Strong Financial & Strategic Progress RESULTS FOR THE YEAR - - PowerPoint PPT Presentation

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Strong Financial & Strategic Progress RESULTS FOR THE YEAR - - PowerPoint PPT Presentation

Apr 19, 2023 341 likes •660 views

Strong Financial & Strategic Progress RESULTS FOR THE YEAR ENDED 31 MARCH 2017 19 75 Year ended 31 March 2017 1 AGENDA INTRODUCTION Martin Davey, Chairman HIGHLIGHTS Adam Couch, CEO FINANCIAL REVIEW Mark Bottomley, Finance Director

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SLIDE 1 19 75 1 Year ended 31 March 2017

Strong Financial & Strategic Progress

RESULTS FOR THE YEAR ENDED 31 MARCH 2017
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SLIDE 2 19 75 2 Year ended 31 March 2017 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

AGENDA

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SLIDE 3 19 75 3 Year ended 31 March 2017

HIGHLIGHTS

TOTAL VOLUME GROWTH RECORD PIG NUMBERS PROCESSED EXPORT SALES TO FAR EAST INVESTMENT IN ASSET BASE FOR FUTURE GROWTH +25% 2 2.7M +49% £47M REVENUE (£M)2 +22.5% 2017 2016 1,245.1 1,016.3 ADJUSTED EARNINGS PER SHARE (P)1,2 +17.6% 2017 2016 120.9 102.8 FREE CASH FLOW (£M)
  • 13.2%
2017 2016 72.4 83.4 ADJUSTED PROFIT BEFORE TAX (£M)1,2 +17.2% 2017 2016 75.5 64.4 DIVIDEND PER SHARE (P) +17.6% 2017 2016 44.1 37.5 NET (DEBT)/FUNDS (£M)
  • £28.8M
(11.0) 2017 17.8 2016 1. Excludes IAS41 movements on biological assets and acquisition related amortisation in 2017 and 2016
  • 2. 2016 results have been restated to exclude the sandwich business, which was sold in July 2016 and is now treated as discontinued
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SLIDE 4 19 75 4 Year ended 31 March 2017 DIVIDEND PER SHARE (pence) ADJUSTED PROFIT BEFORE TAX 1,2 (£M) £64m 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 32.733.0 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 £116m £157m £313m £740m 49.1 52.2 57.8 64.4 '17 £1,245m £1,005m 75.5 34.7 REVENUE 2 27 YEARS OF UNBROKEN DIVIDEND GROWTH 1. Excludes IAS41 movements on biological assets and acquisition related amortisation in 2017 and 2016
  • 2. 2016 results have been restated to exclude the sandwich business, which was sold in July 2016 and
is now treated as discontinued

TRADING RECORD

1990 – 2017 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 '17 44.1
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SLIDE 5 19 75 5 Year ended 31 March 2017

HIGHLIGHTS

  • Strong revenue and earnings growth
  • Pig price infmation 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
Compound annual growth rates to 31 March 2017 REVENUE 9.3% PA ADJUSTED EARNINGS PER SHARE 9.2% PA ADJUSTED PROFIT BEFORE TAX 8.7% PA DIVIDEND PER SHARE 9.3% PA 10 YEAR RECORD
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SLIDE 6 19 75 6 Year ended 31 March 2017 1. Like-for-like revenue excludes the contribution from Crown Chicken and Ballymena in the current year
  • 2. Excludes IAS 41 movement on biological assets in both years
  • 3. Excludes acquisition related amortisation in both years

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 profjt 2, 3 76.1 65.1 17.0% Adjusted operating margin 2, 3 6.1% 6.4% 29bps Adjusted profjt before tax 2, 3 75.5 64.4 17.2% Adjusted earnings per share 2, 3 120.9p 102.8p 17.6% Dividend per share 44.1p 37.5p 17.6%
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SLIDE 7 19 75 7 Year ended 31 March 2017 £M 2017 2016 Cash generated from operations 87.7 97.8 Tax paid (14.8) (14.0) Net cash from operating activities 72.9 83.8 Net capital expenditure (46.5) (33.7) Government grants received – 0.2 Acquisitions (56.0) – Disposals 15.5 – Interest paid (0.5) (0.4) Share issues 0.8 0.6 Dividend paid (14.6) (14.6) Net cash (outfmow) / infmow (28.4) 35.9 Net (debt) / funds (11.0) 17.8 NET CAPEX (£M) 2017 2016 Fresh pork 11.1 9.1 Convenience 23.9 12.1 Gourmet products 7.4 6.5 Poultry 3.9 5.1 Other 0.2 0.9 Net capex 46.5 33.7 NET (DEBT) / FUNDS BRIDGE (£M) A d j u s t e d E B I T D A 100 120 140 80 60 40 20
  • 20
2 1 6 W
  • r
k i n g c a p i t a l T a x a t i
  • n
A c q u i s i t i
  • n
s / d i s p
  • s
a l s N e t c a p e x D i v i d e n d s O t h e r 2 1 7 17.8 40.5 18.6 14.8 46.5 2.5 11.0 14.6 103.7

CASH FLOW

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SLIDE 8 19 75 8 Year ended 31 March 2017 £M 2017 2016 Property, plant & equipment 215.7 178.5 Intangible assets 158.5 139.7 Biological assets 19.6 11.0 Working capital 68.3 41.2 Net (debt) / funds (11.0) 17.8 Tax, grants, provisions, pensions (29.7) (20.2) Net assets 421.4 368.0 KEY METRICS 2017 2016 ROCE 1 19.0% 18.2% Gearing 3% – Interest cover 122x 98x Dividend cover 2 2.7x 2.7x Acquired goodwill 23.3 Acquired customer relationships 4.6 Acquisition related amortisation (2.1) Sale of sandwich business (7.0) Net movement 18.8 Acquisitions / disposals 5.4 Inventories 13.7 Receivables 26.6 Payables (18.6) Net movement 27.1 1. Adjusted operating profit divided by sum of average net assets, net debt, pension liabilities & deferred tax
  • 2. On adjusted profit for the year from continuing operations
81 bps y-o-y improvement in ROCE

BALANCE SHEET

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SLIDE 9 19 75 9 Year ended 31 March 2017

POSITIVE 4 YEAR CAGR ACROSS KEY METRICS

FY14 FY16 FY15 FY17 10% 12% 11% 13% 14% CAGR 2.7% CAGR 4.1% CAGR 13.3% CAGR 4.2% ADJUSTED OPERATING MARGIN ADJUSTED GROSS MARGIN ROCE ADJUSTED EBITDA (£M) FY14 FY16 FY15 FY17 5.0% 6.0% 5.5% 6.5% 7.0% FY14 FY16 FY15 FY17 16% 17% 18% 19% FY17 60 40 20 80 100 120 FY14 FY15 FY16 11.8 5.4 16.8 12.4 5.8 17.0 13.4 6.4 18.2 12.8 6.1 19.0 71.3 77.0 85.9 103.7
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SLIDE 10 19 75 10 Year ended 31 March 2017 FREE CASH FLOW NET CAPEX ACQUISITION / (DISPOSAL) DIVIDEND PAID CASH INFLOW / (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) 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 9.0 439.6 232.0 55.8 99.7 52.1 * Excludes the proceeds from the issue of share options

CASH GENERATION 2010–2017 (£M)

Strong free cash fmow Record capital expenditure Strategically important corporate activity
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SLIDE 11 19 75 11 Year ended 31 March 2017 ACCORDION

SUCCESSFUL REFINANCING OF BANKING FACILITY ON IMPROVED TERMS

REFINANCING Completed 17th November 2016 New £160m revolving credit facility with 4 major UK banks Includes committed overdraft of £20m Option to access a further £40m
  • n the same improved terms
To November 2021 with opportunity to extend for a further two years Unsecured COMMITTED (11.0) 17.8 (17.3) OLD FACILITY NEW FACILITY 120 160 30 40 2015 2016 2017 REVOLVING CREDIT FACILITY (£M) NET FUNDS / (DEBT) PROFILE (£M)
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SLIDE 12 19 75 12 Year ended 31 March 2017 CRANSWICK PERFORMANCE Sustainable growth Infmation Innovation TRENDS Retailers Consumers Out of home OUTLOOK Poultry Strategic partnerships Innovation

COMMERCIAL OVERVIEW

FULL YEAR REVIEW 2017
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SLIDE 13 19 75 13 Year ended 31 March 2017 RETAILERS Recovery in Top 4 Infmation management New solutions CONSUMERS Convenience Health Inspiration OUT OF HOME Continued growth Forecourts New product solutions

MARKET TRENDS

CONSUMER INSIGHT & RETAILER PERFORMANCE
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SLIDE 14 19 75 14 Year ended 31 March 2017 INFLATION H1 defmation H2 infmation Ongoing management SUSTAINED GROWTH Cooked meats Sausages Bacon INNOVATION Trend led Increased channels Indirect supply

CRANSWICK PERFORMANCE

GROWTH OUTPACING THE MARKET IN ALL CATEGORIES
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SLIDE 15 19 75 15 Year ended 31 March 2017 *SOURCE: Kantar Worldpanel, 52 w/e 26 March 2017

COMMERCIAL DATA

NOTES: (i) Like-for-like Fresh Pork sales exclude the contribution from Ballymena. Including Ballymena, total Fresh Pork sales growth was +6.7%. Fresh Pork retail sales -3.9%, volume -6.4% (ii) Gourmet Products comprises Sausage, Bacon and Pastry (iii) Convenience comprises Cooked Meats and Continental Products (iv) Poultry comprises Fresh and Cooked Poultry. Like-for-like Poultry sales exclude the contribution from Crown Chicken. Including Crown Chicken, total Poultry sales growth was +181% CRANSWICK SALES ANNUAL SALES 2016–17 MARKET* ANNUAL SALES 2016–17 CATEGORY CHANGE CHANGE VALUE VOLUME VALUE VOLUME Fresh Pork (i) +2.1%
  • 0.5%
  • 7.7%
  • 3.6%
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% +25.6% +1.0% +6.0% Super premium +8.4%
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SLIDE 16 19 75 16 Year ended 31 March 2017

Food on the Go Modern Lunch Modern Delicatessen Slow Cook & Sous Vide Health Modern Pork

INNOVATION

MEETING CONSUMER NEEDS
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SLIDE 17 19 75 17 Year ended 31 March 2017 STRATEGIC PARTNERSHIPS Strategic relationships Bespoke supply chains Capital investment POULTRY Business wins Added value from Summer 2017 Investment plan INNOVATION Consumer focused Modern Relevant

OUTLOOK

LONG-TERM STRATEGIC GROWTH
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SLIDE 18 19 75 18 Year ended 31 March 2017 CONSOLIDATION DRIVING THE CORE DIVERSIFICATION EXPANDING OUR OFFER INTERNATIONAL DEVELOPING NEW OPPORTUNITIES GUIDING PRINCIPLES STRATEGIC PILLARS HIGH QUALITY PRODUCTS SALES GROWTH SUSTAINABILITY QUALITY PEOPLE VALUE INNOVATION OPERATING EXCELLENCE

STRATEGY & BUSINESS MODEL

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SLIDE 19 19 75 19 Year ended 31 March 2017 SALES GROWTH HIGH QUALITY PRODUCTS OPERATING EXCELLENCE SUSTAINABILITY Entering new tiers Market share gains Long-term relationships Acquisition of Dunbia Ballymena Strengthens UK pork processing business Further supply chain security Record capital expenditure to enhance capability New £25m facility for Continental Fine Foods Stronger throughput drives
  • perating effjciencies
Focus on premium Business wins based
  • n quality
Strong innovation pipeline DRIVING THE CORE BUSINESS

CONSOLIDATION

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SLIDE 20 19 75 20 Year ended 31 March 2017 SALES GROWTH HIGH QUALITY PRODUCTS OPERATING EXCELLENCE SUSTAINABILITY Strong growth category New retail business New product and category opportunities Integrated supply chain Low food miles adding to product quality Strong environmental credentials Drive effjciency through farm to fork model Optimise value of whole birds and portions Stronger throughput drives
  • perating effjciencies
Focus on premium tier From fresh to cooked added value Retail and
  • ut-of-home ranges
SIGNIFICANT GROWTH POTENTIAL THROUGH POULTRY STRATEGY

DIVERSIFICATION

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SLIDE 21 19 75 21 Year ended 31 March 2017 SALES GROWTH HIGH QUALITY PRODUCTS OPERATING EXCELLENCE SUSTAINABILITY Strong export sales growth Weaker sterling makes exports more competitive Ballymena to drive further export growth Higher welfare is a difgerentiator Develop international
  • perations
Long-term market growth Export 5th quarter Maximise value of cuts Develop value added business Price premium on quality products Investment in Norfolk facility to meet USDA standards New product development EXPANDING OUR FOOTPRINT

INTERNATIONAL

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SLIDE 22 19 75 22 Year ended 31 March 2017 Far East export sales up 49% Strong prices due to supply/demand imbalance Over 1,000T of product per week shipped to China China consumes over half the global pig meat produced Leveraging trust in UK products Ballymena will drive further export growth FAR EAST EXPORT REVENUE A WIDE RANGE OF PRODUCTS SUPPLIED FY17 15 10 5 20 35 40 45 50 30 25 £M FY14 FY15 FY16 33.1 25.7 20.7 49.5 STRONG FAR EAST REVENUE GROWTH

INTERNATIONAL

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SLIDE 23 19 75 23 Year ended 31 March 2017 FY18 GUIDANCE £70M FY17 TOTAL £47M PROJECT BENEFIT COOKED MEATS – HULL, BARNSLEY & MILTON KEYNES Site upgrades (£16m) Improved quality Improved effjciency New capability FRESH PORK – NORFOLK Abattoir upgrade (£6m) Improved effjciency Additional capacity New capability SAUSAGES – HULL & NORFOLK Site upgrades (£6m) New capability Improved effjciency Additional capacity PROJECT BENEFIT CONTINENTAL PRODUCTS – MANCHESTER New site (£25m) Increased capacity Improved effjciency Product difgerentiation FRESH PORK – HULL Extension (£5m) Increased capacity Improved effjciency FRESH PORK – BALLYMENA Site upgrade (£2m) Increased capacity Improved effjciency

CONTINUED CAPITAL INVESTMENT TO ADD CAPACITY, DRIVE EFFICIENCY & ENHANCE CAPABILITY

DELIVERED ONGOING
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SLIDE 24 19 75 24 Year ended 31 March 2017

RECORD CAPITAL EXPENDITURE TO SUPPORT FUTURE GROWTH PIPELINE

£M 50 60 70 40 30 20 10 2014 2015 2016 2017 2018F CAPITAL EXPENDITURE DEPRECIATION 47.0 27.7 27.7 34.3 17.8 18.3 21.2 70.0 30.0 21.1
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SLIDE 25 19 75 25 Year ended 31 March 2017 FRESH POULTRY FRESH BEEF FRESH PORK FRESH LAMB FRESH BACON & GAMMON FRESH SAUSAGE SLICED COOKED MEATS

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

23% 23% 8% 6% 12% 6% 22% £7.72 0.00 2.00 March 2017 March 2016 4.00 6.00 8.00 10.00 £3.98 £4.23 £4.46 £4.67 £8.41 FRESH CHICKEN FRESH PORK FRESH BEEF FRESH LAMB £7.94 £7.98 SOURCE: Kantar Worldpanel, 52 week data to 26 March 2017 UK GERMANY EU 28 DENMARK POLAND SPAIN FRANCE NETHERLANDS 20 40 60 80 100 120 140 SOURCE: AHDB, 52 week data to 10 April 2017 EXPENDITURE SHARE PIG PRICE – UK & EU p/kg 52 WEEK PIG REF PRICE p/kg

PIG PRICES & MARKET

UK RETAIL AVERAGE PRICE (£/kg) 2017 2016 2015 2014 2013 120 150 170 130 160 180 110 140 100 90 80 EU SPP DAPP
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SLIDE 26 19 75 26 Year ended 31 March 2017 Strong revenue & earnings growth Strong balance sheet & cash generation Strong growth in Far East export sales Acquisition of Crown Chicken Acquisition of Dunbia Ballymena Record investment in core asset base Pork & chicken competitively priced Gaining market share Growth strategy
  • n track

Strong Performance Ongoing Investment Positive Outlook

SUMMARY – A YEAR OF STRATEGIC PROGRESS

SALES GROWTH OPERATING EXCELLENCE HIGH QUALITY PRODUCTS SUSTAINABILITY
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SLIDE 27 19 75 27 Year ended 31 March 2017 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 difger 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.

DISCLAIMER

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SLIDE 28 19 75 28 Year ended 31 March 2017

APPENDIX 1

CORPORATE ACTIVITY ACQUISITION OF CROWN CHICKEN
  • 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
  • f £6.6m (year ended 31st December 2015)
  • Net cash consideration of £39.4m
  • Management team remains
with the business
  • Earnings enhancing in FY17
SALE OF SANDWICH BUSINESS
  • Sold to Greencore plc on
23rd July 2016
  • Net cash consideration of £15.7m
  • Revenue of £54m
(year to 31st March 2016)
  • Supports the Group’s
strategy of focusing on its high-growth, premium product categories
  • Ongoing development of ‘Food
to Go’ ofger across core product ranges remains central to the Group’s future growth strategy ACQUISITION OF DUNBIA BALLYMENA
  • Acquired 16th November 2016
  • Leading Northern Irish pork
processing business
  • Modern, purpose-built facility in
County Antrim, Northern Ireland
  • Strategic, well-established
supply chain
  • Revenue of £72.4m in year
ended 29th March 2016
  • Initial net cash consideration
  • f £16.7m, with further contingent
consideration of £1.25m
  • Earnings enhancing in FY17
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SLIDE 29 19 75 29 Year ended 31 March 2017 £M 2017 2016 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 profjt 1, 2 76.1 76.5 65.1 66.2 Adjusted operating margin 1, 2 6.1% 6.0% 6.4% 6.2% Adjusted profjt before tax 1, 2 75.5 75.9 64.4 65.7 Adjusted earnings per share 1, 2 120.9p 121.5p 102.8p 104.7p 1 Excludes IAS41 movement on biological assets in both years 2 Excludes acquisition related amortisation in both years

APPENDIX 2

RESTATEMENT OF INCOME STATEMENT
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SLIDE 30 19 75 30 Year ended 31 March 2017 £M 2017 2016 Adjusted operating profjt 76.1 65.1 Net IAS 41 movement 4.1 (1.0) Acquisition related amortisation (2.1) (1.4) Operating profjt 78.1 62.7 Profjt before tax 77.5 62.1 Profjt after tax 62.4 49.1 Discontinued operations 4.8 (3.7) Profjt for the year 67.2 45.4

APPENDIX 3

ADJUSTED & REPORTED EARNINGS
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SLIDE 31 19 75 31 Year ended 31 March 2017 TAX % 2017 2016 Headline tax rate 20.0 20.0 Disallowed expenses 0.9 1.4 Deferred tax rate change – (0.7) Prior year adjustments (1.4) 0.3 Efgective tax rate (continuing) 19.5 21.0 EARNINGS PER SHARE PENCE 2017 2016 Adjusted (continuing) 120.9 102.8 Acquisition related amortisation (4.2) (2.8) Net IAS 41 movement 8.2 (1.9) Tax impact (0.7) 0.8 On profjt for the year (continuing) 124.2 98.9

APPENDIX 4

TAX & EARNINGS PER SHARE