Slide 1: Results for the 52 weeks ended 27 March 2021
TITLE SUB-HEADING Results FOR THE 52 WEEKS ENDED 27 MARCH 2021 52 weeks ended 27 March 2021 1
Slide 2: Agenda
AGENDA INTRODUCTION AND FY21 HIGHLIGHTS Adam Couch, CEO FINANCIAL REVIEW Mark Bottomley, CFO COMMERCIAL UPDATE Jim Brisby, CCO OPERATING & STRATEGIC REVIEW Adam Couch, CEO Q&A DISCLAIMER: Certain statements in this presentation are forward looking statements. By their nature, forward looking stateme
Slide 3: Trading Record 1990–2021
TRADING RECORD 1990 – 2021 129.7 £1,898m DIVIDEND PER SHARE (pence) £1,898m [128.6] ADJUSTED PROFIT BEFORE TAX 1 (£M) 70.0 XX 102.3 102.3 £1,667m XX 31 YEARS OF UNBROKEN 53.7 60.4 £1,667m 92.0 92.0 90.2 90.2 DIVIDEND GROWTH 55.9 53.7 75.5 75.5 44.1 44.1 64.4 64.4 37.5 37.5 £1,005m £1,005m 57.8 57.8
Slide 4: FY21 Highlights
TITLE SUB-HEADING FY21 Highlights ADAM COUCH CHIEF EXECUTIVE OFFICER 52 weeks ended 27 March 2021 4
Slide 5: FY21 Highlights
FY21 HIGHLIGHTS 5 YEAR CAGR Compound annual growth rates to 27 March 2021 • Strong revenue growth and earnings momentum REVENUE • Exceptionally robust demand across all product categories • Supported our customers by delivering excellent service levels to ensure full +13.3% availability of our produ
Slide 6: A Comprehensive Response to COVID-19
A COMPREHENSIVE RESPONSE TO COVID-19 • Staggered shift patterns implemented along with additional PPE and enhanced amenity facilities • Already rigorous cleaning practices were strengthened • HSE visits to sites approved new processes and hygiene measures • Daily conference calls with senior leaders
Slide 7: New Commitments for Second Nature
NEW COMMITMENTS FOR SECOND NATURE • Net Zero by 2040 • Science Based Targets submitted for verification - 50% reduction in Scope 1 and Scope 2 emissions - 50% relative reduction in Scope 3 emissions • Site carbon neutral plan progressing - 9 sites accredited to PAS2060 - All production facilities co
Slide 8: Financial Review
TITLE SUB-HEADING Financial Review MARK BOTTOMLEY CHIEF FINANCIAL OFFICER 52 weeks ended 27 March 2021 8
Slide 9: Financial Highlights
FINANCIAL HIGHLIGHTS REVENUE (£M) +13.9% ADJUSTED PROFIT BEFORE TAX (£M)1 +26.8% 2021 1,898.4 2021 129.7 2020 1,667.2 2020 102.3 2019 1,437.1 2019 92.0 ADJUSTED EARNINGS PER SHARE (P)1 +27.4% DIVIDEND PER SHARE (P) +15.9% 2021 199.3 2021 70.0 2020 156.4 2020 60.4 2019 144.3 2019 55.9 FREE CASH FLOW
Slide 10: FY21 Summary
FY21 SUMMARY £M FY21 FY20 CHANGE Revenue 1,898.4 1,667.2 +13.9% Like-for-like revenue growth1 - - +12.1% Adjusted gross margin2 14.2% 13.3% +91bps Adjusted operating profit2,3 132.5 105.1 +26.1% Adjusted operating margin2,3 7.0% 6.3% +68bps Adjusted profit before tax2,3 129.7 102.3 +26.8% Effective
Slide 11: Strong Revenue Growth
STRONG REVENUE GROWTH REVENUE BRIDGE (£M) Underlying revenue growth is driven by: +6.6% - New FY21 contract wins - Annualisation of FY20 contract wins 110.0 - Strong retail demand across all four product categories +1.8% +5.5% - Further export growth 28.9 92.3 1,898.4 CATEGORY PROFILE +13.9% % OF GR
Slide 12: Positive Margin Performance
POSITIVE MARGIN PERFORMANCE 16.0% +91bps 14.0% FY20 FY21 12.0% +105bps 10.0% 8.0% +68bps 13.3% 14.2% 6.0% 9.3% 10.4% 4.0% 6.3% 7.0% 2.0% 0.0% ADJUSTED GROSS MARGIN1,2 ADJUSTED EBITDA MARGIN1,2 ADJUSTED OPERATING MARGIN1,2,3 Margin improvement primarily reflects: - Volume driven operational efficienc
Slide 13: Strong Operating Cash Performance
STRONG OPERATING CASH PERFORMANCE... 5.6 1.3 31.7 (6.6) (3.7) (5.3) 41.4 181.4 117.0 £M March 2020 Adjusted Inventories Biological Receivables Payables Taxation Other March 2021 EBITDA assets 52 weeks ended 27 March 2021 13
Slide 14: Drives Reduction in Net Debt
...DRIVES REDUCTION IN NET DEBT 2.9 (22.1) £M (71.1) (92.4) 196.7 (27.9) (146.9) (10.7) (5.7) (7.6) DA ds x ns l 20 21 n es er ta pe tio IT en 20 io pi th as 20 ca xa EB ist ca O d Le ch vi ch Ta qu et ng ed Di ar N ar Ac ki st M M or ju Ad W • Opening and closing net debt includes IFRS 16 Leases •
Slide 15: Investment Continues at Pace
INVESTMENT CONTINUES AT PACE £M FY21 FY20 • Fresh Pork – new coldstore facility purchased along with effluent upgrade, additional investment in agricultural Fresh Pork 20.5 11.3 operations and upgrades to facilities Convenience 13.9 33.5 • Convenience – additional slicing lines and investment in aut
Slide 16: Financially Resilient Business Model
FINANCIALLY RESILIENT BUSINESS MODEL • Low leverage with pre-IFRS 16 Net debt / Adjusted EBITDA ratio 0.1x • Low gearing of 13.5% (2020: 23.9%) • Significant interest cover at 263x (2020: 69x) • Robust balance sheet with £160m of core bank facilities and access to a further £40m available on the sam
Slide 17: Tax Guidance
TAX GUIDANCE • Budget 2021 introduced 2 key changes to UK tax: - Increase CT from 19% to 25% effective 1 April 23 - A ‘super deduction’ of 130% of the cost of any new qualifying capex incurred between 1 April 21 and 31 March 23 • The impact is expected to be a reduction to CT and an increase to DT •
Slide 18: Brexit Update
BREXIT UPDATE • Disruption extremely limited due to extensive preparations and planning • Implemented new systems and processes across the business to manage supply chain complexities • Recruited specialist customs team and rolled out training across all sites • Extensive work with both suppliers an
Slide 19: Commercial Update
TITLE SUB-HEADING Commercial Update JIM BRISBY CHIEF COMMERCIAL OFFICER 52 weeks ended 27 March 2021 19
Slide 20: Unprecedented Growth in Retail Channels
UNPRECEDENTED GROWTH IN RETAIL CHANNELS RETAILER SALES GROWTH (£M) • Record sales in retail channel with growth 4,500 3,848 Retailer Contribution to growth (+£m) in all retailers 4,000 Contribution to Change YoY (£m) 3,500 • Almost £9bn growth (70%) through Top 4 3,000 • Able to meet the demands of
Slide 21: Total Spend in Food and Drink Sector Hit by Hospitality Closures
TOTAL SPEND IN FOOD AND DRINK SECTOR HIT DUE TO HOSPITALITY CLOSURES FOODSERVICE RECOVERY FORECAST • Food service sales fell by over 50% in 2020 WHILST RETAIL SALES ALSO GROW and dropped to just 19% of food and drink spend £198.9bn £194.7bn • Retail sales increased by £12.7bn £174.8bn £52.0bn £70.7b
Slide 22: Strong Category Sales
STRONG CATEGORY SALES RETAIL AND EXPORT DRIVING CHANNEL GROWTH CRANSWICK SALES FY21 • Fresh pork processing increased to deliver increased retail sales and additional internal CHANGE demand, to service added value sites CATEGORY VALUE VOLUME • Convenience sales bolstered through retail growth and an
Slide 23: Meeting the Needs of Our Changing Consumers
MEETING THE NEEDS OF OUR CHANGING CONSUMERS BACK TO BASICS SEEKING CONVENIENCE CELEBRATING NORMAL Value for money Online growth Returning to pre-COVID-19 behaviours Scratch cooking Assisted cook meal solutions In-home entertaining In-home breakfast & lunch QSR share gains Gradual food service recove
Slide 24: Commercial Growth Outlook Remains Positive
COMMERCIAL GROWTH OUTLOOK REMAINS POSITIVE RETAIL GROWTH FOODSERVICE RECOVERY ENHANCING CAPABILITY Retail momentum continues QSR customer expansion Cooked bacon site operational Further opportunities anticipated B2B share gains Breaded poultry site from 2022/23 Accelerating poultry growth Strong rec
Slide 25: Accelerating Our Sustainability Focus
ACCELERATING OUR SUSTAINABILITY FOCUS TARGET 50% REDUCTION ALL PRODUCTION FACILITIES CERTIFIED 100% RENEWABLE ENERGY BY 2030 SCOPE 1, 2 AND 3 CARBON NEUTRAL BY SEPTEMBER 2021 >1,500 TONNES OF PLASTIC REMOVED ZERO EDIBLE FOOD WASTE BY 2030 SUPPORTING OUR COMMUNITIES CRANSWICK FARMS CARBON SOYA REDUCT
Slide 26: Operating & Strategic Review
TITLE SUB-HEADING Operating & Strategic Review ADAM COUCH CHIEF EXECUTIVE OFFICER 52 weeks ended 27 March 2021 26
Slide 27: A Resilient and Sustainable Business Model
A RESILIENT AND SUSTAINABLE BUSINESS MODEL PURPOSE FEEDING THE NATION WITH AUTHENTICALLY MADE, SUSTAINABLY PRODUCED FOOD; CREATED WITH PASSION CONSOLIDATION DIVERSIFICATION INTERNATIONAL DEVELOPING NEW DRIVING THE CORE EXPANDING OUR OFFER OPPORTUNITIES COMPLETION OF COOKED EXPANSION OF EYE NEW EXPOR
Slide 28: Consolidation: Investment in Vertical Integration
CONSOLIDATION INVESTMENT IN VERTICAL INTEGRATION • Continued investment in expanding and enhancing our agricultural supply chain • £12.7 million spent to strengthen vertical integration • Further expansion of the pig herd with herd size increasing 10% year-on-year • Self-sufficiency maintained at ov
Slide 29: Consolidation: Cooked Bacon Facility
CONSOLIDATION COOKED BACON FACILITY • Construction of new class-leading £20 million premium cooked bacon facility complete • Strategic supply agreement with leading quick service restaurant chain • Further retail and food-to-go customers identified • Full end-to-end solution completes vertical integ
Slide 30: Diversification: Eye Poultry Expansion
DIVERSIFICATION EYE POULTRY EXPANSION • Further investment lifts capacity from 1.1 million to 1.4 million birds per week ahead of schedule • Seamless ramp-up reflecting high levels of automation and efficiency • Additional volume meets growing demand from anchor customer • Investment in associated a
Slide 31: Diversification: Premium Breaded Poultry
DIVERSIFICATION PREMIUM BREADED POULTRY • Work started on new £25 million premium breaded poultry facility in Hull • Site will serve both retail and foodservice customers • Commissioning targeted for early FY23 • Poultry market provides strong growth potential • Capitalise on the benefits of full ve
Slide 32: International: African Swine Fever
INTERNATIONAL AFRICAN SWINE FEVER FAR EAST • Further culling in China in recent months and mortality rates rose again over winter • The continuing spread of ASF, along with new variants, highlight the challenges in managing the disease • Restocking is continuing and the sow herd is believed to be a
Slide 33: Summary and Outlook
SUMMARY AND OUTLOOK STRONG PERFORMANCE ONGOING INVESTMENT POSITIVE OUTLOOK Strong revenue growth Expanding our Poultry business Brexit successfully navigated Excellent earnings momentum Investment in Cooked Bacon facility Growth strategy on track Robust financial position Benefits of vertical supply
Slide 34: Appendix: Our History
APPENDIX 1 OUR HISTORY 1970s 1980s 1992 1995 2001 2003 2004 2005 2009 2010 2013 Established Move FT Sutton Simply Continental Sandwich Jack Scaife Perkins Bowes of Yorkshire Pig rearing Agri-Food into food – deli Sausages Fine Foods Factory – dry cured Chilled Norfolk – Baker – business business pro
Slide 35: Appendix: Our Locations
APPENDIX 2 OUR LOCATIONS Fresh Pork Preston, Hull Riverside, Hull Ballymena, Northern Ireland Watton, Norfolk BALLYMENA Convenience Cooked Meats, Sutton Fields, Hull MALTON Cooked Meats, Valley Park, Barnsley SHERBURN Cooked Meats, Milton Keynes HULL Continental Products, Bury BARNSLEY Mediterranean
Slide 36: Appendix: Adjusted & Reported Earnings; Tax & EPS
APPENDIX 3 ADJUSTED & REPORTED EARNINGS; TAX & EARNINGS PER SHARE ADJUSTED & REPORTED EARNINGS TAX £M FY21 FY20 % FY21 FY20 Adjusted operating profit 132.5 105.1 Headline tax rate 19.0 19.0 Disallowed expenses 1.3 1.9 Net IAS 41 movement (11.4) 5.4 Prior year adjustments (0.9) (0.8) Acquisition rela
Slide 37: Appendix: Balance Sheet & Cash Flow
APPENDIX 4 BALANCE SHEET & CASH FLOW BALANCE SHEET (£M) FY21 FY20 CASH FLOW (£M) FY21 FY20 Property, plant & equipment 376.7 357.7 Cash generated from operations 203.5 144.7 Intangible assets 203.8 207.3 Tax paid (22.1) (27.7) Right-of-use assets 68.8 64.8 Net cash from operating activities 181.4 11
Slide 38: Appendix: Cash Allocation
APPENDIX 5 CASH ALLOCATION (£M) FREE CASH ACQUISITION / CASH INFLOW / NET CAPEX DIVIDEND PAID FLOW (DISPOSAL)2 (OUTFLOW)1 BANKING FACILITY £160m revolving credit facility FY21 180.9 71.1 10.7 27.9 71.2 with four major UK banks FY20 115.8 97.1 76.2 22.6 (80.1) Includes committed overdraft of £20m FY1
Slide 39: Appendix: IFRS Impact
APPENDIX 6 IFRS 16 IMPACT IFRS 16 IMPACT ON FINANCIAL STATEMENTS FY21 FY20 Impact on total assets 68.8 64.8 Impact on total liabilities (71.6) (65.2) Overall effect on net assets (2.8) (0.4) Remove rental costs 13.7 9.4 Add depreciation (12.3) (8.2) Add loss on disposal (0.2) - Impact on operating p
Slide 40: Appendix: Price per kg Meat Prices
Price per kg Price per kg 80 160 180 Price per kg 4/5/2014 80 100 100 120 120 140 140 160 180 6/5/2014 80 100 120 140 160 180 8/5/2014 4/5/2014 Fresh 4/5/2014 10/5/2014 6/5/2014 6/5/2014 12/5/2014 Fresh Fresh 8/5/2014 8/5/2014 2/5/2015 Fresh Fresh FreshFresh Fresh Fresh Fresh Fresh Fresh 10/5/2014 1
Slide 41: Appendix: Global Pig Meat Forces
APPENDIX 8 GLOBAL PIG MEAT FORCES ANNUAL PROCESSING NUMBERS BY REGION 56M 11M 189M 53M 565M VS 684M PRE ASF 62% 37M U.K. GERMANY THE UK IS 62% SELF-SUFFICIENT IN RUSSIA PIG MEAT PRODUCTION NORTH AMERICA CHINA SOURCE: USDA/AHDB 2020 EAST ASIA 52 weeks ended 27 March 2021 41