weeks to 1(st) October 2023.
4 Market expectations as complied by Greencore from available
analyst estimates on 13 November 2023 (
https://www.greencore.com/investor-relations/analyst-centre )
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 9.30am on 28 November 2023 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
Jonathan Solesbury Interim Chief Financial Tel: +353 (0)
Officer 1 605 1000
Curtis Armstrong Finance Director Tel: +44 (0) 1246
- FP&A and IR 384649
David Marshall Head of Capital Markets Tel: +353 (0)
1 605 1000
Jonathan Neilan FTI Consulting Tel: +353 (0)
86 231 4135
Nick Hasell FTI Consulting Tel: +44 (0) 203
727 1340
About Greencore
We are a leading manufacturer of convenience food in the UK and
our purpose is to make every day taste better. To help us achieve
this we have a model called The Greencore Way, which is built on
the differentiators of People at the Core, Great Food, Excellence
and Sustainability - The Greencore Way describes both who we are
and how we will succeed. 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 FY23 we manufactured 779m sandwiches and other food to go
products, 132m chilled ready meals, 45m chilled soups and sauces
and 245m jars of cooking sauces, pickles and condiments. We carry
out more than 10,400 direct to store deliveries each day. We have
16 world-class manufacturing sites and 17 distribution centres in
the UK, with industry-leading technology and supply chain
capabilities. We generated revenues of GBP1.9bn in FY23 and employ
13,600 people. We are headquartered in Dublin, Ireland. For further
information go to www.greencore.com or follow Greencore on social
media.
OPERATING REVIEW(1)
Strategic developments
The Group delivered good progress against its strategic
priorities in FY23, underpinned by close customer engagement in a
highly inflationary and difficult consumer spending environment.
The Group delivered year-on-year reported revenue growth of 10.0%,
through a combination of underlying volume growth, including net
new business wins and also recovering significant levels of
inflation. Manufactured volume growth of 0.5% represents a strong
volume performance, relative to the wider market performance(3) .
The Group maintained outstanding operational service levels during
the financial year, working closely with our customers and supply
partners, with overall service levels at 98.5% in FY23 compared to
97.4% in FY22.
Management has remained focused on proactively managing contract
returns and capacity management across the Group. The Group has
exited a number of contracts, which were delivering sub-optimal
returns with a focus on maximising returns and optimising use of
our manufacturing footprint.
The Group successfully delivered on its Better Greencore
programme targets in FY23, a change programme to drive efficiency
and profit improvement, with a focus on fixed cost and overhead
inflation. The targeted GBP30m of annualised benefits from this
programme were realised during H2 FY23. In March 2023, the Group
accelerated a headcount reduction programme which resulted in the
reduction of approximately 250 salaried roles, in addition to this,
a further 100 vacant salaried roles were removed from the
organisational structure.
An exceptional charge of GBP8.9m was recognised in FY23 related
to the Better Greencore programme; bringing the cumulative cost of
delivery of the programme to GBP25.7m, including GBP0.7m of capital
expenditure.
During the financial year the Group established a strategic
framework for recovery and growth, with goals set across a three
horizon framework:
-- The first objective was to stabilise the business through the
first horizon, which was achieved in FY23;
-- The second horizon is focused on the rebuilding of profitability and returns; and
-- The focus of the third horizon is to further develop our strong growth platform.
Our horizon framework will guide the prioritisation and
sequencing of our long-term strategic objectives.
The Group also initiated incremental activity on commercial and
operational efficiencies to support profitability and mitigate
inflation in FY23. The Group made good progress in implementing
these in FY23 as outlined below.
-- A commercial excellence programme combining profit
enhancement activities across volume, cost, pricing and product
mix:
o a deep product innovation pipeline has enabled the Group to
drive volume and unlock value for both Greencore and customers;
o improvements in our NPD process have increased efficiency and
allowed us to better support customers;
o in FY23, the number of SKUs were reduced by 9% with volume per
SKU increasing 10%; while the Group continued to be a supplier of
choice to our chosen partners; and
o increased focus on returns has led to the resignation from
contracts which were delivering sub-optimal returns.
-- A structured operational excellence programme has been
rolled-out across the business. This involves:
o detailed diagnostic benchmarking of the Group's manufacturing
facilities;
o the selection of four pilot large sites for improvement
activities, which together account for c.50% of Group COGS; and
o implementation of improvement methodologies, with each of the
four sites focused on one of material waste, labour, planning,
supply chain planning or engineering.
Following on from this the Group will continue to focus on
commercial excellence, operational excellence and continued tight
management of costs.
The Group announced the appointment of Catherine Gubbins as
Executive Director and Chief Financial Officer on 5September 2023.
Catherine joins the business on 6 February 2024 from daa plc, the
global airports and travel retail group where she has worked for
nine years in various roles including as Group CFO since March
2021.
In November 2023, John Amaechi and Sly Bailey advised the Board
that they would not be seeking re-election at the 2024 Annual
General Meeting.
Trading Performance
FY23 FY22 Change Change
GBPm GBPm (As reported) (Pro Forma
Basis)
Revenue 1,913.7 1,739.6 +10.0% +13.5%
-------- -------- --------------- ------------
Group Operating Profit 66.0 52.1 +GBP13.9m n/a
-------- -------- --------------- ------------
Adjusted Operating
Profit 76.3 72.2 +GBP4.1m n/a
-------- -------- --------------- ------------
Group Profit Before
Tax 45.2 39.8 +GBP5.4m n/a
-------- -------- --------------- ------------
Group reported revenue increased by 10.0% to GBP1.9bn in FY23.
Reported revenue growth was driven by an 11.3% benefit from
recovery of cost inflation, a 0.7% benefit from manufactured volume
increases (a combination of underlying growth, price mix and new
business wins) and a (1.9%) decline related to distribution of
third-party goods, the Trilby Trading Limited business and revenue
contribution from the 53(rd) week in FY22. On a pro forma basis,
revenue increased 13.5% in FY23 as a result of adjusting for the
impact of the 53(rd) week in FY22 and the disposal of the edible
oils trading business, Trilby Trading Limited.
Overall, Group Operating Profit in FY23 increased 26.7% to
GBP66.0m and Adjusted Operating Profit increased by 5.7% to
GBP76.3m. The Adjusted Operating Profit improvement was driven by
the increased revenue performance underpinned by the operational
and commercial initiatives implemented during the financial year.
Group Profit Before Tax was GBP45.2m in FY23, compared to GBP39.8m
in FY22.
Substantial inflation in the Group's main cost components led to
a low double digit percentage rate of inflation in FY23. Inflation
incurred was largely recovered or mitigated in the period, through
a number of mechanisms, including pass-through of cost increases,
cost reductions, product and range reformulations, and alternative
sourcing. Specifically, the Better Greencore change programme
alongside other efficiency initiatives also supported the
offsetting, recovery and mitigation of labour, fixed cost and other
overhead cost inflation.
The largest component of inflation was in commodities across raw
materials and packaging, some of which was recovered through
pre-agreed recovery mechanisms in place with a number of customers.
The other elements of inflation were largely recovered through a
combination of close customer engagement and operational
efficiencies. Key initiatives on which the Group worked in
collaboration with customers, included range alterations, packaging
redesigns and product reformulations.
New business, net of business losses, contributed c.2% of the
Group's revenue growth in the period. The new business was largely
driven by the annualisation of the on-boarding of a strategic
business win across multiple categories, which was supported by a
strategic capital investment.
The Group managed a very active commercial agenda with customers
in FY23 and launched approximately 400 new or reformulated
products, within the Group's total SKU range of more than 1,600
products. Examples of launches with key customers during the
financial year include Christmas ranges of sandwiches. In January
2023, a series of new own label brands were launched in the vegan
and health category with major retailers. We also launched a new
range of cooking sauces, as well as creating summer twists on the
nation's favourite quiche and picnic ranges.
Revenue in the Group's Food to Go categories (comprising
sandwiches, salads, sushi and chilled snacking) totalled GBP1.25bn
and accounted for approximately 65% of reported revenue. Reported
revenue increased by 7.9% in these categories, largely driven by
inflation recovery, in addition to volume growth in sandwiches and
the contribution of new business wins. The Group also experienced
volume growth across the Food to Go Salads category, however there
were weaker performances in the Side of Plate category and a
continued challenging own label sushi market. Revenue from the
distribution of third-party products accounted for approximately 9%
of Group revenue in FY23.
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 the Trilby Trading Limited business.
Reported revenue across these categories increased by 14.3% to
GBP661.1m in FY23. The increase was driven by inflation recovery,
in addition to volume increases across a number of categories.
Revenue related to volume growth was 0.4% higher than in FY22,
excluding the impact of the 53(rd) week in FY22, due largely to the
annualisation of new business wins onboarded in the ready meals
category in FY22. In addition to this the Group also saw a strong
volume performance in the cooking sauce and soup categories,
however much of the remainder of the grocery category saw a more
challenging performance.
Group Cash Flow and Returns
FY23 FY22 Change
GBPm GBPm (as reported)
Free Cash Flow 56.8 58.7 -GBP1.9m
------ ------ ---------------
Net Debt 199.0 228.0 -GBP29.0m
------ ------ ---------------
Net Debt (excluding lease
liabilities) 154.0 180.0 -GBP26.0m
------ ------ ---------------
ROIC 8.9% 8.4% 50bps
------ ------ ---------------
The Group continued to carefully manage both Cash Flows and
leverage in FY23.
The Group recorded a Free Cash inflow of GBP56.8m in FY23 a
modest decrease on the prior year as the higher profitability in
FY23, was offset by increases in financing and tax costs. Free Cash
Flow conversion was 42.8% compared with 46.3% in FY22.
The Group's Net Debt at 29 September 2023 was GBP199.0m, a
decrease of GBP29.0m compared to 30 September 2022. Net Debt
excluding lease liabilities was GBP154.0m down 14% on the prior
year due to increased profitability, reduction in capital
expenditure and disposal proceeds of Trilby Trading Limited. The
Group's Net Debt: EBITDA leverage covenant as measured under
financing agreements was 1.2x at period end, compared to 1.5x at 30
September 2022.
In January 2023, the Group further strengthened its balance
sheet when it extended the maturity on its GBP50.0m bilateral
facility by two years to January 2026. As at 29 September 2023, the
Group had total committed debt facilities of GBP482.8m, a weighted
average maturity of 2.1 years and cash and undrawn committed bank
facilities of GBP327.8m. Subsequent to the year end, the Group has
refinanced its debt facilities with a new five year GBP350.0m
sustainability linked revolving credit facility.
ROIC increased to 8.9% for the year ended 29 September 2023,
compared to 8.4% for the prior year. The year-on-year increase was
driven primarily by increased profitability in the 12-month period
to 29 September 2023. Average invested capital decreased
year-on-year from GBP695.0m to GBP678.1m.
Better Future Plan
During FY23, we focused on assigning ownership of action and
refined topic priorities to help us to reach our targets.
Our FY23 key sustainability strategy progress included the
implementation of a new plan ownership model which sees plan owners
within relevant business functions take responsibility for each
element of our Better Future Plan and defined the strategic focus
to four priorities; Energy, Food Waste, Communities and Healthy and
Sustainable Diets.
Progress across the Better Future Plan was made as outlined
below:
-- reported on deforestation-free soy for the first time,
providing visibility of the total soy footprint;
-- embedded human rights as an agenda item for discussion in key
supplier performance meetings;
-- launched scope 3 carbon engagement with key suppliers, for collaboration with suppliers;
-- completed energy savings opportunity scheme (ESOS) audits
across 80% of our total group energy usage; andon-boarded the
Mondra environmental footprinting tool.
FINANCIAL REVIEW(1)
Revenue and Operating Profit
Reported revenue in the period was GBP 1,913.7 m, an increase of
10.0% compared to FY22, due to increased volume in the financial
year including new business wins, as well as recovery of inflation.
Pro Forma Revenue increased by 13.5%. Pro Forma Revenue adjusts for
the disposal of the Trilby Trading Limited in both financial years
and has adjusted FY22 revenue for the additional week of
trading.
Group Operating Profit increased from GBP52.1m in FY22 to
GBP66.0m in FY23 as a result of the increased revenue performance
underpinned by the operational and commercial initiatives
implemented during the financial year . Adjusted Operating Profit
was GBP76.3m compared to GBP72.2m in FY22 . Adjusted Operating
Margin was 4.0 %, 20 bps lower than FY22.
Net finance costs
The Group's net bank interest cost was GBP16.9m in FY23, an
increase of GBP5.8m versus FY22. The increase was driven by higher
cost of debt during FY23. The Group also recognised a GBP1.2m
interest charge relating to the interest payable on lease
liabilities in the period (FY22: GBP1.2m).
The Group's non-cash finance charge in FY23 was a net GBP2.7m
(FY22: GBPNil). The change in the fair value of derivatives and
related debt adjustments including foreign exchange in the
financial year was a GBP1.4m charge (FY22: GBP1.2m credit) and the
non-cash pension financing charge of GBP1.2m was GBP0.1m higher
than the FY22 charge of GBP1.1m.
Profit before taxation
The Group's Profit before taxation increased from GBP39.8m in
FY22 to GBP45.2m in FY23, driven by higher Group Operating Profit
and lower exceptional items offset by higher finance costs.
Adjusted Profit Before Tax in the period was GBP58.1m compared to
GBP59.8m in FY22, the decrease primarily driven by a higher
effective tax rate.
Taxation
The Group's effective tax rate in FY23 was 21 % (FY22: 19%). The
increase in the effective tax rate reflects the increase in the UK
corporation tax rate.
Exceptional items
The Group had a pre--tax exceptional charge of GBP6.7m in FY23,
and an after tax charge of GBP5.5m, comprised as follows:
Exceptional Items GBPm
Reorganisation costs (8.9)
------
Pension restructuring (0.4)
------
Profit on disposal of trading business 0.1
------
Release of legacy business liability 1.7
------
Reversal of Impairment 0.6
------
Non-core property related income 0.2
------
Exceptional items (before tax) (6.7)
------
Tax on exceptional items 1.2
------
Exceptional items (after tax) (5.5)
------
In FY23, the Group continued the Better Greencore programme to
support the Group's excellence cost efficiency programmes and to
unlock further cost efficiencies by reducing organisational
complexity. The Group recognised a charge of GBP8.9m in respect of
work carried out in the period (FY22: GBP16.1m). These exceptional
costs were offset by a number of exceptional credits which included
the profit on disposal of Trilby Trading Limited of GBP0.1m and the
release of a legacy business liability of GBP1.7m.
Earnings per share
The Group's basic earnings per share for FY23 was 7.2 pence
compared to 6.2 pence in FY22. This was driven by a GBP3.6m
increase in profit attributable to equity holders and a decrease in
the weighted average number of shares in issue in FY23 to 495.4m
(FY22: 523.4m) due to the impact of the share buyback
programme.
Adjusted Earnings were GBP46.2m in the period, GBP1.9m behind
FY22 largely due to an increase in Adjusted Operating Profit offset
by an increase in interest and tax costs. Adjusted Earnings Per
Share of 9.3 pence compared to adjusted earnings per share of 9.2
pence in FY22.
Cash Flow and Net Debt
Adjusted EBITDA was GBP5.9m higher in FY23 at GBP132.8m. The
Group recognised a net working capital inflow of GBP2.2m (FY22:
working capital inflow of GBP2.0m). Maintenance Capital Expenditure
of GBP26.6m was recorded in the financial year (FY22: GBP16.9m).
The cash outflow in respect of exceptional charges was GBP10.9m
(FY22: GBP13.6m).
Interest paid in the period was GBP17.6m (FY22: GBP16.7m),
including interest of GBP1.2m on lease liabilities, an increase on
FY22 reflecting higher interest costs on borrowings in FY23. The
Group recognised tax paid of GBP2.7m (FY22: GBP2.2m tax receipt) in
the period. The cash tax payable by the Group will remain low due
to the availability of full expensing relief for capital
expenditure. The Group's effective tax rate will be higher than the
cash tax rate in the medium term as deferred tax liabilities will
arise on assets where full expensing relief has been claimed. The
deferred tax liabilities will release over the useful life of the
assets. Cash repayments on lease liabilities decreased to GBP15.6m
(FY22: GBP17.3m). The Group's cash funding for defined benefit
pension schemes was GBP11.1m (FY22: GBP11.5m).
In FY23, the Group recorded Strategic Capital Expenditure of
GBP10.8m (FY22: GBP33.1m).
The Group did not make any equity dividend cash payments in
either period. The Group made net share purchases of GBP30.1m in
FY23 reflecting the continuation of the Group's share buyback
programme in FY23 with GBP26.2m of shares bought back in FY23 and
the purchase of shares for the Group's employee share ownership
scheme of GBP3.9m. This compared to net share purchases of GBP11.8m
in FY22.
In September 2023, the Group completed the sale of its interests
in its edible oils business, Trilby Trading Limited for a final net
cash consideration of GBP6.1m.
The Group's Net Debt excluding lease liabilities at 29 September
2023 was GBP154.0m, a decrease of GBP26.0m compared to the end of
FY22.
Financing
As at 29 September 2023, the Group had total committed debt
facilities of GBP482.8m and a weighted average maturity of 2.1
years. These facilities comprised:
-- a GBP340.0m revolving credit bank facility with a maturity date of January 2026;
-- a GBP50.0m bilateral bank facility with a maturity date of January 2026;
-- a GBP45.0m bank term loan facility with a maturity date of June 2024; and
-- GBP13.5m and $41.9m of outstanding Private Placement Notes
with maturities ranging between June 2024 and June 2026
At 29 September 2023 the Group had cash and undrawn committed
bank facilities of GBP327.8m (FY22: GBP398.0m).
Subsequent to the financial year end, the Group has refinanced
its debt facilities with a new five year GBP350.0m sustainability
linked revolving credit facility ('RCF'), maturing in November 2028
with the option to extend for up to a further two years. The
facility also includes a GBP100 million accordion option which
provides additional potential financing facilities. This new
facility replaces the existing GBP340.0m RCF that was due to mature
in January 2026. A GBP45.0m term loan due to mature in June 2024
was also repaid in full as part of this debt restructuring.
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 29
September 2023 was GBP20.1m, GBP0.2m lower than the position at 30
September 2022. The net pension deficit after related deferred tax
was GBP12.8m (FY22: GBP10.4m), comprising a net deficit on UK
schemes of GBP28.3m (FY22: GBP44.5m) and a net surplus on Irish
schemes of GBP15.5m (FY22: GBP34.1m).
In November 2022, the trustees of the Irish legacy defined
benefit scheme entered into an annuity buy-in transaction to
purchase an insurance policy for the pensioner liabilities,
representing approximately 80% of the liabilities of the scheme.
This has the benefit of de-risking the future of the scheme. The
insurance policy is treated as a plan asset and the fair value of
the policy is determined to be the present value of the related
obligations. At the completion of the buy-in of the insurance
policy, the Group recognised an actuarial loss in equity reflecting
the change in the value of the plan assets to match the related
obligation.
The decrease in the Group's net pension deficit was driven
principally by net actuarial losses particularly on the Irish
scheme offset by contributions paid by the Group. The movement in
the discount rate is driven by the corporate bond rate. The UK
scheme is 75% hedged for movements in gilt yields.
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. A full actuarial valuation was carried out on
the Irish scheme at 31 March 2022 and a full actuarial valuation is
ongoing with reference to 31 March 2023 for the UK defined benefit
scheme. The Group expects the annual cash funding requirement for
all schemes to be approximately GBP12m - GBP15m.
Return of value to shareholders
In May 2022, a GBP50m return of value to shareholders over the
next two years was announced. The Group completed GBP35.0m of share
buyback programme to 29 September 2023, of which the total cash
returned in FY23 was GBP26.2m. On 10 October 2023, the continuation
of the Group's share buyback programme was announced up to a
maximum of GBP15.0m to 30 March 2024. Between 10 October 2023 and
24 November 2023, the Company purchased a total of 4,907,006
ordinary shares under the Buyback Programme, returning a total of
GBP4.5m in cash to shareholders.
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 financial year ended 29
September 2023 issued on 28 November 2023.
Dalton Philips
Chief Executive Officer
Date: 27 November 2023
GROUP INCOME STATEMENT
For financial year ended 29 September 2023
2023* 2022
Exceptional Exceptional
(Note (Note
Notes Pre- exceptional 3) Total Pre- exceptional 3) Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ----------------- ------------ ---------- ----------------- ------------ ----------
Revenue 2 1,913.7 - 1,913.7 1,739.6 - 1,739.6
Cost of sales (1,344.9) - (1,344.9) (1,216.6) - (1,216.6)
------------------------ ----------------- ------------ ---------- ----------------- ------------ ----------
Gross profit 568.8 - 568.8 523.0 - 523.0
Operating costs
before
acquisition related
amortisation (491.4) (6.7) (498.1) (449.6) (16.5) (466.1)
Impairment of trade
receivables (1.1) - (1.1) (1.2) - (1.2)
------------------------ ----------------- ------------ ---------- ----------------- ------------ ----------
Group operating profit
before acquisition
related amortisation 76.3 (6.7) 69.6 72.2 (16.5) 55.7
Amortisation of
acquisition
related intangibles (3.6) - (3.6) (3.6) - (3.6)
------------------------ ----------------- ------------ ---------- ----------------- ------------ ----------
Group operating
profit/(loss) 72.7 (6.7) 66.0 68.6 (16.5) 52.1
Finance income 4 0.7 - 0.7 0.2 - 0.2
Finance costs 4 (21.5) - (21.5) (12.5) - (12.5)
Profit/(loss) before
taxation 51.9 (6.7) 45.2 56.3 (16.5) 39.8
Taxation (10.5) 1.2 (9.3) (10.5) 3.0 (7.5)
------------------------ ----------------- ------------ ---------- ----------------- ------------ ----------
Profit/(loss) for
the financial year
attributable to the
equity shareholders 41.4 (5.5) 35.9 45.8 (13.5) 32.3
------------------------ ----------------- ------------ ---------- ----------------- ------------ ----------
Earnings per share (pence)
Basic earnings per
share 5 7.2 6.2
Diluted earnings per
share 5 7.2 6.1
------------------------ ----------------- ------------ ---------- ----------------- ------------ ----------
* The financial year is the 52 week period ended 29 September
2023 with comparatives for the 53 week period ended 30 September
2022.
GROUP STATEMENT OF COMPREHENSIVE INCOME
for financial year ended 29 September 2023
2023* 2022
Notes GBPm GBPm
------------------------------------------------------- ------ ------- ------
Total comprehensive income for the financial year
Items that will not be reclassified to profit
or loss:
Actuarial (loss)/gain on Group legacy defined
benefit pension schemes (9.2) 14.4
Tax charge on Group legacy defined benefit pension
schemes (0.6) (4.1)
------------------------------------------------------- ------ ------- ------
(9.8) 10.3
------------------------------------------------------- ------ ------- ------
Items that may subsequently be reclassified to
profit or loss:
Currency translation adjustment (0.5) 1.8
Translation reserve transferred to Income Statement
on disposal of subsidiary 9 (0.6) -
Cash flow hedges:
fair value movement taken to equity (3.1) 8.5
transferred to Income Statement for the financial
year (1.5) (1.6)
(5.7) 8.7
------------------------------------------------------- ------ ------- ------
Other comprehensive income for the financial
year (15.5) 19.0
Profit for the financial year 35.9 32.3
------------------------------------------------------- ------ ------- ------
Total comprehensive income for the financial
year attributable to the equity holders 20.4 51.3
------------------------------------------------------- ------ ------- ------
* The financial year is the 52 week period ended 29 September
2023 with comparatives for the 53 week period ended 30 September
2022.
GROUP STATEMENT OF FINANCIAL POSITION
at 29 September 2023
2023 2022
Notes GBPm GBPm
----------------------------------------------------- ------ -------- --------
ASSETS
Non-current assets
Goodwill and intangible assets 6 461.1 468.1
Property, plant and equipment 6 315.5 319.4
Right-of-use assets 41.0 44.4
Investment property 4.6 3.1
Retirement benefit assets 8 18.4 39.8
Derivative financial instruments 3.7 12.4
Deferred tax assets 28.8 37.1
Trade and other receivables 0.1 0.3
----------------------------------------------------- ------ -------- --------
Total non-current assets 873.2 924.6
----------------------------------------------------- ------ -------- --------
Current assets
Inventories 72.9 63.3
Trade and other receivables 234.2 248.7
Cash and cash equivalents 116.5 99.6
Derivative financial instruments 0.9 2.5
Total current assets 424.5 414.1
----------------------------------------------------- ------ -------- --------
Total assets 1,297.7 1,338.7
----------------------------------------------------- ------ -------- --------
EQUITY
Capital and reserves attributable to equity holders
of the Company
Share capital 4.8 5.2
Share premium 89.7 89.7
Other reserves 120.8 127.8
Retained earnings 244.5 242.9
----------------------------------------------------- ------ -------- --------
Total equity 459.8 465.6
----------------------------------------------------- ------ -------- --------
LIABILITIES
Non-current liabilities
Borrowings 7 125.8 209.8
Lease liabilities 30.7 33.6
Other payables 2.4 2.7
Provisions 6.9 5.2
Retirement benefit obligations 8 38.5 60.1
Deferred tax liabilities 15.2 18.9
----------------------------------------------------- ------ -------- --------
Total non-current liabilities 219.5 330.3
----------------------------------------------------- ------ -------- --------
Current liabilities
Borrowings 7 144.7 69.8
Trade and other payables 446.0 445.1
Lease liabilities 14.3 14.4
Derivative financial instruments - 0.1
Provisions 3.0 4.7
Current tax payable 10.4 8.7
Total current liabilities 618.4 542.8
----------------------------------------------------- ------ -------- --------
Total liabilities 837.9 873.1
----------------------------------------------------- ------ -------- --------
Total equity and liabilities 1,297.7 1,338.7
----------------------------------------------------- ------ -------- --------
GROUP STATEMENT OF CASH FLOWS
for the financial year ended 29 September 2023
2023* 2022
Notes GBPm GBPm
------------------------------------------------------ ------ ------- -------
Profit before taxation 45.2 39.8
Finance income 4 (0.7) (0.2)
Finance costs 4 21.5 12.5
Exceptional items 3 6.7 16.5
------------------------------------------------------ ------ ------- -------
Group operating profit before exceptional items 72.7 68.6
Depreciation and impairment of property, plant
and equipment and right-of-use assets 56.8 52.5
Amortisation of intangible assets 6.3 6.7
Employee share-based payment expense 3.3 2.7
Contributions to Group legacy defined benefit
pension scheme 8 (11.1) (11.5)
Working capital movement 2.2 2.0
Net cash inflow from operating activities before
exceptional items 130.2 121.0
Cash outflow related to exceptional items (10.9) (13.6)
Interest paid (including lease liability interest) (17.6) (16.7)
Tax (paid)/ received (2.7) 2.2
Net cash inflow from operating activities 99.0 92.9
------------------------------------------------------ ------ ------- -------
Cash flow from investing activities
Purchase of property, plant and equipment (36.0) (48.6)
Purchase of intangible assets (1.4) (1.4)
Disposal of undertakings 9 6.1 -
Net cash outflow from investing activities (31.3) (50.0)
------------------------------------------------------ ------ ------- -------
Cash flow from financing activities
Ordinary shares purchased - own shares (3.9) (3.0)
Capital return via share buyback (26.2) (8.8)
(Repayment)/drawdown of bank borrowings (20.2) 9.6
Repayment of Private Placement Notes (15.5) (47.3)
Settlement of swaps on maturity of Private Placement
Notes (0.1) (2.6)
Repayment of lease liabilities (15.6) (17.3)
Net cash outflow from financing activities (81.5) (69.4)
------------------------------------------------------ ------ ------- -------
Net decrease in cash and cash equivalents and
bank overdrafts (13.8) (26.5)
------------------------------------------------------ ------ ------- -------
Reconciliation of opening to closing cash and
cash equivalents and bank overdrafts
Cash and cash equivalents and bank overdrafts
at beginning of the financial year 46.7 73.6
Translation adjustment (0.1) (0.4)
Net decrease in cash and cash equivalents and
bank overdrafts (13.8) (26.5)
------------------------------------------------------ ------ ------- -------
Cash and cash equivalents and bank overdrafts
at end of the financial year** 32.8 46.7
------------------------------------------------------ ------ ------- -------
* The financial year is the 52 week period ended 29 September
2023 with comparatives for the 53 week period ended 30 September
2022.
** Cash and cash equivalents and bank overdrafts is made up of
cash at bank and in hand of GBP116.5m (2022: GBP99.6m) and bank
overdrafts of GBP83.7m (2022: GBP52.9m).
Notes to the financial information for the financial year ended
29 September 2023
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 financial year ended
29 September 2023.
The financial information is based on the information included
in the audited Consolidated Financial Statements of Greencore Group
plc for the financial year ended 29 September 2023, to which an
unqualified audit opinion is provided. Full details of the basis of
preparation of the Group Financial Statements for the financial
year ended 29 September 2023 are included in Note 1 of the FY23
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 Group continue to operate in a
complex trading environment linked to ongoing challenges with
inflation.
Accordingly, the Directors have considered a number of scenarios
for the next 18 months from the commencement of FY24. These
scenarios consider the potential impact of inflation on consumer
spending, along with consideration of under recovery of targets set
out under the Group's commercial and operational initiatives. The
impact on revenue, profit and cashflow are modelled, including the
consequential impact on working capital.
The scenarios assumed by the Group are as follows:
-- A base case assuming internally approved budget and strategic
plans, which includes amounts for near term climate change related
expenditure;
-- A downside scenario which assesses the potential impact of inflation on consumer spending and corresponding impact on volume, along with under recovery of targets set out under the Group's commercial and operational initiatives; and
-- A severe downside scenario which includes further potential
impacts on volume due to the inflationary environment and further
under recovery of targets set out under the Group's commercial and
operational initiatives.
In each scenario, the Group would employ mitigants within its
control, which would include a reduction in non-business critical
capital projects and other discretionary cash flow items.
While the Group is in a net current liability position of
GBP193.9m (2022: GBP128.7m) at 29 September 2023, the Group has
retained financial strength and flexibility, with cash and undrawn
committed bank facilities of GBP327.8m at 29 September 2023
(September 2022: GBP398.0m).
Subsequent to the year end, the Group has refinanced its debt
facilities with a new five year GBP350.0m sustainability linked
revolving credit facility ('RCF'), maturing in November 2028 with
the option to extend for up to a further two years. This new
facility replaces the existing GBP340.0m RCF that was due to mature
in January 2026. A GBP45.0m term loan due to mature in June 2024
was also repaid in full as part of this debt restructuring.
The Group is satisfied that there is sufficient headroom in the
financial covenants under facilities for each scenario.
Based on these scenarios and the resources available to the
Group, including the post year end re-financing, the Directors
believe the Group has sufficient liquidity to manage through a
range of different cashflow scenarios over the next 18 months from
the year end date. Accordingly, the Directors adopt the going
concern basis in preparing these 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, frozen Yorkshire Puddings, as well as the Irish
Ingredients trading business. On 29 September 2023, the Group
disposed the Irish Ingredients trading business, Trilby trading
Limited.
Revenue earned individually from three customers in Convenience
Foods UK & Ireland of GBP348.3m, GBP280.7m and, GBP274.8m
respectively represents more than 10% of the Group's revenue (2022:
Revenue earned individually from three customers in Convenience
Foods UK & Ireland of GBP316.0m, GBP261.0m and GBP196.3m, 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. All
income in the Group has been recognised at a point in time and not
over time.
2023 2022
GBPm GBPm
Revenue
Food to go categories 1,252.6 1,161.3
Other convenience categories 661.1 578.3
---------------------------------------------------- -------- --------
Total revenue for Convenience Foods UK and Ireland 1,913.7 1,739.6
---------------------------------------------------- -------- --------
Food to go categories includes sandwiches, salads, sushi and
chilled snacking while other convenience categories include chilled
ready meals, chilled soups and sauces, chilled quiche, ambient
sauces and pickles, frozen Yorkshire Puddings, as well as the Irish
Ingredients trading business, which was disposed of on 29 September
2023.
3. Exceptional Items
Exceptional items are those which, as set out in our accounting
policy, 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:
2023 2022
GBPm GBPm
----------------------------------------------- ----- ------ -------
Reorganisation costs (A) (8.9) (16.1)
Defined benefit pension schemes restructuring (B) (0.4) (0.4)
Profit on disposal of trading business (C) 0.1 -
Release of legacy business liability (D) 1.7 -
Reversal of impairment (E) 0.6 -
Non-core property related income (F) 0.2 -
Total exceptional items before taxation (6.7) (16.5)
Tax credit on exceptional items 1.2 3.0
------------------------------------------------------- ------ -------
Total exceptional items (5.5) (13.5)
------------------------------------------------------- ------ -------
(A) Reorganisation costs
The Group continued with its change programme 'Better
Greencore', which commenced in the prior year. This is to support
revitalisation of
its excellence cost efficiency programmes and unlock further
cost efficiencies by reducing organisational complexity. The Group
recognised a
charge of GBP8.9m in the current financial year (2022: GBP16.1m)
of which GBP6.2m related to people costs and GBP2.7m related to
professional fees.
(B) Defined benefit pension schemes restructuring
In the current financial year, the Group incurred a charge of
GBP0.4m (2022: GBP0.4m) in relation to restructuring costs
associated with its legacy defined benefit schemes in Ireland. In
FY23, the trustees of the scheme completed the buy-in of an annuity
insurance policy. See note 8 for further details.
(C) Profit on disposal of trading business
On 29 September 2023, the Group completed the disposal of its
interest in its Irish trading business, Trilby Trading Limited,
recognising a profit
on disposal of GBP0.1m (2022: GBPNil). For more detail on the
disposal, see Note 9.
(D) Release of legacy business liability
In the current financial year, the Group released GBP1.7m of a
liability relating to legacy business disposals which the Group is
satisfied are not probable to be paid.
(E) Reversal of impairment
As volumes have continued to build back since the impact of
COVID-19, the Group reopened a facility and brought its related
assets back into use in the financial year which had been impaired
in a prior period. The Group reviewed the assets in line with the
requirements of IAS 36 Impairment of assets and determined it
appropriate to recognise a reversal of impairment of GBP0.6m
relating to these assets.
(F) Non-core property related income
At 29 September 2023, the Group reviewed the fair value of the
Irish investment properties portfolio in line with the requirements
of IAS 36, with consideration given to bids received from third
parties during the financial year for the purchase of parts of the
land and have determined it appropriate to recognise a reversal of
an impairment of GBP1.6m. The Group also recognised a provision of
GBP1.2m (2022: GBPNil) of remediation costs in relation to
investment properties.
Cash flow on exceptional items
The total net cash outflow during the financial year in respect
of exceptional charges was GBP10.9m (2022: GBP13.6m), of which
GBP2.7m was in respect of prior year exceptional charges. The net
proceeds from the disposal of Trilby Trading Limited of GBP6.1m has
been recognised separately on the Group Statement of Cash Flows
within investing activities.
4. Finance income and finance costs
2023 2022
GBPm GBPm
-------------------------------------------------------------- ------- -------
Finance income
Interest on bank deposits 0.7 0.2
Total finance income 0.7 0.2
-------------------------------------------------------------- ------- -------
Finance costs
Finance costs on interest bearing cash and cash equivalents,
borrowings and other financing costs (17.6) (11.3)
Interest on lease obligations (1.2) (1.2)
Net pension financing charge (1.2) (1.1)
Unwind of discount on liabilities (0.1) (0.1)
Change in fair value of derivatives and related debt
adjustment (1.2) 1.9
Foreign exchange on inter-company and external balances
where hedge accounting is not applied (0.2) (0.7)
-------------------------------------------------------------- ------- -------
Total finance costs (21.5) (12.5)
-------------------------------------------------------------- ------- -------
5. Earnings per Ordinary Share
In the current financial year, the Group repurchased 33,382,718
Ordinary Shares (2022: 9,728,677) in the Company, by way of a share
buyback, costing GBP26.2m (2022: GBP8.8m). These shares were
immediately cancelled. The effect of this on the weighted average
number of ordinary shares was a decrease of 16,134,894 shares
(2022: 774,827).
Numerator for Earnings per Share Calculations 2023 2022
GBPm GBPm
------------------------------------------------------ ------ ------
Profit attributable to equity holders of the Company 35.9 32.3
------------------------------------------------------ ------ ------
Denominator for Basic Earnings Per Share Calculations 2023 2022
'000 '000
----------------------------------------------------------- --------- --------
Shares in issue at the beginning of the financial year 516,837 526,547
Effect of share buyback and cancellation in the financial
year (16,135) (775)
Effect of shares held by Employee Benefit Trust (5,330) (2,403)
Effect of shares issued during the financial year - 13
----------------------------------------------------------- --------- --------
Weighted average number of Ordinary Shares in issue
during the financial year 495,372 523,382
----------------------------------------------------------- --------- --------
Dilutive effect of share options 1,165 2,123
----------------------------------------------------------- --------- --------
Weighted average number of Ordinary Shares for diluted
earnings per share 496,537 525,505
----------------------------------------------------------- --------- --------
2023 2022
pence pence
----------------------------------------------------------- --------- --------
Basic earnings per Ordinary Share 7.2 6.2
----------------------------------------------------------- --------- --------
Diluted earnings per Ordinary Share 7.2 6.1
----------------------------------------------------------- --------- --------
6. Impairment of goodwill, intangible assets and property, plant and equipment
At 29 September 2023, 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 of GBP447.3m (2022: GBP449.4m) at 29 September 2023 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 (2022: GBPNil). The
reduction in goodwill value of GBP2.1m year-on-year relates to the
disposal of the Group's interest in Trilby Trading Limited
(GBP2.0m) and a reduction in relation to foreign exchange of
GBP0.1m. There were no impairments of intangible assets (2022:
GBPNil).
The Group keeps all assets under review on an ongoing basis to
identify any impairments to be recognised as a result of
obsolescence due to either a change in production methods rendering
certain assets idle or a replacement of assets to align with the
Group's net zero. There was an impairment of GBP3.0m recorded on
property, plant and equipment following such reviews in the current
financial year (2022: GBP0.9m). No assets were impaired in the
current financial year due to climate related strategy (2022:
GBPNil).
7. Borrowings and cash and cash equivalents
2023 2022
GBPm GBPm
------------------------------------------------- -------- --------
Bank overdrafts (83.7) (52.9)
Bank borrowings (139.0) (158.8)
Private placement notes (47.8) (67.9)
--------------------------------------------------- -------- --------
Total borrowings (270.5) (279.6)
--------------------------------------------------- -------- --------
Cash and cash equivalents 116.5 99.6
--------------------------------------------------- -------- --------
Total borrowings and cash and cash equivalents (154.0) (180.0)
--------------------------------------------------- -------- --------
Total borrowings and cash and cash equivalents is used by the
Group for the purpose of calculating leverage under the Group's
financing agreements.
Private Placement Notes
The Group's outstanding Private Placement Notes net of finance
fees amounted to GBP47.8m (denominated as $41.9m and GBP13.5m) at
29 September 2023 (2022: GBP67.9m, denominated as $55.9m and
GBP18.0m). These were issued as fixed rate debt in June 2016
($55.9m and GBP18m) with maturities ranging between June 2024 and
June 2026. The Group repaid $14.0m and GBP4.5m Private Placement
Notes in June 2023 (2022: $65m repaid in October 2021).
In December 2018, the Group entered into cross-currency swap
arrangements for the $55.9m Private Placement Notes to swap from
fixed rate US dollar to fixed rate sterling. The fixed rate US
dollar to fixed rate sterling swaps are designated as cash flow
hedges.
8. 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. 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 November 2022, the Trustees of the Irish legacy defined
benefit scheme entered into an annuity buy-in transaction to
purchase an insurance policy for the pensioner liabilities,
representing approximately 80% of the liabilities of the scheme.
This has the benefit of de-risking the future of the scheme. The
insurance policy is treated as a plan asset and the fair value of
the policy is determined to be the present value of the related
obligations. At the completion of the buy-in of the insurance
policy, the Group recognised an actuarial loss in equity reflecting
the change in the value of the plan assets to match the related
obligation.
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 GBP20.3m at 30 September 2022 to a net liability of
GBP20.1m at 29 September 2023. This reduction in the net liability
position is mainly driven by actuarial losses of GBP9.2m and the
completion of the annuity buy-in offset by contributions paid by
the group. During the financial year, the Group paid GBP12.4m
(2022: GBP12.6m) 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. A full actuarial valuation was carried out on the Irish
scheme at 31 March 2022 and a full actuarial valuation is ongoing
with reference to 31 March 2023 for the UK scheme. 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 in the range of GBP12m-GBP15m in FY24.
The financial position of the schemes was as follows:
UK Irish 2023 UK Irish 2022
schemes schemes Total schemes schemes Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- --------- --------- -------- --------- --------- --------
Fair value of plan assets 159.4 145.4 304.8 168.7 170.3 339.0
Present value of scheme liabilities (197.2) (127.7) (324.9) (228.0) (131.3) (359.3)
------------------------------------- --------- --------- -------- --------- --------- --------
(Deficit)/surplus in schemes (37.8) 17.7 (20.1) (59.3) 39.0 (20.3)
Deferred tax asset 9.5 (2.2) 7.3 14.8 (4.9) 9.9
------------------------------------- --------- --------- -------- --------- --------- --------
Net (liability)/asset at end
of financial year (28.3) 15.5 (12.8) (44.5) 34.1 (10.4)
------------------------------------- --------- --------- -------- --------- --------- --------
Presented as:
Retirement benefit asset* - 18.4 18.4 - 39.8 39.8
Retirement benefit obligation (37.8) (0.7) (38.5) (59.3) (0.8) (60.1)
------------------------------------- --------- --------- -------- --------- --------- --------
*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
2023 2022 2023 2022
--------------------------------------------------- -------- -------- ------------- ------------
Rate of increase in pension payments* 3.05% 3.35% 1.50% 0.00%
Discount rate 5.60% 5.00% 4.50% 4.00%
Inflation rate** 3.30% 3.55% 2.50% 2.40%
--------------------------------------------------- -------- -------- ------------- ------------
* 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 Retail Price Index ('RPI') and Consumer Price
Index ('CPI') are derived from the Harmonised Index of Consumer Prices
('HICP') and relative yields of index-linked and fixed interest government
bonds.
9. Disposal of Undertakings
On 29 September 2023, the Group completed the sale of the entire
share capital of Trilby Trading Limited ('Trilby') to K.T.C.
(Edibles) Limited, a majority owned subsidiary of funds managed by
Endless LLP. Trilby is an importer and distributor of edible oils
and fats for the food processing industry, operating out of
Ireland. From a sustainability perspective, the Group's disposal of
Trilby is expected to result in the removal of circa 280,000 tonnes
of carbon dioxide equivalents (CO(2) e) from the Group's FY24 Scope
3 footprint. This accounts for 20% of our total Scope 3 footprint
in FY23 and a 32% reduction in the base year.
The business is not considered to be a separate major line of
business or geographical area of operation and therefore does not
constitute a discontinued operation as defined in IFRS 5
Non-Current Assets Held for Sale and Discontinued Operations.
Trilby is included within the Convenience Foods UK and Ireland
reporting segment.
Effect of disposal on the financial statements
2023
GBPm
-------------------------------------------------------- -------
Goodwill and intangibles (2.0)
Property, plant and equipment (0.4)
Trade and other receivables (11.5)
Cash and cash equivalents (5.1)
Trade and other payables 8.1
Financial Instruments 0.1
-------------------------------------------------------- -------
Total assets and liabilities disposed of (10.8)
-------------------------------------------------------- -------
Disposal consideration
Purchase consideration 8.5
Working capital settlement 2.8
-------------------------------------------------------- -------
Total net consideration 11. 3
-------------------------------------------------------- -------
Disposal-related costs (1.0)
Translation reserve transferred to Income Statement on
disposal of subsidiary 0.6
-------------------------------------------------------- -------
Profit on disposal 0.1
-------------------------------------------------------- -------
Reconciliation of consideration to cash received
2023
GBPm
-------------------------------------------------------- ------
Purchase consideration 8.5
Cash received in respect of working capital settlement 2.8
Transaction costs paid (0.1)
-------------------------------------------------------- ------
Net consideration received on completion 11.2
-------------------------------------------------------- ------
Cash and cash equivalents disposed of (5.1)
-------------------------------------------------------- ------
Net cash inflow arising on disposal 6.1
-------------------------------------------------------- ------
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 financial year, the next phase of the value
return to shareholders completed with a further GBP26.2m value
(2022: GBP8.8m) returned up to 29 September 2023 in the form of a
share buyback. The Group launched the fourth share buyback
programme which commenced on 10 October 2023 and will end no later
than 30 March 2024 and will conclude the GBP50m commitment.
11. Subsequent Events
Bank Refinancing
Subsequent to the year end, the Group has refinanced its debt
facilities with a new five year GBP350m sustainability linked
revolving credit facility ('RCF'), maturing in November 2028 with
the option to extend for up to a further two years. This new
facility replaces the existing GBP340m RCF that was due to mature
in January 2026. A GBP45m term loan due to mature in June 2024 was
also repaid in full as part of this debt restructuring.
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'). There
have been no
adjustments made to existing APMs being reported and no new APMs
have been included in this report.
The Group views these APMs as useful for providing 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 focus on
the core business
performance of the Group. The APMs are not part of the IFRS
financial statements and are accordingly are not audited.
Pro Forma Revenue Growth
The Group uses Pro Forma Revenue Growth as a supplemental
measure of its performance. The Group views Pro Forma Revenue
Growth as
providing a 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 FY23
Pro Forma Revenue Growth adjusts reported revenue in FY23 and
FY22 to reflect the disposal of Trilby Trading Limited, which
completed in
FY23. In addition, FY22 revenue has been adjusted for the
additional trading week which was included in H2.
2023
Convenience
Foods
UK & Ireland
------------------------------------------------- --------------
Reported revenue - % increase from FY22 to FY23 10.0%
Impact of disposals 1.0%
Impact of additional trading week 2.5%
------------------------------------------------- --------------
Pro Forma Revenue Growth FY23 13.5%
------------------------------------------------- --------------
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
Full year Full
H1 FY23 H2 FY23 H1 FY23 H2 FY23 year
------------------------------- -------- -------- ---------- -------- -------- ------
Reported revenue- % increase
from FY22 to FY23 15.6 2.0% 7.9% 28.5% 2.0% 14.3%
Impact of disposals - - - 2.8% 6.8% 4.2%
Impact of additional trading
week - 3.7% 2.2% - 3.7% 3.1%
-------------------------------
Pro Forma Revenue Growth FY23 15.6% 5.7% 10.1% 31.3% 12.5% 21.6%
------------------------------- -------- -------- ---------- -------- -------- ------
Pro Forma Revenue Growth FY22
While Pro Forma Revenue Growth is not comparable year-on-year,
we have included the prior year disclosure for completeness. This
has been
calculated to reflect the disposal of Premier Molasses Company
Limited for the period in FY21 up to the date of disposal. FY22
was
a 53 week period, Pro Forma Revenue adjusts the FY22 reported
revenue to exclude the additional revenue. 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
Full Year Full
H1 FY22 H2 FY22 H1 FY22 H2 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%
------------------------------- -------- -------- ---------- -------- -------- -------
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 deprecation and amortisation of intangibles 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:
2023 2022
GBPm GBPm
------------------------------------------------------------ ------- -------
Profit for the financial year 35.9 32.3
Taxation (A) 9.3 7.5
Exceptional items 6.7 16.5
Net finance costs (B) 20.8 12.3
Amortisation of acquisition related intangibles 3.6 3.6
------------------------------------------------------------ ------- -------
Adjusted Operating Profit 76.3 72.2
Depreciation and amortisation (c) 56.5 54.7
------------------------------------------------------------ ------- -------
Adjusted EBITDA 132.8 126.9
------------------------------------------------------------ ------- -------
Adjusted Operating Margin (%) 4.0% 4.2 %
------------------------------------------------------------ ------- -------
(A) Includes tax credit on exceptional items of GBP1.2m (2022: GBP3.0m).
(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 associate and before
exceptional items, pension finance items, amortisation of
acquisition related intangibles, FX on inter-company and certain
external balances and the movement in the fair value of all
derivative financial instruments and related debt adjustments.
The following table sets out the calculation of Adjusted
PBT:
2023 2022
GBPm GBPm
---------------------------------------------------------- ------- -------
Profit before taxation 45.2 39.8
Exceptional items 6.7 16.5
Pension finance items 1.2 1.1
Amortisation of acquisition related intangibles 3.6 3.6
FX and fair value movements(A) 1.4 (1.2)
---------------------------------------------------------- ------- -------
Adjusted Profit Before Tax 58.1 59.8
---------------------------------------------------------- ------- -------
(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 financial
year, excluding Ordinary Shares purchased by Greencore and held in
trust in respect of the Annual Bonus Plan, Performance Share Plan,
Employee Share Incentive Plan and Restricted 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:
2023 2022
GBPm GBPm
------------------------------------------------------------ -------- --------
Profit attributable to equity holders 35.9 32.3
Exceptional items (net of tax) 5.5 13.5
FX effect on inter-company and external balances where
hedge accounting is not applied 0.2 0.7
Movement in fair value of derivative financial instruments
and related debt adjustments 1.2 (1.9)
Amortisation of acquisition related intangible assets
(net of tax) 2.7 2.7
Pension financing (net of tax) 0.7 0.8
------------------------------------------------------------ -------- --------
Adjusted Earnings 46.2 48.1
------------------------------------------------------------ -------- --------
2023 2022
'000 '000
------------------------------------------------------------ -------- --------
Weighted average number of ordinary shares in issue
during the financial year 495,372 523,382
------------------------------------------------------------ -------- --------
2023 2022
pence pence
------------------------------------------------------------ -------- --------
Adjusted Basic Earnings Per Share 9.3 9.2
------------------------------------------------------------ -------- --------
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 of complying with
applicable laws and regulations. It includes continuous improvement
projects of less than GBP1.0m 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 GBP1.0m 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:
2023 2022
GBPm GBPm
--------------------------------- ------ ------
Purchase of property, plant,
and equipment 36.0 48.6
Purchase of intangible assets 1.4 1.4
------------------------------------- ------ ------
Net cash outflow from capital
expenditure 37.4 50.0
------------------------------------- ------ ------
Strategic Capital Expenditure 10.8 33.1
Maintenance Capital Expenditure 26.6 16.9
------------------------------------- ------ ------
Net cash outflow from capital
expenditure 37.4 50.0
------------------------------------- ------ ------
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
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 and Free Cash Flow
Conversion:
2023 2022
GBPm GBPm
--------------------------------------------------------- ------- -------
Net cash inflow from operating activities 99.0 92.9
Net cash outflow from investing activities (31.3) (50.0)
--------------------------------------------------------- ------- -------
Net cash inflow from operating and investing activities 67.7 42.9
Strategic Capital Expenditure 10.8 33.1
Repayment of lease liabilities (15.6) (17.3)
Disposal of undertakings (6.1) -
Free Cash Flow 56.8 58.7
--------------------------------------------------------- ------- -------
Adjusted EBITDA 132.8 126.9
--------------------------------------------------------- ------- -------
Free Cash Flow Conversion (%) 42.8% 46.3%
--------------------------------------------------------- ------- -------
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 29 September 2023 is as follows:
At Translation At
30 September Cash and non-cash 29 September
2022 flow adjustments 2023
GBPm GBPm GBPm GBPm
-------------------------------------- -------------- ------- -------------- --------------
Cash and cash equivalents and
bank overdrafts 46.7 (13.8) (0.1) 32.8
Bank borrowings (158.8) 20.2 (0.4) (139.0)
Private Placement Notes (67.9) 15.5 4.6 (47.8)
Net debt excluding lease liabilities (180.0) 21.9 4.1 (154.0)
-------------------------------------- -------------- ------- -------------- --------------
Lease liabilities (48.0) 16.8 (13.8) (45.0)
-------------------------------------- -------------- ------- -------------- --------------
Net Debt (228.0) 38.7 (9.7) (199.0)
-------------------------------------- -------------- ------- -------------- --------------
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)
-------------------------------------- -------------- ------- -------------- --------------
RETURN ON INVESTED CAPITAL ('ROIC')
The Group uses ROIC as a key measure to determine returns for
the Group and as a key measure to determine 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 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 Group
Income Statement.
The following table sets forth the calculation of NOPAT and
invested capital used in the calculation of ROIC for the financial
years;
2023 2022
GBPm GBPm
---------------------------------------- ------- ------------------
Adjusted Operating Profit 76.3 72.2
Taxation at the effective tax rate (A) (16.0) (13.7)
---------------------------------------- ------- ------------------
Group NOPAT 60.3 58.5
---------------------------------------- ------- ------------------
2023 2022
GBPm GBPm
---------------------------------------------------- -------- --------
Invested Capital
Total assets 1,297.7 1,338.7
Total liabilities (837.9) (873.1)
Net Debt 199.0 228.0
Derivatives not designated as fair value hedges (4.6) (14.8)
Retirement benefit obligation (net of deferred tax
asset) 12.8 10.4
Invested Capital for the Group(B) 667.0 689.2
---------------------------------------------------- -------- --------
Average Invested Capital for ROIC calculation for
the Group 678.1 695.0
---------------------------------------------------- -------- --------
ROIC (%) for the Group 8.9% 8.4%
---------------------------------------------------- -------- --------
(A) The effective tax rates for the Group for the financial year
ended 29 September 2023 and 30 September 2022 were 21% and 19%
respectively.
(B) The invested capital for the Group in 2021 was
GBP700.8m.
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END
FR UBRKROOUAUAA
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