Interim Results FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019
AGENDA INTRODUCTION & HIGHLIGHTS Adam Couch, CEO FINANCIAL REVIEW Mark Bottomley, Finance Director COMMERCIAL UPDATE Jim Brisby, Commercial Director OPERATING & STRATEGIC REVIEW Adam Couch, CEO Q&A 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 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. 19 75 Interim results – 6 months ended 30 September 2019 2
H1 HIGHLIGHTS • Positive start to the year • Reported revenue ahead by 7.1% • Total export revenue up 65%, including Far East export revenue 94% ahead • Commissioning of world-class £75 million primary poultry processing facility in Eye, Sufgolk now under way • Record H1 capital expenditure of £56 million to provide the platform for future growth • Acquisition of Katsouris Brothers, further broadening our non-meat activities • Dividend increased 5% to 16.7p per share 10 YEAR RECORD Compound annual growth rates to 31 March 2019 REVENUE ADJUSTED PROFIT ADJUSTED EARNINGS DIVIDEND BEFORE TAX PER SHARE PER SHARE +10.2% +9.0% +10.4% +9.9% 19 75 Interim results – 6 months ended 30 September 2019 3
TRADING RECORD 1990 – 2019 ADJUSTED PROFIT BEFORE TAX 1,2 (£M) DIVIDEND PER SHARE (pence) 55.9 £1,437m 90.2 92.0 53.7 29 YEARS OF UNBROKEN DIVIDEND GROWTH 75.5 44.1 64.4 37.5 £1,005m 57.8 34.0 52.2 32.0 49.1 30.0 28.5 47.3 27.5 45.6 43.8 25.0 £740m 21.7 34.7 REVENUE 19.9 32.7 33.0 18.1 31.1 16.5 14.5 13.2 21.2 21.6 12.0 19.8 £313m 10.8 17.5 8.3 7.5 6.8 11.7 5.8 £157m 5.1 £116m 4.6 9.3 4.1 4.3 7.1 4.0 3.8 3.3 £64m 2.2 2.3 3.0 3.1 4.0 5.0 2.8 1.4 1.7 0.9 '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 '15 '16 '17 '18 '19 '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 '15 '16 '17 '18 '19 1. Excludes IAS41 movements on biological assets and acquisition related amortisation in 2019 and 2018 2. 2018 adjusted for 53rd week 19 75 Interim results – 6 months ended 30 September 2019 4
Financial Review MARK BOTTOMLEY FINANCE DIRECTOR
H1 P&L SUMMARY £M H1 FY20 H1 FY19 % CHANGE 770.0 Revenue 719.2 +7.1% Like-for-like revenue growth1 +5.4% 13.0% Adjusted gross margin2 12.4% +60bps Adjusted operating profjt2,3 47.4 44.9 +5.6% Adjusted operating margin2,3 6.2% 6.2% – 46.4 Adjusted profjt before tax2,3 44.8 +3.6% Efgective tax rate 20.1% 20.2% -10bps Adjusted EPS (pence)2,3 71.6 70.0 +2.3% Reported EPS (pence) 73.2 66.4 +10.2% 16.7 Interim DPS (pence) 15.9 +5.0% 1. Like-for-like revenue excludes the contribution from Katsouris Brothers Limited 2. Excludes IAS 41 movement on biological assets in both years 3. Excludes acquisition related amortisation in both years 19 75 Interim results – 6 months ended 30 September 2019 6
H1 REVENUE REVENUE BRIDGE (£M) • Acquisition of Katsouris Brothers Limited adds £12.3 million to revenue +1.7% +0.6% +4.8% • Number of pigs processed during the period increased 9% year-on-year 34.2 • Strong wholesale and export pricing alongside an increase in added-value products drove price/mix benefjt 12.3 4.3 770.0 +7.1% CATEGORY PROFILE % OF GROUP REVENUE 719.2 14% 34% Fresh Pork 16% Convenience Gourmet Products Poultry 36% H1 FY19 KATSOURIS UNDERLYING UNDERLYING H1 FY20 VOLUME PRICE/MIX 19 75 Interim results – 6 months ended 30 September 2019 7
H1 PROFIT & MARGIN PERFORMANCE PROFIT PERFORMANCE 1,2 (£M) MARGIN PERFORMANCE 1,2 (%) H1 FY19 +50bps +14.1% 80 10 H1 FY20 H1 FY19 H1 FY20 70 8 60 +5.6% IN LINE 50 6 58.7 67.0 44.9 47.4 8.2% 8.7% 6.2% 6.2% 40 4 30 20 2 10 0 0 EBITDA OPERATING PROFIT EBITDA MARGIN OPERATING MARGIN 1. Includes fjrst time recognition of IFRS 16 Leases in 2019 which increases EBITDA by £4.1m and increases operating profjt by £0.5m. Prior year comparatives have not been restated 2. Excludes IAS 41 movement on biological assets and acquisition related amortisation in both years 19 75 Interim results – 6 months ended 30 September 2019 8
H1 NET DEBT BRIDGE 80 11.9 67.0 60 15.9 40 52.0 20 6.3 0 (67.2) (113.7) 15.6 (20) £M 41.3 (40) 3.8 (60) 46.5 (80) (100) (120) March Adjusted Working Taxation Net capex Dividends Acquisition Other Like-for-like IFRS 16 September 2019 EBITDA capital net debt 2019 19 75 Interim results – 6 months ended 30 September 2019 9
H1 CAPITAL EXPENDITURE NET CAPEX (£M) H1 FY20 H1 FY19 Fresh Pork 5.1 13.0 • £4.2 million invested across three pork primary processing facilities including £0.8 million on refrigeration at Hull facility Convenience 21.8 14.4 • £0.9 million invested in pig farming operations Gourmet Products 1.8 0.9 • £13.9 million extension to Sutton Fields Cooked Meats facility Poultry 27.0 12.5 • £24.1 million spent in the period on new poultry primary processing facility at Eye, Sufgolk Gross Capex 55.7 40.8 • Capex guidance for FY20 of c£100 million Fixed Asset Sale Proceeds (3.7) (0.3) Net Capex 52.0 40.5 19 75 Interim results – 6 months ended 30 September 2019 10
H1 BALANCE SHEET BALANCE SHEET (£M) H1 FY20 H1 FY19 WORKING CAPITAL MOVEMENT (£M) Property, plant & equipment 1 383.2 263.5 Inventories 8.0 Intangible assets 190.6 155.1 Receivables 32.1 Biological assets 26.2 19.6 Payables (28.3) Working capital 92.4 80.6 Net movement 11.8 Net (debt)/funds 1 (113.7) 2.2 Katsouris acquisition (7.7) Tax, grants, provisions, pensions (18.2) (17.6) Like-for-like movement 4.1 Net assets 1 560.5 503.4 KEY METRICS H1 FY20 H1 FY19 ROCE is lower as expected due to the uplift in ROCE 1,2 15.9% 18.9% capital expenditure and the impact of IFRS 16. Gearing 1 20.3% – 1. Includes fjrst time recognition of IFRS 16 Leases in 2019 which increases net debt by £46.5m, and increases property, plant and equipment by £46.4m. Prior year comparatives have not been restated 2. Adjusted operating profjt divided by the sum of average opening and closing net assets, net debt/ (funds), pension liability and deferred tax 19 75 Interim results – 6 months ended 30 September 2019 11
IFRS 16 IMPACT H1 IFRS 16 IMPACT ON £M FINANCIAL STATEMENTS No material impact to PBT or Net Assets Impact on total assets 46.4 • Right-of-use assets and lease liabilities have been recognised on the balance sheet Impact on total liabilities (46.5) Overall efgect on net assets (0.1) • Lease liabilities were measured at the present value of the remaining lease payments, discounted using Remove rental costs 4.1 the Group’s incremental borrowing rate as of 1 April 2019. The weighted average Group incremental Add depreciation (3.6) borrowing rate applied to the lease liabilities on Impact on operating profjt 0.5 1 April 2019 was 3.0% Add lease interest costs (0.6) The Group used the modifjed retrospective, asset Impact on PBT (0.1) equals liability, transition approach: Impact on net debt • No impact to previously reported equity (46.5) • No restatement of the previous reported period Impact on EPS (pence) (0.2) 19 75 Interim results – 6 months ended 30 September 2019 12
Commercial Update JIM BRISBY GROUP COMMERCIAL DIRECTOR
GROCERY MARKET OVERVIEW 25 25+14+14+1414+9+7+5+5+5+3+2+15+15+A TOTAL GROCERY MARKET SHARE (%) • Total grocery market growth at 1.4% (worth £1.6BN) • Top 4 performance remains subdued 2% OTHER 14% 24% • Discounter growth continues through penetration 3% gains and store openings 5% • Consumer drivers remain focused around premium, 5% convenience and health 13% 5% 7% TOTAL OWN LABEL GROWTH 13% 9% ECONOMY TIER STANDARD TIER PREMIUM TIER +4.3% +1.3% +5.9% SOURCE: Kantar Worldpanel 52 w/e 6 October 2019 TOTAL GROCERY £ GROWTH (%) DISRUPTING THE RETAIL LANDSCAPE +£1.3BN 12 LOW CONSUMER 10 9.5% CONFIDENCE 8 8.4% 6 +£0.1BN -£0.3BN 4 3.4% 2 0.7% 0.5% -0.3% -0.5% -0.6% -0.9% -0.9% 1.4% 0 -2 TOTAL ALDI LIDL CO-OP MARKET ICELAND ASDA TESCO SAINSBURY’S M&S MORRISONS WAITROSE SOURCE: Kantar Worldpanel 52 w/e 6 October 2019 19 75 Interim results – 6 months ended 30 September 2019 14
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