Slide 1: Strong Financial & Strategic Progress
Strong Financial & Strategic Progress RESULTS FOR THE YEAR ENDED 31 MARCH 2017 19 75 Year ended 31 March 2017 1
Slide 2: Agenda
AGENDA INTRODUCTION Martin Davey, Chairman HIGHLIGHTS Adam Couch, CEO FINANCIAL REVIEW Mark Bottomley, Finance Director COMMERCIAL UPDATE Jim Brisby, Commercial Director OPERATING & STRATEGIC REVIEW Adam Couch, CEO Q&A 19 75 Year ended 31 March 2017 2
Slide 3: Highlights
HIGHLIGHTS REVENUE (£M)2 ADJUSTED PROFIT BEFORE TAX (£M) 1,2 +22.5% +17.2% 2017 1,245.1 2017 75.5 2016 1,016.3 2016 64.4 ADJUSTED EARNINGS PER SHARE (P) 1,2 DIVIDEND PER SHARE (P) +17.6% +17.6% 2017 120.9 2017 44.1 2016 102.8 2016 37.5 FREE CASH FLOW (£M) NET (DEBT)/FUNDS (£M) -13.2% -£28.8M 2017 72
Slide 4: Trading Record 1990–2017
TRADING RECORD 1990 – 2017 ADJUSTED PROFIT BEFORE TAX 1,2 (£M) DIVIDEND PER SHARE (pence) 75.5 44.1 44.1 £1,245m 75.5 37.5 £1,245m 64.4 27 YEARS OF UNBROKEN 37.5 64.4 DIVIDEND GROWTH 34.0 32.0 34.0 £1,005m 57.8 32.0 30.0 £1,005m 57.8 52.2 30.0 28.5 52.2 27.5 28.5 49.1 49.1 27.5 25.0 47.3 25.0 45.6 4
Slide 5: Highlights
HIGHLIGHTS • Strong revenue and earnings growth • Pig price inflation successfully managed • Positive contribution from acquisitions • Far East export sales up 49% • Record £47m capex programme to support strong growth pipeline • Sale of Sandwich business • Dividend up 17.6% to 44.1p per share 10 YE
Slide 6: Financial Summary
FINANCIAL SUMMARY CONTINUING OPERATIONS (£M) 2017 2016 % CHANGE Revenue 1,245.1 1,016.3 22.5% Like-for-like revenue 1 1,145.2 1,016.3 12.7% Adjusted gross margin 2 12.8% 13.4% 68bps Adjusted operating profit 2, 3 76.1 65.1 17.0% Adjusted operating margin 2, 3 6.1% 6.4% 29bps Adjusted profit before t
Slide 7: Cash Flow
CASH FLOW £M 2017 2016 Cash generated from operations 87.7 97.8 NET CAPEX (£M) 2017 2016 Tax paid (14.8) (14.0) Fresh pork 11.1 9.1 Convenience 23.9 12.1 Net cash from operating activities 72.9 83.8 Gourmet products 7.4 6.5 Net capital expenditure (46.5) (33.7) Poultry 3.9 5.1 Government grants rece
Slide 8: Balance Sheet
BALANCE SHEET Acquired goodwill 23.3 £M 2017 2016 Acquired customer relationships 4.6 Property, plant & equipment 215.7 178.5 Acquisition related amortisation (2.1) Sale of sandwich business (7.0) Intangible assets 158.5 139.7 Net movement 18.8 Biological assets 19.6 11.0 Working capital 68.3 41.2 A
Slide 9: Positive 4 Year CAGR Across Key Metrics
POSITIVE 4 YEAR CAGR ACROSS KEY METRICS ADJUSTED GROSS MARGIN ADJUSTED EBITDA (£M) 120 CAGR 2.7% CAGR 13.3% 100 14% 103.7 80 13% 13.4 85.9 12.8 77.0 60 71.3 12% 12.4 40 11.8 11% 20 10% 0 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 ADJUSTED OPERATING MARGIN ROCE 7.0% 19% CAGR 4.1% CAGR 4.2% 19.0 6.5% 18%
Slide 10: Cash Generation 2010–2017 (£M)
CASH GENERATION 2010–2017 (£M) FREE CASH ACQUISITION / CASH INFLOW / NET CAPEX DIVIDEND PAID FLOW (DISPOSAL) (OUTFLOW)* 2017 72.4 46.5 40.5 14.6 (29.2) 2016 83.4 33.5 – 14.6 35.3 2015 52.7 20.4 17.7 15.3 (0.7) Strong free cash flow 2014 59.1 27.4 14.4 12.7 4.6 Record capital 2013 49.0 30.5 5.8 11.4
Slide 11: Successful Refinancing of Banking Facility on Improved Terms
SUCCESSFUL REFINANCING OF BANKING FACILITY ON IMPROVED TERMS REVOLVING CREDIT FACILITY (£M) REFINANCING 40 Completed 17th November 2016 30 ACCORDION COMMITTED New £160m revolving credit 120 160 facility with 4 major UK banks Includes committed overdraft of £20m OLD FACILITY NEW FACILITY Option to ac
Slide 12: Commercial Overview
COMMERCIAL OVERVIEW FULL YEAR REVIEW 2017 TRENDS CRANSWICK PERFORMANCE OUTLOOK Retailers Sustainable growth Poultry Consumers Inflation Strategic partnerships Out of home Innovation Innovation 19 75 Year ended 31 March 2017 12
Slide 13: Market Trends
MARKET TRENDS CONSUMER INSIGHT & RETAILER PERFORMANCE RETAILERS CONSUMERS OUT OF HOME Recovery in Top 4 Convenience Continued growth Inflation management Health Forecourts New solutions Inspiration New product solutions 19 75 Year ended 31 March 2017 13
Slide 14: Cranswick Performance
CRANSWICK PERFORMANCE GROWTH OUTPACING THE MARKET IN ALL CATEGORIES SUSTAINED GROWTH INFLATION INNOVATION Cooked meats H1 deflation Trend led Sausages H2 inflation Increased channels Bacon Ongoing management Indirect supply 19 75 Year ended 31 March 2017 14
Slide 15: Commercial Data
COMMERCIAL DATA CRANSWICK SALES MARKET* ANNUAL SALES 2016–17 ANNUAL SALES 2016–17 CHANGE CHANGE CATEGORY VALUE VOLUME VALUE VOLUME Fresh Pork (i) +2.1% -0.5% -7.7% -3.6% +8.4% Super premium Gourmet Products (ii) +16.4% +28.0% -2.5% +0.2% Convenience (iii) +20.3% +23.0% -1.0% -0.1% Poultry (iv) +17.7
Slide 16: Innovation: Meeting Consumer Needs
INNOVATION MEETING CONSUMER NEEDS Modern Modern Pork Modern Lunch Delicatessen Slow Cook Health Food on the Go & Sous Vide 19 75 Year ended 31 March 2017 16
Slide 17: Outlook
OUTLOOK LONG-TERM STRATEGIC GROWTH POULTRY STRATEGIC PARTNERSHIPS INNOVATION Business wins Strategic relationships Consumer focused Added value from Summer 2017 Bespoke supply chains Modern Investment plan Capital investment Relevant 19 75 Year ended 31 March 2017 17
Slide 18: Strategy & Business Model
STRATEGY & BUSINESS MODEL CONSOLIDATION DIVERSIFICATION INTERNATIONAL DRIVING THE CORE EXPANDING OUR OFFER DEVELOPING NEW OPPORTUNITIES STRATEGIC PILLARS GUIDING PRINCIPLES QUALITY VALUE SALES HIGH QUALITY OPERATING SUSTAINABILITY GROWTH PRODUCTS EXCELLENCE PEOPLE INNOVATION 19 75 Year ended 31 Marc
Slide 19: Consolidation
CONSOLIDATION DRIVING THE CORE BUSINESS SALES GROWTH HIGH QUALITY PRODUCTS OPERATING EXCELLENCE SUSTAINABILITY Entering new tiers Focus on premium Record capital expenditure Acquisition of Dunbia to enhance capability Ballymena Market share gains Business wins based on quality New £25m facility for
Slide 20: Diversification
DIVERSIFICATION SIGNIFICANT GROWTH POTENTIAL THROUGH POULTRY STRATEGY SALES GROWTH HIGH QUALITY PRODUCTS OPERATING EXCELLENCE SUSTAINABILITY Strong growth category Focus on premium tier Drive efficiency through Integrated farm to fork model supply chain New retail business From fresh to cooked added
Slide 21: International
INTERNATIONAL EXPANDING OUR FOOTPRINT SALES GROWTH HIGH QUALITY PRODUCTS OPERATING EXCELLENCE SUSTAINABILITY Strong export Price premium on Export 5th quarter Higher welfare sales growth quality products is a differentiator Maximise value of cuts Weaker sterling makes Investment in Norfolk Develop i
Slide 22: International: Strong Far East Revenue Growth
INTERNATIONAL STRONG FAR EAST REVENUE GROWTH FAR EAST EXPORT REVENUE A WIDE RANGE OF PRODUCTS SUPPLIED £M 50 45 49.5 40 35 30 33.1 25 25.7 20 20.7 15 10 5 0 FY14 FY15 FY16 FY17 Far East export sales up 49% China consumes over half the global pig meat produced Strong prices due to supply/demand imbal
Slide 23: Continued Capital Investment to Add Capacity, Drive Efficiency
CONTINUED CAPITAL INVESTMENT TO ADD CAPACITY, DRIVE EFFICIENCY & ENHANCE CAPABILITY FY17 TOTAL £47M FY18 GUIDANCE £70M DELIVERED ONGOING PROJECT BENEFIT PROJECT BENEFIT COOKED MEATS – HULL, Improved quality CONTINENTAL PRODUCTS – Increased capacity BARNSLEY & MILTON KEYNES Improved efficiency MANCHE
Slide 24: Record Capital Expenditure to Support Future Growth Pipeline
RECORD CAPITAL EXPENDITURE TO SUPPORT FUTURE GROWTH PIPELINE £M 70 70.0 60 50 47.0 40 34.3 30 30.0 27.7 27.7 20 21.1 21.2 17.8 18.3 10 0 2014 2015 2016 2017 2018F CAPITAL EXPENDITURE DEPRECIATION 19 75 Year ended 31 March 2017 24
Slide 25: Pig Prices & Market
PIG PRICES & MARKET PIG PRICE – UK & EU p/kg UK RETAIL AVERAGE PRICE (£/kg) 180 EU 170 FRESH £3.98 March 2017 SPP CHICKEN £4.23 March 2016 160 DAPP 150 FRESH £4.46 PORK 140 £4.67 130 FRESH £7.72 120 BEEF £7.94 110 100 FRESH £8.41 LAMB £7.98 90 80 2013 2014 2015 2016 2017 0.00 2.00 4.00 6.00 8.00 10.
Slide 26: Summary – A Year of Strategic Progress
SUMMARY – A YEAR OF STRATEGIC PROGRESS Strong Ongoing Positive Performance Investment Outlook Strong revenue & Acquisition of Pork & chicken earnings growth Crown Chicken competitively priced Strong balance sheet Acquisition of Gaining & cash generation Dunbia Ballymena market share Strong growth in
Slide 27: Disclaimer
DISCLAIMER Certain statements in this presentation are forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by those statements. F
Slide 28: Appendix: Corporate Activity
APPENDIX 1 CORPORATE ACTIVITY ACQUISITION OF SALE OF ACQUISITION OF CROWN CHICKEN SANDWICH BUSINESS DUNBIA BALLYMENA • Acquired 8th April 2016 • Sold to Greencore plc on • Acquired 16th November 2016 23rd July 2016 • Based in East Anglia • Leading Northern Irish pork • Net cash consideration of £15.
Slide 29: Appendix: Restatement of Income Statement
APPENDIX 2 RESTATEMENT OF INCOME STATEMENT 2017 2016 £M Continuing Total Continuing Total Revenue 1,245.1 1,263.8 1,016.3 1,069.6 Adjusted gross margin 1 12.8% 12.7% 13.4% 13.4% Adjusted operating profit 1, 2 76.1 76.5 65.1 66.2 Adjusted operating margin 1, 2 6.1% 6.0% 6.4% 6.2% Adjusted profit befo
Slide 30: Appendix: Adjusted & Reported Earnings
APPENDIX 3 ADJUSTED & REPORTED EARNINGS £M 2017 2016 Adjusted operating profit 76.1 65.1 Net IAS 41 movement 4.1 (1.0) Acquisition related amortisation (2.1) (1.4) Operating profit 78.1 62.7 Profit before tax 77.5 62.1 Profit after tax 62.4 49.1 Discontinued operations 4.8 (3.7) Profit for the year
Slide 31: Appendix: Tax & Earnings Per Share
APPENDIX 4 TAX & EARNINGS PER SHARE TAX EARNINGS PER SHARE % 2017 2016 PENCE 2017 2016 Headline tax rate 20.0 20.0 Adjusted (continuing) 120.9 102.8 Disallowed expenses 0.9 1.4 Acquisition related amortisation (4.2) (2.8) Deferred tax rate change – (0.7) Net IAS 41 movement 8.2 (1.9) Prior year adju