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 REVIEW Adam Couch, CEO Q&A 2 Year ended 31 March 2016 2
TRADING RECORD 1990-2016 ADJUSTED PROFIT BEFORE TAX* (£m) DIVIDEND PER SHARE (pence) 1990-2016 1990-2016 65.7 37.5 £1,070m 34.0 26 years of unbroken 57.8 £1,003m 32.0 dividend growth 30.0 52.2 49.1 28.5 27.5 47.3 25.0 45.6 43.8 £740m 21.7 19.9 34.7 18.1 32.7 33.0 31.1 16.5 14.5 13.2 12.0 21.2 21.6 10.8 19.8 £313m Revenue 17.5 8.3 7.5 6.8 11.7 5.8 3.3 3.8 4.0 4.1 4.3 4.6 5.1 £157m £116m 7.1 9.3 2.8 £64m 5.0 4.0 2.2 2.3 3.0 3.1 1.7 1.4 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 '14 '15 '16 '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 * Excludes IAS41 movement on biological assets and acquisition related amortisation in 2016 and 2015 and goodwill impairment in 2016 3 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 10 YEAR RECORD Compound annual growth rates to 31 March 2016 TURNOVER ADJUSTED PROFIT ADJUSTED EARNINGS DIVIDEND BEFORE TAX PER SHARE PER SHARE 9.5% 7.8% 7.4% 8.6% PA PA PA PA 4 Year ended 31 March 2016
FINANCIAL SUMMARY £m 2016 2015 % Change 6.6% REVENUE 1,069.6 1,003.3 4.7% 1,032.3 985.6 UNDERLYING REVENUE 1 1.0% 13.4% 12.4% ADJUSTED GROSS MARGIN 2 12.8% 66.2 58.7 ADJUSTED OPERATING PROFIT 2,3 ADJUSTED OPERATING MARGIN 2,3 6.2% 5.8% 34 bps 65.7 57.8 ADJUSTED PROFIT BEFORE TAX 2,3 13.7% 104.7p 92.1p ADJUSTED EARNINGS PER SHARE 2,3 13.7% 37.5p 34.0p DIVIDEND PER SHARE 10.3% 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 5 Year ended 31 March 2016
TAX & EARNINGS PER SHARE TAX EARNINGS PER SHARE % 2016 2015 Pence 2016 2015 CURRENT TAX RATE HEADLINE TAX RATE 20.0 21.0 ADJUSTED EARNINGS PER SHARE 104.7 92.1 ADJUSTED EARNINGS PER SHARE DISALLOWED EXPENSES DISALLOWED EXPENSES 1.4 0.9 ACQUISITION RELATED AMORTISATION (2.8) (1.4) ACQUISITION RELATED AMORTISATION DEFERRED TAX RATE CHANGE (0.7) 0.1 NET IAS 41 MOVEMENT (1.9) (8.6) NET IAS 41 MOVEMENT GOODWILL IMPAIRMENT GOODWILL IMPAIRMENT 1.6 - GOODWILL IMPAIRMENT (9.3) - GOODWILL IMPAIRMENT PRIOR YEAR ADJUSTMENTS 0.3 (0.1) TAX IMPACT 0.8 2.0 DISALLOWABLES TAX IMPACT EFFECTIVE TAX RATE 22.6 21.9 REPORTED EARNINGS PER SHARE 91.5 84.1 6 6 Year ended 31 March 2016
CASH FLOW £m 2016 2015 97.8 67.1 CASH GENERATED FROM OPERATIONS NET CAPEX £m 2016 2015 8.4 7.9 FRESH PORK (14.0) (12.7) TAX PAID 11.1 7.3 COOKED MEATS 83.8 54.4 NET CASH FROM OPERATING ACTIVITIES 5.1 1.7 POULTRY 5.3 1.6 SAUSAGE/BACON (33.7) (20.9) NET CAPITAL EXPENDITURE OTHER 3.8 2.4 0.2 0.5 GOVERNMENT GRANTS RECEIVED 33.7 20.9 NET CAPEX - (17.7) ACQUISITIONS (NET) (0.4) (0.9) INTEREST PAID NET FUNDS / (DEBT) BRIDGE £m - (0.8) ISSUE COSTS OF LONG-TERM BORROWINGS 80 9.0 14.0 0.6 0.9 60 SHARE ISSUES 33.7 40 87.4 (14.6) (15.3) DIVIDEND PAID 14.6 1.0 20 17.8 35.9 0.2 0 NET CASH INFLOW (17.3) -20 5 A l n x s r 6 a e 1 D o e d 1 t h 0 i p n 0 17.8 (17.3) T i p t t NET FUNDS / (DEBT) 2 a a e O 2 I a B x c d c a i E t v g T e d i n N D e i t k s r u o j W d A 7 Year ended 31 March 2016
BALANCE SHEET £m 2016 2015 (1.4) 178.5 166.1 ACQUISITION RELATED AMORTISATION PROPERTY, PLANT AND EQUIPMENT PROPERTY, PLANT & EQUIPMENT GOODWILL IMPAIRMENT - SANDWICHES (4.6) INTANGIBLE ASSETS 139.7 145.7 INTANGIBLE ASSETS (6.0) NET MOVEMENT 11.0 11.8 BIOLOGICAL ASSETS BIOLOGICAL ASSETS (2.9) INVENTORIES WORKING CAPITAL 41.2 48.2 WORKING CAPITAL (0.1) TRADE & OTHER RECEIVABLES 17.8 (17.3) NET DEBT (4.0) NET FUNDS / (DEBT) TRADE & OTHER PAYABLES (7.0) NET MOVEMENT TAX, GRANTS, PROVISIONS, PENSIONS (20.2) (22.1) TAX, GRANTS, PROVISIONS, PENSIONS 368.0 332.4 NET ASSETS KEY METRICS: 2016 2015 18.5% 17.0% ROCE ROCE 1 - 5% GEARING GEARING 150 bps improvement in ROCE Strong improvement across INTEREST COVER 110x 60x INTEREST COVER all key metrics 2.4x 2.5x DIVIDEND COVER 1. Adjusted operating profjt divided by sum of average net assets, net debt, pension liabilities and deferred tax 8 Year ended 31 March 2016
CASH GENERATION & BANKING FACILITY CASH GENERATION 2009-2016 £m BANKING FACILITY • £120m revolving credit facility FREE CASH* NET ACQUISITION / DIVIDEND with 3 major UK banks CASH INFLOW / CAPEX (DISPOSAL) PAID FLOW (OUTFLOW) • Extending to July 2018 2016 83.4 33.5 – 14.6 35.3 • Unsecured 2015 52.7 20.4 17.7 15.3 (0.7) • Headroom of £138m at March 2016 2014 59.1 27.4 14.4 12.7 4.6 2013 49.0 30.5 5.8 11.4 1.3 NET FUNDS / (DEBT) PROFILE £m 2012 43.4 19.9 (14.5) 11.8 26.2 2011 50.0 33.9 - 10.5 5.6 17.8 2010 29.6 19.9 (8.1) 8.8 9.0 2009 39.9 20.7 - 8.8 10.4 2014 2015 2016 407.1 206.2 15.3 93.9 91.7 (17.0) (17.3) * Excludes the proceeds from the issue of share options 9 Year ended 31 March 2016
COMMERCIAL REVIEW TRENDS CRANSWICK PERFORMANCE OUTLOOK 10 Year ended 31 March 2016
ECONOMIC ENVIRONMENT SHOPPERS LESS FOCUSED ON SAVING PRAGMATIC SHOPPER MONEY & QUALITY REMAINS IMPORTANT • Informed rational choices 50% • Social media peer infmuence • Price / quality equation 45% 40% DEFLATION 35% • Base commodities 30% • Increased competition 25% • Increasing disposable income 20% 15% TRADING ENVIRONMENT 10% • Leisure spend 5% • Big ticket items 0% • Premium growth Sep 10 Nov 10 Jan 11 Mar 11 May 11 July 11 Sep 11 Nov 11 Jan 12 Mar 12 May 12 July 12 Sep 12 Nov 12 Jan 13 Mar 13 May 13 July 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14 July 14 Sep 14 Nov 14 Jan 15 Mar 15 May 15 July 15 Sep 15 Nov 15 Focus on saving money in the next year Focus on quality in the next year SOURCE: IGD, December 2015 11 Year ended 31 March 2016
CONSUMER & SHOPPER DYNAMICS PREMIUM GROWTH • Premium retailers • Premium ranges • Cranswick premium growth CONSUMER BEHAVIOURS CHANGING • Increased focus on health and well-being • Convenience and online growth • Eating out of home BIG 4 RETAILERS STABILISING • Simpler pricing • Tesco ‘Farms’ range • Sainsbury’s resilience 12 Year ended 31 March 2016
PROTEIN TRENDS TOTAL PROTEIN BACK IN VOLUME GROWTH • Meat and poultry up by 3.4% volume • Total pork in growth of 1% • Supported by AHDB campaign POULTRY THE LARGEST CATEGORY • Value +2.1% and volume +4.1% • Versatility and health benefjts • Most consumed protein out of home SHOPPERS • Lower trip spend across the board • Increased perceptions of health • Increasing need for convenience and inspiration SOURCE: Kantar Worldpanel 12 wk data to 27 March 2016 13 Year ended 31 March 2016
CRANSWICK GROWTH STRONG VOLUME GROWTH PREMIUM GROWTH EATING OUT OF HOME • Partially offset by defmation • Overtrade in premium • Poultry growth • Market share gains • Premium businesses in growth • Breakfast growth • Pulled pork campaign • Premium markets in growth • Expanded customer base 14 Year ended 31 March 2016
COMMERCIAL DATA CRANSWICK SALES MARKET* Full Year 2015-16 Annual Sales 2015-16 CATEGORY CHANGE CHANGE VALUE VOLUME VALUE VOLUME -8.9% -3.5% FRESH PORK RETAIL +9.5% +16.7% (i) SAUSAGE +1.1% +5.2% -4.9% -1.6% (iii) BACON & GAMMON +12.5% +16.3% -3.2% -7.2% (iv) -3.9% -1.8% -4.3% -0.6% COOKED MEATS +11.2% +9.5% +4.6% +5.3% CONTINENTAL PRODUCTS +30.8% +28.9% +1.9% +3.6% PASTRY +2.9% +0.6% -1.3% SANDWICHES +2.2% +23.7% +30.3% +5.1% +8.3% COOKED POULTRY (ii) NOTES: *SOURCE: (i) Total Fresh Pork sales growth +9.1% Kantar Worldpanel 52 w/e 29 March 2016 (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% 15 Year ended 31 March 2016
2016-17 & BEYOND SUSTAINED GROWTH • Gaining market share • Major business wins • Potential of poultry strategy INNOVATION PIPELINE • Maintaining relevance in core • Sous vide and slow cook • Food on the Go concepts SECURITY & STABILITY • Longer term deals and strategic relationships • Group wide pricing models • Stable commodities with modest infmation expected 16 Year ended 31 March 2016
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