23rd Nov 2020 17:17
(Alliance News) - Greencore Group PLC on Monday reported a swing to loss during an "exceptionally challenging year" for the convenience food maker, which also unveiled plans for a GBP90 million fundraise.
The placing and subscription will strengthen Greencore's balance sheet as it also grapples with a resurgence of Covid-19 restrictions in the UK, which has hit trading in the new financial year.
Revenue in the year ended September 25 dropped 13% to GBP1.26 billion from GBP1.45 billion, which Greencore put down to the food to go space being badly hit by Covid-19 in the second half of its financial year.
Greencore swung to a GBP10.8 million pretax loss from a GBP56.4 million profit.
"This has been an exceptionally challenging year for Greencore, and I am enormously proud of the resilience and adaptability that our colleagues have shown in helping to navigate the business through the toughest trading conditions it has ever seen," Chief Executive Officer Patrick Coveney said.
He added: "There is a direct correlation between the performance of food to go and the nation's ability to move around freely. As a result, that part of our business has been significantly impacted by the social restrictions that have been put in place as a result of Covid-19."
Greencore opted not to declare a full-year dividend, after a 6.20 pence per share payout a year earlier.
Although it incurred Covid-19 related costs of GBP24.6 million, Greencore looked to keep a lid on annual expenses. The company deferred a "substantial portion" of non-essential spend and suspended dividends.
On Monday, it looked to bolster its balance sheet further, proposing a fundraise of GBP90 million.
"Throughout the year we have acted quickly and decisively to put in place comprehensive sets of measures to mitigate the impact of Covid-19 on our business. However, in light of the ongoing uncertainty that is being caused by the current lockdown measures, there is a strong rationale in further strengthening our balance sheet. Today's proposed placing achieves this," Coveney said.
Greencore added that the fundraise means the company avoid making another round of cost cuts and ensures it can "proactively manage debt levels".
Recent weeks have seen the UK government implement tiered Covid-19 restrictions and a month-long lockdown in England.
In the first five weeks of Greencore's new financial year, pro-forma revenue was down 22% year-on-year.
"The recent Covid-19 resurgence and evolving policy response has increased uncertainty in the group's trading environment for the remainder of FY21," the company added.
Greencore shares closed 4.9% higher at 118.80p each in London on Monday.
By Eric Cunha; [email protected]
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