Cranswick Plc FY17 Report Webview.Pdf
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Cranswick plc Annual Report & Accounts Year Ended 31 March 2017 Cranswick plc Annual Report & Accounts 2017 Cranswick plc is a leading and innovative British supplier of premium, fresh and added value food products with annual revenues in excess of £1.2 billion. STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 2 Our Products and Customers 44 Chairman’s Governance Overview 82 Statement of Directors’ Responsibilities 4 Sustained Operational Growth 46 Board of Directors 83 Independent Auditor’s Report 6 Chairman’s Statement 48 Governance Report 90 Group Income Statement 8 Our Guiding Principles 53 Audit Committee Report 91 Statements of Comprehensive Income 16 Chief Executive’s Review 60 Nomination Committee Report 92 Balance Sheets 18 Our Business Model 62 Remuneration Committee Report 94 Statements of Cash Flow 20 Our Supply Chain Model 77 Directors’ Report 96 Statements of Changes in Equity 22 Market Overview 98 Notes to the Accounts 24 Our Strategy 34 Our KPIs 36 Operating and Financial Review SHAREHOLDER INFORMATION 40 Principal Risks and Uncertainties 134 Five Year Statement 134 Financial Calendar 135 Shareholder Analysis 136 Advisers Strategic Report Corporate Governance Financial Statements Shareholder Information HIGHLIGHTS A YEAR OF STRONG FINANCIAL AND STRATEGIC PROGRESS REVENUE £’M † ADJUSTED PROFIT BEFORE TAX £’M * † +22.5% +17.2% 2017 1,245.1 2017 75.5 2016 1,016.3 2016 64.4 2015 1,003.3 2015 57.8 ADJUSTED EARNINGS PER SHARE P * † DIVIDEND PER SHARE P +17.6% +17.6% 2017 120.9 2017 44.1 2016 102.8 2016 37.5 2015 92.1 2015 34.0 FREE CASH FLOW £’M* NET (DEBT)/FUNDS £’M -13.2% -£28.8M 2017 72.4 (11.0) 2017 2016 83.4 2016 17.8 2015 53.5 (17.3) 2015 +25% † 2.7m +49% TOTAL VOLUME GROWTH RECORD PIG NUMBERS EXPORT SALES PROCESSED TO FAR EAST £47m >9,000 15 INVESTMENT IN ASSET BASE SIZE OF WORKFORCE UK MANUFACTURING FOR FUTURE GROWTH LOCATIONS * Adjusted and like-for-like references throughout the Report and Accounts refer to non-IFRS measures or Alternative Performance Measures (APMs). Definitions and reconciliations of the APMs to IFRS measures are provided in Note 31. † Throughout the Report and Accounts, 2016 results have been restated to exclude the Sandwich business, which was sold in July 2016 and is now treated as discontinued. Annual Report & Accounts 2017 Cranswick plc 1 Strategic Report Corporate Governance Financial Statements Shareholder Information STRATEGIC REPORT AT A GLANCE OUR PRODUCTS AND CUSTOMERS +26% OUR PRODUCTS WE PRODUCE A RANGE OF HIGH INCREASE IN LIKE-FOR-LIKE QUALITY, PREDOMINANTLY FRESH POULTRY VOLUMES PRODUCTS INCLUDING FRESH PORK, CONVENIENCE, GOURMET PRODUCTS GROWING OUR POULTRY BUSINESS AND POULTRY. % of group revenue The growth of our premium cooked poultry Product profile business and the acquisition of Crown Chicken in the year has substantially 11% 5% increased the contribution from poultry to total Group revenues. 19% 32% 37% A meaningful proportion of our revenue 19% Fresh & Added Value Pork Traditional Air-Dried Bacon & Gammon growth stems from our ability to create and launch new products to meet the constantly 2017 2016 changing demands from our customers and consumers, with over 800 new products launched in the year. Read more about category performance 39% on pages 36 to 37. 38% † Cooked Meats, Continental Products and Ingredients. Fresh Pork Convenience † Gourmet Poultry * Pastry, Sausages and Burgers, Bacon and Gammon. Products* OUR KEY CUSTOMERS Sausages & Burgers Handmade Pastry AROUND THREE QUARTERS OF OUR REVENUES COME FROM OUR RETAIL CUSTOMERS, PRIMARILY THROUGH +49% THEIR OWN-LABEL PRODUCTS PARTICULARLY IN PREMIUM AND INCREASE IN EXPORT SALES SUPER-PREMIUM CATEGORIES. TO FAR EAST We have a broad retail customer base selling our products into each of the top four UK multiple grocers as well as the growing GROWING OUR EXPORT BUSINESS premium grocery and discounter channels. We have recently won premium cooked % of group revenue chicken listings with two of our key Customer profile retail customers. 6% 5% We have a strong presence in the ‘food to go’ Cooked Meats Continental Products sector and we have a clear, targeted strategy 19% to build long-term relationships in this fast 20% developing market. Food service continues to be a growth sector 2017 2016 for us with many of our products now listed by UK hotel, pub and other food service outlet chains. We also have a rapidly growing export 74% business with Far Eastern markets being 76% particularly important. UK Retail UK Food Service and Export Manufacturing Fresh Chicken Premium Cooked Poultry 2 Cranswick plc Annual Report & Accounts 2017 Annual Report & Accounts 2017 Cranswick plc 3 Strategic Report Corporate Governance Financial Statements Shareholder Information STRATEGIC REPORT AT A GLANCE SUSTAINED OPERATIONAL GROWTH 15 BALLYMENA SINCE BEING FORMED BY FARMERS IN THE EARLY 1970s, WE HAVE GROWN THROUGH TARGETED 1 ACQUISITIONS AND ORGANIC GROWTH TO BE A LEADING AND INNOVATIVE BRITISH SUPPLIER OF MALTON PREMIUM, FRESH AND ADDED VALUE FOOD PRODUCTS WITH ANNUAL REVENUES IN EXCESS OF 2 3 4 5 6 HULL £1.2 BILLION. WE NOW OPERATE FROM FIFTEEN WELL INVESTED, HIGHLY EFFICIENT PRODUCTION SHERBURN 7 FACILITIES IN THE UK, WITH A WORKFORCE OF OVER 9,000 PEOPLE. MANCHESTER 8 9 Adjusted profit before tax (£’M) since 1990 Dividend per share (P) since 1990 10 BARNSLEY 44.1 75.5 64.4 37.5 34.0 57.8 32.0 52.2 30.0 49.1 28.5 47.3 27.5 45.6 43.8 25.0 11 13 NORFOLK 21.7 34.7 19.9 32.7 33.0 31.1 18.1 16.5 14.5 14 21.2 21.6 13.2 SUFFOLK 19.8 12.0 17.5 10.8 8.3 11.7 7.5 6.8 9.3 5.8 7.1 4.6 5.1 5.0 3.8 4.0 4.1 4.3 3.0 3.1 4.0 2.8 3.3 1.7 2.2 2.3 0.9 1.4 12 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 MILTON KEYNES CORPORATE ACTIVITY IN THE YEAR 1 Handmade Pastry Malton 13 14 15 Sale of Sandwich business Acquisition of Crown Chicken Acquisition of Ballymena pork processing business 2 3 Fresh Pork Hull In April 2016 we acquired Crown Chicken. In November 2016, we acquired Dunbia’s Ballymena pork processing In July 2016 we sold our Sandwich business 4 Cooked Meats Hull The acquisition further develops our presence business. This acquisition enhances our pig processing capability to Greencore plc. This is in line with our strategy 5 Gourmet Sausages & Burgers Hull in the growing poultry sector. and establishes a significant presence in Northern Ireland. of focusing on our core businesses. 6 Premium Cooked Poultry Hull 7 Traditional Bacon and Gammon Sherburn 8 9 Continental Products Manchester £84m £72m £54m 10 Cooked Meats Barnsley 11 Fresh Pork & Sausages Norfolk CROWN BALLYMENA SANDWICH 12 Cooked Meats Milton Keynes REVENUE REVENUE REVENUE 13 Feed Milling Norfolk Year ended 31 December 2015 Year ended 29 March 2016 Year ended 31 March 2016 14 Fresh Chicken Suffolk 15 Fresh Pork Ballymena Read more Read more Read more on page 38. on page 37. on page 38. Agriculture 1985 1991 1992 1995 2001 2004 2010 2013 2014 2016 Entry to the Primary pork Cooked meats Gourmet Continental Hand-cured, Handmade Pig breeding Premium Chicken breeding, stock market processing sausages products air-dried bacon pastry and rearing cooked poultry rearing, processing and animal feed 4 Cranswick plc Annual Report & Accounts 2017 Annual Report & Accounts 2017 Cranswick plc 5 Strategic Report Corporate Governance Financial Statements Shareholder Information STRATEGIC REPORT CHAIRMAN’S STATEMENT A YEAR OF STRONG FINANCIAL AND STRATEGIC PROGRESS THE PAST YEAR HAS BEEN PARTICULARLY POSITIVE FOR THE BUSINESS. CRANSWICK HAS DELIVERED ANOTHER STRONG TRADING PERFORMANCE, ACHIEVED RECORD SALES OF OVER £1.2 BILLION, AND MADE STRATEGIC PROGRESS IN A NUMBER OF KEY AREAS. STRATEGIC PROGRESS CASH FLOW AND FINANCIAL POSITION CORPORATE GOVERNANCE The human resource function is especially Strategic initiatives included the acquisition Cranswick’s borrowings are conservatively The Board embraces the UK Corporate important when operating such a format and of CCL Holdings and its subsidiary Crown structured and cash generation from Governance Code as part of its culture and is a key element of the overall strategic plan. Chicken (’Crown‘) at the beginning of the operating activities was once again very a statement relating to compliance with the All colleagues are viewed as critical stakeholders, financial year which expanded the Company’s strong. In November 2016, bank borrowings Code is included within the Governance and there is a commitment to implementing a presence in poultry, the UK’s largest meat were refinanced, increasing the unsecured Report on page 52. training and development strategy that delivers category. This was followed later in the year facility to £160 million. This is expected to workforce capabilities, skills and competencies by the acquisition of Dunbia Ballymena provide generous headroom for future ENVIRONMENT through apprenticeship schemes, development (’Ballymena‘) which further strengthened growth through to 2021 along with an option Managing and reducing Cranswick’s impact programmes and training courses. Cranswick’s UK pork processing capability. to extend for a further two years. on the environment has been an integral part of business activities under a dedicated The Board is committed to this and recognises The Company’s Sandwich business, a Further details are provided in the Operating project team for some time.