Results FOR THE YEAR ENDED 31 MARCH 2018
AGENDA INTRODUCTION & HIGHLIGHTS Adam Couch, CEO FINANCIAL REVIEW Mark Bottomley, Finance Director COMMERCIAL REVIEW Jim Brisby, Commercial Director OPERATING & STRATEGIC REVIEW Adam Couch, CEO Q&A 19 75 Year ended 31 March 2018 2
HIGHLIGHTS • Strong revenue growth • Record capital expenditure to add capacity, extend capability and drive effjciencies • Planning approval granted for new world class poultry primary processing facility with further associated investment to upscale existing agricultural operations • New Continental Foods facility complete and being commissioned • Strong volume performance across each of our four product categories • Dividend up 21.8% to 53.7p per share 10 YEAR RECORD Compound annual growth rates to 31 March 2018 REVENUE ADJUSTED PROFIT ADJUSTED EARNINGS DIVIDEND BEFORE TAX PER SHARE PER SHARE +10.1% +10.8% +10.8% +10.4% 19 75 Year ended 31 March 2018 3
TRADING RECORD 1990 – 2018 DIVIDEND PER SHARE (pence) ADJUSTED PROFIT BEFORE TAX 1 (£M) 92.4 53.7 £1,465m 28 YEARS OF UNBROKEN DIVIDEND GROWTH 75.5 44.1 64.4 37.5 £1,005m 57.8 34.0 32.0 52.2 30.0 49.1 28.5 27.5 47.3 45.6 25.0 43.8 £740m 21.7 19.9 34.7 32.7 33.0 18.1 REVENUE 31.1 16.5 14.5 13.2 21.2 21.6 12.0 19.8 10.8 £313m 17.5 8.3 7.5 6.8 11.7 5.8 £157m 5.1 4.3 4.6 £116m 4.1 9.3 3.8 4.0 7.1 3.3 £64m 4.0 5.0 2.8 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 '15 '16 '17 '18 '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 1. Excludes IAS41 movements on biological assets and acquisition related amortisation in 2018 and 2017. 19 75 Year ended 31 March 2018 4
FINANCIAL HIGHLIGHTS +17.6% +22.4% ADJUSTED PROFIT BEFORE TAX (£M) 1 REVENUE (£M) 2018 1,464.5 2018 92.4 2017 75.5 1,245.1 2017 +19.9% +21.8% ADJUSTED EARNINGS PER SHARE (P) 1 DIVIDEND PER SHARE (P) 2018 145.0 2018 53.7 2017 2017 120.9 44.1 +54.3% +£31.6M FREE CASH FLOW (£M) NET FUNDS / (DEBT) 2018 111.7 2018 20.6 2017 72.4 2017 (11.0) +13% 3.1M +30% £59M TOTAL SALES RECORD PIG NUMBERS TOTAL EXPORT INVESTMENT IN ASSET BASE VOLUME GROWTH PROCESSED SALES GROWTH FOR FUTURE GROWTH 1. Excludes IAS41 movements on biological assets and acquisition related amortisation in 2018 and 2017 19 75 Year ended 31 March 2018 5
FINANCIAL SUMMARY £M 2018 2017 % CHANGE 1,464.5 17.6% Revenue 1,245.1 Like-for-like revenue 1 1,403.3 1,245.1 12.7% Adjusted gross margin 2 12.8% 12.8% – Adjusted operating profjt 2, 3 92.8 21.9% 76.1 Adjusted operating margin 2, 3 6.3% 6.1% 22bps Adjusted profjt before tax 2, 3 92.4 75.5 22.4% 145.0p 19.9% Adjusted earnings per share 2, 3 120.9p Dividend per share 53.7p 44.1p 21.8% 1. Like-for-like revenue excludes the contribution from Crown Chicken and Ballymena prior to the anniversary of their acquisition and also the impact of the 53rd week in the current year 2. Excludes IAS 41 movement on biological assets in both years 3. Excludes acquisition related amortisation in both years 19 75 Year ended 31 March 2018 6
CASH FLOW £M 2018 2017 Cash generated from operations 127.7 87.7 NET CAPEX (£M) 2018 2017 Tax paid (15.6) (14.8) Fresh pork 15.1 11.1 Convenience 31.9 23.9 Net cash from operating activities 112.1 72.9 Gourmet products 6.4 7.4 Net capital expenditure (58.0) (46.5) Poultry 4.6 3.9 – Other 0.2 Acquisitions (5.3) (56.0) Net capex 58.0 46.5 Disposals – 15.5 Interest paid (0.4) (0.5) NET FUNDS / (DEBT) BRIDGE (£M) Share issues 1.6 0.8 140 4.0 120 Dividend paid (18.2) (14.6) 15.6 5.3 100 80 Net cash infmow / (outfmow) 31.8 (28.4) 58.0 128.5 60 40 18.2 4.2 20.6 Net funds / (debt) 20.6 (11.0) 20 0 (11.0) -20 7 A l n s x s r 8 a n e 1 o e d 1 0 D t o h 0 i i p n T p t i t 2 2 a t a e O I a i B x s c d c E a u i t v i T e g q i d N D n c e k i A t s r o u j W d A 19 75 Year ended 31 March 2018 7
BALANCE SHEET £M 2018 2017 Property, plant & equipment 237.3 215.7 Intangible assets 156.2 158.4 Inventories (3.0) Biological assets 17.8 19.6 Receivables 9.5 Working capital 71.5 68.3 (3.3) Payables Net funds / (debt) 20.6 (11.0) Net movement 3.2 Tax, grants, provisions, pensions (23.5) (29.6) Net assets 479.9 421.4 KEY METRICS 2018 2017 ROCE 1 20.3% 19.0% 133 bps y-o-y improvement Gearing – 3% in ROCE Interest cover 221x 122x Dividend cover 2 2.7x 2.7x 1. Adjusted operating profit divided by the sum of average net assets, net debt, pension liabilities & deferred tax 2. On adjusted profit for the year 19 75 Year ended 31 March 2018 8
POSITIVE 5 YEAR CAGR ACROSS KEY METRICS ADJUSTED EBITDA (£M) ADJUSTED OPERATING MARGIN CAGR 15.9% 140 120 128.5 CAGR 3.9% 7.0% 100 103.7 6.5% 80 6.4 6.3 85.9 6.0% 77.0 6.1 60 71.3 5.8 5.5% 40 5.4 0 5.0% FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 FREE CASH FLOW (£M) ROCE 20.3 120 CAGR 17.3% 20% CAGR 4.8% 100 111.7 19% 19.0 80 83.4 72.4 60 18% 18.2 59.1 52.7 40 17% 20 17.0 16.8 0 16% FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 19 75 Year ended 31 March 2018 9
RECORD CASH GENERATION CASH GENERATION 2011–2018 (£M) FREE CASH ACQUISITION / CASH INFLOW / BANKING FACILITY NET CAPEX DIVIDEND PAID FLOW (DISPOSAL) (OUTFLOW)* £160m revolving credit facility with four major UK banks 2018 111.7 58.0 5.3 18.2 30.2 Includes committed 2017 72.4 46.5 40.5 14.6 (29.2) overdraft of £20m Option to access further 2016 83.4 33.5 – 14.6 35.3 £40m on same terms 2015 52.7 20.4 17.7 15.3 (0.7) To November 2022 with opportunity to extend 2014 59.1 27.4 14.4 12.7 4.6 for a further year Unsecured 2013 49.0 30.5 5.8 11.4 1.3 2012 43.4 19.9 (14.5) 11.8 26.2 NET FUNDS / (DEBT) 2016 2017 2018 2011 50.0 33.9 – 10.5 5.6 20.6 17.8 521.7 270.1 69.2 109.1 73.3 (11.0) * Excludes the proceeds from the issue of share options. 19 75 Year ended 31 March 2018 10
RECORD CAPITAL EXPENDITURE TO SUPPORT FUTURE GROWTH PIPELINE 80 70 60 58.7 50 47.0 40 35.7 34.3 30 27.7 20 21.1 21.2 18.3 10 0 2015 2016 2017 2018 2019F CAPITAL EXPENDITURE DEPRECIATION 19 75 Year ended 31 March 2018 11
COMMERCIAL UPDATE CRANSWICK PERFORMANCE CONSUMER TRENDS OUTLOOK Core category growth Spending habits Consolidation Poultry performance Retail and foodservice Innovation New markets Premium, convenient and healthy Poultry strategy 19 75 Year ended 31 March 2018 12
MARKET OVERVIEW PIG PRICE – UK & EU p/kg (i) EU Infmationary pressure on pig price easing 180 SPP 170 DAPP 160 UK and EU gap widening 150 140 Retail price infmation 130 120 110 Chicken and pork competitively priced 100 90 80 2010 2011 2012 2013 2014 2015 2016 2017 2018 UK RETAIL AVERAGE PRICE (£/kg) (ii) EXPENDITURE SHARE (ii) FRESH AND READY TO COOK PORK FRESH £4.10 March 2018 CHICKEN £4.15 March 2017 BACON & GAMMON 41% 6% SAUSAGE 9% FRESH £4.75 SLICED COOKED HAM PORK £4.49 13% 24% FRESH PRIMARY CHICKEN 7% FRESH £7.88 29% ADDED VALUE CHICKEN BEEF £7.75 6% 12% COOKED CHICKEN 19% 4% £8.58 FRESH 24% FRESH BEEF LAMB £8.40 6% FRESH LAMB 0.00 2.00 4.00 6.00 8.00 10.00 SOURCE: i) AHDB April 2018 ii) Kantar 52w/e 25 March 2018 19 75 Year ended 31 March 2018 13
CRANSWICK PERFORMANCE SALES PERFORMANCE BY CATEGORY CRANSWICK SALES (i) MARKET* ANNUAL SALES 2017-18 ANNUAL SALES 2017-18 CHANGE CHANGE CATEGORY VALUE VOLUME VALUE VOLUME Fresh Pork (ii) +10.0% +5.6% +5.0% -0.7% Convenience (iii) +10.1% +4.7% +1.9% -0.1% Gourmet Products (iv) +20.2% +15.0% +3.3% +1.3% +7.3% Poultry (v) +16.8% +12.0% +1.3% +2.2% Super premium *SOURCE: NOTES: Kantar Worldpanel, 52 w/e 25 March 2018 (i) Excludes the impact of 53rd week in the current year (ii) Like-for-like Fresh Pork sales exclude the contribution from Ballymena prior to 16 November. Including Ballymena prior to 16 November, Fresh Pork sales growth was +18.2%. Fresh Pork retail sales +6.8%, volume -3.6% (iii) Convenience comprises Cooked Meats and Continental Foods (iv) Gourmet Products comprises Sausage, Bacon and Pastry (v) Poultry comprises Fresh and Cooked Poultry. Like-for-like Poultry sales exclude the contribution from Crown Chicken prior to 8 April. Including Crown Chicken prior to 8 April, Poultry sales growth was +19.2% 19 75 Year ended 31 March 2018 14
CRANSWICK PERFORMANCE GROUP SALES BY CHANNEL 72+24+6 RETAIL Growth ahead of the market EXPORT GROWTH Major business wins 7% RETAIL 30% GROWTH Customer focused innovation 16% 22% FOODSERVICE AND WHOLESALE FOOD SERVICE & 71% Strategic relationships WHOLESALE GROWTH B2B relationships with retailer suppliers 20% Recipe boxes and digital EXPORT China approval for Northern Ireland USA volume and value growth New market development 19 75 Year ended 31 March 2018 15
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