Bakkavor Finance (2) plc

Transcription

1 Bakkavor Finance (2) plc Annual Results 2010 High Yield Bond Market Call 30 March 2011 Ágúst Guðmundsson, Group CEO Peter Gates, Group CFO Gordon Pates, CEO UK & Europe

2 DISCLAIMER The issue and distribution of this Presentation and the Bakkavor finance (2) plc Annual Report 2010 (Annual report) of which it is based is restricted by law. This Presentation and the Annual Report is not being distributed by, nor has it been approved for the purposes of section 21 of the Financial Services and Markets Act 2000 (the FSMA ) by, a person authorised under the FSMA. This Presentation and the Annual Report is for distribution only to persons who (i) have professional experience in matters relating to investments (being investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the Financial Promotion Order )), (ii) are persons falling within Article 49(2)(a) to (d) ( high net worth companies, unincorporated associations, etc. ) of the Financial Promotion Order, (iii) are outside the United Kingdom or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) in connection with the issue or sale of any Notes may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as relevant persons ). This Presentation and the Annual Report is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons. No part of this Presentation and the Annual Report should be published, reproduced, distributed or otherwise made available in whole or in part to any other person without the prior written consent of Bakkavor Finance (2) plc. This Presentation and the Annual report does not constitute an offering memorandum in whole or part and any decision to invest in the offering of the senior secured notes. This Presentation and the Annual report does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire Notes of the Issuer in any jurisdiction or an inducement to enter into investment activity. 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This Presentation and the Annual Report includes forward-looking statements within the meaning of the U.S. securities laws and certain other jurisdictions, based on our current expectations and projections about future events. All statements other than statements of historical facts included in this Offering Memorandum including, without limitation, statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives for future operations, may be deemed to be forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties. Words such as aim, anticipate, assume, believe, continue, could, estimate, expect, forced, guidance, intend, may, plan, potential, predict, projected, risk, should, will and similar expressions or the negatives of these expressions are intended to identify forward-looking statements. 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Any forward-looking statement speaks only as at the date on which it is made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The information contained in this document is provided as at the date of this document and is subject to change without notice. 2

3 PRESENTERS Agust Gudmundsson Group CEO Founded Bakkavör Group in 1986 Executive Chairman from and Chief Executive Officer from May 2006 Peter Gates Group CFO Appointed Chief Financial Officer in November 2010, having served as Interim Group Treasurer for Bakkavör in 2009 Before joining Bakkavör he held senior roles in a number of large UK and European businesses Gordon Pates CEO UK and Europe Joined Geest in 1969 and held various operational and leadership positions within the Group before being appointed CEO of Bakkavor UK in

4 BAKKAVOR TODAY A leading international producer of fresh prepared foods Ranked #1 or #2 in all key categories in which we operate in the UK Trades with 8 of the top 10 global grocery retailers 1 Manufactures over 6,000 different fresh prepared food products across 18 product categories 57 facilities in 10 countries Employs more than 18,000 people 2010 revenue split by segment Cont. Europe 12% Rest of World 4% UK Produce 7% UK FPF 77% 1. Source Deloitte Global Powers of Retailing

5 FINANCIAL & BUSINESS OVERVIEW 12M 2010 Chg from 2009 Group like-for-like sales 1,643m 2.5% Driven by core UK fresh prepared food business EBITDA* Underlying EBITDA ratio 132.0m (3%) 8.0% (30bps) Good EBITDA growth in core UK FPF business, however impacted by higher input costs, sale of produce business and 53 rd trading week in 2009 Free cash flow & Net Debt 62.3m 585.4m ( 39.7m) Demonstrating the Group s continued focus on cash generation and debt reduction Key developments - Continuing commodity price inflation - Sales volumes strong but greater commercial pressures - Refinancing completed *Excluding restructuring costs and Bakkavor Group ehf royalty charges 5

6 OVERALL SALES GROWTH Strong growth in core UK prepared business Full Year Total sales and like-for-like sales Sales in million Actual Actual Like-for-like 12M 10 12M 09 % Chg UK Prepared 1,274 1,232 5% UK Produce (20%) Europe % Rest of World % Total 1,643 1,651 3% Like for like % change on a normalised constant currency basis Like-for-like sales of continuing business including new businesses and excluding JVs Some figures in the tables may not correspond exactly owing to rounding 6

7 HISTORIC EBITDA and EBITDA MARGIN m % 7.2% 8.3% 8.0% % 12% 10% 8% 6% 4% 2% 0% Recovery of profitability since 2008 EBITDA margin in line with expectations 7

8 PROFITABILITY IMPACTED BY TOUGH TRADING CONDITIONS Underlying EBITDA* and EBITDA margin Underlying EBITDA million in the year, down 3% yoy with EBITDA margin of 8.0%, down 30 bps yoy Underlying EBITDA 27.3 million in Q4, down 20% yoy with EBITDA margin of 6.8%, down 200 bps yoy EBITDA m EBITDA EBITDA margin EBITDA Margin % Q4 Q1 10 Q2 Q3 Q4 * Excluding restructuring costs and Bakkavor Group ehf royalty charges 8

9 INCOME STATEMENT - HIGHLIGHTS m Change % Turnover 1,643 1,650 0% Adjusted EBITDA (3%) Exceptionals 13 (5) Ehf royalty charge (12) (12) Depreciation (45) (44) Amortisation (9) (10) Operating Profit % Net finance costs (68) (83) (18%) Other gains and losses 10 2 Profit/(Loss) before tax 21 (15) Taxation (14) 19 Profit/(Loss) after tax % 9

10 CASH GENERATION Cash flow, 2010 m EBITDA* 10.0 (56.2) cash generated from operating activities 76.5m Working Capital Movement* (2.6) Capacity investment (13.1) Mainenance (7.8) 62.3 Interest Paid Tax Paid Total Capex Free cash generation from operating activities * Before one-off items Net operating debt has reduced by 6% to 585m (2009: 625m) 10

11 HISTORIC FREE CASH FLOW million Adjusted EBITDA Maintenance Capex (19.9) (20.6) (11.2) (7.8) Capacity Capex (28.0) (29.7) (12.3) (13.1) in Working Capital (22.1) (64.7) Tax (2.8) 8.8 (3.2) (2.6) Net Interest (23.8) (32.9) (53.4) (56.2) Free Cash Flow 61.9 (23.6) as % of Adjusted EBITDA 39.1% (20.4%) 68.4% 47.2% 11

12 FALLING LEVERAGE AND STRONG INTEREST COVER x 6x Net Debt 1 m x x 4.4x x 2x Net Leverage x Consistent cash generation resulted in continued deleveraging Pro forma 2010 EBITDA / Net interest was 2.8x 1. Excluding loans from related parties. 2. Calculated as a multiple of Adjusted EBITDA. 12

13 COMMODITY PRICE INFLATION Managing commodity price increases still a high priority Rapeseed oil Butter Chicken Plastics Input cost pressures 2010 Hit by high price rises in core dairy markets and wheat Moving in to 2011 Higher prices for packaging, rape seed oil, chicken and expect higher prices in fruit and veg due to poor weather conditions Source: Datagain Information Service Action Continue to offset these increased purchasing costs wherever possible through ongoing price negotiations with customers and suppliers and by hedging against price rises 13

14 CHALLENGING TRADING ENVIRONMENT Pressure Promotional activity continues to drive consumer spend Results in higher promotional funding costs Impact Higher sales volumes, however lower price margins Action We remain committed to driving operational efficiencies and performance across all our businesses in order to offset the impact on our profit margin 14

15 CHALLENGING TRADING ENVIRONMENT Proposed closure of Exotic Farm Produce, Lincolnshire - Site employs 116 employees - has been loss-making for a sustained period of time due to the impact of reduced sales volumes and ongoing input inflation - end of Jan 2011 via tender EFP lost its biggest customer contract, 60% of EFP turnover Action - Entered 90-day consultation process with employees - Plan to close the site in Q Plan to transfer remaining produce trading business to other sites within Group 15

16 LOOKING AHEAD We remain confident in the long-term prospects for the business and our vision remains unchanged. However, given the continued economic uncertainty, we are cautious about consumer confidence in the short-term and the impact of continued raw material inflation. Therefore we expect the trading environment to remain challenging throughout 2011, particularly in the first half. 16

17 Q & A 17