RESULTS FOR YEAR ENDED 31 MARCH 2016 AGENDA INTRODUCTION Martin - - PowerPoint PPT Presentation

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RESULTS FOR YEAR ENDED 31 MARCH 2016 AGENDA INTRODUCTION Martin - - PowerPoint PPT Presentation

Sep 17, 2022 44 likes •318 views

RESULTS FOR YEAR ENDED 31 MARCH 2016 AGENDA INTRODUCTION Martin Davey, Chairman HIGHLIGHTS Adam Couch, CEO FINANCIAL REVIEW Mark Bottomley, Finance Director COMMERCIAL REVIEW Jim Brisby, Commercial Director OPERATING & STRATEGIC

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SLIDE 1

RESULTS

FOR YEAR ENDED 31 MARCH 2016

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SLIDE 2 2 Year ended 31 March 2016 AGENDA 2 INTRODUCTION Martin Davey, Chairman HIGHLIGHTS Adam Couch, CEO FINANCIAL REVIEW Mark Bottomley, Finance Director COMMERCIAL REVIEW Jim Brisby, Commercial Director OPERATING & STRATEGIC REVIEW Adam Couch, CEO Q&A
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SLIDE 3 3 Year ended 31 March 2016 TRADING RECORD 1990-2016 26 years of unbroken dividend growth 1990-2016 1990-2016 1.4 1.7 2.2 2.3 3.0 3.1 4.0 5.0 7.1 9.3 11.7 17.5 19.8 21.2 21.6 31.1 32.7 33.0 43.8 0.9 47.3 45.6 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '14 '15 '16 £64m £116m £157m £313m £740m £1,003m £1,070m 49.1 52.2 57.8 65.7 34.7 34.0 37.5 3.3 3.8 4.0 4.1 4.3 4.6 5.1 5.8 6.8 7.5 8.3 10.8 12.0 13.2 14.5 16.5 18.1 19.9 21.7 25.0 27.5 28.5 30.0 2.8 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 32.0 '14 '15 '16 * Excludes IAS41 movement on biological assets and acquisition related amortisation in 2016 and 2015 and goodwill impairment in 2016 Revenue ADJUSTED PROFIT BEFORE TAX* (£m) DIVIDEND PER SHARE (pence)
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SLIDE 4 4 Year ended 31 March 2016 HIGHLIGHTS
  • Strong revenue and earnings growth
  • Adjusted operating margin up from 5.8% to 6.2%
  • Continued growth in Far East export sales
  • Post year end acquisition of Crown Chicken
  • £34 million capital investment across the
Group’s asset base to support future growth
  • Dividend up 10.3% to 37.5p per share
Compound annual growth rates to 31 March 2016 TURNOVER ADJUSTED PROFIT BEFORE TAX ADJUSTED EARNINGS PER SHARE DIVIDEND PER SHARE 9.5% PA 7.8% PA 7.4% PA 8.6% PA 10 YEAR RECORD
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SLIDE 5 5 Year ended 31 March 2016 FINANCIAL SUMMARY 1. Underlying revenue in both the current and prior fjnancial years excludes the contribution from Benson Park prior to 22 October and revenue from pig breeding, rearing and trading activities 2. Excludes IAS 41 movement on biological assets in 2016 and 2015 3. Excludes acquisition related amortisation in 2016 and 2015 and goodwill impairment in 2016 £m 2016 2015 % Change 1,069.6 1,003.3 1,032.3 985.6 13.4% 12.4% 66.2 58.7 6.2% 5.8% 65.7 57.8 104.7p 92.1p 37.5p 34.0p REVENUE ADJUSTED OPERATING MARGIN 2,3 ADJUSTED GROSS MARGIN 2 ADJUSTED EARNINGS PER SHARE 2,3 UNDERLYING REVENUE 1 ADJUSTED PROFIT BEFORE TAX 2,3 ADJUSTED OPERATING PROFIT 2,3 DIVIDEND PER SHARE 6.6% 4.7% 1.0% 12.8% 34 bps 13.7% 13.7% 10.3%
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SLIDE 6 6 Year ended 31 March 2016 6 TAX & EARNINGS PER SHARE % 2016 2015 CURRENT TAX RATE 20.0 21.0 DISALLOWED EXPENSES 1.4 0.9 (0.7) 0.1 GOODWILL IMPAIRMENT 1.6
  • DISALLOWABLES
0.3 (0.1) 22.6 21.9 Pence 2016 2015 ADJUSTED EARNINGS PER SHARE 104.7 92.1 ACQUISITION RELATED AMORTISATION (2.8) (1.4) NET IAS 41 MOVEMENT (1.9) (8.6) GOODWILL IMPAIRMENT (9.3)
  • TAX IMPACT
0.8 2.0 91.5 84.1 HEADLINE TAX RATE ADJUSTED EARNINGS PER SHARE ACQUISITION RELATED AMORTISATION NET IAS 41 MOVEMENT GOODWILL IMPAIRMENT TAX IMPACT DISALLOWED EXPENSES DEFERRED TAX RATE CHANGE GOODWILL IMPAIRMENT PRIOR YEAR ADJUSTMENTS EFFECTIVE TAX RATE REPORTED EARNINGS PER SHARE TAX EARNINGS PER SHARE
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SLIDE 7 7 Year ended 31 March 2016 CASH FLOW £m 2016 2015 97.8 67.1 (14.0) (12.7) 83.8 54.4 (33.7) (20.9) 0.2 0.5
  • (17.7)
(0.4) (0.9)
  • (0.8)
0.6 0.9 (14.6) (15.3) 35.9 0.2 17.8 (17.3) NET FUNDS / (DEBT) BRIDGE £m
  • 20
20 40 60 80 NET CAPEX £m FRESH PORK COOKED MEATS POULTRY SAUSAGE/BACON OTHER NET CAPEX 8.4 7.9 11.1 7.3 1.7 5.1 5.3 1.6 3.8 33.7 2.4 20.9 2016 2015 2 1 5 A d j u s t e d E B I T D A W
  • r
k i n g c a p i t a l T a x a t i
  • n
N e t c a p e x D i v i d e n d s O t h e r 2 1 6 (17.3) 87.4 TAX PAID NET CASH FROM OPERATING ACTIVITIES CASH GENERATED FROM OPERATIONS NET CAPITAL EXPENDITURE GOVERNMENT GRANTS RECEIVED INTEREST PAID ISSUE COSTS OF LONG-TERM BORROWINGS SHARE ISSUES DIVIDEND PAID NET CASH INFLOW ACQUISITIONS (NET) NET FUNDS / (DEBT) 9.0 14.0 33.7 14.6 17.8 1.0
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SLIDE 8 8 Year ended 31 March 2016 BALANCE SHEET KEY METRICS: 2016 2015 ROCE 18.5% 17.0% GEARING
  • 5%
INTEREST COVER 110x 60x 2.4x 2.5x £m 2016 2015 PROPERTY, PLANT AND EQUIPMENT 178.5 166.1 INTANGIBLE ASSETS 139.7 145.7 BIOLOGICAL ASSETS 11.0 11.8 WORKING CAPITAL 41.2 48.2 NET DEBT 17.8 (17.3) TAX, GRANTS, PROVISIONS, PENSIONS (20.2) (22.1) 368.0 332.4 PROPERTY, PLANT & EQUIPMENT INTANGIBLE ASSETS BIOLOGICAL ASSETS WORKING CAPITAL NET FUNDS / (DEBT) TAX, GRANTS, PROVISIONS, PENSIONS NET ASSETS GEARING ROCE1 INTEREST COVER DIVIDEND COVER (1.4) (4.6) (6.0) (2.9) (0.1) (4.0) (7.0) INVENTORIES ACQUISITION RELATED AMORTISATION TRADE & OTHER RECEIVABLES GOODWILL IMPAIRMENT - SANDWICHES TRADE & OTHER PAYABLES NET MOVEMENT NET MOVEMENT
  • 1. Adjusted operating profjt divided by sum of average net assets, net debt, pension liabilities and deferred tax
150 bps improvement in ROCE Strong improvement across all key metrics
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SLIDE 9 9 Year ended 31 March 2016 CASH GENERATION & BANKING FACILITY FREE CASH FLOW NET CAPEX ACQUISITION / (DISPOSAL) DIVIDEND PAID CASH* INFLOW / (OUTFLOW) 2016 83.4 33.5 – 14.6 35.3 2015 52.7 20.4 17.7 15.3 (0.7) 2014 59.1 27.4 14.4 12.7 4.6 2013 49.0 30.5 5.8 11.4 1.3 2012 43.4 19.9 (14.5) 11.8 26.2 2011 50.0 33.9
  • 10.5
5.6 2010 29.6 19.9 (8.1) 8.8 9.0 2009 39.9 20.7
  • 8.8
10.4 407.1 206.2 15.3 93.9 91.7 * Excludes the proceeds from the issue of share options
  • £120m revolving credit facility
with 3 major UK banks
  • Extending to July 2018
  • Unsecured
  • Headroom of £138m at
March 2016 CASH GENERATION 2009-2016 £m BANKING FACILITY NET FUNDS / (DEBT) PROFILE £m 2016 17.8 2015 (17.3) 2014 (17.0)
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SLIDE 10 10 Year ended 31 March 2016 COMMERCIAL REVIEW TRENDS CRANSWICK PERFORMANCE OUTLOOK
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SLIDE 11 11 Year ended 31 March 2016 ECONOMIC ENVIRONMENT
  • Base commodities
  • Increased competition
  • Increasing disposable income
  • Leisure spend
  • Big ticket items
  • Premium growth
  • Informed rational choices
  • Social media peer infmuence
  • Price / quality equation
PRAGMATIC SHOPPER DEFLATION TRADING ENVIRONMENT Focus on saving money in the next year Focus on quality in the next year SOURCE: IGD, December 2015 SHOPPERS LESS FOCUSED ON SAVING MONEY & QUALITY REMAINS IMPORTANT Sep 10 Nov 10 Nov 11 Nov 12 Nov 13 Nov 14 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 May 11 May 12 May 13 May 14 May 15 July 11 July 12 July 13 July 14 July 15 Sep 15 Nov 15 Sep 11 Sep 12 Sep 13 Sep 14 50% 45% 35% 25% 15% 10% 5% 40% 30% 20% 0%
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SLIDE 12 12 Year ended 31 March 2016 CONSUMER & SHOPPER DYNAMICS
  • Increased focus on health and well-being
  • Convenience and online growth
  • Eating out of home
  • Simpler pricing
  • Tesco ‘Farms’ range
  • Sainsbury’s resilience
  • Premium retailers
  • Premium ranges
  • Cranswick premium growth
PREMIUM GROWTH BIG 4 RETAILERS STABILISING CONSUMER BEHAVIOURS CHANGING
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SLIDE 13 13 Year ended 31 March 2016 PROTEIN TRENDS
  • Value +2.1% and volume +4.1%
  • Versatility and health benefjts
  • Most consumed protein out of home
  • Lower trip spend across the board
  • Increased perceptions of health
  • Increasing need for convenience and inspiration
  • Meat and poultry up by 3.4% volume
  • Total pork in growth of 1%
  • Supported by AHDB campaign
TOTAL PROTEIN BACK IN VOLUME GROWTH SHOPPERS POULTRY THE LARGEST CATEGORY SOURCE: Kantar Worldpanel 12 wk data to 27 March 2016
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SLIDE 14 14 Year ended 31 March 2016 STRONG VOLUME GROWTH PREMIUM GROWTH EATING OUT OF HOME
  • Partially offset by defmation
  • Market share gains
  • Pulled pork campaign
  • Overtrade in premium
  • Premium businesses in growth
  • Premium markets in growth
  • Poultry growth
  • Breakfast growth
  • Expanded customer base
CRANSWICK GROWTH
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SLIDE 15 15 Year ended 31 March 2016 COMMERCIAL DATA CATEGORY CRANSWICK SALES MARKET* Full Year 2015-16 CHANGE CHANGE Annual Sales 2015-16 NOTES: (i) Total Fresh Pork sales growth +9.1% (ii) Cooked Poultry sales growth since the anniversary of the acquisition of Benson Park on 22 October 2015 (iii) Super Premium Sausage category growth +3.7% (iv) Super Premium Bacon category growth +14.0% *SOURCE: Kantar Worldpanel 52 w/e 29 March 2016 FRESH PORK RETAIL SAUSAGE BACON & GAMMON COOKED MEATS CONTINENTAL PRODUCTS PASTRY SANDWICHES COOKED POULTRY +9.5% +30.8% +2.9% +23.7%
  • 3.9%
+11.2% +12.5% (ii) +1.1%
  • 8.9%
  • 4.9%
  • 7.2%
  • 4.3%
+4.6% +1.9% +2.2% +5.1% (iv) (iii) VALUE VOLUME VALUE VOLUME +16.7% +28.9% +0.6% +30.3%
  • 1.8%
+9.5% +5.2% +16.3%
  • 3.5%
  • 1.6%
  • 3.2%
  • 0.6%
  • 1.3%
+5.3% +3.6% +8.3% (i)
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SLIDE 16 16 Year ended 31 March 2016 2016-17 & BEYOND
  • Gaining market share
  • Major business wins
  • Potential of poultry strategy
SUSTAINED GROWTH INNOVATION PIPELINE SECURITY & STABILITY
  • Maintaining relevance in core
  • Sous vide and slow cook
  • Food on the Go concepts
  • Longer term deals and strategic relationships
  • Group wide pricing models
  • Stable commodities with modest infmation expected
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SLIDE 17 17 Year ended 31 March 2016 17 STRATEGY & BUSINESS MODEL BRITISH HERITAGE AUTHENTICALLY MADE ENTREPRENEURIAL SPIRIT COMMITTED TO TASTE OUR DIFFERENTIATORS GUIDING PRINCIPLES CONSOLIDATION Driving the core Market share gain Broadening the offer Keeping it relevant DIVERSIFICATION Expanding our ofger New products New proteins INTERNATIONAL Seeking new opportunities Export 5th quarter Added value International operations PILLARS OF GROWTH
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SLIDE 18 18 Year ended 31 March 2016 STRATEGIC PROGRESS SUPPLY CHAIN DEVELOPMENT INTERNATIONAL FACILITIES
  • Partial vertical integration
  • R&D investment
  • Dedicated supply chains
  • Continued growth in Far
East export sales
  • Additional certifjcation for China
  • Added value focus for EU
  • Over £200m invested in last 8 years
  • Ongoing investment plan
  • New capability and increased
capacity
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SLIDE 19 19 Year ended 31 March 2016
  • Making British more competitive
  • Integrated premium supply chains
  • 20% of pig supply in-house
VERTICAL INTEGRATION R&D INVESTMENT DEDICATED SUPPLY CHAINS
  • Farming development for indoor and outdoor
breeding systems
  • Feed and genetic research
  • Improves product quality and production effjciencies
  • Specifjc farms and pig breeds developed for
different customers
  • Creates point of difference for retailers
  • Secures long term supply agreements
SUPPLY CHAIN DEVELOPMENT
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SLIDE 20 20 Year ended 31 March 2016

24+23+8+7+13+6+23

£7.94 0.00 2.00 March 2016 March 2015 4.00 6.00 8.00 10.00 £4.23 £4.42 £4.67 £4.92 £7.98 FRESH CHICKEN FRESH PORK FRESH BEEF FRESH LAMB £7.94 £7.94 SOURCE: AHDB, 52 wk data to 25 April 2016 SOURCE: Kantar Worldpanel March 2016 DAPP SPP EU 28 DENMARK NETHERLANDS POLAND FRANCE SPAIN 20 40 60 120 100 80 UK 52 WK PIG REF PRICE p/kg PIG PRICE – UK & EU p/kg UK RETAIL AVERAGE PRICE (£/kg) EU 28 GERMANY FRESH POULTRY FRESH BEEF FRESH PORK FRESH LAMB FRESH BACON & GAMMON FRESH SAUSAGE SLICED COOKED MEATS PIG PRICES & MARKET EXPENDITURE SHARE 23% 22% 8% 6% 13% 6% 22%
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SLIDE 21 21 Year ended 31 March 2016 INTERNATIONAL
  • Opportunities for higher welfare pork
  • Added value sausage and bacon
  • UK pig price commands c10%
premium over EU price
  • USDA approval for our facilities
  • Ribs the primary focus for US market
  • Strong dollar makes exports more
competitive
  • Over 1,000T of product per week
to China
  • Further PRC Certifjcation granted
  • Strengthening of prices due to supply
and demand imbalance EUROPE FAR EAST USA
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SLIDE 22 22 Year ended 31 March 2016 FACILITIES PROJECT BENEFIT DELIVERED ONGOING PREMIUM POULTRY - Hull
  • Extension
  • Inline cooking equipment
GAMMON - Milton Keynes
  • Heat set gammon facility
CONTINENTAL PRODUCTS - Manchester
  • British charcuterie facility
FRESH PORK - Norfolk
  • Abattoir upgrade
COOKED MEATS - Hull, Barnsley
  • Site upgrades
& Milton Keynes SAUSAGES - Hull & Norfolk
  • Site upgrades
  • Increased capacity
  • Improved effjciency
  • Product differentiation
  • New capability
  • New market segment
  • Effjciency & competitive position
  • New capability
  • Product differentiation
  • Improved effjciency
  • Improved effjciency
  • Additional capacity
  • New capability
  • Improved quality
  • Improved effjciency
  • New capability
  • New capability
  • Improved effjciency
  • Additional capacity
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SLIDE 23 23 Year ended 31 March 2016
  • Acquired 8th April 2016
  • Based in East Anglia
  • Leading integrated poultry producer:
  • Breeds, rears and processes fresh chicken
  • Well invested and effjcient milling operation
  • Revenue of £83.8m and adjusted EBITDA of £6.6m
(year ended 31st December 2015)
  • Net cash consideration of £39.3m
  • Management team remains with the business
  • Acquisition is expected to be earnings enhancing
in FY17 ACQUISITION OF CROWN CHICKEN
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SLIDE 24 24 Year ended 31 March 2016 POULTRY STRATEGY DEVELOP MULTI-CHANNEL STRATEGY OPTIMISE THE VALUE OF INDIVIDUAL CUTS ECONOMIES OF SCALE & FIND OUR NICHE CAPITAL INVESTMENT MODEL OPTIMISE THE EFFICIENCY OF THE WHOLE VALUE CHAIN
  • Customer focus
  • Drive quality and consistency
  • Market insight
  • INNOVATE
  • Take preferred supplier and category captain status
  • Exploit the best markets for each
  • Premium
  • Welfare and CSR with supply chain
  • Capital investment required
  • Market is demanding higher quality
  • Technically more competent facilities
  • Benson Park
  • Feed mill
SUPPL Y CHAIN ESTABLISH COMPETITIVE ADVANTAGE LEAN PROCESSING EFFICIENT OPERATIONS OUR PRODUCTS DELIGHTING CUSTOMERS STRATEGICALLY ALIGNED CUSTOMER QUALITY INNOVATION PEOPLE VALUE THE CRANSWICK MODEL
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SLIDE 25 25 Year ended 31 March 2016 SUMMARY
  • Strong revenue and earnings growth
  • Strong balance sheet and
cash generation
  • Strong growth in Far East export sales
  • Acquisition of Crown Chicken
  • Ongoing investment in core asset base
  • Continued development of key
supply chains
  • Pork and chicken competitively priced
  • Gaining market share
  • Growth strategy on track
STRONG PERFORMANCE ONGOING INVESTMENT POSITIVE OUTLOOK
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SLIDE 26 26 Year ended 31 March 2016 Q&A

www.cranswick.plc.uk

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SLIDE 27 27 Year ended 31 March 2016 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. Forward looking statements regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. Accordingly undue reliance should not be placed on forward looking statements.