Half year results for the 26 weeks ended 26 September 2020

Group revenue up +15.0%
November 30, 2020

Financial headlines:

  • Group revenue up +15.0%; Q2 Group revenue up +8.1%
  • Branded revenue up +18.6%; Q2 branded revenue up +11.0%
  • Trading profit increased +28.7% to £65.8m after increased marketing investment and incremental Covid costs
  • Adjusted profit before tax up +50.2% to £47.7m; adjusted earnings per share up +49.6% to 4.5p
  • Statutory profit before tax increased £35.5m to £50.5m; profit after tax up £31.1m to £43.4m
  • Net debt reduced by £87.9m on pre-IFRS 16 basis to £382.8m; Net debt on post-IFRS basis £403.1m
  • Net debt/EBITDA, reduced to 2.3x compared to 2.7x six months earlier
  • Combined pensions surplus of £516.5m reduced from £1,230.4m at 28 March 2020 due to discount rate decrease

Strategic & operational headlines:

  • Exceptional trading throughout H1, delivering strong profit growth and accelerated Net debt reduction
  • Priority of protecting colleagues through COVID-19 pandemic and keeping shelves stocked
  • Growing faster than the market; share gains in all our categories
  • Online performance +112% and ahead of this fast growing channel, increasing market share by 260bps
  • Grocery brands household penetration up over 3%, attracting 1.1 million new consumers
  • Significantly increased consumer marketing investment planned for FY20/21; six major brands on TV
  • Branded revenue growth more than offsets Non-branded revenue declines in B2B out of home volumes
  • Cost savings programme to deliver ahead of £5m target
  • Announced repayment in aggregate of £120m callable Floating rate notes in FY20/21 reducing interest costs by £6m p.a.
  • Credit ratings upgrades received from both S&P and Moody’s
  • Hovis disposal completed 5 November, raising proceeds of £37.3m

Alex Whitehouse, Chief Executive Officer:

“In the first half of the year, demand for our branded product ranges has been exceptional, particularly in our Grocery businesses which have helped deliver strong profit growth, accelerated debt reduction and a lowest ever Net debt/EBITDA ratio of 2.3x. We have seen many more meal occasions being consumed at home, particularly in the first quarter, followed by a transition towards more normal levels of demand through quarter two. During this entire time, we have continued to drive our branded growth model, launching insightful new products and supporting our three biggest brands with above the line advertising. Consequently, we have continued to grow faster than all our categories, increasing market share in each one; a reflection not only of our strong brands but also the amazing performance of our supply chain colleagues to ensure product availability. In online, we have grown +112% which is again ahead of channel growth, leading to a market share gain of 260 basis points.”

“During recent months, the health and wellbeing of all our colleagues has remained our top priority. We put in place a wide variety of measures across our locations at a very early stage to help keep our colleagues safe and all these measures will remain in place until we are certain they’re no longer required. I am extremely proud of the collective efforts of all our colleagues during this very testing period. Over recent months, we have also supported our communities by delivering nearly 9,000 cases of products to 28 hospitals and over 400,000 meals to those in need via Fareshare, the charitable food redistributor.”

“Looking to the second half of the financial year, we expect to see continued revenue growth driven by further new product innovation, strong commercial plans and increased marketing investment for our brands, with six major brands planned to be advertised on TV. We also now expect to see an increase in demand for our brands due to the impact of recently increased government restrictions on eating out. The longevity of this increased demand is likely to be linked to the duration of these new measures, and although we have tougher comparatives in the fourth quarter, we anticipate that Trading profit for the full year will be ahead of current market expectations. Additionally, following both our recent progress in accelerating leverage reduction along with proceeds received from the Hovis transaction, we are today announcing a new medium-term target for Net debt/EBITDA of approximately 1.5x.”

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Read and download the full RNS of our Half Year results