TIDMBAKK
RNS Number : 2761Y
Bakkavor Group PLC
08 September 2020
8 September 2020
Bakkavor Group plc
Proven business model delivers a solid performance
Bakkavor Group plc ("Bakkavor", "the Group" or "the Company"),
the leading provider of fresh prepared food in the UK, today
announces its half year unaudited results for the 26-week period
ended 27 June 2020.
FINANCIAL HIGHLIGHTS
-- Reduction in Group revenue limited to 4.6% at GBP880.5m and
steady recovery since April into H2
-- Group like-for-like revenue(1) down 5.2% to GBP852.4m
o Solid UK trading in extremely challenging market, with 4.5%
decrease to GBP754.0m
o International revenues down 10.1% to GBP98.4m, reflecting
early impact of COVID-19 in China, offset by encouraging growth in
the USA
-- Adjusted operating profit(1) down 32.3% to GBP28.7m
-- Basic earnings per share of 0.9p and Adjusted earnings per share of 2.6p
-- Operational net debt(1) increased by 3.0% to GBP367.4m, with leverage of 2.6x
-- Successful planned refinancing of core debt facilities in Q1
and significant liquidity available
-- Dividend policy under regular review and no interim payable
operational highlights
-- Strong start to the year in UK and US until the COVID-19 outbreak
-- Continued to prioritise safety and wellbeing of all
colleagues through enhanced H&S and hygiene protocols
-- Rapidly adapted business operations in response to short-term changes in demand
-- Decisive mitigating actions taken to lower cost base and
preserve cash, including strategic restructurings in all
regions
-- Working closely with customers in all markets to drive growth back into categories
GBP million (unless otherwise stated) H1 2020 H1 2019 Change
--------------------------------------- -------- -------- ---------
Group revenue 880.5 923.0 (4.6%)
Like-for-like revenue(1) 852.4 899.2 (5.2%)
Adjusted operating profit(1) 28.7 42.4 (32.3%)
Adjusted operating profit margin(1) 3.3% 4.6% (130bps)
Operating profit 13.7 29.3 (53.2%)
Profit before tax 6.8 19.5 (65.1%)
Basic EPS 0.9p 3.0p (2.1p)
Adjusted EPS(1) 2.6p 4.9p (2.3p)
Free cash flow(1) (3.3) 15.0 (18.3)
Operational net debt(1) 367.4 356.6 10.8
Interim dividend per share 0p 2p (2p)
--------------------------------------- -------- -------- ---------
1. Alternative performance measures are referred to as
'like-for-like', 'adjusted', 'underlying' and are applied
consistently throughout this document. These are defined in full
and reconciled to the reported statutory measures in Note 20.
OUTLOOK
It is encouraging that the steady recovery in trading seen
across the business in June has been maintained into the second
half of the year.
The macroeconomic uncertainty caused by COVID-19, combined with
limited clarity as to the terms and implications of the UK's exit
from the EU, means that we have to be cautious as we look ahead to
the rest of this year and into 2021. However, our performance in
the first half of the year has proven our ability to withstand
major operational challenges and gives us confidence in the quality
of our business model and strength of our customer
partnerships.
We continue to be a robust business with market leading
positions in each of the categories in which we operate and, as
such, we are well-placed to capitalise on the long-term trend for
fresh, healthy and convenient food.
Agust Gudmundsson, CEO, said:
"The first half of this year has been extremely challenging, but
I am pleased to report that the Group has produced a solid
performance given the COVID-19 issues the business has faced. The
scale and strength of our operations, coupled with our ability to
react at speed, has proved a clear advantage to our customers
during this period.
"But more than this, our performance is testament to the hard
work and commitment of everyone at Bakkavor. In difficult
circumstances, we have worked tirelessly to minimise disruption and
continue to deliver for our customers. We are fortunate to have
such dedicated colleagues and their health, safety and wellbeing
continues to be our foremost priority. I am hugely grateful for
their support.
"We have taken many difficult yet necessary decisions this year
to protect the long-term success of our business. Whilst there will
be further challenges ahead, we remain a robust, balanced and well
capitalised Group and the steps we have already taken to protect
our business, combined with the recent improvement in trading,
gives us confidence for the future."
Presentation
We will be presenting to analysts via a webcast at 10.00 am, 8
September 2020, through the Investors section of the Group's
website at https://bakkavor.eventcdn.net/2020h1/register/. The
presentation can also be accessed via a replay service shortly
after the presentation has concluded.
ENQUIRIES
Institutional investors and analysts:
Peter Gates, Chief Financial Officer
Sally Barrett-Jolley, Head of Corporate Affairs +44 (0) 20 7908 6143
Financial media:
Tulchan Communications
Will Smith +44 (0) 20 7353 4200
About Bakkavor
Bakkavor is the leading provider of fresh prepared food ("FPF")
in the UK, with a growing international presence in the United
States and China. The Group is the number one by market share in
the UK in the four FPF product categories of meals, pizza &
bread, salads and desserts, providing high-quality, fresh, healthy
and convenient food. Its customers include some of the UK's leading
grocery retailers, including Tesco, Marks & Spencer,
Sainsbury's and Waitrose. The Group's International segment
operates in the US and China. As these FPF markets continue to
grow, Bakkavor seeks to leverage its UK expertise in order to build
its presence in these territories. Bakkavor was founded in 1986 and
has its headquarters in London. The Group has over 20,000 employees
and operates 25 factories in the UK, 5 in the US and 9 in
China.
LEI number: 213800COL7AD54YU9949
Disclaimer - forward-looking statements
This half year statement, prepared by Bakkavor Group plc (the
"Company"), may contain forward-looking statements about Bakkavor
Group plc and its subsidiaries (the "Group"). Forward-looking
statements involve uncertainties because they relate to events, and
depend on circumstances, that will, or may, occur in the future. If
the assumptions on which the Group bases its forward-looking
statements change, actual results may differ from those expressed
in such statements. Forward-looking statements speak only as of the
date they are made and the Company undertakes no obligation to
update these forward-looking statements. Nothing in this statement
should be construed as a profit forecast. Some numbers and period
on period percentages in this statement have been rounded or
adjusted in order to ensure consistency with the financial
information.
Group overview
Bakkavor is the leading provider in the UK fresh prepared food
(FPF) market, with a growing international presence in the US and
China. Our customers include every major UK grocery retailer and
some of the world's best-known food brands.
Our people
We could not do what we do without the commitment of our people
to deliver great-tasting fresh prepared food. This year, following
the COVID-19 outbreak, our business like many others has faced
major challenges, but our colleagues have shown remarkable
fortitude and spirit in response to the difficulties they have
faced. They have continued to show total commitment, support one
another, and help out in their local communities. They are 'Food
Heroes' and we cannot thank them enough for their exceptional
performance during one of the toughest periods in living
memory.
The health, safety and wellbeing of our colleagues has always
been our foremost priority, and this has remained the case during
the COVID-19 pandemic. As a leading food manufacturer with over 30
year's experience, our well-established controls for managing both
people and food safety within our operations were already
industry-leading. As the potential scale of the pandemic became
clear, we acted quickly to introduce additional checks and
processes. In line with government and public health guidelines, we
introduced new social distancing measures across our sites, and
made sure that all colleagues who could work from home were able to
do so. We also brought in restricted visitor access, screens and
visors and temperature screening, a rigorous return to work
procedure, more frequent cleaning regimes and additional
handwashing protocols. As lockdown restrictions eased, and
government guidance changed, we have continued to adapt these
controls appropriately, ensuring the health and safety of all
20,000 of our colleagues across the Group.
Trading performance
COVID-19 has had a significant impact on our overall performance
during this period. Our business in China was severely impacted
towards the end of January, and our UK and US businesses, which
started the year very well, experienced a sharp reduction in sales
volumes in the last week of March and into April. This situation
improved into May and June as volumes in all three regions started
to stabilise and show early signs of recovery. However, markets
remain volatile and consumer habits continue to adjust.
Group revenue for the half year was down 4.6%, and like-for-like
revenue (1) was down 5.2% compared to the same period last year.
Adjusted operating profit(1) was impacted by lower sales volume in
the period and fell 32.3% to GBP28.7 million. We have continued to
protect our profitability through the first six months, and because
of the range of mitigating actions taken, the Adjusted operating
profit margin impact was limited to a reduction of 130 bps. Cash
remained in clear focus during the period. While we made a
substantial cut in capital expenditure to GBP21.0 million and
focused on essential maintenance projects, a softer trading
performance and a small working capital outflow means that free
cash flow(1) was inevitably impacted, resulting in a net outflow of
GBP3.3 million.
Group financial summary
GBP million H1 2020 H1 2019 Change
------------------------------------- -------- -------- ---------
Group revenue 880.5 923.0 (4.6%)
Like-for-like revenue(1) 852.4 899.2 (5.2%)
Adjusted operating profit(1) 28.7 42.4 (32.3%)
Adjusted operating profit margin(1) 3.3% 4.6% (130bps)
Operating profit 13.7 29.3 (53.2%)
Operating profit margin 1.6% 3.2% (160bps)
------------------------------------- -------- -------- ---------
1. Alternative performance measures are referred to as
'like-for-like', 'adjusted', 'underlying' and are applied
consistently throughout this document. These are defined in full
and reconciled to the reported statutory measures in Note 20.
Financial stability
In April, the Group completed a planned refinancing of its core
financing arrangements, extending them until 2024. Operational net
debt(1) at the end of June 2020 was GBP367.4 million (December
2019: GBP354.8 million) due to a small cash outflow in the period
and we continue to operate with significant headroom against our
current facilities of GBP537.5 million. We therefore have not seen
any requirement to access government-supported debt funding. We
also believe that the Group will continue to operate comfortably
within its existing financial covenants.
Corporate Responsibility
Despite the tough external environment, we have continued our
long-term commitment to sustainability and progressing our
Corporate Responsibility (CR) agenda across the Group. The
beginning of the year saw the formal launch of 'Trusted Partner',
our new Group-wide CR strategy and associated commitments to
Responsible Sourcing, Sustainability & Innovation and
Engagement & Wellbeing. We have also formally joined the UK
Plastics Pact and, working closely with our customers, are well on
track to deliver against its commitments. By way of example, more
than four tonnes of plastic have been eliminated simply by no
longer providing cutlery in salad pots, and plans are already in
place to remove 200 million more items.
Board changes
As announced recently, Todd Krasnow will be standing down from
his role as Independent Non-executive Director and Chair of the
Nomination Committee in October 2020. Todd has made a significant
contribution to Bakkavor over the past three years and we thank him
for his counsel following the Company's Initial Public Offering in
November 2017.
We were delighted to welcome Umran Beba to the Board of Bakkavor
on 1 September 2020 as an Independent Non-executive Director and as
a member of the Remuneration and Nomination Committees. Umran is
currently a partner at August Leadership, and prior to this she
worked at PepsiCo Inc, the global food and beverage company for 25
years, retiring in May 2020. Her experience of running food and
beverage operations in numerous regions, including Turkey, the
Middle East, Asia Pacific and the US, combined with her more recent
global role in the area of workforce diversity and employee
engagement, will further strengthen the diverse mix of skills and
experience on the Board.
In addition, Einar Gustafsson, Managing Director of Bakkavor
Asia, stood down from his role on the Management Board and left the
business in June 2020. Following this, Agust Gudmundsson assumed
responsibility for Bakkavor Asia, working closely alongside the
strong local management team.
Dividend
As a result of the ongoing uncertainty from the COVID-19
pandemic, and to ensure we maintain an appropriate level of
liquidity headroom throughout this period, the Board is not
declaring an interim dividend for 2020. The Board is however
mindful of the importance of income to shareholders and as
performance improves and visibility increases, it will keep future
dividends under close review and make a further announcement early
next year.
BUSINESS REVIEW
United Kingdom
The UK is Bakkavor's largest market, representing around 90% of
Group revenue. We have successfully leveraged our scale, expertise
and relationships with key customers to build on our market leading
positions in each of the four categories in which we operate -
meals, pizza & bread, salads and desserts - and increased our
overall share of the total FPF market.
UK Financial summary
GBP million H1 2020 H1 2019 Change
------------------------------------- -------- -------- ---------
Revenue 780.4 813.5 (4.1%)
Like-for-like revenue(1) 754.0 789.7 (4.5%)
Adjusted operating profit(1) 41.0 51.3 (20.1%)
Adjusted operating profit margin(1) 5.3% 6.3% (100bps)
Operating profit 26.0 39.8 (34.7%)
Operating profit margin 3.3% 4.9% (160bps)
------------------------------------- -------- -------- ---------
1. Alternative performance measures are referred to as
'like-for-like', 'adjusted', 'underlying' and are applied
consistently throughout this document. These are defined in full
and reconciled to the reported statutory measures in Note 20.
Trading performance
Although we experienced a strong start to the year, benefitting
from recent new business in the meals and desserts categories our
sales were heavily impacted in early April as the Covid-19 outbreak
spread. Throughout the second quarter, demand across our categories
fell sharply as consumers cut back on the number of store visits
they made, reverting to 'one big shop', and consequently switched
away from short shelf-life chilled products. In the latter part of
that quarter we saw an improving sales trend, with like-for-like
revenue(1) down 6.7% in June compared to nearly 19% in April, such
that overall revenues for the period totalled GBP780.4 million.
This improvement was principally driven by a return to more
frequent shopping as lockdown measures began to ease. Despite
increased stability and further signs of recovery, we currently
still expect trading for the second half to remain subdued.
The impact on our business of lower volumes and associated
inefficiencies, together with an increase in necessary one-off
costs, resulted in a reduction in Adjusted operating profit for the
period of 20.1% to GBP41.0 million .
Supporting our customers
Faced with such a volatile trading environment, we had to take
quick and decisive action. Working alongside our customers, we
agreed to postpone certain new product launches and simplify
existing ranges to help ensure continuity of supply at a time of
considerable uncertainty and volatile demand. Our service levels
and quality of products have remained at industry-leading levels
and reaffirmed the strength of our underlying processes throughout
our sites. We believe the crisis has brought us closer to our
customers, and we are now working hard with them to reinvigorate
our categories and drive a return to growth.
Category review
Although lockdown measures had a noticeable impact on sales in
our meals category, we gained market share and extended our market
leadership, with our Italian and Indian ranges performing
particularly well. Vegetable accompaniments and healthy meal ranges
suffered as consumers used their increased time at home to return
to cooking from scratch. More recently, however, we have seen a
broader recovery in the category as lockdowns began to ease.
Trading in our pizza & bread category has been strong
through the period, as consumers turned to convenient and familiar
options during difficult times. Attractive pizza meal-deals proved
to be especially popular with shoppers and also benefitted sales of
desserts and dips. Our desserts category proved to be more
resilient than we had initially anticipated as consumers continued
to shop for sweet treats and desserts during the lockdown.
With many people working from home, the demand for 'Food to Go'
products reduced considerably, and consequently we have seen a
significant decline in our salads businesses. This category is
highly seasonal and in recent weeks we have seen an improvement
helped by the warmer weather and the easing of lockdown
restrictions. Whilst we still see significant long-term
opportunities within this category, as always, we remain focused on
protecting our margins and continue to review our capacity and cost
base accordingly.
Strategic and operational actions
The crisis this year has prompted us to take a number of
difficult but necessary decisions regarding capacity across our
sites. This has impacted both operational and central functions
and, wherever possible, we have supported impacted colleagues by
making use of the Job Retention Scheme (Furlough). During the early
stages of lockdown, we temporarily closed a factory on our Bo'ness
site to realign our capacity with a rapid drop in demand for 'Food
to go' products. As the market has started to recover, this factory
has now reopened.
We have recently concluded a consultation to close a salads site
in Spalding and entered into a period of consultation to close our
site in Alresford; in both cases this is due to our resignation of
business due to low margins. In addition, the pandemic has prompted
us to identify new and more efficient ways of working with our
customers, and this has led to the restructuring of several
office-based functions.
Brexit
We continue to progress our plans in relation to the UK's exit
from the EU at the end of 2020. Given likely changes to the
immigration rules, the steps we have taken to help our European
colleagues achieve settled status, coupled with ongoing volatility
in the UK jobs market means that we are now more optimistic about
managing our labour requirements in the future. We remain confident
that our scale and strong relationships with our global supply base
leave us well-placed to deal with any unexpected changes next year,
particularly given the performance of our network throughout the
challenges of this year. Nonetheless we continue to work on our
scenario planning, taking into account current government guidance
on potential tariffs and changes to customs processes.
People
The importance of providing food to the nation meant the UK
Government included our colleagues in the list of critical 'key
workers'. We immediately implemented a range of enhanced protocols
throughout the business to protect and reassure all who work for
us. Detailed risk assessments have been carried out across all of
our sites based on evolving guidance and we have liaised closely
with government agencies (HSE, PHE, DEFRA) to ensure we continually
develop and adapt our response to this crisis. We have worked very
closely with PHE in response to regional spikes and we have chosen
to test our workforce in Leicester and Newark, with around 95% of
colleagues participating in the voluntary testing programme. We
have been complimented by various regulatory bodies on the health
and safety protocols we have in place.
More generally, we launched a Wellbeing Toolkit to support all
our colleagues, which offers updated support and advice on
physical, emotional and financial health and through this we have
continued to promote our Employee Assistance Programme. We also
launched our Food Heroes 'thank you' campaign in recognition of the
incredible commitment shown by colleagues both at work and in their
communities.
International
GBP million H1 2020 H1 2019 Change
----------------------------------- -------- -------- ---------
Revenue 100.1 109.5 (8.6%)
Like-for-like revenue(1) 98.4 109.5 (10.1%)
Adjusted operating loss(1) (12.3) (8.9) (38.2%)
Adjusted operating loss margin(1) (12.3%) (8.1%) (420bps)
Operating loss (12.3) (10.5) (17.1%)
Operating loss margin (12.3%) (9.6%) (270bps)
----------------------------------- -------- -------- ---------
1. Alternative performance measures are referred to as
'like-for-like', 'adjusted', 'underlying' and are applied
consistently throughout this document. These are defined in full
and reconciled to the reported statutory measures in Note 20.
Our International business is focused on the two largest food
markets in the world, the US and China. During the period, both
businesses were significantly impacted by the onset of COVID-19,
with like-for-like revenue(1) down 10.1% to GBP98.4 million and as
a result we reported an operating loss of GBP12.3 million. Both
businesses managed well within a tough environment and in recent
weeks have experienced a gradual improvement in trading as
restrictions have eased. Despite the events of this year, we retain
our long-term confidence in the potential for both markets.
United States
Our US business began the year strongly, benefitting from the
substantial operational changes implemented in 2019, and the
increased demand for our fresh prepared meals was very encouraging.
We had an aggressive launch pipeline and significant new product
development activity for our customers. However, from the end of
March the COVID-19 outbreak meant our focus turned to more
immediate actions. We prioritised the safety and wellbeing of our
colleagues, introducing strict social distancing, enhanced hygiene
measures and temperature checking across all our sites, and we are
closely monitoring any further changes in infection rates across
the country.
While a short-term shift in consumer habits away from fresh
products towards the frozen and ambient aisles impacted demand, our
individual sites responded and adapted well. Working with our
customers, we acted quickly to review our products and adjust our
capacity, focusing on ensuring operational excellence and financial
delivery including downsizing our overhead structure. In addition,
we have delayed the development of our new process for hummus
production until next year and we temporarily closed our bakery in
Charlotte which has now reopened. Taking these prompt decisions
helped to minimise disruption and mitigate the financial impact on
the business. Despite the challenges of the second quarter, revenue
in the six months was still up 13.6% year on year.
Following recent major investments, our new meals sites in Texas
and California both delivered strong top line growth in the first
half and are now profitable ahead of schedule. Whilst we are
expecting further revenue growth in the second half, we anticipate
this will be at a slower rate as the market remains volatile,
COVID-19 continues to have a residual impact on underlying sales
volumes and we annualise against the significant uplift in sales at
our Texas site.
China
Our business in China was the first part of the Group to be
affected by COVID-19. From the end of January, we saw a significant
reduction in demand as large parts of the economy remained closed
for several months. This inevitably impacted revenues in the period
which were 35% down on the prior year. Unlike the rest of our
business, the majority of our customers in China are foodservice
operators, who were heavily impacted during the lockdown period.
Our sales in the retail channels held up well, but whilst still
growing, this represents a relatively small proportion of our
business.
Production at all nine sites was impacted, especially during
February when it became necessary to temporarily close a number of
them. However, this did not impact our customers, as we maintained
service levels by transferring production across our remaining
locations, including our new site at Haimen.
Given the challenging nature of the operating environment, we
also took a number of necessary actions to control costs. As in
other parts of the Group, these included temporary salary cuts and
recruitment freezes and in Hong Kong we have streamlined our
operating structure.
The external trading environment has gradually improved in the
second quarter of the year as restrictions on movements have lifted
and this trend has continued. Although we are encouraged by this,
and the fact our foodservice customers have now largely reopened
their businesses, we remain cautious as the economic pressures of
the previous months have dampened consumer confidence. Our volumes
are still well below normal levels and are not expected to return
to the prior year level until early in 2021. However, despite this,
as a result of the mitigating actions already implemented, we
expect the Adjusted EBITDA(1) impact for 2020 to be at the lower
end of our initial estimates we gave in February 2020 of GBP6-10
million.
Financial review
Revenue
Reported revenue decreased by GBP42.5 million, or 4.6%, from
GBP923.0 million in H1 2019 to GBP880.5 million in 2020.
Like-for-like revenue1 was down 5.2%, from GBP899.2 million in
H1 2019 to GBP852.4 million in H1 2020. This reduction was due to
the impact of COVID-19 on sales volumes more than offsetting
underlying growth across the business.
UK
In the UK segment, reported revenue decreased by 4.1%, or
GBP33.1 million, from GBP813.5 million in H1 2019 to GBP780.4
million in H1 2020.
Like-for-like revenue1, which excludes Freshcook that was closed
in April 2019 and Blueberry Foods that was acquired in June 2019,
decreased by 4.5%, from GBP789.7 million in H1 2019 to GBP754.0
million in H1 2020. Freshcook contributed revenues of GBP21.3
million in 2019 for the period up to its closure. Blueberry Foods
contributed GBP2.1 million to reported revenue in the period from
acquisition to the end of H1 2019 and GBP26.4 million in H1
2020.
After a good start to the year, following the significant
business win for our meals category in September 2019, the COVID-19
outbreak saw revenues drop by 19% in April compared to the same
period in the prior year. Since then, volumes have stabilised with
revenues in June down by 6.7% year on year, and signs of improved
trading across our meals, pizza & bread, and desserts
categories. Our salads category, however, and particularly our
'Food to go' products continue to be impacted, with significantly
lower volumes year on year.
International
In the International segment, reported revenue decreased by
GBP9.4 million, or 8.6%, to GBP100.1 million in H1 2020 from
GBP109.5 million in the prior year. The weakening of Sterling in
the period helped to increase reported revenue in H1 2020 by GBP1.7
million.
Like-for-like revenue1, which is at constant currency, decreased
by 10.1%, from GBP109.5 million in H1 2019 to GBP98.4 million in H1
2020. The decrease was due to the impact of COVID-19 on the
revenues in China from the end of January and in the US from the
end of March. In both regions revenues have steadily recovered
since the initial outbreaks, with the US benefitting from
increasing volumes at both of its new sites in Texas and California
following the launch of a number of new products. The recovery in
China has been slower than initially expected and revenues remain
significantly down in June year on year.
Exceptional Items
Included within Other administrative costs and Finance Costs are
exceptional items which are adjusted for when determining the
Group's APMs as management consider that when determining the
underlying performance of the business these items should be
disclosed separately by virtue of their nature or amount.
Exceptional items comprise the following:
GBP million H1 2020 H1 2019
--------------------------------------------- ------- -------
Disruption - 2.9
Restructuring and impairment 15.0 10.2
Accelerated amortisation of refinancing fees 1.7 -
16.7 13.1
--------------------------------------------- ------- -------
(1) Alternative performance measures are referred to as
'like-for-like', 'adjusted', 'underlying' and are applied
consistently throughout this document. These are defined in full
and reconciled to the reported statutory measures in Note 20.
H1 2020
The Group incurred GBP16.7 million of costs presented as
exceptional items in H1 2020 of which GBP3.0 million related to
restructuring costs, with a further GBP8.0 million impairment
charge in respect of tangible fixed assets as a result of the
planned closure of a salads factory in Spalding. The Group also
incurred a GBP4.0 million asset impairment charge in respect of the
proposed closure of our salads site at Alresford as the relevant
assets are no longer expected to have any future value to the
Group. In addition, the Group incurred GBP1.7 million of
accelerated amortisation of refinancing fees following the Group's
refinancing of its core debt facilities on 18 March 2020.
H1 2019
The Group incurred GBP13.1 million of costs in the prior period
of which GBP2.9 million related to disruption costs; GBP1.6 million
related to repurposing our existing factory in California for ready
meal manufacturing; and GBP1.3 million related to the UK business
preparing for the launch of significant new products later in Q3
2019. In addition, the Group incurred GBP10.2 million of
restructuring and impairment costs in the UK. Of this, GBP7.7
million related to the closure of a meals business in Lincolnshire
comprising cash closure costs of GBP4.2 million and plant and
equipment asset impairments of GBP3.5 million. The remaining GBP2.5
million was for redundancy costs following changes to our
commercial and marketing structure.
Operating profit
Operating profit decreased by GBP15.6 million, or 53.2%, from
GBP29.3 million in H1 2019 to GBP13.7 million in H1 2020 with
margins decreasing by 160 basis points to 1.6%. In the UK,
operating profit has decreased from GBP39.8 million in H1 2019 to
GBP26.0 million in H1 2020. For the International business, the
operating loss has increased from GBP10.5 million in H1 2019 to
GBP12.3 million in H1 2020. The decreases in both regions are
primarily due to the impact of lower revenues across the business
and additional costs incurred following the COVID-19 outbreak.
Operating profit has also been impacted by an increase in the
depreciation charge following recent capital investments. The Group
has also incurred significant costs in the period as the business
responds to the COVID-19 outbreak, with enhanced health and safety
and hygiene protocols and strategic restructuring in all regions,
and has also increased its legal provisions based on potential
payments that may be required. These costs have been largely offset
by overhead reductions across the Group, including structural
changes, and funding under the Job Retention Scheme. In addition,
operating profit includes a net credit of GBP3.1 million (H1 2019:
GBP5.5 million) arising from the reassessment of the need for
certain commercial accruals and the requirement for provisions
under the Group's short-term bonus scheme.
Adjusted operating profit(1)
Adjusted operating profit1, which excludes exceptional items,
was GBP28.7 million for H1 2020, a decrease of 32.3% from GBP42.4
million in H1 2019. Adjusted operating profit(1) margin decreased
by 130 basis points to 3.3% in H1 2020. In the UK, Adjusted
operating profit has decreased from GBP51.3 million in H1 2019 to
GBP41.0 million in H1 2020. For the International business, the
Adjusted operating loss(1) has increased from GBP8.9 million in H1
2019 to GBP12.3 million in H1 2020.
Finance costs
Finance costs increased by GBP2.7 million, or 29.7%, from GBP9.1
million in H1 2019 to GBP11.8 million in H1 2020. The costs for H1
2020 include GBP1.7 million for the accelerated amortisation of
refinancing fees following the Group's refinancing of its core debt
facilities during the period. The remaining GBP1.0 million increase
is due to an increase in borrowing costs from higher average debt
levels in the period. The Group's cost of debt remains at circa
3.5% per annum.
Tax
The Group tax charge for the period decreased by GBP0.9 million,
from GBP2.3 million in H1 2019 to GBP1.4 million in H1 2020. The
GBP1.4 million charge represents an effective tax rate of 20.6% on
profit before tax of GBP6.8 million. The Group annual tax rate for
2020 is forecast to be 21.0% of profit before tax. Excluding
exceptional items and the change in fair value of derivative
financial instruments, the underlying effective tax rate was 19.0%
and exceeds the 14.6% underlying rate for the corresponding period
last year. The main reason for this increase was that the UK
statutory tax rate was originally due to reduce from the current
19.0% to 17.0% with effect from 2020. This meant that UK deferred
tax liabilities that were previously provided for at 17.0%, being
the rate at which timing differences were expected to reverse.
However, the UK statutory rate is now being held at 19.0% which has
resulted in an increase in deferred tax liabilities.
Earnings per share
Basic earnings per share has decreased from 3.0 pence for H1
2019 to 0.9 pence in H1 2020, reflecting the impact of COVID-19 on
trading in the period and an increase in depreciation following
capital investment in the prior year.
Adjusted earnings per share(1) , which is calculated before
exceptional items and the change in fair value of derivative
financial instruments has decreased from 4.9 pence for H1 2019 to
2.6 pence in H1 2020. The weighted average number of shares in
issue during both H1 2019 and H1 2020 was 579,425,585.
Cash Flow
Net cash from operating activities, which is calculated before
capital expenditure but after payments for exceptional items,
decreased by GBP29.4 million from GBP42.5 million in H1 2019 to
GBP13.1 million in H1 2020. This was largely due to the impact of a
year on year working capital increase of GBP21.0 million arising
from the impact of lower revenues on the Group's negative working
capital cycle. In addition, tax paid has increased by GBP3.7
million following changes to UK legislation that now require the
estimated tax due for a financial year to be paid within that
period. The Group's interest paid has also increased by GBP3.4
million due to GBP4.2 million of refinancing fees in the
period.
Net cash used in investing activities decreased by GBP39.7
million in the period from GBP60.6 million in H1 2019 to GBP20.9
million in H1 2020. This was primarily due to a GBP23.4 million
decrease in capital expenditure as the Group delayed further
investments to mitigate against the impact of the COVID-19
pandemic. H1 2019 also included the purchase of Blueberry Foods for
GBP17.4 million.
Free cash flow1 for H1 2020, which is the key measure the
Directors use to manage cash flow in the business, was a GBP3.3
million outflow, GBP18.3 million lower than H1 2019. This was
principally due to a GBP20.1 million increase in year on year
working capital outflows to GBP25.1 million due to the reduction in
trading in the period and an increase of GBP3.7 million in tax paid
as set out above. This was partly offset by expenditure on core
capital (excluding development projects) being GBP13.7 million
lower than H1 2019, as the Group lowered its capital investment
plan in response to the pandemic.
Capital, Debt and Leverage
On 18 March 2020, the Group completed a refinancing of its core
debt facilities amounting to GBP410 million through a new term loan
and Revolving Credit Facility totalling GBP455 million. The new
facilities are due to mature in March 2024, with an option to
extend the tenure by a further two years subject to lender
approval.
In addition to the free cash outflow in the period the Group
incurred GBP4.2 million in refinancing fees and paid GBP0.3 million
in respect of exceptional items. Overall, this has resulted in an
increase of GBP12.6 million in operational net debt(1) from the
year end to GBP367.4 million. Leverage (the ratio of operational
net debt to adjusted EBITDA) was 2.6 times at June 2020.
The Group continues to target a medium-term range of 1.5 - 2.0
times. The Group's liquidity position remains strong with
comfortable headroom against all financial covenants.
Pensions
Under the IAS 19 valuation principles that are required to be
used for accounting purposes, the Group recognised a surplus of
GBP20.0 million for the UK defined benefit scheme as at 27 June
2020 (28 December 2019: surplus of GBP9.7 million).The increase in
the surplus is mainly due to an increase in the value of
assets.
The Group and the Trustee agreed in April 2017 the triennial
valuation of the UK defined benefit pension scheme as at 31 March
2016. This resulted in a funding shortfall which continues to be
paid over an agreed eight-year recovery period ending on 31 March
2024. The recovery contributions over that period amount to GBP22.5
million, with GBP2.5 million payable for the year ending 31 March
2021. Discussions with the Trustee regarding the next triennial
valuation as at 31 March 2019 are ongoing.
Principal Risks and Uncertainties
Details of the Principal risks and uncertainties facing the
Group are set out on pages 58 to 65 of the 2019 Annual Report and
Accounts, published on 6 May 2020. These risks include, but are not
limited to, Food safety and integrity, Raw material and input cost
inflation, Reliance on a small number of key customers, Labour
availability and cost, IT systems and cyber risk, Health and
safety, Recruitment and retention of key employees, Strategic
growth and change programmes, Treasury and pensions and Brexit
disruption. We also summarised the risks to the business from
COVID-19, including the potential operational and financial impacts
and the specific mitigating actions available. There have been no
changes to the level of risks faced by the business other than as
set out below.
COVID-19
As the pandemic has developed across the world and regulatory
guidance has evolved, our operational procedures have been adapted
and updated regularly to ensure that we stay in line with the
latest guidance. As a food manufacturer, we already have stringent
hygiene and health and safety standards embedded throughout our
business. In addition, we have continued to implement regular risk
assessments across all our sites and have put appropriate action
plans in place to prioritise the health and wellbeing of all our
employees.
The Group continues to operate with significant headroom against
available debt facilities that currently amount to GBP537.5 million
and has therefore not seen any requirement to access government
supported debt funding in relation to the impact of COVID-19. We
believe that the Group will continue to operate comfortably within
its existing financial covenants.
Brexit
The Group's Brexit committee continually monitors developments
regarding the terms of the UK's exit from the EU at the end of
2020. Based on current government guidelines we believe there is
heightened risk of a no deal exit, and consequently the
introduction of tariffs that would likely increase the raw material
cost base of our UK business. If this were to arise, we would work
closely with our customers to manage this risk.
Condensed consolidated income statement
26 weeks ended 29 June 2019
26 weeks ended 27 June 2020 (Unaudited) (Unaudited)
---------------------------------------------- -------------------------------------------
Exceptional Exceptional
Underlying items Underlying items
GBP million Notes activities (note 4) Total activities (note 4) Total
----------------- ------ ----------------- ----------------- -------- ----------------- ------------ --------
Continuing
operations
Revenue 3 880.5 - 880.5 923.0 - 923.0
Cost of sales (628.6) - (628.6) (678.0) (1.1) (679.1)
----------------- ------ ----------------- ----------------- -------- ----------------- ------------ --------
Gross profit 251.9 - 251.9 245.0 (1.1) 243.9
Distribution
costs (35.5) - (35.5) (36.8) - (36.8)
Other
administrative
costs (187.7) (15.0) (202.7) (166.2) (12.0) (178.2)
Share of results
of associates
after tax - - - 0.4 - 0.4
----------------- ------ ----------------- ----------------- -------- ----------------- ------------ --------
Operating
profit/(loss) 28.7 (15.0) 13 .7 42.4 (13.1) 29.3
Finance costs 5 (10.1) (1.7) (11.8) (9.1) - (9.1)
Other gains and
(losses) 6 4.9 - 4.9 (0.7) - (0.7)
----------------- ------ ----------------- ----------------- -------- ----------------- ------------ --------
Profit/(loss)
before tax 23.5 (16.7) 6.8 32.6 (13.1) 19.5
Tax (4.5) 3.1 (1.4) (5.2) 2.9 (2.3)
----------------- ------ ----------------- ----------------- -------- ----------------- ------------ --------
Profit/(loss)
for the period
attributable to
equity holders
of the parent
company 19.0 (13.6) 5.4 27.4 (10.2) 17.2
----------------- ------ ----------------- ----------------- -------- ----------------- ------------ --------
Earnings per
share
Basic 7 0.9p 3.0p
Diluted 7 0.9p 3.0p
----------------- ------ ----------------- ----------------- -------- ----------------- ------------ --------
Condensed consolidated statement of comprehensive income
26 weeks ended 26 weeks ended
27 June 29 June
2020 2019
GBP million (Unaudited) (Unaudited)
-------------------------------------------------------------- --------------- ---------------
Profit for the period 5.4 17.2
-------------------------------------------------------------- --------------- ---------------
Other comprehensive income/(expense)
Items that may be reclassified to the income statement:
Exchange differences on translation of foreign operations 10.6 (0.1)
Loss on cash flow hedges (0.4) -
Tax relating to these items 0.1 -
Items that will not be reclassified to the income statement:
Actuarial gain on defined benefit pension schemes 9.6 8.3
Tax relating to these items (1.8) (1.4)
-------------------------------------------------------------- --------------- ---------------
Total other comprehensive income net of tax 18.1 6.8
-------------------------------------------------------------- --------------- ---------------
Total comprehensive income 23.5 24.0
-------------------------------------------------------------- --------------- ---------------
Condensed consolidated statement of financial position
27 June 28 December
GBP million Notes 2020 (Unaudited) 2019 (Audited)
----------------------------------------------- ------ ------------------ ----------------
Non-current assets
Goodwill 9 654.1 651.2
Other intangible assets 2.6 2.7
Property, plant and equipment 10 536.0 553.7
Interests in associates and other investments 13.2 12.6
Deferred tax asset 28.9 27.2
Retirement benefit asset 20.0 9.7
1,254.8 1,257.1
----------------------------------------------- ------ ------------------ ----------------
Current assets
Inventories 11 57.1 64.4
Trade and other receivables 12 112.4 131.7
Current tax assets 6.2 -
Cash and cash equivalents 14 58.8 25.9
Derivative financial instruments 2.5 -
237.0 222.0
----------------------------------------------- ------ ------------------ ----------------
Total assets 1,491.8 1,479.1
----------------------------------------------- ------ ------------------ ----------------
Current liabilities
Trade and other payables 13 (333.8) (390.4)
Current tax liabilities - (3.9)
Borrowings 14 (44.8) (48.5)
Provisions (16.3) (5.9)
Derivative financial instruments - (3.3)
(394.9) (452.0)
----------------------------------------------- ------ ------------------ ----------------
Non-current liabilities
Trade and other payables 13 - (0.6)
Borrowings 14 (454.7) (409.8)
Provisions (12.9) (14.4)
Derivative financial instruments (0.4) (0.2)
Deferred tax liabilities (30.9) (28.5)
(498.9) (453.5)
----------------------------------------------- ------ ------------------ ----------------
Total liabilities (893.8) (905.5)
----------------------------------------------- ------ ------------------ ----------------
Net assets 598.0 573.6
----------------------------------------------- ------ ------------------ ----------------
Equity
Share capital 16 11.6 11.6
Merger reserve (130.9) (130.9)
Hedging reserve (0.3) -
Translation reserve 37.6 27.0
Retained earnings 680.0 665.9
--------------------- --- -------- --------
Total equity 598.0 573.6
--------------------- --- -------- --------
Condensed consolidated statement of changes in equity
Merger Hedging Translation Retained
GBP million Share capital reserve reserve reserve earnings Total
------------------------------ -------------- -------------- -------------- ------------- -------------- -------
Balance at 30 December 2018 11.6 (130.9) - 33.8 654.9 569.4
(Audited)
Profit for the period - - - - 17.2 17.2
Other comprehensive
(expense)/income for the
period - - - (0.1) 6.9 6.8
------------------------------ -------------- -------------- -------------- ------------- -------------- -------
Total comprehensive
(expense)/income for the
period - - - (0.1) 24.1 24.0
------------------------------ -------------- -------------- -------------- ------------- -------------- -------
Dividends paid (Note 8) - - - - (23.2) (23.2)
Credit for share-based
payments - - - - 1.2 1.2
Balance at 29 June 2019 11.6 (130.9) - 33.7 657.0 571.4
(Unaudited)
------------------------------ -------------- -------------- -------------- ------------- -------------- -------
Balance at 29 December 2019 11.6 (130.9) - 27.0 665.9 573.6
(Audited)
Profit for the period - - - - 5.4 5.4
Other comprehensive income
for the period - - (0.3) 10.6 7.8 18.1
------------------------------ -------------- -------------- -------------- ------------- -------------- -------
Total comprehensive income
for the period - - (0.3) 10.6 13.2 23.5
------------------------------ -------------- -------------- -------------- ------------- -------------- -------
Credit for share-based
payments - - - - 0.9 0.9
Balance at 27 June 2020 11.6 (130.9) (0.3) 37.6 680.0 598.0
(Unaudited)
------------------------------ -------------- -------------- -------------- ------------- -------------- -------
Condensed consolidated statement of cash flows
26 weeks 26 weeks
ended ended
27 June 29 June
2020 2019
GBP million Notes (Unaudited) (Unaudited)
------------------------------------------------------- ------ -------------- --------------
Net cash generated from operating activities 17 13.1 42.5
-------------------------------------------------------
Investing activities
Dividends received from associates 0.1 -
Purchases of property, plant and equipment (21.0) (44.4)
Proceeds on disposal of property, plant and equipment - 1.2
Acquisition of subsidiary - (17.4)
Net cash used in investing activities (20.9) (60.6)
Financing activities
Dividends paid 8 - (23.2)
Increase in borrowings 375.9 63.6
Repayment of borrowings (330.0) -
Payment of lease liabilities (6.0) (6.4)
------------------------------------------------------- ------ -------------- --------------
Net cash generated from financing activities 39.9 34.0
Net increase in cash and cash equivalents 32.1 15.9
Cash and cash equivalents at beginning of period 25.9 12.4
Effect of foreign exchange rate changes 0.8 0.1
Cash and cash equivalents at end of period 58.8 28.4
------------------------------------------------------- ------ -------------- --------------
Notes to the condensed financial statements
1. General Information
The information for the 26 weeks ended 27 June 2020 and 26 weeks
ended 29 June 2019 is unaudited and does not constitute statutory
accounts within the meaning of s435 (1) and (2) of the Companies
Act 2006. These condensed consolidated interim financial statements
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency rules
of the Financial Conduct Authority. The condensed consolidated
statement of financial position as at 28 December 2019 has been
derived from the consolidated statement of financial position
included in the Group's financial statements for the 52 weeks ended
28 December 2019, a copy of which has been delivered to the
Registrar of Companies. The auditor's report on those accounts was
not qualified, did not include any reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying the report and did not contain statements under section
498 (2) or (3) of the Companies Act 2006.
This financial information does not include all of the
information and disclosure required in the annual consolidated
financial statements and should be read in conjunction with the
Bakkavor Group plc (the "Group") annual financial statements for
the 52 weeks ended 28 December 2019, which have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union.
Controlling parties
Two of the Company's Directors, Agust Gudmundsson and Lydur
Gudmundsson, hold shares in the Company through their beneficial
ownership of Carrion Enterprises Limited and Umbriel Ventures
Limited. On 23 May 2019, Carrion Enterprises Limited and Umbriel
Ventures Limited each sold 3,229,625 ordinary shares to Lixaner Co
Limited, a company owned and controlled by Sigurdur Valtysson, who
runs the family office for Agust and Lydur Gudmundsson. Following
the transaction, Lixaner Co Limited holds 6,459,250 ordinary shares
(representing 1.11% of the issued share capital of the company) and
Carrion Enterprises Limited and Umbriel Ventures Limited each hold
142,103,505 ordinary shares (representing 24.52% of the issued
share capital of the Company).
Given the close relationship between the parties, Sigurdur
Valtysson is to be considered as acting in concert with Agust and
Lydur Gudmundsson for the purposes of the definition in the
Takeover Code and the parties are controlling shareholders of the
Company. The aggregate shareholding in the Company of Carrion
Enterprises Limited and Umbriel Ventures Limited and their concert
party group following the sale of shares to Lixaner Co Limited
remained unchanged at 290,666,260 ordinary shares (representing
50.16% of the issued shares capital of the Company).
Principal activities and seasonality
The principal activities of the Group comprise the preparation
and marketing of fresh prepared foods and the marketing and
distribution of fresh produce. These activities are undertaken in
the UK, US and China and products are primarily sold through high
street supermarkets. The Group's cash flows are affected by
seasonal variations. Sales of fresh prepared food have historically
tended to be marginally higher during the summer months and in the
weeks leading up to Christmas. The Group generally has higher gross
profit margins during the summer months because the Group is able
to source locally produced raw materials during that period, which
reduces costs.
2. Significant accounting policies
Basis of accounting
The financial information has been prepared on the historical
cost basis, except for the revaluation of financial instruments and
defined benefit pension scheme assets and liabilities (which are
stated at fair value or actuarial valuation).
Accounting policies
The accounting policies adopted are consistent with those of the
previous financial statements except as described below:
In May 2020, the Group fixed the interest on a GBP100 million of
borrowings through the purchase of interest rate swaps that mature
in March 2024. These interest rate swaps have been designated as
hedges and for which hedge accounting is sought and were documented
as such at their inception. This documentation identifies the
hedging instrument, the hedged item or transaction, the nature of
the risk being hedged and how hedge effectiveness will be measured
throughout their duration. These hedges have been designated as
cash flow hedges and are expected at inception to be highly
effective in offsetting changes in the cash flows of hedged
items.
Where a derivative financial instrument is designated as a hedge
of the variability in cash flows of a recognised asset or
liability, or a highly probable forecast transaction, the effective
part of any gain or loss on the derivative financial instrument is
recognised within equity in the hedging reserve, with the
ineffective portion being reported in the profit or loss. When a
highly probable forecast transaction results in the recognition of
a non-financial asset or liability, the cumulative gain or loss is
removed from the hedging reserve in equity and included in the
initial measurement of the non-financial asset or liability.
Otherwise, the associated gains and losses that had previously been
recognised within equity in the hedging reserve are transferred to
the profit or loss as the cash flows of the hedged item impact the
profit or loss.
Hedge accounting is discontinued when the hedging instrument
expires or is sold, terminated, exercised or no longer qualifies
for hedge accounting. At that point in time, any cumulative gain or
loss on the hedging instrument recognised within equity in the
hedging reserve is kept in the hedging reserve until the forecast
transaction occurs. If a hedged transaction is no longer
anticipated to occur, the net cumulative gain or loss recognised
within equity in the hedging reserve is transferred immediately to
the profit or loss.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to the expected total annual profit
or loss.
There have been no changes in the period to the Group's critical
accounting judgements and key sources of estimation uncertainty as
disclosed in the Group's annual financial statements for the 52
weeks ended 28 December 2019.
Going concern
The Directors, in their detailed consideration of going concern,
have reviewed the Group's future revenue projections and cash
requirements, which they believe are based on prudent
interpretations of market data and past experience. The Directors
have also considered the Group's level of available liquidity under
its financing facilities which were renewed on 18 March 2020 for a
four-year period. The Directors have carried out a robust
assessment of the potential implications from both the current
COVID-19 outbreak and the terms of the UK's exit from the European
Union at the end of 2020. This has included updated scenario
planning on the implications of a second wave of COVID-19 and the
potential for further lockdown restrictions which may impact
consumer demand for the Group's products. The Group has also
modelled the potential impact of the introduction of tariffs by the
UK government on the cost of goods imported into the UK from the EU
from the start of 2021 and the effect this may have on sales
volumes if retail pricing increases. Having taken these factors
into account , under either scenario, the Directors consider that
adequate headroom is available based on the forecasted cash
requirements of the business. At the date of this report, the Group
has complied in all respects with the terms of its borrowing
agreements, including its financial covenants, and forecasts to
continue to do so in the future.
Consequently, the Directors consider that the Group has adequate
resources to meet its liabilities as they fall due for the
foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the financial statements.
3. Segment information
The chief operating decision-maker has been defined as the
Management Board headed by the Chief Executive Officer. They review
the Group's internal reporting in order to assess performance and
allocate resources. Management has determined the segments based on
these reports.
As at the statement of financial position date, the Group is
organised as follows:
The preparation and marketing of fresh prepared
* UK: foods and fresh produce for distribution
in the UK.
The preparation and marketing of fresh prepared
* International: foods and fresh produce in the US and China.
The Group manages the performance of its businesses through the
use of 'Adjusted operating profit' as defined in Note 20.
The following table provides an analysis of the Group's segment
information for the period 29 December 2019 to 27 June 2020:
GBP million UK International Total
--------------------------------------------------- ------- -------------- --------
Revenue 780.4 100.1 880.5
--------------------------------------------------- ------- -------------- --------
Adjusted EBITDA (Note 20) 68.1 (5.2) 62.9
Depreciation (25.8) (6.6) (32.4)
Amortisation (0.1) (0.2) (0.3)
Share scheme charges (0.9) - (0.9)
Loss on disposal of property, plant and equipment (0.3) (0.3) (0.6)
Adjusted operating profit/(loss) (Note 20) 41.0 (12.3) 28.7
Exceptional items (Note 4) (15.0) - (15.0)
Operating profit/(loss) 26.0 (12.3) 13.7
Finance costs (11.8)
Other gains and (losses) 4.9
--------------------------------------------------- ------- -------------- --------
Profit before tax 6.8
Tax (1.4)
--------------------------------------------------- ------- -------------- --------
Profit for the period 5.4
--------------------------------------------------- ------- -------------- --------
3. Segment information (continued)
The following table provides an analysis of the Group's segment
information for the period from 30 December 2018 to 29 June
2019:
GBP million UK International Total
----------------------------------------------------- ------- -------------- -------
Revenue 813.5 109.5 923.0
----------------------------------------------------- ------- -------------- -------
Adjusted EBITDA as previously reported (Note 20) 70.6 2.9 73.5
Restatement (Note 20) 5.1 (7.0) (1.9)
----------------------------------------------------- ------- -------------- -------
Adjusted EBITDA restated (Note 20) 75.7 (4.1) 71.6
Depreciation (23.9) (4.9) (28.8)
Amortisation - (0.2) (0.2)
Share scheme charges (1.2) - (1.2)
Profit on disposal of property, plant and equipment 0.7 (0.1) 0.6
Share of results of associates after tax - 0.4 0.4
----------------------------------------------------- ------- -------------- -------
Adjusted operating profit/(loss) (Note 20) 51.3 (8.9) 42.4
Exceptional items (Note 4) (11.5) (1.6) (13.1)
----------------------------------------------------- ------- -------------- -------
Operating profit 39.8 (10.5) 29.3
Finance costs (9.1)
Other gains and (losses) (0.7)
----------------------------------------------------- ------- -------------- -------
Profit before tax 19.5
Tax (2.3)
----------------------------------------------------- ------- -------------- -------
Profit for the period 17.2
----------------------------------------------------- ------- -------------- -------
Major customers
For the 26 weeks ended 27 June 2020, the Group's four largest
customers accounted for 77.4% (26 weeks ended 29 June 2019: 75.7%)
of total revenue from continuing operations. The Group does not
enter into long-term contracts with its retail customers. Each of
these four customers' accounts for a significant amount of the
Group's revenue and are all in the UK segment. The percentage of
Group revenue from these customers is as follows:
26 weeks ended 26 weeks ended
27 June 29 June
2020 2019
------------ --------------- ---------------
Customer A 37.0% 30.2%
Customer B 19.6% 23.9%
Customer C 11.2% 10.9%
Customer D 9.6% 10.7%
------------ --------------- ---------------
All of the Group's revenue is from the sale of goods.
3. Segment information (continued)
Revenue by geographical region
The Group derives revenue in the following geographical
regions:
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019
--------------- --------------- ---------------
UK 780.4 813.5
US 67.6 59.5
China 32.5 50.0
Group revenue 880.5 923.0
--------------- --------------- ---------------
4. Exceptional items
The Group's financial performance is analysed in two ways;
underlying performance (which does not include exceptional items)
and exceptional items that are material and not expected to
reoccur. The Directors consider that the underlying activities
results better represent the ongoing operations and key metrics of
the Group.
Exceptional items includes items that are non-recurring,
significant in nature and are important to users in understanding
the business, including restructuring costs, disruption costs,
pre-commissioning and start-up costs for new manufacturing
facilities, impairment of assets, disposals of subsidiaries and
associates and fair value adjustments:
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019
------------------------------ --------------- ---------------
Disruption - 2.9
Restructuring and impairment 15.0 10.2
------------------------------ --------------- ---------------
Operating profit 15.0 13.1
Finance costs (Note 5) 1.7 -
------------------------------ --------------- ---------------
Total before tax 16.7 13.1
Tax on exceptional items (3.1) (2.9)
------------------------------ --------------- ---------------
Total after tax 13.6 10.2
------------------------------ --------------- ---------------
H1 2020
The Group incurred GBP16.7 million of costs presented as
exceptional items in H1 2020 of which GBP3.0 million related to
restructuring costs, with a further GBP8.0 million impairment
charge in respect of tangible fixed assets as a result of the
planned closure of a salads factory in Spalding. The Group also
incurred a GBP4.0 million asset impairment charge in respect of the
proposed closure of our salads site at Alresford as the relevant
assets are no longer expected to have any future value to the
Group. In addition, the Group incurred GBP1.7 million of
accelerated amortisation of refinancing fees following the Group's
refinancing of its core debt facilities on 18 March 2020.
H1 2019
The Group incurred GBP13.1 million of costs in the prior period
of which GBP2.9 million related to disruption costs; GBP1.6 million
as our existing factory in California was repurposed for ready meal
manufacturing and GBP1.3 million in the UK as the business prepared
for the launch of significant new products later in Q3 2019. In
addition, the Group incurred GBP10.2 million of restructuring and
impairment costs in the UK. Of this, GBP7.7 million related to the
closure of a Meals business in Lincolnshire comprising cash closure
costs of GBP4.2 million and plant and equipment asset impairments
of GBP3.5 million. The remaining GBP2.5 million was for redundancy
costs following changes to our commercial and marketing
structure.
5. Finance costs
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019
--------------------------------------------------------- --------------- ---------------
Interest on borrowings 10.3 8.0
Interest on lease liabilities 1.4 1.5
Unwind of discount on provisions 0.1 0.1
--------------------------------------------------------- --------------- ---------------
11.8 9.6
--------------------------------------------------------- --------------- ---------------
Less: amounts included in the cost of qualifying assets - (0.5)
--------------------------------------------------------- --------------- ---------------
11.8 9.1
--------------------------------------------------------- --------------- ---------------
The interest on borrowings figure includes GBP1.7 million (2019:
GBPnil) of accelerated amortisation of refinancing fees relating to
the Group's refinancing of its core debt facilities on 18 March
2020. This amount has been classed as an exceptional item in the
condensed consolidated income statement.
Borrowing costs included in the cost of qualifying assets in the
26 weeks ended 29 June 2019 arose on the general borrowing pool and
were calculated by applying a capitalisation rate of 3.0% to
expenditure on such assets. There were no borrowing costs included
in the cost of qualifying assets in the current period.
6. Other gains and (losses)
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019
---------------------------------------------------------- --------------- ---------------
Foreign exchange (losses)/gains (0.2) 0.2
Change in fair value of derivative financial instruments 5.1 (0.9)
4.9 (0.7)
---------------------------------------------------------- --------------- ---------------
7. Earnings per share
The calculation of earnings per Ordinary share is based on
earnings after tax and the weighted average number of Ordinary
shares in issue during the period.
For diluted earnings per share, the weighted average number of
Ordinary shares in issue is adjusted to assume conversion of all
potentially dilutive Ordinary shares.
The calculation of the basic and diluted earnings per share is
based on the following data:
Earnings
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019
------------------------------------------------------------ --------------- ---------------
Profit attributable to equity shareholders of the Company 5.4 17.2
------------------------------------------------------------ --------------- ---------------
Number of shares
26 weeks ended 26 weeks ended
27 June 29 June
'000 2020 2019
--------------------------------------------------------------------------- --------------- ---------------
Weighted average number of Ordinary shares 579,426 579,426
Effect of potentially dilutive Ordinary shares 3,575 3,260
--------------------------------------------------------------------------- --------------- ---------------
Weighted average number of Ordinary shares for diluted earnings per share 583,001 582,686
--------------------------------------------------------------------------- --------------- ---------------
26 weeks ended 26 weeks ended
27 June 29 June
2020 2019
---------------------------- --------------- ---------------
Basic earnings per share 0.9p 3.0p
Diluted earnings per share 0.9p 3.0p
---------------------------- --------------- ---------------
8. Dividends
At the AGM on 23 May 2019 a final dividend of 4 pence per share
to each of the Ordinary shareholders for the period ended 29
December 2018 was approved. The total amount of GBP23,177,023 was
paid on 29 May 2019.
On 10 September 2019, the Company declared an interim dividend
for the period ended 28 December 2019 of 2 pence per share to each
of the Ordinary shareholders totalling GBP11,588,512. This interim
dividend was paid to Ordinary shareholders on 11 October 2019.
At the AGM on 12 June 2020 the Board declared that no final
dividend would be paid for the period ended 28 December 2019.
9. Goodwill
GBP million
-------------------------------------------- ------
At 30 December 2018 650.2
Recognised on acquisition of a subsidiary 2.9
Exchange rate difference during the period (0.1)
-------------------------------------------- ------
At 29 June 2019 653.0
-------------------------------------------- ------
At 29 December 2019 651.2
Exchange rate difference during the period 2.9
At 27 June 2020 654.1
-------------------------------------------- ------
10. Property, plant and equipment
GBP million
-------------------------------------------- -------
At 30 December 2018 507.1
Additions 50.2
Acquisition of subsidiary 17.6
Disposals (0.6)
Depreciation charge for the period (28.8)
Impairment (3.5)
-------------------------------------------- -------
At 29 June 2019 542.0
-------------------------------------------- -------
At 29 December 2019 553.7
Additions 20.2
Disposals (0.3)
Depreciation charge for the period (32.4)
Impairment (12.0)
Exchange rate difference during the period 6.8
At 27 June 2020 536.0
-------------------------------------------- -------
There were no additions in the 26 weeks ended 27 June 2020
(2019: GBP9.7 million) in respect of development projects.
11. Inventories
27 June 28 December
GBP million 2020 2019
----------------------------- -------- ------------
Raw materials and packaging 49.2 55.5
Work-in-progress 1.9 2.2
Finished goods 6.0 6.7
----------------------------- -------- ------------
57.1 64.4
----------------------------- -------- ------------
12. Trade and other receivables
27 June 28 December
GBP million 2020 2019
------------------------------------------------- -------- ------------
Amounts receivable from trade customers 83.0 107.3
Expected credit loss (1.7) (1.6)
Net amounts receivable from trade customers 81.3 105.7
Other receivables 13.0 15.4
Prepayments 18.1 10.6
------------------------------------------------- -------- ------------
Trade and other receivables due within one year 112.4 131.7
------------------------------------------------- -------- ------------
During the period, the Group has continued to operate trade
receivable factoring arrangements. These are non-recourse
arrangements and therefore amounts are de-recognised from trade
receivables. At 27 June 2020 GBP111 million was drawn under
factoring facilities, a decrease of GBP23 million compared to 28
December 2019 representing cash collected before it was
contractually due from the customer.
As at 27 June 2020, the Group's amounts receivable from trade
customers includes GBP34.0 million (28 December 2019: GBP49.4
million) which could be factored under the non-recourse trade
receivable factoring arrangement.
13. Trade and other payables
27 June 28 December
GBP million 2020 2019
---------------------------------------------- -------- ------------
Trade payables 203.8 244.4
Other taxation 1.0 2.4
Other payables 22.4 23.9
Accruals and deferred income 106.6 120.3
---------------------------------------------- -------- ------------
333.8 391.0
Less amounts due after one year:
Accruals and deferred income - (0.6)
---------------------------------------------- -------- ------------
- (0.6)
---------------------------------------------- -------- ------------
Trade and other payables due within one year 333.8 390.4
---------------------------------------------- -------- ------------
During the prior period, the Group set up an arrangement to
provide financing for the Group's suppliers. This is a voluntary
programme that potentially gives suppliers earlier access to cash.
At 27 June 2020, trade payables amounting to GBP21.5 million (28
December 2019: GBP18.7 million) were subject to these arrangements.
These balances are classified as trade payables, and the related
payments as cash flows from operating activities, since the
original obligation to the supplier remains and has not been
replaced with a new obligation to the bank.
14. Net debt
27 June 28 December
GBP million 2020 2019
-------------------------------- -------- ------------
Cash and cash equivalents 58.8 25.9
-------------------------------- -------- ------------
Borrowings (33.6) (36.7)
Lease liabilities (11.2) (11.8)
-------------------------------- -------- ------------
Total debt due within one year (44.8) (48.5)
Borrowings (389.3) (340.5)
Lease liabilities (65.4) (69.3)
-------------------------------- -------- ------------
Total debt due after one year (454.7) (409.8)
Group net debt (440.7) (432.4)
-------------------------------- -------- ------------
Group net debt is the sum of cash and cash equivalents, prepaid
fees to be amortised over the term of outstanding borrowings,
outstanding borrowings, interest accrued on borrowings and lease
liabilities.
On 18 March 2020, the Group completed a refinancing of its core
debt facilities amounting to GBP410 million through a new term loan
and Revolving Credit Facility totalling GBP455 million. The new
facilities are due to mature in March 2024, with an option to
extend the tenure by a further two years subject to lender
approval.
In May 2020, the Group fixed the interest on a GBP100 million of
borrowings through the purchase of interest rate swaps that mature
in March 2024.
15. Financial Instruments
The categories of financial instruments are as follows:
27 June 28 December
GBP million 2020 2019
------------------------------------------ -------- ------------
Financial assets
Fair value through profit and loss:
Trade receivables 34.0 49.4
Derivative financial instruments 2.5 -
Loans and receivables at amortised cost:
Trade receivables 47.3 56.3
Other receivables 13.0 15.4
Cash and cash equivalents 58.8 25.9
------------------------------------------ -------- ------------
155.6 147.0
------------------------------------------ -------- ------------
27 June 28 December
GBP million 2020 2019
------------------------------------------------ -------- ------------
Financial liabilities
Fair value through other comprehensive income:
Derivative financial instruments 0.4 3.5
------------------------------------------------ -------- ------------
Other financial liabilities at amortised cost:
Trade payables 203.8 244.4
Other payables 22.4 23.9
Accruals 105.6 118.9
Borrowings 422.9 377.2
Lease liabilities 76.6 81.1
------------------------------------------------ -------- ------------
831.7 849.0
------------------------------------------------ -------- ------------
Trade receivables have been determined as level 2 under IFRS 7
Financial Instruments: Disclosures. The fair value of loans and
receivables approximates to their carrying values due to the
short-term nature of the receivables. The fair values for the
derivative financial instruments have been determined as level 2
under IFRS 7 Financial Instruments: Disclosures. Quoted prices are
not available for the derivative financial instruments and so
valuation models are used to estimate fair value. The models
calculate the expected cash flows under the terms of each specific
contract and then discount these values back to a present value.
These models use as their basis independently sourced market
parameters including, for example, interest rate yield curves and
currency rates.
The fair value of other financial liabilities at amortised cost
approximates to their carrying value. The trade and other payables
approximate to their fair value due to the short-term nature of the
payables. The lease liabilities fair value approximates to the
carrying value based on discounted future cash flows.
16. Share capital and share premium
Issued share capital as at 27 June 2020 amounted to GBP11.6
million (579,425,585 Ordinary shares of GBP0.02 each) (28 December
2019: GBP11.6 million (579,425,585 Ordinary shares of GBP0.02
each)).
17. Notes to the condensed consolidated statement of cash
flows
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019
------------------------------------------------------------ --------------- ---------------
Operating profit 13.7 29.3
Adjustments for:
Share of results of associates after tax - (0.4)
Depreciation of property, plant and equipment 32.4 28.8
Amortisation of intangible assets 0.3 0.2
Loss/(profit) on disposal of property, plant and equipment 0.6 (0.6)
Impairment of assets 12.0 3.5
Share scheme charges 0.9 1.2
Net retirement benefits charge less contributions (0.6) (1.4)
------------------------------------------------------------ --------------- ---------------
Operating cash flows before movements in working capital 59.3 60.6
Decrease in inventories 7.3 4.7
Decrease in receivables 18.9 9.2
Decrease in payables (57.4) (15.0)
Increase/(decrease) in provisions 8.8 (0.3)
Cash generated by operations 36.9 59.2
Income taxes paid (11.7) (8.0)
Interest paid (12.1) (8.7)
------------------------------------------------------------ --------------- ---------------
Net cash generated from operating activities 13.1 42.5
------------------------------------------------------------ --------------- ---------------
18. Contingent liabilities
The Group is currently subject to a National Living Wage
enquiry, which has been ongoing since July 2017. The Directors have
assessed and provided for the potential liability that may arise
from the enquiry.
19. Events after the statement of financial position date
In August we concluded a consultation to close a salads site in
Spalding and also entered into a period of consultation to close
our site in Alresford . The relevant assets for these sites were
impaired as of 27 June 2020 and an impairment charge of GBP12
million has been included within operating profit for the 6 months
ended 27 June 2020.
20. Alternative performance measures
The Group uses various non-IFRS financial measures to evaluate
growth trends, assess operational performance and monitor cash
performance. The Directors consider that these measures enable
investors to understand the ongoing operations of the business.
They are used by management to monitor financial performance as it
is considered to aid comparability of the financial performance of
the Group from year to year.
Change in alternative performance measures
Some of the Group's key metrics have been restated for the 26
weeks ended 29 June 2019, to include start-up losses for new sites
and the impact of IFRS 16, which were both excluded in 2019, and to
exclude the change in the fair value of derivative financial
instruments. The changes have been made to simplify the reporting
of alternative performance measures and improve comparability of
year on year metrics. This has impacted Adjusted EBITDA, Adjusted
operating profit, Adjusted profit before tax, free cash flow and
Adjusted earnings and hence Adjusted basic and diluted earnings per
share. The following table provides details of the changes:
Adjusted operating Adjusted profit
GBP million Adjusted EBITDA profit before Tax Adjusted earnings Free cash flow
------------------- ---------------- ------------------- ------------------ ------------------- -----------------
As previously
reported 73.5 50.7 40.9 34.4 17.6
Start-up losses
for new sites (8.3) (8.3) (8.3) (8.3) (8.3)
IFRS 16 impact 6.4 - - - 5.7
Change in fair
value of
derivative
financial
instruments - - 0.9 0.9 -
Tax on the above - - - 1.6 -
items
As restated 71.6 42.4 33.5 28.6 15.0
------------------- ---------------- ------------------- ------------------ ------------------- -----------------
The impact of the reduction in Adjusted earnings of GBP5.8
million is to reduce Adjusted basic and diluted earnings per share
from 5.9p to 4.9p for the 26 weeks ended 29 June 2019.
20. Alternative performance measures (continued)
Like-for-like (LFL) revenue
The Group defines LFL revenue as revenue from continuing
operations adjusted for the revenue generated from businesses
closed or sold in the current and prior year, revenue generated
from businesses acquired in the current and prior period and the
effect of foreign currency movements. The Directors believe LFL
revenue is a key metric of the Group's revenue growth trend, as it
allows for a more meaningful comparison of trends from period to
period.
The following table provides the information used to calculate
LFL revenue for the Group.
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019 % change
-------------------------------- --------------- --------------- ---------
Statutory revenue 880.5 923.0 (4.6%)
Revenue from acquisitions (26.4) (2.1)
Revenue from closed businesses - (21.7)
Effect of currency movements (1.7) -
-------------------------------- --------------- --------------- ---------
Like-for-like revenue 852.4 899.2 (5.2%)
-------------------------------- --------------- --------------- ---------
The following table provides the information used to calculate
LFL revenue for the UK segment.
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019 % change
-------------------------------- --------------- --------------- ---------
Statutory revenue 780.4 813.5 (4.1%)
Revenue from acquisitions (26.4) (2.1)
Revenue from closed businesses - (21.7)
-------------------------------- --------------- --------------- ---------
Like-for-like revenue 754.0 789.7 (4.5%)
-------------------------------- --------------- --------------- ---------
The following table provides the information used to calculate
LFL revenue for the International segment.
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019 % change
------------------------------ --------------- --------------- ---------
Statutory revenue 100.1 109.5 (8.6%)
Effect of currency movements (1.7) -
------------------------------ --------------- --------------- ---------
Like-for-like revenue 98.4 109.5 (10.1%)
------------------------------ --------------- --------------- ---------
20. Alternative performance measures (continued)
Adjusted EBITDA and Adjusted operating profit
The Group manages the performance of its businesses through the
use of 'Adjusted EBITDA' and 'Adjusted operating profit', as these
measures exclude the impact of items that hinder comparison of
profitability year-on-year. EBITDA is generally defined as
operating profit/(loss) before depreciation and amortisation. In
calculating Adjusted EBITDA and Adjusted operating profit, we
exclude restructuring costs, asset impairments, and those
additional charges or credits that are considered significant or
one-off in nature. In addition, for Adjusted EBITDA we exclude the
share of results of associates after tax and share scheme charges,
as this is a non-cash amount. Adjusted operating profit margin is
used as an additional profit measure that assesses profitability
relative to the revenues generated by the relevant segment, It is
calculated by dividing the Adjusted operating profit by the
statutory revenue for the relevant segment.
The following table provides a reconciliation from the Group's
Operating profit to Adjusted EBITDA.
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019
------------------------------------------------------------ --------------- -----------------
Operating profit 13.7 29.3
Depreciation 32.4 28.8
Amortisation 0.3 0.2
EBITDA 46.4 58.3
Exceptional items (Note 4) 15.0 13.1
Share scheme charges 0.9 1.2
Loss/(profit) on disposal of property, plant and equipment 0.6 (0.6)
Share of results of associates after tax - (0.4)
Adjusted EBITDA 62.9 71.6
Less IFRS 16 impact (6.7) (6.4)
------------------------------------------------------------ --------------- -----------------
Adjusted EBITDA pre IFRS 16 (1) 56.2 65.2
------------------------------------------------------------ --------------- -----------------
(1) Excludes the impact of IFRS 16 as the Group's bank facility
agreement definition of Adjusted EBITDA excludes the impact of this
standard
Operating profit
The following table provides a reconciliation from Operating
profit to Adjusted operating profit.
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019
---------------------------- --------------- -----------------
Operating profit 13.7 29.3
Exceptional items (Note 4) 15.0 13.1
Adjusted operating profit 28.7 42.4
---------------------------- --------------- -----------------
Adjusted EBITDA and Adjusting Operating Profit by segment are
reconciled to Operating Profit in Note 3.
20. Alternative performance measures (continued)
Operational net debt and leverage
Operational net debt excludes the impact of non-cash items on
the Group's net debt. The Directors use this measure, as it
reflects actual net borrowings at the relevant reporting date and
is most comparable with the Group's free cash flow and aligns with
the definition of net debt in the Group's bank facility agreements
which exclude the impact of IFRS 16. The following table provides a
reconciliation from the Group's net debt to the Group's operational
net debt.
27 June 28 December
GBP million 2020 2019
---------------------------------------------------------------------------------------------- -------- ------------
Group net debt (440.7) (432.4)
Unamortised fees (4.7) (2.8)
Interest accrual 3.2 1.6
Lease liabilities recognised under IFRS 16 74.8 78.8
---------------------------------------------------------------------------------------------- -------- ------------
Group operational net debt (367.4) (354.8)
---------------------------------------------------------------------------------------------- -------- ------------
Adjusted EBITDA (last 12 months pre IFRS 16 and including covenant adjustments) 143.1 156.1
Leverage (Operational net debt/Adjusted EBITDA pre IFRS 16 and including covenant
adjustments) 2.6 2.3
---------------------------------------------------------------------------------------------- -------- ------------
Free cash flow
The Group defines free cash flow as the amount of cash generated
by the Group after meeting all of its obligations for interest, tax
and pensions, and after purchases of property, plant and equipment
(excluding development projects), but before payments of
refinancing fees and other exceptional or significant non-recurring
cash flows. Free cash flow has benefitted from non-recourse
factoring of receivables as set out in Note 12 and the extension of
payment terms for certain suppliers as described in Note 13. The
Directors view free cash flow as a key liquidity measure, and the
purpose of presenting free cash flow is to indicate the underlying
cash available to pay dividends, repay debt or make further
investments in the Group. The following table provides a
reconciliation from net cash generated from operating activities to
free cash flow.
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019
---------------------------------------------------------------------------------- --------------- -----------------
Net cash generated from operating activities 13.1 42.5
Dividends received from associates 0.1 -
Purchases of property, plant and equipment (21.0) (44.4)
Purchases of property, plant and equipment relating to development projects (Note
10) - 9.7
Proceeds on disposal of property, plant and equipment - 1.2
Cash impact of exceptional items 0.3 6.0
Refinancing fees 4.2 -
Free cash flow (3.3) 15.0
---------------------------------------------------------------------------------- --------------- -----------------
20. Alternative performance measures (continued)
Adjusted earnings per share
The Group calculates Adjusted basic earnings per Ordinary share
by dividing Adjusted earnings by the weighted average number of
Ordinary shares in issue during the year. Adjusted earnings is
calculated as profit attributable to equity holders of the Company
adjusted to exclude exceptional items as presented in the condensed
consolidated income statement and the change in value of derivative
financial instruments. The Directors use this measure as it tracks
the underlying profitability of the Group and enables comparison
with the Group's peer companies. The following table reconciles
profit attributable to equity shareholders of the Company to
Adjusted earnings.
26 weeks ended 26 weeks ended
27 June 29 June
GBP million 2020 2019
--------------------------------------------------------------------------- --------------- -----------------
Profit attributable to equity shareholders of the Company 5.4 17.2
Exceptional items (Note 4) 16.7 13.1
Change in fair value of derivative financial instruments (5.1) 0.9
Tax on the above items (2.1) (2.6)
--------------------------------------------------------------------------- --------------- -----------------
Adjusted earnings 14.9 28.6
Add back: Tax on adjusted profit before tax 3.5 4.9
Adjusted profit before tax 18.4 33.5
--------------------------------------------------------------------------- --------------- -----------------
Effective tax rate on underlying activities
(Tax on Adjusted profit before tax/Adjusted profit before tax) 19.0% 14.6%
--------------------------------------------------------------------------- --------------- -----------------
Number 000's
--------------------------------------------------------------------------- --------------- -----------------
Weighted average number of Ordinary shares 579,426 579,426
Effect of dilutive Ordinary shares 3,575 3,260
--------------------------------------------------------------------------- --------------- -----------------
Weighted average number of Ordinary shares for diluted earnings per share 583,001 582,686
Adjusted basic earnings per share 2.6p 4.9p
Adjusted diluted earnings per share 2.6p 4.9p
--------------------------------------------------------------------------- --------------- -----------------
Statement of Directors' responsibilities
The Directors confirm that to the best of their knowledge the
condensed set of financial statements has been prepared in
accordance with International Accounting Standard ("IAS") 34
Interim Financial Reporting and includes a fair review of the
information required by the Disclosure Guidance and Transparency
Rule ("DTR") 4.2.7R (an indication of important events during the
first six months and a description of the principal risks and
uncertainties for the remaining six months of the year) and by DTR
4.2.8R (a disclosure of related party transactions and changes
therein).
The Board of Directors that served during the six months ended
27 June 2020, and their respective responsibilities, can be found
on pages 70 and 71 of the 2019 Annual Report & Accounts.
This responsibility statement has been approved by the Directors
of the Company ("the Group Board") and signed on its behalf on 7
September 2020 by:
Agust Gudmundsson Peter Gates
CEO CFO
Independent review report to Bakkavor Group plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Bakkavor Group plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the half-yearly financial report of Bakkavor Group plc for the
26-week period ended 27 June 2020. Based on our review, nothing has
come to our attention that causes us to believe that the interim
financial statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Condensed consolidated statement of financial position as at 27 June 2020;
-- the Condensed consolidated income statement and Condensed
consolidated statement of comprehensive income for the period then
ended;
-- the Condensed consolidated statement of cash flows for the period then ended;
-- the Condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the half-yearly
financial report have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the Directors
The half-yearly financial report, including the interim
financial statements, is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the half-yearly financial report based on
our review. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants, Leeds
7 September 2020
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR FLFVDATIDIII
(END) Dow Jones Newswires
September 08, 2020 02:00 ET (06:00 GMT)
Bakkavor (LSE:BAKK)
Historical Stock Chart
From Mar 2024 to Apr 2024
Bakkavor (LSE:BAKK)
Historical Stock Chart
From Apr 2023 to Apr 2024