Cranswick Plc · LSE:CWK
Cranswick — Investor Day (November 2018)
46 slides from Cranswick's investor day presentation, Nov 8, 2018
Slide 1: Capital Markets Day and Cranswick Continental Foods site visit
Slide 2: Agenda
10:00 10:15 10:40 11:00 11:30 12:45 13:15 13:30 13:45 14:30 AGENDA COFFEE CRANSWICK OVERVIEW Adam Couch, Chief Executive Mark Bottomley, Finance Director INVESTING FOR GROWTH Chris Aldersley, Chief Operating Officer ADVENTURES IN GOOD TASTE — THE CONTINENTAL FOODS STORY Rollo Thompson, Managing Dire
Slide 3: Our History
OUR HISTORY Sd war sae & ~~ 1970s ~~ 1980s 1992 ~~ 1995 ~~ 2001 ~~ 2003 -- 2004 -- 2005 --- 2009: Established Move FT Sutton’s Simply Continental Sandwich Jack Scaife’s Perkins Bowes of Agri-Food into food Deli Cooked Sausages Fine Foods Factory — dry cured Chilled Norfolk business production Meats
Slide 4: Cooked Meats
COOKEDMEATS
Slide 5: Our Purpose
OUR PURPOSE FEEDING THE NATION WITH AUTHENTICALLY MADE, SUSTAINABLY PRODUCED FOOD; CREATED WITH PASSION REASONS TO BELIEVE TRADITIONAL, ARTISANAL CRAFT, UPSCALED THROUGH INDUSTRY LEADING FOOD PRODUCTION : ah Zo LY BRITISH HERITAGE COMMITTED TO TASTE COMPANY OF ENTREPRENEURS:
Slide 6: Strategy & Business Model
STRATEGY & BUSINESS MODEL CONSOLIDATION DIVERSIFICATION INTERNATIONAL DRIVING THE CORE EXPANDING OUR OFFER DEVELOPING NEW OPPORTUNITIES STRATEGIC PILLARS GUIDING PRINCIPLES &) GSESOND NATURE SALES GROWTH HIGH QUALITY OPERATING. SUSTAINABILITY PRODUCTS EXCELLENCE 9 Se) 76
Slide 7: Over the last five years we have
OVER THE LAST 5 YEARS WE HAVE INCREASED INCREASED PROFIT INCREASED DIVIDEND ENHANCED OUR FIXED REVENUE BEFORE TAX PER SHARE ASSETS BASE 4 From £875m to From £49.1m to From 30.0p to Over £180m £1,465m £92.4m 53775) of capital +67% +88% +79% expenditure INCREASED NUMBER INCREASED FAR EAST INCREASED NU
Slide 8: Trading Record 1990–2018
TRADING RECORD 1990 — 2018 ADJUSTED PROFIT BEFORE TAX' (£M) DIVIDEND PER SHARE (pence) 28 YEARS OF UNBROKEN DIVIDEND GROWTH REVENUE |. Excludes IAS movements on blologicat assets and ceculston related amortisation in 2018 and 2017.
Slide 9: FY18 Financial Highlights
FY18 FINANCIAL HIGHLIGHTS REVENUE (£M) +17.6% ADJUSTED PROFIT BEFORE TAX (£M)' +22.4% 2018 1,464.5 2018 92.4 2017 1,245.1 2017 US) ADJUSTED EARNINGS PER SHARE (P)! +19.9% DIVIDEND PER SHARE (P) +21.8% FREE CASH FLOW (£M) +54.3% — NET FUNDS / (DEBT) +£31.6M 2017 RA 2017 (110) +13% 3.1M +30% £59M TOTA
Slide 10: Positive Year CAGR Across Key Metrics
POSITIVE 5 YEAR CAGR ACROSS KEY METRICS ADJUSTED EBITDA (£M) ADJUSTED OPERATING MARGIN 140 CAGR 15.9% ee? 120 ans a 084 CAGR 3.9% _ 100 ed ccanneeeneet eae 103.7 65%. gente so} cease? 710 60% ee 3 , _ "] FY FYI FYI6 FY? Fvig FY FYIS FYIG FYI FYI8 FREE CASH FLOW (£M) ROCE 120 CAGR 17.3% ere woe CAGR
Slide 11: FY19 Q1 Trading Update
FY19 Q1 TRADING UPDATE + Revenue ahead by 3.2% with positive contributions from each of the Group’s product categories -« New Continental Foods facility commissioned « Work started on new poultry primary processing facility + Net funds of £8m (2017: £18m net debt) + Start to the year in line with ma
Slide 12: Investing for Growth
Slide 13: Managing the Business from Farm to Fork
MANAGING THE BUSINESS FROM FARM TO FORK FARMED PROCESSED CREATED ENJOYED WHOLESALE FRESH PORK FRESH CHICKEN = Las = pera ooKeD mies ah “= = x,
Slide 14: Cranswick Facilities
CRANSWICK FACILITIES BALLYMENA’ MALTON! SHERBURN HULLS BARNSLEY. BURY ~ MANCHESTER DENBIGH MILTON KEYNES ‘WATTON EYE WEYBREAD HULL Fresh Pork, Preston Fresh Pork, Riverside Cooked Meats, Sutton Fields Gourmet Sausages, Lazenby’s Added Value Poultry, Benson Park MALTON Gourmet Pastry, Yorkshire Baker
Slide 15: Investing in Pig Farming
INVESTING IN PIG FARMING REINVESTED IN FARMING OPERATIONS IN 2013 SECURITY OF SUPPLY CHAIN TRACEABILITY FROM FARM TO FORK WAYLAND FARMS WOLD FARMS Outdoor pig production in East Anglia Production in Yorkshire & Lincolnshire Expanding breeding herds State of the art indoor breeding unit Additional fi
Slide 16: Efficiency
EFFICIENCY “URS Capital investment delivering positive returns Investment at all Cranswick sites over last 5 years Continental Foods and Cranswick Poultry case studies today
Slide 17: Adventures in Good Taste: The Continental Foods Story
Slide 18: Cranswick Continental Foods History
CRANSWICK CONTINENTAL FOODS HISTORY A a = CRANSWICK”” Great Bah Tse Qo ~ 1983 --- 1999 ---- 2001 - 2004 ---- 2008 “ Business Hibernia Way Acquired by Guinness Venture into founded manufacturing Cranswick Circle prepacked distribution chilled olives site bvceseesseeseens 2010 fees 201 1 a 201 4 seses
Slide 19: Antipasti
NTIPASTI ome ~~ s
Slide 20: Managing the Continental Supply Chain from End to End
MANAGING THE CONTINENTAL SUPPLY CHAIN FROM END TO END ee FROM FARM... «TO FORK * se FROM TREE... ..TO TOOTHPICK . PROCESSING WITH EFFICIENCY CREATING EXPERIENCES SECOND NATURE 9 Se) 75
Slide 21: Processing Continental Foods in the UK Removes Complexity
PROCESSING CONTINENTAL FOODS IN THE UK REMOVES COMPLEXITY & ADDS VALUE TO THE SUPPLY CHAIN mS 4 wl a. Sainsbury's Iceland EEE PRODUCER CONSOLIDATION OPTIMISED PARTNERS & PROCESSING SUPPLY CHAIN EFFICIENT | FLEXIBLE | CONSISTENT | SUSTAINABLE 19 Se) 6
Slide 22: Partnerships Across the Continent
PARTNERSHIPS ACROSS THE CONTINENT A GROUP OF LIKE-MINDED BUSINESSES Long-term strategic partnerships Fully integrated closed supply chain with full visibility as a starting point Driving the techni cal, | da together
Slide 23: Our Retail Markets in Focus
OUR RETAIL MARKETS IN FOCUS 300 100 CONTINENTAL MEATS oo CHILLED OLIVES 280 + Market value £282m 80 AND ANTIPASTI = = . 3 200 + 23% cumulative growth 3 70 Marketvallie;£95in z over last 5 years =| a0 + 63% cumulative growth Zz Lo « Last year +6.5% z : over last 5 years ui D ui 3 100 3 7 9 z + Purcha
Slide 24: Customer Base
CUSTOMER BASE RETAIL CUSTOMERS Sainsbury's Iceland CHANNEL DEVELOPMENT DRL iy Godsto Savour every moment
Slide 25: Future Opportunities
FUTURE OPPORTUNITIES MAKING IT FAMILIAR Targeted Usage Popular Flavour Profiles Formats to help the UK consumer know Marinating & flavouring antipasti Recreating the sharing experience how to use continental products to appeal to UK consumer easily at home FOR THE MORE DISCERNING CONSUMER FACILITATI
Slide 26: Broadened Processing Capabilities
Broadened processing capabilities Market leading innovation Slicing efficiency & flexi 26
Slide 27: British Charcuterie
British Charcuterie. We continue to use the Woodall family traditional recipes and have maintained the curing skills passed down through the generations. Our products feature original recipes, curing and smoking techniques together with unique blends of spices. All of our products are produced using
Slide 28: Industry Leading Expansion: Cranswick Poultry
Re ” Davild Park, as . “Managing Direciont COUNTRY FOODS | Pouliry
Slide 29: Cranswick Poultry
Slide 30: Chicken Second Largest Protein
CHICKEN SECOND LARGEST PROTEIN CHICKEN BEST VALUE PROTEIN OPTION FOR SHOPPERS CHILLED RETAIL EXPENDITURE SHARE UK RETAIL AVERAGE PRICE (£/kg) - ‘s a = Pig volume static - Added value growth driving the core pork category Source: Kantar 52 w/o 8 Soptomber 2018 FRESH AND READY TO COOK PORK. PORK MARIN
Slide 31: Fresh Chicken Market — Category Breakdown
FRESH CHICKEN MARKET — CATEGORY BREAKDOWN TOTAL FRESH CHICKEN £3.3BN +2.4% YOY FRESH PRIMARY £2.1BN COOKED & PROCESSED £1.2BN % Share of 54% 1% Fresh Chicken 21% 14% Primary Core Chicken £1.8BN +1.3% YOY ae Breasts: E£ABNE2.7% YOY. yr Whole-bird £438Mia2.1% YOY Portions £315M +2.9% YOY. Source: Kant
Slide 32: Synergies Between Pigs and Poultry
Slide 33: Chicken Production Cycle
CHICKEN PRODUCTION CYCLE ig v3 : 6 i 22 ve : i : 8 iG is 8 Vo BREEDER LAYING SHEDS INCUBATOR HATCHING CHICKS DAY OLD 32-42 DAYS Teveeeees bere ae Ce ee Cee Praveceeeed FY )eceeeee Pevcceeeee PH PROCESSING FURTHER PROCESSING 9D 75
Slide 34: Key Areas of Development
KEY AREAS OF DEVELOPMENT 9 MILLING 8 BREEDERS 8 HATCHERY a | BROILERS 5 | PRIMARY PROCESSING Full control of supply chain from farm to fork Investment underway in all areas of the operation
Slide 35: Milling expansion
2. BREEDERS 3. HATCHERY 4, BROILERS 5. PRIMARY PROCESSING Additional mill capacity 4,500MT at Hoxne producing per week broiler specific feed +2,500MT a week Increased Plans to increase current volume capacity milling capacity at to supply all flocks Kenninghall 19 Ne) 76
Slide 36: Breeders expansion
1. MILLING 3. HATCHERY 4, BROILERS 5. PRIMARY PROCESSING Increase breeder capacity to maintain vertical integration 12 breeder farms Additional units eventually supplying 1,400,000 eggs per week Currently producing 700,000 eggs a week
Slide 37: Hatchery current and future position
| 4. MILLING 2. BREEDERS 4, BROILERS 5. PRIMARY PROCESSING CURRENT POSITION Capacity to hatch 600,000 birds a week at state of the art facility FUTURE POSITION Initially outsource hatching operation to provide sufficient broilers Further capacity required to have capability to hatch all birds Expand
Slide 38: Broilers expansion
1. MILLING 2. BREEDERS 3. HATCHERY 5. PRIMARY PROCESSING Continue the expansion plans with new farms meeting 27 farms in close proximity to processing site retailer requirements volumes from coe . Additional broiler farms 500,000 per week v 4.200.000 to 750,000 to supply Sau? birds a week to Eye per
Slide 39: Primary Processing
1. MILLING 2. BREEDERS 3. HATCHERY 4, BROILERS 5. PRIMARY PROCESSING PROCESSING Site capacity 500,000 birds 41,200,000 birds capacity 20% cutting capacity Increased cutting capabilities Whole bird site focus Industry leading technology Wholesale customer base Retail focused site
Slide 40: What Does This Mean?
WHAT DOES THIS MEAN? First green field poultry processing site in 30 years World class technological advances Close proximity to farms for low food miles Integral part of Cranswick strategy for full vertical integration IMPLEMENTING TECHNOLOGICAL SERVICES
Slide 41: The Sustainability Challenge
Challenge < Andy Napthine, Group Marketing Controller eo CRANSWICK ””
Slide 42: Why Are We Doing This?
WHY ARE WE DOING THIS? | LEAD THE INDUSTRY —_| THE INDUSTRY ENGAGE WORK WITH OUR USE LESS WASTE LESS SAVE MONEY EMPLOYEES COMMUNITIES DO THE RIGHT THING
Slide 43: Courtauld 2025
COURTAULD 2025 - REDUCE REQUIRED RESOURCE BY 20% PACKAGING AND FOOD WASTE ENERGY AND WATER OUR COMMITMENTS SECOND NATURE CHAMPIONS Jina PLASTIC FOOD WASTE ENERGY REDUCE EDIBLE FOOD REDUCE BY Cer eGeo WASTE BY 50% 100% RENEWABLE CAEP EEEVAELE FULL SITE MAPPING ELECIRICIING ANDES" ERECINERS AND INTERN
Slide 44: Our Approach to Second Nature
OUR APPROACH TO SECOND NATURE SECOND NATURE THINKING SUSTAINABLY | FARMING SUSTAINABLY ‘$) SOURCING SUSTAINABLY PRODUCING SUSTAINABLY LIVING SUSTAINABLY UI 19 Se) 6
Slide 45: At the Heart of the Business
AT THE HEART OF THE BUSINESS ) —aX—e-—— - ad ool HIGH QUALITY LEAN PRODUCTS PROCESSING KEEPING THEM SUSTAINABILITY RELEVANT INVESTMENT INVENTORY 6s 68 = ° S me of CUSTOMER ———— a CHAIN ONE BUSINESS VERTICAL ‘APPROACH INTEGRATION EMBEDDED IN THE CULTURE THROUGHOUT THE BUSINESS 9D 75
Slide 46: Q&A