Results FOR THE YEAR ENDED 31 MARCH 2019
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 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 Year ended 31 March 2019 2
HIGHLIGHTS • Like-for-like revenue in line with prior year • Record capital expenditure of £79 million to add capacity, extend capability and drive effjciencies • Construction of the new world-class poultry primary processing facility in Eye, Sufgolk is continuing to plan • New long-term supply agreement secured to supply fresh poultry from the new Eye facility • New Continental Foods facility in Bury, Lancashire completed and commissioned • Like-for-like Far East export volumes 16% ahead • Dividend up 4.1% to 55.9p 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 +9.0% +10.2% +10.4% +9.9% 19 75 Year ended 31 March 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 10.8 £313m 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 Year ended 31 March 2019 4
FINANCIAL HIGHLIGHTS -0.2% +2.0% REVENUE (£M) 2 ADJUSTED PROFIT BEFORE TAX (£M) 1,2 2019 1,437.1 2019 92.0 2018 2018 90.2 1,440.0 +1.9% +4.1% ADJUSTED EARNINGS PER SHARE (P) 1,2 DIVIDEND PER SHARE (P) 55.9 2019 144.3 2019 2018 141.6 2018 53.7 -21.8% -£14.3M NET FUNDS FREE CASH FLOW (£M) 2019 87.3 2019 6.3 2018 111.7 2018 20.6 +28% +16% £79m c10,300 INCREASE IN LIKE-FOR-LIKE FAR EAST INVESTMENT IN ASSET BASE SIZE OF SIZE OF PIG HERD EXPORT VOLUME GROWTH FOR FUTURE GROWTH WORKFORCE 1. Excludes IAS41 movements on biological assets and acquisition related amortisation in 2019 and 2018 2. 2018 adjusted for 53rd week 19 75 Year ended 31 March 2019 5
FINANCIAL SUMMARY 2019 2018 % CHANGE % CHANGE £M 52 weeks 53 weeks (as reported) (like-for-like) 1 Revenue 1,437.1 1,464.5 -1.9% -0.2% Adjusted gross margin 2 13.0% 12.8% +22 bps +23 bps Adjusted operating profjt 2, 3 92.3 92.8 -0.5% +1.8% Adjusted operating margin 2, 3 6.4% 6.3% +9 bps +12 bps Adjusted profjt before tax 2, 3 92.0 92.4 -0.4% +2.0% Adjusted earnings per share 2, 3 144.3p 145.0p -0.5% +1.9% Dividend per share 55.9p 53.7p +4.1% +4.1% 1. Like-for-like excludes 53rd week of trading in prior 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 2019 6
CASH FLOW £M 2019 2018 NET CAPEX (£M) 2019 2018 Fresh pork 18.7 15.1 Cash generated from operations 106.5 127.7 Convenience 23.2 31.9 Tax paid (18.8) (15.6) Gourmet products 3.9 6.4 Net cash from operating activities Poultry 32.2 4.6 87.7 112.1 Net capex 78.0 58.0 Net capital expenditure (78.0) (58.0) Capex guidance for FY20 of c£100m Acquisitions (0.8) (5.3) Loan to joint venture (2.2) – Interest paid NET FUNDS BRIDGE (£M) (0.4) (0.4) 140 11.5 Share issues 1.8 1.6 18.8 120 100 Dividend paid (22.1) (18.2) 121.2 80 78.0 60 Net cash (outfmow) / infmow (14.0) 31.8 40 22.1 20 0.8 2.2 2.1 6.3 20.6 Net funds 0 6.3 20.6 l n x s s r g g A a e o e d n n n n D t o h i i p n a i n i T p t i t s a a e t o O e I a i o B x c d s l p c C l E a t v i u i V O g T e i q J d n N D c e i k A t s r o u W d j A 19 75 Year ended 31 March 2019 7
BALANCE SHEET £M 2019 2018 Property, plant & equipment 291.2 237.3 Intangible assets 153.5 156.2 Inventories 8.2 Biological assets 21.3 17.8 Receivables 1.6 Working capital 78.9 71.5 Payables (2.4) Net funds 6.3 20.6 Net movement 7.4 Tax, grants, provisions, pensions (16.3) (23.5) Net assets 534.9 479.9 KEY METRICS 2019 2018 ROCE lower as expected due to ROCE 1 uplift in capital expenditure 18.4% 20.3% Gearing – – IFRS 16 to reduce ROCE in FY20 (see Appendix 4 for Interest cover 217x 221x further details); immaterial impact to Net Assets and PBT Dividend cover 2 2.6x 2.7x 1. Adjusted operating profjt divided by the sum of average opening and closing net assets, net debt/(funds), pension liability and deferred tax 2. On adjusted profjt for the year 19 75 Year ended 31 March 2019 8
KEY METRICS FOR LAST 5 YEARS ADJUSTED OPERATING PROFIT 1 (£M) ADJUSTED OPERATING MARGIN 1 CAGR 12.0% CAGR 2.5% 100 90 92.3 90.7 80 7.0% 70 76.1 60 65.1 6.5% 50 6.4 6.4 58.7 6.3 40 6.0% 6.1 30 5.8 20 5.5% 10 0 5.0% FY15 FY16 FY17 FY181 FY19 FY15 FY16 FY17 FY181 FY19 FREE CASH FLOW (£M) ROCE 120 CAGR 13.4% 20% CAGR 2.0% 20.3 100 111.7 19% 19.0 87.3 80 83.4 72.4 60 18% 18.2 18.4 52.7 40 17% 20 17.0 0 16% FY15 FY16 FY17 FY182 FY19 FY15 FY16 FY17 FY182 FY19 1. 2018 adjusted for 53rd week 2. FY18 included 53 weeks of trading 19 75 Year ended 31 March 2019 9
STRONG CASH GENERATION CASH GENERATION 2012–2019 (£M) FREE CASH ACQUISITION / CASH INFLOW / NET CAPEX DIVIDEND PAID BANKING FACILITY FLOW (DISPOSAL)2 (OUTFLOW)1 £160m revolving credit facility with four major UK banks 2019 87.3 78.0 3.0 22.1 (15.8) Includes committed 2018 111.7 58.0 5.3 18.2 30.2 overdraft of £20m 2017 72.4 46.5 40.5 14.6 (29.2) Option to access further £40m on same terms 2016 83.4 33.5 – 14.6 35.3 To November 2023 3 2015 52.7 20.4 17.7 15.3 (0.7) Unsecured 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) 2017 2018 2019 2012 43.4 19.9 (14.5) 11.8 26.2 20.6 559.0 314.2 72.2 120.7 51.9 6.3 1. Excludes the proceeds from the issue of share options (11.0) 2. Includes loan to joint venture 3. Facility reduces to £120m from November 2022 19 75 Year ended 31 March 2019 10
RECORD CAPITAL INVESTMENT TO ADD CAPACITY, DRIVE EFFICIENCY AND ENHANCE CAPABILITY CROWN CHICKEN SUFFOLK FRESH PORK HULL NEW PROCESSING FACILITY HULL EXTENSION EXPANSION OF SITE UPGRADES AGRICULTURAL OPERATIONS CONVENIENCE BARNSLEY & BURY AGRICULTURE NORFOLK COOKED MEATS SITE PIG HERD EXPANSION UPGRADES INVESTMENT IN CONTINENTAL NEW POULTRY SUPPLY CHAIN BURY FACILITY 19 75 Year ended 31 March 2019 11
COMMERCIAL UPDATE MARKET TRENDS CRANSWICK PERFORMANCE OUTLOOK State of the nation Year of consolidation Consolidation Retailer performance Poultry growth Innovation Consumer behaviours Sustainability Poultry strategy 19 75 Year ended 31 March 2019 12
FOOD VOLUMES IN RETAIL STATIC AND CONSUMERS CONCERNED ABOUT THE ECONOMY +1.4% +1.5% +1.0% £ GROWTH INFLATION POPULATION SOURCE: Kantar Worldpanel 12 w/e 24 March 2019 IN 12 MONTHS TIME, HOW DO YOU THINK FOOD PRICE CONCERN THE ECONOMY WILL BE DOING? 59% 70% 88% Food prices 60% Energy bills 72% of shoppers say they are worried 50% Petrol prices 48% about their own fjnances as 40% No wage increase 39% Brexit proceed s Change in personal 30% 28% circumstance 59% 56% Interest rates 20% 28% JAN JAN Tax and benefjt 2019 27% 10% 2018 changes Job insecurity 26% 0% 2 1 1 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 V House prices 10% G V B Y G B Y G V B Y G V B Y G V B Y G V B Y G V B Y G V B A O A A A A A A U O E U E U O E U O E U O E U O E U O E U O E F M N F M F M F M F M F M F M F A N A A N A N A N A N A N A N Other 10% BETTER THAN NOW ABOUT THE SAME AS NOW WORSE THAN NOW SOURCE: IGD ShopperVista Research; Base: 1000+. All shoppers, February 2019 19 75 Year ended 31 March 2019 13
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