REG - Greggs PLC - Interim Results
30/07/2024 07:00
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RNS Number : 2907Y Greggs PLC 30 July 2024
30 July 2024
GREGGS PLC
("Greggs" or "the Company")
INTERIM RESULTS FOR THE 26 WEEKS ENDED 29 JUNE 2024
Continued strategic progress with ambitious growth plans on track
First half financial highlights
H1 2024 H1 2023
Total sales £960.6m £844.0m
Underlying pre-tax profit excluding exceptional items * £74.1m £63.7m
Underlying diluted earnings per share excluding exceptional items* 53.8p 46.8p
Ordinary interim dividend per share 19.0p 16.0p
* Excludes H1 2023 impact of £16.3 million exceptional net income related to
settlement of a Covid business interruption insurance claim. Including this
exceptional gain, H1 2023 pre-tax profit was £80.0 million and diluted
earnings per share were 59.0p.
· Total first-half sales up 13.8%, with company-managed shop LFL**
sales up 7.4%
· Underlying profit before tax excluding exceptional items up 16.3% to
£74.1 million
· Cash balance of £141.5 million at June 2024 (December 2023: £195.3
million), expected to reduce as capital investment programme progresses
· Interim dividend of 19.0p pence per share declared, an increase of
18.8%
** Like-for-like (LFL) company-managed shop sales performance against 2023
comparable period, where shops have a calendar year's trading history
(excluding any shops which opened, relocated or closed in the current or prior
year)
Strategic progress
Estate growth:
· 99 new shops, including 30 relocations, opened in the first half, 18
closures (excluding relocations), giving 51 net new shops in the period
· 2,524 shops trading as at 29 June 2024
· Strong pipeline and remain on track to achieve 140 to 160 net new
shop openings in 2024 (openings are typically weighted to the second half)
LFL growth:
· Menu development supporting growth across all dayparts and channels:
o Over-ice drinks range, including the Mango and Strawberry Cooler and the
Strawberries and Cream Refresher, is proving successful and now available in
500 shops, with plans to roll out to a further 200 shops this year
o Dedicated pizza deals, including the Late Trade Pizza Deal and Pizza Box
Deal, driving strong sales growth, with hot food also continuing to perform
well. Recently launched a four-slice pizza sharing box option to complement
our existing range
· Progress continues in the evening daypart and new channels:
o Evening daypart sales growing ahead of the average LFL rate, albeit from a
low base, increasing share of sales mix by daypart
o Sales through the delivery channel represented 6.7% of company-managed
shop sales in the first half of 2024 (H1 2023: 5.3%)
o The Greggs App was scanned in 18.3% of company-managed shop transactions
(H1 2023: 10.6%)
Supply chain investment:
· Redevelopment of Birmingham and extension of Amesbury distribution
centres on track to complete in second half of 2024, creating logistics
capacity for an additional 300 shops
· The initial build phase of the new frozen manufacturing and logistics
site in Derby, which we expect to be operational in late 2026, is progressing
well
· Contracts exchanged for the purchase of a 25-acre plot of land at
Symmetry Park in Kettering, on which we will construct our new National
Distribution Centre. This site, expected to be operational in the first half
of 2027, will support our existing Radial Distribution Centres to service
circa 700 more shops through the automated upstream picking of chilled and
ambient goods.
"Greggs has made good progress in the first half of the year, further
broadening our range of on-the-go food and drink whilst making it more
accessible to more customers. Our success is founded on the exceptional
value that Greggs offers to customers looking for food and drink on-the-go and
the fast and friendly service delivered by our colleagues.
"Our cost outlook for 2024 remains unchanged and we continue to trade in line
with our plan. The Board remains confident in the long-term growth strategy,
and we are investing to support that growth."
- Roisin Currie, Chief Executive
ENQUIRIES:
Greggs plc (http://www.greggs.co.uk) Hudson Sandler (http://www.hudsonsandler.com)
Roisin Currie, Chief Executive Wendy Baker / Hattie Dreyfus /
Richard Hutton, Chief Financial Officer Nick Moore / Emily Brooker
David Watson, Head of IR Email: greggs@hudsonsandler.com (mailto:greggs@hudsonsandler.com)
Tel: 0191 281 7721 Tel: 020 7796 4133
An audio webcast of the analysts' presentation will be available to download
later today at http://corporate.greggs.co.uk/ (http://corporate.greggs.co.uk/)
CHIEF EXECUTIVE'S REPORT
Greggs has had a strong first half, with like-for-like sales in
company-managed shops growing by 7.4% when compared with the equivalent period
of 2023. Total sales for the 26 weeks to 29 June 2024 were £960.6 million, an
increase of 13.8% (H1 2023: £844.0 million).
We continue to make good progress against our strategic plan, which targets
growth through both new shop openings and increasing like-for-like sales. To
support this strategic plan, we are investing in our supply chain capacity and
in the technology that will underpin our ambitions.
Operational and strategic development
The first half of 2024 saw Greggs deliver further strong sales growth and
improvement in our brand health metrics, both building on the record levels
reported for 2023. We continue to be the UK's leading food-to-go brand
(Source: YouGov Brand Index, June 2024) and maintain our sector-leading
reputation for value.
Estate growth
In the first half of 2024 we opened 99 new shops, including 25 franchised
units and 30 relocated shops. We closed 18 shops (excluding relocations),
resulting in 51 net new shops in the period and a total of 2,524 shops (of
which 524 are franchised) trading as at 29 June 2024. Our estate expansion
programme is expanding our reach into new locations as well as relocating
constrained existing shops to larger sites in better locations to facilitate
further growth. Consistent with the phasing seen in prior years, our net new
shop openings are weighted more to the second half of 2024.
In the first half of the year we refurbished 81 shops, including 21 franchised
units, modernising them to our latest look and enhancing their capability for
food preparation and collection of digital orders. We anticipate completing
between 180 and 190 shop refurbishments, 140 to 145 company-managed and 40 to
45 franchised, in 2024 (2023: 122 refurbishments).
Our assessment of catchments across the UK continues to support our ambition
to have significantly more than 3,000 shops. Our confidence in this
opportunity is underpinned by success in catchments where Greggs continues to
be underrepresented such as retail parks, railway stations, airports,
roadsides and supermarkets. We have continued to grow our partnerships with
franchisees of the Greggs brand and with supermarket groups; opening 25 shops
with franchise partners, five with Tesco and three with Sainsbury's. Greggs is
increasingly present in travel hubs - an example in the first half was our
opening at Embankment underground station.
Our shop opening programme is improving the quality of the Greggs estate, as
well as extending its reach. Shop relocations typically give our shops the
space to embrace new channels and grow sales, whilst catchments from which we
permanently withdraw a shop are normally trading significantly below the Group
average. The diversity of the Greggs estate has also significantly evolved
over the last 10 years; in 2014 82% of our estate was located in cities, towns
and suburbs; this proportion now stands at just 52%. We have had particular
success in growing our presence in roadside locations, which now represent 26%
of the estate, helping make our great quality and great value food and drink
more accessible to customers on the move.
Greggs is a trusted brand offering a strong covenant to landlords and
franchise partners and this continues to generate opportunities in new
locations. Our new shop pipeline is strong and we remain confident that we
will open between 140 and 160 net new shops in the year as a whole. Given
our ambition to grow the estate to significantly more than 3,000 shops in the
UK, we are building capacity to support up to 3,500 shops in our latest supply
chain investment programme.
Like-for-like growth
Menu development is key to our success and innovation in our food and drink
offer has supported growth across all dayparts and channels. Our new over-ice
drinks range is proving popular with customers and is now available in 500
shops, with plans to roll out to a further 200 shops this year. We have also
launched chilled 'Ready-to-Drink' Latte and Caramel Latte canned products,
further extending the choice in our beverage range.
Our dedicated pizza deals, including the Late Trade Pizza Deal (a pizza slice
and cold drink purchased after 4pm) and Pizza Box Deal are driving strong
sales growth, and a new four-slice pizza sharing box option is now available
to buy from £6.50. Our hot food range, in particular our Southern Fried
Chicken Goujons and Southern Fried Potato Wedges, continues to perform well
and the Katsu Chicken Bake is a tasty addition to our range of rolls and
bakes. Seasonal additions, such as our new Pesto Chicken and Spicy Bean
Flatbreads, along with the Apple and Strawberry Fruit Pot, have proved popular
additions to the Healthier Choice range and the new Pesto and Mozzarella Salad
and updated Chicken and Bacon Pasta Salad are performing particularly well.
Our made-to-order hot food trials have been extended to additional shops and
now include the Fish Finger Sandwich and Fish Finger Wrap alongside our
existing range of chicken burgers and wraps. As ever, Greggs value for money
offering shines through, with customers able to enjoy a Crispy Chicken Burger
as part of a meal deal, with wedges and a drink from £5.00.
Menu development is also supporting the strategic progress of the Greggs offer
in new channels and dayparts:
· Evening trade - post-4pm sales grew more strongly than the average
LFL rate, albeit from a low base. Over the long term we believe that the
evolution of our menu and the extent of our suburban shop estate offers a
significant opportunity to grow our share of both the walk-in and delivery
evening markets.
· Delivery - having quickly rolled out with Uber Eats as a second
aggregator in the second half of 2023 we have continued to increase the number
of shops that offer delivery services on both the Just Eat and Uber Eats
platforms. Sales through the delivery channel represented 6.7% of
company-managed shop sales in the first half of 2024 (H1 2023: 5.3%).
· Greggs App - growth in use of the Greggs App has continued, with
18.3% of company-managed customer transactions scanned as part of our loyalty
programme in the first half of 2024 (H1 2023: 10.6%). We have continued to
invest in our customer relationship management ('CRM') approach, which has
included migrating to new CRM software.
Investing in our supply chain and technology to support our growth plans
To support our growth plan, we are investing in further supply chain capacity
and in technology. We are on track to complete the redevelopment of our
Birmingham distribution centre and the extension of our Amesbury distribution
centre later this year, which will add a further 300 shops of logistics
capacity to our southern network.
To facilitate further expansion, we are building two brand new
state-of-the-art facilities in the Midlands. These sites will enable growth
without the need to build further Radial Distribution Centres ('RDCs') and
provide white space for future manufacturing and logistics capacity.
The first site will be a frozen product manufacturing and logistics facility
located in Derby. This will mirror our northern frozen manufacturing campus at
Balliol, including an automated cold store but with the addition of automated
picking of products to shop level. We have signed an agreement for a lease for
the site and the landlord is currently constructing the building. Due to open
in 2026, this site will be a consolidation point for our frozen food logistics
in the south of the UK, as well as increasing the capacity of our existing
RDCs by supporting them with upstream picking. We will initially construct one
new manufacturing line on the site, with space to progressively develop
further lines in step with future demand.
The second site will be a new National Distribution Centre ('NDC') for the
storage, picking and distribution of chilled and ambient goods. We have
exchanged contracts to purchase a 25-acre plot of land at Symmetry Park in
Kettering. Subject to planning permission being granted we expect the purchase
to complete in the fourth quarter of 2024, with the site being developed for
opening in H1 2027. This site will replace and expand our two existing NDC
facilities in Kettering which will enable our existing RDCs to service circa
700 more shops by providing upstream picking of chilled and ambient goods. We
expect to deliver productivity improvements from automation and the scale of
the operations, and the site also provides white space to develop future RDC
and manufacturing capacity if required.
Our investment in technology continues to drive improved processes and provide
greater value and insight from our data. In the first half of 2024 we
implemented a new CRM platform which enhances our ability to engage with our
customers and further build loyalty. We have also progressed with the
implementation of new EPOS till software across the estate, which will enable
improved management of pricing and promotions, and started work to migrate to
the next version of our SAP ERP solution, with the first modules planned to go
live in 2025.
The Greggs Pledge
We continue to make good progress against our ten Greggs Pledge sustainability
commitments, including moving 60% of our natural gas to a renewable
alternative and replacing the diesel used by our distribution fleet at Enfield
Distribution Centre with hydrogenated vegetable oil (HVO). Looking forward, we
are currently considering the views of our various stakeholder groups which
will help to inform our priorities for the evolution of the Greggs Pledge for
2025 and beyond.
Financial performance
Total sales for the 26 weeks to 29 June 2024 were £960.6 million (H1 2023:
£844.0 million). Like-for-like sales in company-managed shops grew by 7.4%.
Underlying pre-tax profit was £74.1 million in the first half of 2024 (H1
2023: £63.7 million, excluding an exceptional gain of £16.3 million related
to settlement of a Covid business interruption insurance claim). The
year-on-year progress has been supported by continued strong like-for-like
growth and better recovery of cost inflation than was the case in the first
half of 2023. Overall cost inflation in the first half of 2024 was 4% and we
continue to expect 4-5% cost inflation for the year as a whole. Looking
forward energy pricing is fixed for the remainder of 2024 and for circa 66% of
our 2025 requirement, and we have around four months' forward purchasing cover
in respect of our requirements for food and packaging inputs.
The net financing expense of £1.7 million in the period (H1 2023: £1.7
million) comprised £5.9 million in respect of the IFRS 16 interest charge on
lease liabilities, £0.6 million of facility charges under the Company's
(undrawn) financing facilities offset by £4.8 million of interest received on
bank deposits.
The effective rate of Corporation Tax on underlying profits for the period was
25.6% (H1 2023: 24.9%, excluding the exceptional gain) which we expect to be
the effective tax rate for the whole of 2024. Going forward the effective rate
is expected to remain around 1.0 percentage point above the headline
corporation tax rate; this is principally because of expenditure for which no
tax relief is available, such as depreciation on properties acquired before
the introduction of structures and buildings tax allowances, and acquisition
costs relating to new shops.
Underlying diluted earnings per share for the period were 53.8 pence (H1 2023:
46.8 pence, excluding the exceptional gain).
Capital expenditure and financial position
Capital expenditure during the first half was £102.2 million (H1 2023: £85.6
million) as we increased investment in line with our previously announced
growth plans. The year-on-year increase was driven by increased supply chain
activity with expenditure to refurbish our Birmingham RDC and extend our
Amesbury RDC, and the initial works and equipment deposits for the new Derby
frozen manufacturing campus. In the balance of the year we will continue the
development of our retail estate, complete the works at both our Birmingham
and Amesbury RDCs, and commence work on the two new sites in Derby and
Kettering. Our full year guidance for capital expenditure in 2024 remains in
the range of £250 to £280 million (2023: £199.8 million). Provided that
planning permission is granted on a timely basis we expect to complete the
land purchase at Kettering this year, which would likely lead to capital
expenditure being at the top end of this range.
We continue to carry a higher-than-normal cash position in order to support
the multi-year investment in our significant growth programme and ended the
period with a cash balance of £141.5 million (1 July 2023: £138.6
million). At the period end the Company had a net current liabilities
position of £59.0 million (1 July 2023: net current assets position of £19.9
million) following the payment of the special dividend in May 2024 and
continued capital investment. Our cash balance is inflated by an invoicing
issue caused by a supplier migrating to a new billing system, which has
increased both 'cash and cash equivalents' and 'trade and other payables' by
circa £30 million. We expect this issue to be resolved in the second half,
with a corresponding cash outflow to settle the balance payable. In the first
half we renewed our revolving credit facility for a three-year period to June
2027, with two further one-year extension options. The facility provides
liquidity of £100 million in committed funds.
In the second half of 2024 we expect to complete the sale of our legacy bakery
site at Twickenham, and therefore the assets related to this site have been
reclassified as held for sale. The site was closed in 2016 as part of the
restructure of our supply chain, with the subsequent sale delayed due to
planning considerations for the change of use of the site. Full planning
consent has now been granted and, on completion, we expect to recognise an
exceptional gain in the 2024 full year results.
During the first half the Company made a special contribution of £4.5 million
to its defined benefit pension scheme which facilitated the purchase of a bulk
annuity 'buy-in' policy with Aviva. This policy will provide regular
payments to the Trustee to fund future pension payments and significantly
reduces the Company's exposure to the funding risks associated with its
defined benefit pension liabilities.
Dividend
The Board has declared an interim dividend of 19.0 pence per share (2023: 16.0
pence), consistent with the first-half increase in earnings per share. The
overall ordinary dividend for the year will be proposed in line with our
progressive dividend policy, which targets a full year ordinary dividend that
is around two times covered by underlying earnings.
The interim dividend will be paid on 4 October 2024 to those shareholders on
the register at the close of business on 6 September 2024.
Summary and outlook
Greggs has made good progress in the first half of the year, further
broadening our range of on-the-go food and drink whilst making the brand more
accessible to more customers. We remain optimistic about the many
opportunities available to Greggs and are encouraged by the continued strong
execution of our strategic plan, evidenced by our success in driving volume
growth whilst also building capacity for the future. Our success is founded on
the exceptional value that Greggs offers to customers looking for food and
drink on-the-go and the fast and friendly service delivered by our colleagues.
Our cost outlook for 2024 remains unchanged and we continue to trade in line
with our plan. Whilst uncertainties remain, the Board's expectations for the
full year outcome are unchanged. The Board remains confident in the long-term
growth strategy, and we are investing to support that growth.
Roisin Currie
Chief Executive
30 July 2024
Greggs plc
Consolidated income statement
For the 26 weeks ended 29 June 2024
26 weeks ended 26 weeks ended 26 weeks ended 26 weeks ended 52 weeks ended 52 weeks ended 52 weeks ended
29 June 2024 1 July 2023 1 July 2023 1 July 2023 30 December 2023 30 December 2023 30 December 2023
Total Excluding exceptional items Exceptional items Excluding exceptional items Exceptional items
(see Note 4) Total (see Note 4) Total
£m £m £m £m £m £m £m
Revenue 960.6 844.0 - 844.0 1,809.6 - 1,809.6
Cost of sales (369.7) (329.7) - (329.7) (710.5) - (710.5)
Gross profit 590.9 514.3 - 514.3 1,099.1 - 1,099.1
Distribution and selling costs (465.4) (408.0) - (408.0) (844.5) 0.3 (844.2)
Administrative expenses (49.7) (40.9) - (40.9) (82.9) - (82.9)
Other income - - 16.3 16.3 - 20.3 20.3
Operating profit 75.8 65.4 16.3 81.7 171.7 20.6 192.3
Finance expense (net) (1.7) (1.7) - (1.7) (4.0) - (4.0)
Profit before tax 74.1 63.7 16.3 80.0 167.7 20.6 188.3
Income tax (19.0) (15.9) (3.8) (19.7) (41.0) (4.8) (45.8)
Profit for the period attributable to equity holders of the parent
55.1 47.8 12.5 60.3 126.7 15.8 142.5
Basic earnings per share 54.3p 47.2p 12.3p 59.5p 125.0p 15.6p 140.6p
Diluted earnings per share 53.8p 46.8p 12.2p 59.0p 123.8p 15.4p 139.2p
Greggs plc
Consolidated statement of comprehensive income
For the 26 weeks ended 29 June 2024
26 weeks ended 26 weeks ended 52 weeks ended
29 June 2024 1 July 2023 30 December 2023
£m £m £m
Profit for the period 55.1 60.3 142.5
Other comprehensive income
Items that will not be recycled to profit and loss:
Remeasurements on defined benefit pension plans (11.5) 0.2 -
Tax on remeasurements on defined benefit pension plans 0.8 0.1 0.4
Other comprehensive income for the period, net of income tax (10.7) 0.3 0.4
Total comprehensive income for the period 44.4 60.6 142.9
Greggs plc
Consolidated balance sheet
as at 29 June 2024
29 June 2024 1 July 2023 30 December 2023
£m £m £m
ASSETS
Non-current assets
Intangible assets 19.7 13.6 18.3
Property, plant and equipment 568.0 439.4 510.3
Right-of-use assets 302.3 284.3 296.6
Defined benefit pension asset - 6.7 6.6
890.0 744.0 831.8
Current assets
Inventories 48.8 44.6 48.8
Trade and other receivables 50.0 64.4 53.8
Assets held for resale 1.1 - -
Current tax - 8.1 -
Cash and cash equivalents 141.5 138.6 195.3
241.4 255.7 297.9
Total assets 1,131.4 999.7 1,129.7
LIABILITIES
Current liabilities
Trade and other payables (230.3) (180.9) (211.1)
Current tax liability (11.8) - (4.9)
Lease liabilities (53.9) (51.9) (52.5)
Provisions (4.4) (3.0) (4.0)
(300.4) (235.8) (272.5)
Non-current liabilities
Other payables (1.6) (2.6) (2.3)
Lease liabilities (273.1) (252.5) (267.1)
Deferred tax liability (60.4) (44.4) (54.7)
Defined benefit pension liability (0.2) - -
Long-term provisions (1.7) (3.0) (2.2)
(337.0) (302.5) (326.3)
Total liabilities (637.4) (538.3) (598.8)
Net assets 494.0 461.4 530.9
EQUITY
Capital and reserves
Issued capital 2.0 2.0 2.0
Share premium account 25.1 25.1 25.1
Capital redemption reserve 0.4 0.4 0.4
Retained earnings 466.5 433.9 503.4
Total equity attributable to equity holders of the Parent 494.0 461.4 530.9
Greggs plc
Consolidated statement of changes in equity
For the 26 weeks ended 29 June 2024
26 weeks ended 1 July 2023
Issued Share Capital Retained Total
capital premium redemption earnings
reserve
£m £m £m £m £m
Balance at 1 January 2023 2.0 23.1 0.4 420.5 446.0
Total comprehensive income for the period
Profit for the period - - - 60.3 60.3
Other comprehensive income - - - 0.3 0.3
Total comprehensive income for the period - - - 60.6 60.6
Transactions with owners, recorded directly in equity
Issue of ordinary shares - 2.0 - - 2.0
Sale of own shares - - - 0.8 0.8
Purchase of own shares - - - (5.0) (5.0)
Share-based payment transactions - - - 2.3 2.3
Dividends to equity holders - - - (44.6) (44.6)
Tax items taken directly to reserves - - - (0.7) (0.7)
Total transactions with owners - 2.0 - (47.2) (45.2)
Balance at 1 July 2023 2.0 25.1 0.4 433.9 461.4
52 weeks ended 30 December 2023
Issued Share Capital Retained Total
capital premium redemption earnings
reserve
£m £m £m £m £m
Balance at 1 January 2023 2.0 23.1 0.4 420.5 446.0
Total comprehensive income for the period
Profit for the financial year - - - 142.5 142.5
Other comprehensive income - - - 0.4 0.4
Total comprehensive income for the year - - - 142.9 142.9
Transactions with owners, recorded directly in equity
Issue of ordinary shares - 2.0 - - 2.0
Purchase of own shares - - - (5.0) (5.0)
Sale of own shares - - - 1.6 1.6
Share-based payment transactions - - - 4.6 4.6
Dividends to equity holders - - - (60.8) (60.8)
Tax items taken directly to reserves - - - (0.4) (0.4)
Total transactions with owners - 2.0 - (60.0) (58.0)
Balance at 30 December 2023 2.0 25.1 0.4 503.4 530.9
26 weeks ended 29 June 2024
Issued Share Capital Retained Total
capital premium redemption earnings
reserve
£m £m £m £m £m
Balance at 31 December 2023 2.0 25.1 0.4 503.4 530.9
Total comprehensive income for the period
Profit for the period - - - 55.1 55.1
Other comprehensive income - - - (10.7) (10.7)
Total comprehensive income for the period - - - 44.4 44.4
Transactions with owners, recorded directly in equity
Sale of own shares - - - 3.7 3.7
Share-based payment transactions - - - 2.6 2.6
Dividends to equity holders - - - (87.5) (87.5)
Tax items taken directly to reserves - - - (0.1) (0.1)
Total transactions with owners - - - (81.3) (81.3)
Balance at 29 June 2024 2.0 25.1 0.4 466.5 494.0
Greggs plc
Consolidated statement of cash flows
For the 26 weeks ended 29 June 2024
26 weeks ended 26 weeks ended 52 weeks ended
29 June 2024 1 July 2023 30 December 2023
£m £m £m
Cash flows from operating activities
Cash generated from operations (see page 13) 157.4 114.7 333.0
Income tax paid (5.7) (9.8) (11.9)
Interest paid on lease liabilities (5.9) (4.2) (9.6)
Interest paid on loans and borrowings (0.6) (0.4) (0.7)
Net cash inflow from operating activities 145.2 100.3 310.8
Cash flows from investing activities
Acquisition of property, plant and equipment (88.4) (81.0) (189.5)
Acquisition of intangible assets (3.4) (2.2) (8.6)
Proceeds from sale of property, plant and equipment 0.6 0.5 0.8
Interest received 4.6 2.9 6.1
Net cash outflow from investing activities (86.6) (79.8) (191.2)
Cash flows from financing activities
Proceeds from issue of share capital - 2.0 2.0
Sale of own shares 3.7 0.8 1.6
Purchase of own shares - (5.0) (5.0)
Dividends paid (87.5) (44.6) (60.8)
Repayment of principal of lease liabilities (28.6) (26.7) (53.7)
Net cash outflow from financing activities (112.4) (73.5) (115.9)
Net (decrease)/increase in cash and cash equivalents (53.8) (53.0) 3.7
Cash and cash equivalents at the start of the period 195.3 191.6 191.6
Cash and cash equivalents at the end of the period 141.5 138.6 195.3
Greggs plc
Consolidated statement of cash flows (continued)
For the 26 weeks ended 29 June 2024
Cash flow statement - cash generated from operations
26 weeks ended 26 weeks ended 52 weeks ended
29 June 2024 1 July 2023 30 December 2023
£m £m £m
Profit for the period 55.1 60.3 142.5
Amortisation 2.0 2.1 3.9
Depreciation - property, plant and equipment 37.8 31.8 66.6
Depreciation - right-of-use assets 28.7 26.7 54.5
Impairment charge- property, plant and equipment 0.6 0.7 1.4
Impairment charge - right-of-use assets 1.6 0.3 2.5
Loss on sale of property, plant and equipment 1.0 1.0 2.0
Release of government grants (0.2) (0.2) (0.5)
Share-based payment expense 2.6 2.3 4.6
Net finance expense 1.7 1.7 4.0
Income tax expense 19.0 19.7 45.8
Increase in inventories - (4.0) (8.2)
Decrease/(increase) in receivables 3.9 (14.2) (3.6)
Increase/(decrease) in payables 8.1 (13.2) 18.0
Decrease in provisions - (0.3) (0.5)
Decrease in pension liability (4.5) - -
Cash from operating activities 157.4 114.7 333.0
Notes
1. Basis of preparation
The condensed accounts have been prepared for the 26 weeks ended 29 June
2024. Comparative figures are presented for the 26 weeks ended 1 July 2023.
These condensed accounts have been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the UK. They do not include all the
information required for full annual accounts, and should be read in
conjunction with the Group accounts for the 52 weeks ended 30 December 2023.
These condensed accounts are unaudited and were approved by the Board of
Directors on 30 July 2024.
The comparative figures for the 52 weeks ended 30 December 2023 are not the
Company's statutory accounts for that financial year. Those accounts were
reported on by the Company's auditor and delivered to the Registrar of
Companies. The report of the auditors was (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report; and (iii) did not contain a
statement under section 498(2) or (3) of the Companies Act 2006.
Going concern
The Directors have considered the adoption of the going concern basis of
preparation for these condensed accounts. The Directors have reviewed cash
flow forecasts prepared for a period of 18 months from the date of approval of
these condensed accounts.
At the end of the reporting period the Group had £241.5 million of available
liquidity including £141.5 million cash and cash equivalents and £100.0
million of the undrawn revolving credit facility ('RCF').
In reviewing the cash flow forecasts the Directors considered the current
trading position of the Group and the likely capital expenditure and working
capital requirements of its growth plans. The cashflow forecasts show that the
Group expects to comply with the covenants included within the RCF agreement
throughout the review period.
Taking into account the current cash level and the committed facilities the
Directors are confident that the Group will have sufficient funds to allow it
to continue to operate. After reviewing the projections and sensitivity
analysis the Directors believe that it is appropriate to prepare the condensed
accounts on a going concern basis.
Judgements and estimates
In preparing these condensed accounts, management have made judgements and
estimates that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual results may
differ from these estimates. In addition to the key estimates and judgements
disclosed in the consolidated accounts for the 52 weeks ended 30 December 2023
the following additional areas have been identified or updated for the 26
weeks ended 29 June 2024.
Impairment
Property, plant and equipment and right-of-use assets are reviewed for
impairment if events or changes in circumstances indicate that the carrying
value may not be recoverable. For example, shop fittings and right-of-use
assets may be impaired if sales in that shop fall. When a review for
impairment is conducted the recoverable amount is estimated based on the
higher of the value-in-use calculations or fair value less costs of disposal.
Value-in-use calculations are based on management's estimates of future cash
flows generated by the assets and an appropriate discount rate. Consideration
is also given to whether the impairment assessments made in prior years remain
appropriate based on the latest expectations in respect of recoverable amount.
Where it is concluded that the impairment has reduced, a reversal of the
impairment is recorded to the carrying value that would have been recognised
if the original impairment had not occurred, net of depreciation that would
have been charged.
The Group has traded profitably throughout 2023 and 2024 to date. As such
there is not considered to be a global indicator of impairment across the
Group's asset base. Where indicators of impairment exist for specific cash
generating units (CGUs), with each individual shop considered its own CGU,
then an impairment review has been performed to calculate the recoverable
value.
For those shops with indications of impairment, the value-in-use has been
calculated using the following assumptions:
· Like-for-like transaction volumes for mature shops have been
assumed to grow at a rate of 2.0% for year one of the period of the impairment
review, reducing steadily to 0.0% for year six onwards;
· Earnings before interest, tax, depreciation, amortisation and
rent (EBITDAR) is used as a proxy for net cash flow excluding rental payments;
· The discount rate is based on the Group's pre-tax cost of capital
and at 29 June 2024 was 9.4% (1 July 2023: 10.4%; 30 December 2023: 9.9%); and
· Consideration of the appropriate period over which to forecast
cash flows, including reference to the lease term. Where considered
appropriate cash flows have been included for periods beyond the lease
probable end date (to a maximum of five years in accordance with IAS 36).
On the basis of these value-in-use calculations, a net impairment charge of
£2.2 million has been recognised during the current period (of which £0.6
million relates to fixtures and fittings and £1.6 million relates to
right-of-use assets) resulting in an impairment provision of £7.8 million
being retained at 29 June 2024 in respect of 127 shops (of which £2.8 million
relates to fixtures and fittings and £5.0 million relates to right-of-use
assets).
Post-retirement benefits
The valuation of the defined benefit pension scheme for the purposes of IAS 19
(Revised) as at 30 December 2023 has been updated as at 29 June 2024 and the
movements have been reflected in these condensed accounts. These movements
include updating the valuation of scheme liabilities following the
finalisation of the triennial actuarial valuation of the scheme as at 6 April
2023 as well as the purchase in May 2024 of a bulk annuity 'buy-in' policy
with Aviva. The purchase of this policy significantly reduces the Company's
exposure to the funding risks associated with its defined benefit
liabilities.
The valuation of the assets held by the scheme following the buy-in results in
an accounting loss. Although a buy-out of the scheme is possible in the future
there is no indication that this will be executed and finalised in the
short-term. The scheme has retained all responsibility to meet future pension
payments to pensioners and the buy-in is not recognised as a settlement.
Therefore the loss on the valuation of the qualifying insurance policy asset
has been recognised through other comprehensive income (OCI) in the period
ended 29 June 2024.
2. Accounting policies
The accounting policies applied by the Group in these condensed accounts are
the same as those applied by the Group in its consolidated accounts for the 52
weeks ended 30 December 2023 other than as disclosed below:
· Non-current Liabilities with Covenants - Amendments to IAS1 and
Classification of Liabilities as Current or Non-current - Amendments to IAS 1.
Its adoption did not have a material effect on the accounts.
Principal risks and uncertainties
The Directors have considered the principal risks and uncertainties which
could have a material impact on performance for the remainder of the financial
year.
The assessment of principal risks and uncertainties made in the 2023 Annual
Report and Accounts remains valid and we do not believe there to have been any
material changes in the profile of those risks since then.
We have considered whether the Company is facing any new principal risks at
each of our Risk Committee meetings so far during 2024. All new and emerging
areas of risk which have been identified fall within the scope of our existing
principal risks and uncertainties, and no additional disclosure is required.
The assessment above should be read in conjunction with the statement of
principal risks described on pages 62-64 in the 2023 Annual Report and
Accounts. Other than the matters described above we believe our exposure to
other principal risks faced by the business is not significantly different to
that described in that statement.
3. Operating segments
The Board is considered to be the 'chief operating decision maker' of the
Group in the context of the IFRS 8 definition. In addition to its
company-managed retail activities, the Group generates revenues from its
business to business channel which includes franchise and wholesale
activities. Both channels were categorised as reportable segments for the
purposes of IFRS 8.
Company-managed retail activities - the Group sells a consistent range of
fresh bakery goods, sandwiches and drinks in its own shops or via delivery.
Sales are made to the general public on a cash basis. All results arise in
the UK.
Business to business channel - the Group sells products to franchise and
wholesale partners for sale in their own outlets as well as charging a licence
fee to franchise partners. These sales and fees are invoiced to the partners
on a credit basis. All results arise in the UK.
All revenue in 2024 and 2023 was recognised at a point in time.
The Board regularly reviews the revenues and trading profit of each segment.
The Board receives information on overheads, assets and liabilities on an
aggregated basis consistent with the Group accounts.
26 weeks ended 29 June 2024 26 weeks ended 29 June 2024 26 weeks ended 29 June 2024 26 weeks ended 1 July 2023 26 weeks ended 1 July 2023 26 weeks ended 1 July 2023 52 weeks ended 30 December 2023 52 weeks ended 30 December 2023 52 weeks ended 30 December 2023
Retail Business to business Total Retail Business to business Total Retail Business to business Total
company-managed company-managed company-managed
shops shops shops
£m £m £m £m £m £m £m £m £m
Revenue 851.2 109.4 960.6 755.8 88.2 844.0 1,610.9 198.7 1,809.6
Trading profit* 117.2 24.5 141.7 103.0 16.7 119.7 250.1 41.1 291.2
Overheads including profit share (119.5)
(65.9) (54.3)
Operating profit 75.8 65.4 171.7
Finance expense (1.7) (1.7) (4.0)
Profit before tax 74.1 63.7 167.7
(excluding exceptional items)
Exceptional items (see Note 4) - 16.3 20.6
Profit before tax 74.1 80.0 188.3
* Trading profit is defined as gross profit less supply chain costs and retail
costs (including property and direct management costs) and before central
overheads.
4. Exceptional items
The exceptional item in 2023 related to:
· A net gain of £16.3 million (1 July 2023: £16.3 million) on the
settlement of a Covid-19 business interruption insurance claim. The net gain
was recognised after deduction of fees payable to advisors and the £2.5
million advance already recognised as income in 2020;
· A net gain of £4.0 million (1 July 2023: £nil) on the
settlement of a business interruption insurance claim relating to flooding at
the Treforest bakery in 2020;
· A £0.3 million (1 July 2023: £nil) release of a previous
provision for onerous leases no longer required.
5. Taxation
The taxation charge for the 26 weeks ended 29 June 2024 and 1 July 2023 is
calculated by applying the Directors' best estimate of the annual effective
tax rate to the profit or loss for the period using rates substantively
enacted by the half year date as required by IAS34 'Interim Financial
Reporting'.
6. Earnings per share
26 weeks ended 29 June 2024 26 weeks ended 1 July 2023 26 weeks ended 1 July 2023 26 weeks ended 1 July 2023 52 weeks ended 30 December 2023 52 weeks ended 30 December 2023 52 weeks ended 30 December 2023
Excluding exceptional items Exceptional items Excluding exceptional items Exceptional items
(see Note 4) (see Note 4)
Total Total Total
£m £m £m £m £m £m £m
Profit for the period attributable to equity holders of the parent
55.1 47.8 12.5 60.3 126.7 15.8 142.5
Basic earnings per share 54.3p 47.2p 12.3p 59.5p 125.0p 15.6p 140.6p
Diluted earnings per share 53.8p 46.8p 12.2p 59.0p 123.8p 15.4p 139.2p
Weighted average number of ordinary shares
26 weeks ended 29 June 2024 26 weeks ended 1 July 2023 52 weeks ended 30 December 2023
Number Number Number
Issued ordinary shares at start of period 102,255,675 102,112,581 102,112,581
Effect of shares issued - 29,793 86,106
Effect of own shares held (649,199) (849,669) (879,975)
Weighted average number of ordinary shares during the period 101,606,476 101,292,705 101,318,712
Effect of share options in issue 811,752 1,014,417 977,753
Weighted average number of ordinary shares (diluted) during the period 102,418,228 102,307,122 102,296,465
Issued ordinary shares at end of period 102,255,675 102,254,826 102,255,675
7. Dividends
The following tables analyse dividends when paid and the year to which they
relate:
Dividend declared 26 weeks ended 26 weeks ended 52 weeks ended
29 July 2024 1 July 2023 30 December 2023
Pence per share Pence per share Pence per share
2022 final dividend - 44.0p 44.0p
2023 interim dividend - - 16.0p
2023 final dividend 46.0p - -
2023 special dividend 40.0p - -
86.0p 44.0p 60.0p
26 weeks ended 26 weeks ended 52 weeks ended
29 June 2024 1 July 2023 30 December 2023
£m £m £m
Total dividend payable
2022 final dividend - 44.6 44.6
2023 interim dividend - - 16.2
2023 final dividend 46.8 - -
2023 special dividend 40.7 - -
Total dividend paid in period 87.5 44.6 60.8
26 weeks ended 26 weeks ended 52 weeks ended
29 June 2024 1 July 2023 30 December 2023
£m £m £m
Dividend proposed at period end and not included as a liability in the
accounts
2023 interim dividend (16.0p per share) - 16.2 -
2023 final dividend (46.0p per share) - - 46.8
2023 special dividend (40.0p per share) - - 40.7
2024 interim dividend (19.0p per share) 19.4 - -
19.4 16.2 87.5
8. Related party transactions
There have been no related party transactions in the first 26 weeks of the
current financial year which have materially affected the financial position
or performance of the Group.
Related parties are consistent with those disclosed in the Group's Annual
Report and Accounts for the 52 weeks ended 30 December 2023.
9. Half year report
The condensed accounts were approved by the Board of Directors on 30 July
2024. They will be available on the Company's website,
corporate.greggs.co.uk (https://corporate.greggs.co.uk)
10. Calculation of Alternative Performance Measures
One-year like-for-like (LFL) sales increase - compares year-on-year cash sales
in company-managed shops, excluding any shops which opened, relocated or
closed in the current or prior period.
26 weeks ended 26 weeks ended 26 weeks ended
29 June 2024 29 June 2024 29 June 2024
Non-LFL LFL Total revenue
£m £m £m
Current period sales 197.3 763.3 960.6
2023 sales 133.2 710.8 844.0
_________
Increase 52.5
========
LFL sales increase percentage 7.4%
11. Statement of Directors' responsibilities
The Directors named below confirm on behalf of the Board of Directors that to
the best of their knowledge:
· the condensed set of accounts has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the UK;
· the interim management report includes a fair review of the
information required by:
(a) DTR4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first 26 weeks of
the financial year and their impact on the condensed set of accounts; and a
description of the principal risks and uncertainties for the remaining 26
weeks of the year; and
(b) DTR4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first 26 weeks of the
financial year and that have materially affected the financial position or
performance of the Group during the period; and any changes in the related
party transactions described in the last annual report that could do so.
The Directors of Greggs plc are listed in the Annual Report and Accounts for
the 52 weeks ended 30 December 2023. On 1 June 2024 Tamara Rogers was
appointed as a Non-Executive Director.
For and on behalf of the Board of Directors
Roisin
Currie
Richard Hutton
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