Cranswick plc (CWK) Earnings Call Transcript

Welcome to our Financial Year '24 Results Presentation. We're delighted to welcome you here again to Butchers' Hall, alongside myself, Mark and Jim presenting. We're joined by our Chairman, Tim Smith. We're joined by Chris Aldersley, our Chief Operation Officer; and a host of our senior leadership team. Catherine, Mark and Matt Cunningham will happily answer any of the questions you may have following the Q&A session at the end. Turning briefly to the Agenda on Page 1, if I may, I'll briefly comment on the progress we've made during the year. Mark will then run through the numbers, and Jim will update on the commercial progress before handing back to me for a few words on the strategy and operational performance. And we'll then open up to Q&A. Before we start turning the pages on the slide deck, I want to recap on what has been an extremely strong year for the business. We delivered strong financial performance, and made further progress in delivering our strategy. Our business would not be where it is today if it's not for the people in that business. So before we go any further, I just want to thank all my colleagues for the brilliant team efforts that they've made, for their passion, their commitment and professionalism and support over the last 12 months, which genuinely sets us apart. Access to labor remains one of our biggest challenges, and the recent increase in the salary threshold for those arriving in the U.K. on skilled worker visas to GBP 38,700 is not helping matters. We've now recruited more than 650 colleagues from the Philippines who now form a key part of our workforce. We need common sense to prevail here so that the U.K. food industry generally has access to a sustainable labor pool with the right skill sets at a reasonable cost. Planning is another significant challenge for us. We've been very open about our ambition to expand our fresh poultry business in East Anglia, but we face obstacles arising from the bureaucratic and overly complex planning application process. We need the process to be simplified and streamlined, and we continue to press government for a more simple process. Finally, before we start turning the pages on the presentation, I want to briefly discuss our farming business. We've been fully vertically integrated in poultry for some time. But over recent years, we've significantly expanded our pig farming business. 10 years ago, we farmed no pigs at all. And today, we're the largest producer in the U.K., finishing over 30,000 pigs per week. This makes us more than 50% self-sufficient. We've increased the size of our herd at a time when the overall U.K. heard has contracted by circa 15%. And looking ahead, I expect to see further sector consolidation. We're committed to expanding our farming capability to ensure continuity of supply, sustainability, leadership and the highest animal welfare standards. Just direct you briefly on to Page 3. We've delivered another step change in our performance this year. We have a track record of unbroken dividend growth that now extends to 34 years. And on to the commercial and strategic highlights on the following page, I want to briefly reflect on some of these highlights that we've made. Revenue increased by almost 12%, underpinned by positive volume growth across all 4 food categories. Adjusted operating profit was up by 26.3%, reflecting the strong returns we are now generating from our expanded farming and milling operations, tight cost control and the effective deployment of capital. We are increasing our total full year dividend by 13.4% to 90p per share, which means, as I mentioned a moment ago, that we will have delivered 34 years of consecutive dividend growth. We spent another GBP 91.4 million across our estate with well over GBP 600 million now invested over the last 8 years. We also spent GBP 46 million on 2 earnings-enhancing, strategic bolt-on acquisitions, the Elsham Linc farming business, which includes both pigs as well as a milling business, and Froch Foods, which adds additional capacity and capability to our bacon curing and cooked meats business. Despite this level of investment, because of our incredibly strong cash generation, we have actually reduced our bank debt to almost GBP 0, and we've improved our return on capital employed by almost 2.7% to 18.5%, well ahead of our mid-teens target. And finally, before I hand over to Mark and then Jim, I want also to call our commitment for delivering to customers. We deliver excellent service levels throughout the course of the year, and this was very much signaled by a Christmas trading period with a 98% fulfillment. As I mentioned a moment ago, it is our teams across the business that make this happen. I'll now pass on to Mark, who will run through our financial performance.

Good morning, everyone, and thank you, Adam. I'll spend the next few minutes just running through the FY '24 highlights. And as I'm sure you know, and if you don't, FY '24 was a 53-week year, so I'll be talking about 53-week performance, although I will comment on how we've performed on a 52- versus 53-week basis as I run through the presentation. As Adam mentioned, and just looking at the financial highlights before we dig a little bit deeper into the numbers, we've made incredibly strong progress over the last year. Revenue was up 11.9%. Adjusted PBT was 26.1% higher and EPS and DPS were 15.6% and 13.4% ahead, respectively. Our cash conversion has been excellent with our free cash flow increasing by 49.7% and our total net debt, which is almost exclusively IFRS 16 related, dropped below GBP 100 million. As Adam mentioned, our bank debt is virtually GPB 0. If -- I'm turning the slides as well as talking, so if I get a bit sort of out to sync, just give me a shout. Looking at Page 7 and the financial performance, our P&L in a little bit more detail, and here, you can see both, on a 53-week and a 52-week pro forma basis, reported revenue was up 11.9%, as I mentioned, just under GBP 2.6 billion, with like-for-like revenue growing by 11.6%. If you look at that on a 52-week adjusted basis, revenue was up 9.8% with like-for-likes up 9.4%. And our core -- and I'll come on to revenue and dig more deeply into that in a moment or 2. But that revenue growth is really driven by our core U.K. food business, which performed exceptionally strongly. Adjusted operating profit was up by 26.3% to GBP 185.1 million and operating margin at 7.1% was 81 basis points higher. Adjusted profit before tax at GBP 176.6 million was 26.1% ahead, as I mentioned. And although, while not on the slide, just to call it out, our interest cost was higher at GBP 8.9 million compared to GBP 6.4 million last year, slightly lower than I guided to previously. The higher interest cost was entirely due to a higher cost of borrowing with base rates increasing, as you know, as the year progressed. And all our interest is on floating rates. But with bank debt lower, that offset some of that increase in the base rates and its net interest costs pretty low. Our effective tax rate and adjusted profit before tax was 26.1%. That compared to 19.8% last year with the increase in our rates solely attributable to the 6% increase in the headline rate of corporation tax effective from the start of FY '24. And with the impact of that tax rate taken into account, adjusted EPS increased -- still increased by 15.6% to GBP 2.428 per share, and that reflected clearly that very strong performance in our PBT. As Adam mentioned, we are increasing the dividend again. We're proposing to increase our final dividend by 8.5p per share, or 14.5%, to 67.3p per share from 58.8p last time. And this, combined with the interim dividend of 22.7p per share, gives a total dividend of 90p per share compared to 79.4p last time, as I mentioned, an increase of 13.4%. I think the last but not least on that side, you can see how strong our ROCE was this year, 264 basis points higher than last year. And our strong ROCE highlights our ability to deploy capital at pace and drive strong returns. Now, as I mentioned, I'm just going to look at -- if I can get the slides to flip over -- revenue in a little bit more detail. As I mentioned, reported revenue, 11.9% higher, reflecting effective inflation recovery, certainly through the first half of the year, like-for-like revenue increasing by 11.6% with the 53rd week contributing just shy of GBP 50 million. Growth reflected strong volumes in U.K. food, effective recovery of widespread inflation and record Christmas trading with new business wins as well. On a comparable 52-week basis, revenue was up 9.8%. This was underpinned by core U.K. food volume growth of 4.5% with all 4 categories delivering positive volume momentum. And in fact, volume growth accelerated sharply in the second half of the year from 2.6% in H1 to a very strong 6.6% in H2. Our Q4 exit rate was strong, and we've maintained this momentum in the first few weeks of FY '25. Total export sales decreased year-on-year as both pricing and demand from our key Chinese market remains subdued. Pet revenue declined modestly, as expected, reflecting the transition from its legacy customer base and the timing of onboarding the new Pets at Home contract. This really was a tale of 2 halves, though, with revenue substantially lower in H1 as we built stock for the Pets at Home contract and made strong H2 year-on-year growth of over 20% as we started shipment to Pets at Home. And we expect strong acceleration of that growth through H1 in FY '25 as well as we continue to expand and onboard more of that Pets at Home business. Turning to Page 9 of the slide deck and looking at margins, group operating margin at 7.1% was 81 basis points higher than last year. This improvement reflects a strong contribution from our expanded pig farming operations, and that robust return from effective deployment of capital, and last but not least, tight cost control. With the vast majority of our retail business now on a cost of production or market price-linked model, our margins are now more resilient than they've ever been. Just bridging EPS here on Page 10, adjusted EPS increased by 32.8p to 242.8p per share with the strong operating profit, partly offset by the impact of the 6% increase in the headline rate of corporation tax, which came into effect at the start of the year. And you can see the impact of that 34.1p tax split into 2 parts. So the majority of 19.7p relates to the 6% increase in the headline rate of tax and 14.4p reflects the year-on-year profit growth at that previous year's tax rate. What I want to really call out as well is our cash performance and cash generation. So here on Slide 11, you can see our cash and net debt in more detail. Net debt fell by GBP 2 million to GBP 99.4 million from GBP 101.4 million at last year-end. The year-end position now includes GBP 99.3 million of lease liabilities and our bank debt was under GBP 100,000 at year-end. Our free cash conversion was excellent at 142.3%, driving a very strong free cash flow of GBP 223.4 million. That's somewhat a record for the business. I think, importantly, you see that, notwithstanding that nearly 12% growth in top line revenue, our working capital, including biological assets, increased by only GBP 1.4 million. We kept inventory flat and continue to be very disciplined and focused on managing working capital as we look to grow our business. Tax paid in the period of GBP 41.4 million was GBP 21 million higher than last year, and that reflects the impact of the higher tax rate in FY '24 and the benefit of the super deduction that we experienced and took advantage of in FY '23, so back to a more normalized level of cash tax as we look ahead. Capital expenditure, net of disposal proceeds, was GBP 90.6 million. And I'll come on to that in a bit more detail shortly. And dividends paid in the year totaled GBP 43.9 million, GBP 7.6 million up on last year, reflecting the increase in the FY '23 final dividend and the removal of the Scrip dividend option this year. We also spent GBP 47.1 million on acquisitions, the majority of that relating to the Elsham Linc and Froch Foods businesses, but there are also EUR1 million of deferred consideration in that total as well. And this isn't -- this cash performance isn't a one-off. If you look over the late -- last 8 years, our cash generation has been consistently strong, and you can go back a lot further than that. This is a hallmark of the Cranswick business. We've generated over GBP 1 billion of free cash flow over the last 8 years. We spent over GBP 600 million on CapEx, nearly GBP 200 million on M&A and we returned well over GBP 200 million to shareholders by way of our cash dividend over that time. And yet, we've actually reduced bank debt. So it just shows the cash-generative nature of the business and how we convert that profit into cash. In terms of our bank debt facility, we've got a lot of firepower. We've got a GBP 250 million sustainability-linked facility which extends through to November 2026. And we've got the option, should we need it, to do a further GBP 50 million on the same terms. So that facility really does provide us with generous headroom to continue our growth strategy. And at year-end, our leverage was just 0.4x. And as I mentioned, excluding IFRS 16, we were virtually debt free. So looking at our CapEx and our strategic investment in more detail, we've invested a further GBP 91.4 million across our asset base to support further growth and drive further operating efficiencies. Some of the key ongoing projects are covered on this slide. We invested GBP 31 million across the 3 primary processing facilities and our farming infrastructure during the year, GBP 7.6 million of which related to the GBP 62 million ongoing multi-phased redevelopment of our Hull primary processing site, which will add substantial capacity, drive further efficiency improvements, along with the other benefit of onsite cold storage capability. There are also ongoing projects to expand in growth markets, which include a GBP 23 million redevelopment of our Worsley site near Manchester to significantly expand houmous production capacity using new and innovative production processes that should be completed early in the second half. And we're investing GBP 27 million to support the category growth pipeline across the other value poultry sites -- that's our 2 sites in Hull -- by increasing cooking and cooling capacity. We recently completed a GBP 9 million investment project at our Hull meat site. And that has enabled us to successfully launch our -- more of our slow-cooked range with 2 major retail customers. And we continue to diversify our operations with the GBP 10 million investment program at the Pet Products manufacturing facility, which will double dry kibble capacity there, nearing completion, as I mentioned, with Pets at Home as the anchor customer. [indiscernible. Here we go, very briefly here, and I've shown -- we've shown this slide before, this is how we drive value -- how we sort of articulate how we drive value creation. And as you can see down in the bottom right-hand corner of the slide, we've clearly delivered against all of our medium-term targets in both FY '23 and FY '24, albeit with a step change in performance over the last 12 months. And we've introduced that free cash conversion target of 90% on that slide this year. And you can see that we substantially are well ahead of that for the year just ended. Moving that [indiscernible] there we go. Looking at our capital allocation framework, we have a well-established capital allocation framework now. We'll continue to invest in the business to support our growth strategy with CapEx guidance again for FY '25 of GBP 100 million to add further capacity capability and automation. We delivered GBP 91.4 million this year with a strong forward pipeline. We'll invest our investment-grade balance -- sorry, we will maintain our investment-grade balance sheet with a target leverage of less than 2x net debt to EBITDA. And we'll maintain a progressive dividend policy with cover of at least 2.5x EPS to DPS. Our cover this year was 2.7x with a 13.4% growth in dividend per share. And we'll continue to explore complementary targeted bolt-on M&A with the returns ahead of our group WACC. And as we've already talked about, we successfully delivered 2 of those projects this year, and we'll look for more as we go forward. Moving on to the next slide, before I hand over to Jim, I just wanted to touch briefly on guidance for FY '25 because there are a lot of moving parts in FY '24. So you can see, down in the bottom right-hand corner, that gets us to the baseline for FY '24 after adjusting for the 53rd week and the one-off insurance receipts we received this year. Looking into FY '25, off that baseline, I expect revenue growth of circa 5% and a targeted adjusted operating margin of circa 7%. Finance costs should be slightly lower at circa GBP 8 million. And the effective tax rate on adjusted profit should be in line at around 26%. And again, as we said, I'm reiterating our CapEx guidance of GBP 100 million. And on that note, I'll pass on to Jim for an update on our commercial performance.

Thank you, Mark. Good morning, ladies and gentlemen. So I'm going to give a brief rundown of the broader market for Fresh & Chilled with our performance in the last financial year before spending a bit of time on our commercial strategy and where some of the future growth opportunities can come from. So if I can move you over to Page 18, and as you can see here, Fresh & Chilled retail sales remained positive over the last year with all retailers growing value and many retailers are actually also in positive volume territory as well. We've seen a marked improvement in the performance of the full-range retailers as well as they face up to the ongoing share threat from the discounters. Sainsbury's and Tesco is here being the standout performers, and they've worked really hard on convincing shoppers of their value proposition through their Aldi Price Match mechanisms, competitive car pricing as well as their strong promotional offer through there as well. And I think we've got a view that this is likely to continue as I think particularly both of those retailers have a really clear strategy and a renewed focus on food. And I'm particularly calling out Sainsbury's with our next level food strategy, simple as it is. It really increases the focus on the space they have dedicated to fresh foods and are doing that at the expense of clothing and the nonfood offer. In a similar vein, M&S are doing incredibly well by delivering a super retail experience and that real focus on quality and innovation that they're famous for. But at the same time, actually, they've worked on price as well, particularly on convincing shoppers to widen their product basket on some more car items. So moving on to the next chart, as we move into next year, what we're seeing is a marked improvement in consumer confidence and a potentially view of better things ahead. Obviously, the living-wage news will positively affect a huge number of shoppers there. We think this will give a real boost in spending patterns, particularly in food, where premiumization and that affordable treat we often talk about should come back into focus and shoppers really seek to trade up once again. We also see this as helpful in the food service sector, particularly the more casual and QSR sectors, and we're seeing some evidence of this coming through already as well. Food prices are stabilizing. And whilst we're not particularly expecting these prices to deflate, we've certainly seen a moderation of those inflationary pressures, which will certainly and, very importantly, give less uncertainty to the shoppers. So moving over the page onto Page 19, I'm very much of a view we've got resilient demand as we move into the new financial year. We often talk about this, but pork and poultry remain very affordable proteins and all our categories held up very well last year in terms of volume despite that inflationary headwind, particularly at the beginning part of the year. Overall pig meat volumes are holding up well and particularly our premium and convenient categories are doing particularly well. Moving on to fresh chicken, the market volume grew by about 4% year-on-year. Put that in a bit of perspective, that's equivalent to 2/3 of the output of our Eye facility. So at the rate of this kind of rate, the industry would need to build a facility similar to Eye every 18 months or so. Moving on to [indiscernible] and again, these markets are all in -- continuing to grow and very much a trend there where shoppers are becoming more familiar with these products and adopting these products as part of their weekly staples. Household penetration, for example, on charcuterie is now over 65%, and that's grown significantly over the last 5 years. In a similar vein, the fresh olive market grew by over 30% in the last 5 years, and again, mainly due to that increase in household penetration. Food service market, as I touched on a second ago, still very much in recovery and the more affordable end of the market is doing well. This is a market that has been disproportionately challenged with the cost of labor, utilities and not to mention those headwinds from the key menu ingredients as well. So moving over to our commercial performance in the year and as I've touched on -- sorry, Mark [indiscernible] still in the middle of that one. Inflation was certainly well-navigated over this challenging period with much of it managed through the open book strategic arrangements with our bigger customers. And in addition, a key feature of the year following the shortfall and the challenges we are seeing on the peak sector, we've really been looking to structurally alter how we deal with our third-party farmers and moving that to more recognizing the cost of production and the pricing mechanisms we have with retailers, not just back to factory but also back to farm. And through the expansion also of our vertical integration, we're looking at more strategic agriculture alignments with the retailers, which obviously will seek to underpin our business for the long run. And again, over this period, unparalleled service levels throughout a very challenging supply chain situation. So I think it's really credit to the wider teams within the various subsidiaries of the group. And finally, the other big feature of the year is obviously ongoing market share gains. We've continued to make progress in every single part of the business, particularly in pig meat, where I talked about that reduction in the U.K., pig head. One of our key competitors, Pilgrim's, actually closed another 2 plants at Ashton and Morrisons, with their vertical integration, have actually significantly reduced their kill. The overall U.K. kill was down by about 9% on the year, but our volumes have remained consistent throughout. And that agricultural investment that we'll be talking about a lot today has really allowed us to maintain our numbers now throughputs in the key plants. Again, we're gaining share in fresh poultry. We've expanded the numbers of birds processed and we're looking at touching 1.5 million birds a week, which is actually phenomenal for a plant that was originally designed for about 1.1 million birds a week. So we're really sweating that asset there. We've brought on new customers, and we've also actually seen our anchor customer significantly improving their performance with our new trade plan. We've had business wins in value-added poultry, bringing in new volume with one of the U.K.'s leading retailers. We've expanded our share of the cooked, ready-to-eat poultry business there, and we've also taken a significant volume of premium whole-muscle breaded poultry, almost doubling the throughput through that new site there, so some really significant changes in business there. And we continue to expand our Mediterranean food business. We've grown share again here, and we would now be the largest supplier in the U.K. for charcuterie. We've seen significant inflation again in olives, obviously due to harvest and some of the weather patterns. [indiscernible] for those. But again, this has been certainly dealt with and customers are really getting used to now the new price positioning. And again, we're now enjoying the market-leading position in the supply of fresh olives and antipasto as well. Ramona's houmous is now the #1 houmous brand, not just by value, but also by volume. And you may have seen that's been supported by TV sponsorship of James Martin's ITV Saturday Morning Kitchen. And that site will now be at capacity until we can bring on the new facility in the late summer into the autumn. And finally, on Pet, we onboarded the new business with the U.K.'s leading pet care retailer. That was delivered in the period between September and December, and that process was delivered absolutely seamlessly from the outset with great quality and impeccable service. I mean, literally since launch, we have not short-delivered a single bag of kibble for Pets at Home. So this has obviously been incredibly well-received by the customer, and I'll come on to that a little later. So now, if we move over onto Page 20, really what you can see here is that we've delivered volume growth in all categories here in an inflationary market. And certainly, the early part of the year when we're dealing with inflation, we do see the retailers take the foot off the gas with the trade plan and the promotions as well, and hence, Mark talking towards an acceleration of volume growth in the latter part of the year. Group like-for-like volumes on an adjusted 52-week basis, they've been up by 4.5%, so again, some really good momentum on volume there. And that growth has been delivered in all channels other than export, where the China market obviously is a real drag on the numbers with the mismatch of the high domestic supply and poorer demand. And obviously, our export ban remains in place at Watton as well. So moving over onto Page 21, this is really the commercial growth agenda. So we're certainly looking at increasing the importance of our supply chain integration and having a greater involvement in that value chain end-to-end. And this will be a key unlocker for both supporting the volumes through the facilities but also delivering that longevity and competitive advantage with our key customers. One example of this is where we are working on a project with a key customer to deliver market-leading eating quality through improved genetics and optimum processing to deliver on taste and tenderness every time, and that will be a long-term strategic project with a very key customer. And also, of course, again, we're continuing to invest in the assets to free up more capacity and, most notably, the planned investment we have at our flagship pork site at Preston in Hull. And that will allow us to further drive our market share, underpinned by that all-important agricultural supply chain. In addition to the new business we've onboarded during the very end of the last financial year, we actually have new business in the pipeline as well in our value-added poultry business and that we've had confirmation of more cooked, ready-to-eat poultry for a premium retailer, and that will come on stream at the beginning of the next financial year, so to the end of this process. We have actually onboarded some of that business early. But the balance of that business will come in from February and March next year. The new houmous and dips facility, that will come on stream at the end of the summer, and that will really support our Ramona's brand growth. But also having the ability to serve our label customers and the facility there will give us significant competitive advantage through investment in state-of-the-art equipment, the very best kit you can buy for making houmous, which would actually be a unique proposition here in the U.K., and nobody currently has the basket for making houmous. And that also gives us automation and a lot of competitive advantage in terms of being able to do toppings and other things to really add value and premiumize that market as well. And finally, we've invested GBP 10 million in the pet facility, which leaves us really fit for future growth there. That doubles our capacity. And following that successful launch of the Wainright's car business and the Step Up to Naturals ranges, we've actually now been awarded further business from Pets at Home through both range extensions in pork and chicken varieties, which were absent from their ranges, and there are some examples of that on the table. And they launched in the spring of this year. And then finally, we've been awarded significant additional volume on the Wainright's Grain Free range, which will move from another supplier between August and December in the second half of this financial year. In addition to this, as is if that's not enough, we're also working on a new innovative new range proposition for them, and that will also launch later in the year, so feeling that we're getting some real momentum with that customer there. So a lot of new volume will come on board during the course of this year. So moving on to Page 22, And really what we're going to focus on a little bit is some of the strategic enablers in terms of how this all comes together with our strategy and really leading to that differentiated business model I talk about. So that further integration is more and more becoming a key part of our strategy and deepening our value chain involvement, securing and aligning our end-to-end supply chain with key retailers and facilitating expansion against that backdrop of a declining third-party pig farmer supply chain. Obviously, that control of the supply chain also helps enormously towards the path to our net zero targets as well. We've also leveraged our integrated supply chain in chicken to deliver a reduced stocking density solution for our key retail partners, and that gives us early-mover advantage on this while the rest of the industry will be scrambling for agricultural spaces or the retailers will follow suit and look to reduce the stocking density and improve animal welfare credentials. Moving on to lean processing, that focus on capacity, capability and efficiency, that planned investment at Preston is a real example of this, of how we invest heavily in market-leading assets to enable our market share gains across not only the business on the fresh pork from that side. Obviously, that's also a key enabler in the value-added businesses in the wider group, and then indeed moving into new areas such as that houmous and dips facility I mentioned earlier. Iconic and relevant products, this is really where we focus on premium and, again, add value to the business that way, add value to the carcass but also innovating in products to still ever-changing customer needs, particularly around that health, convenience and versatility that we talk about. And finally, really close and long-term strategic customer relationships, focusing on really being close to and enabling their strategic goals as well, that was underlined by the recent Advantage survey, which is a survey that is done across all the retailers. And we actually came in top from a range of fresh suppliers, not just in the meat, fish and poultry universe, but also in the wider fresh and chilled cohort of suppliers. So that was very pleasing and a real recognition of what we're doing for our customers there. So moving on to Page 23, this is a slide actually I often use when introducing the group to a wide variety of new people we come to. And really what this is now is just to demonstrate the variety of categories within which we are now active in. And rather being sort of pigeon-holed, as we often are, as the pig specialists are, even the [ posh ] sausage makers, we're now a real varied value-added businesses. And to put this in a bit of context, combine these categories, that would equate to around GBP 12 billion worth of retail sales value alone, not to mention the opportunity in business-to-business and the out-of-home market as well. We can broadly view these in 3 buckets, adding value to the pig meat that we're obviously most known, across everything from fresh pork to gourmet sausages, gourmet bacon, slow-cooked [indiscernible] products and of course [ cooked ] meats, which is a huge category for us, and obviously also premium pastry that broadly sits in there, in particular with sausage rolls, but also premium pies and an increasing range of meal solutions actually coming from that business as well. Chicken and poultry, very much done along the fresh sides, but also ready-to-cook and ready-to-eat chicken, which was the first category that we entered into in the poultry market and also a big opportunity to grow in our coated and breaded options there as well. And then Mediterranean foods, again, you probably think that very much of olives and antipasto but we're also doing a wide range of ambient foods there, importing olive oil and pulses and sage in the [indiscernible] business under the Cypressa brand, obviously, newly added houmous and dips. And we're also the single biggest importer [indiscernible] to the U.K. market as well and have recently underpinned the contract for the McDonald's [indiscernible] fries as well, which is starting to roll in the business throughout this year. And obviously, finally, on the pet foods, we're very much in the dry dog food market, but we're actually also adding some dry cat products for Pets at Home later in the year. And that's not to mention being the U.K.'s largest supplier of hedgehog food. So moving on to the next page, and on this chart there, I'm looking to highlight the level of white space that genuinely still exists for us to continue to grow the business over the coming years. And what hopefully this highlights, obviously the darker shade there being the Cranswick share of the various categories and the other being the wider market opportunities. And really, I think what I want to highlight here is there is still [ unpulled ] market share to go forward in the core pig meat categories, and we by no means have reached any level of saturation in this market. Our chicken market share sits around 7% and bringing on new facilities also will be the key to developing this share over time. And in Continental, whilst we are the largest supplier in some categories, there's still ample opportunity to grow share. Also, we're developing new market concepts there as well and the team there are doing extremely well. So there remains the opportunity for us to grow our business, really, I think of this in 3 buckets, obviously taking market share from our competitors and winning new business throughout, expanding the category itself through our close retail partnerships and also through active promotion and [ MPD ]. And finally, of course, that drive of premium and really making premium a larger part of given categories, particularly in the sausage and bacon areas where we tend to focus on the premium end of the market, and similar in pastry actually. So hopefully, that gives you a good flavor of where the opportunity lies. So on that note, I'm going to hand back to Adam, who will talk through our strategic opportunities going forward.

Yes, thank you. Thank you, Jim. And I'll quickly wrap up before moving to Q&A. But as you've heard throughout the presentation, we've made further progress in strengthening our 3 strategic pillars of consolidation, expansion and diversification, and by doing so, delivering on our long-term sustainable growth strategy. We continue to deliver further consolidation as we gain market share in our core primary Pork and value-added Convenience categories and ongoing capital investment and expansion of our pighead underpin very much this momentum. We're investing heavily in the whole primary processing facility to enable us to process more pigs to service our growing value-added pork business, and this will culminate in GBP 100 million expenditure over the next 5 years alone. And Jim has shown that there is a huge amount of white space for us still to fill. We have a strong pipeline from secured business wins and value-added poultry to the new houmous facility in Worsley. And this will provide much needed extra capacity when it comes on-stream later in the year. This is because the Ramona's houmous brand is growing at a significant rate. We continue to make good progress in the pet food sector. So far, it's all been about the investment in that Lincoln site with a GBP 10 million CapEx program, which will double that dry kibble capacity. And that's nearing completion now and the investment in the refreshed Vitalin and Alpha range and the investment in the Pets at Home relationship will come to the fore in the latter part certainly of this year. And although it's been a tough year in that business itself, there are many parallels between that and our Crown business, where we commenced back in 2016, in our chicken business, where it took us a good number of years to establish there once we rightsized it. And we put a huge amount of effort and cost in getting that to the right shape at the same time. Over the last 12 months, we've delivered strong revenue growth across our piece. And I want to spend a bit of time talking about that rapidly expanding farming business. As I mentioned at the beginning of the presentation, it was only 10 years ago that we weren't farming pigs at all. And we only moved into the poultry farming when we acquired that Crown poultry facility. Today, we have over 10 million birds on the ground at any one time and 800,000 pigs at the same time. Our increasing self-sufficiency helps reduce market volatility and is enabling us to raise welfare and sustainability standards. The ongoing investment we are making, both organically and through acquisition, is increasing our self-sufficiency and drives operating efficiencies improvements with the associated returns. Access to higher-welfare pigs underpins this strategic customer relationship and allows us to drive premium tier growth. In fact, this ongoing investment in farming and agriculture is core now to our profitable growth and drives this competitive advantage. And finally, on Page 28,oOver the last 12 months, we've delivered strong revenue growth, strengthened our operating margins and completed 2 returns-enhancing acquisitions. We have a substantial capital investment pipeline with 3 major growth projects currently underway, and we will continue to deploy capital at pace across the business with the associated returns. We've made a positive start to the new financial year and trading in the first 6 weeks has been good with the volume momentum we saw through the final quarter of FY '24 maintained. On that ending, I'll hand it over to Q&A from the floor before then returning to any online questions that we may have.

Good morning, guys. First one, Adam, could you expand on, I suppose, the planning restrictions that you're facing at the moment to the level that you can and whether, at the moment, this is prohibitive or if it's just going to cause delays to your plans?

More of the latter, it's more delays than it is anything else, hugely frustrating because we're trying to build not just a sustainable business, but improve on what is already there. And it's somewhat frustrating. We've got -- we've been 2 years in the planning process just for a poultry site, for instance. That's just for livestock, not for the actual plant itself. We'll get there. We're absolutely going to get there. It is a timing issue more than anything else. But it's somewhat frustrating when you're trying to create not just a sustainable business, but one that is a force of real good as well.

And then, Jim, maybe one for you. Just in terms of the branded business, I appreciate you're building a new site in houmous. Cypressa's doing well. And then I saw that you've done your first advertisement in pet food. I guess are there any ambitions to increase branded exposure within the portfolio?

I think, certainly within the portfolio, yes, and that's kind of what you're seeing. I think we have to be quite mindful and targeted of which categories amply lend themselves to branding. That's where the houmous really came to mind. And if you shop that [ fixed ], it's a very bland, beige-looking, everything looks the same. And Ramona's just goes [indiscernible] look at they see a huge burst of color and all the rest of it. And that, coupled with a really good product and some marketing behind it, has really kind of ignited the customer. In a similar vein, the pet market is very brand-orientated. So it's absolutely key there that we have a good presence and a couple of market positionings between Alpha the Vitalin brands there as well. So we -- very much we're in keeping with the [ groove ] we set ourselves in that affordable premium space there.

And then last one for Mark, I just want to know sort of what the base case is on that 5% revenue growth that you're guiding to. I appreciate you had a very good year and the base is high. But equally, you've got some new business wins. Consumer confidence is decent. You've got volume momentum, GBP 20 million probably coming from the acquisitions, if you annualize it. Just give a sense of what I'm missing.

Well, I think I'll pick that one up, actually. I think, on the acquisitions, Elsham is internal. It's part of our vertical integration, so you don't see any external growth in revenue from that. Some of the big projects we've got ongoing will be for -- really for FY '26, the other value [ poultry ] that Jim referred to. And look, we can't assume that we're going to see inflation driving top line as it has been over the last 2 years as well. We've got strong volume momentum as we enter FY '25, but the comps, we've got that volume accelerated through the second half of FY '24. So we will be working hard to make sure that we keep delivering on that. So I think, look, as always, I think we like to underpromise and overdeliver, but we'll very much be focused on driving and delivering the best top line performance that we can, but in a disciplined way. Damian?

Damian from Deutsche Bank. I think the first question, I think, for you, Mark, on the returns profile, very good performance this year underpinned by an improvement in the farming business. And I think Mark, you -- Adam, you've talked about sort of how important that is going forward. Do we need to think about a change in the medium-term expectations for the returns profile of this business?

I think we set -- when we set 15%, and I think if you look at the targets that we set, 15% and ROCE 6% on our operating margin. I'd be disappointed if we're falling -- if we fell below those. They are what I would really see as baseline targets. Historically, we've delivered stronger returns, but we've had a very heavy investment program over the last 3 or 4 years, and that is set to continue. So there is still a mature CapEx in the pipeline. So I think, as CapEx matures, there's more immaterial CapEx replacing that. I'd like to say whether you reset the target is a moot point, but I think we clearly want to continue to deliver strong returns for the business.

Great. Jim, I think, last time you were here, you talked about wanting to improve the capacity utilization and added poultry. And I think you've announced some new business wins today. How far are you sort of on that journey? Are those businesses now full, or is there still some more work to do?

Well, if we look at the ready-to-eat category, we're actually in an investment program now that will release more capacity that will support that new business that I mentioned that comes on in March next year. And that's the constraining factor on that moving over any sooner. And then breaded, we've just taken on a big contract there, which kind of brings us up to short-term-ish capacity. But I think, as that business matures within that, I think we'll become more efficient and that will release a little bit of capacity there.

[indiscernible]

[indiscernible] [ GBP 7 ] million going into that breaded site as part of that $27 million program as well, so to support that growth, yes.

[indiscernible]

So that will give us a little bit more headroom there in the end. Yes, we're certainly getting -- it's certainly a place where they're being efficiently run, put it that way. Okay, thank you.

Okay. And maybe just one last one for Adam. There's a likelihood we're going to have a change of government at some point in the next 12 months. Is that going to change some of the things that you've sort of flagged at the start, sort of labor, planning? Is it your hope?

I live in hope. I live in help. I worry that some of the civil service isn't yet quite on the same page as whatever a new government may necessarily come up with. I mean, there are elements of the system broken. It's not just ourselves. You would hear it from many housebuilders that you would speak to, for instance, on planning in particular, and just lack of a general support and understanding. I would be hopeful of it. We continue to love it. We continue to press, but it is hugely, hugely frustrating when you're trying to add value to an economy and build something really meaningful as well. I mean, don't forget, if we're spending money down in [ Norfolk ] region, it will be the best part of GBP 250 million across the infrastructure, creating 2,000 to 2,500 jobs. So it's of significant importance to the region.

That's helpful.

It's Andrew from Peel Hunt. Well done on a good set of numbers. I'm probably going to follow on a little bit from Damian's question on the labor [ circuit ]. I sense a hint of vitriol in your comments earlier. How much of an issue is that labor issue becoming for you? Is it just margin being left on the table? Or is it becoming sort of an operational kind of issue? Obviously, you're a good employer in the industry, quite far through on things like automation. So I could argue sometime you're a bit of a net beneficiary. I'm just trying to think about how much of an issue that is becoming for you.

Yes. If you go back, I don't know, 2, 2.5 years ago, Andrew, it was a huge issue to us. The industry overall, not just the [ pighead ] sector, but it happened in [ baseline ] and the wider horticultural piece really suffered from a lack of talent within the U.K. of bringing in and the government had curbed many of our routes to the market. We've only ever asked 2 things of government. One is access to labor and access to markets. We're not a subsidized sector in any shape or form, and we're a very progressive business. We like going after business. We're very knowledgeable about our play. Our teams are literally second to none. When it was originally released that we could bring in, obviously, workers, our teams were phenomenal. Hence, I mean [ we have ] now 650 Philippine butchers. And we really went out and these are a phenomenal workforce, absolutely phenomenal. To then suddenly see the migrant Visa lift to GBP 38,700, we're covered for the time being, but it seems nonsensical as well. And the effects are going to be felt far wider than just ourselves. You've seen in the university space. You're seeing it across all the farming and agriculture. So it does need a more balanced and somewhat nuanced approach to it. This rhetoric, you'll see, it doesn't make sense. It absolutely does not make sense. I suspect, in time, there will be some unwinding of that, but it will take some time and maybe change of government and, well, maybe some time even for that new government to understand what the effect is. As it stands today, we'll come through because we've made such good inroads on it, but it is a concern going forward, yes.

[indiscernible] as you alluded to, it shows a balance in favor of investing in automation, and we've done a lot of that. Those of you who have been around our Preston facility in Hull, we'll say we're first to market not just in the U.K. but globally in some of the technology. Our I facility is best-in-class, again, not just in the U.K. but across the world. So as we continue to invest at pace, we can continue to widen that gap between ourselves and our competitors who perhaps don't have the resources to invest [ in the way ] we can.

Great. And one for Jim, I think sort of there was a slide on '24 with your market share. How much -- it was really helpful to see. But how much of -- maybe to focus on just sort of the bigger markets of poultry, do you think you can actually -- would you like to go after maybe in a 3-year view and then in a longer-term view? Sort of what's the real - is it to the levels that you're seeing in fresh pork, or?

Yes, I think that would be our long-term view. I don't think that will be delivered in 3 years either. I think -- I mean, our pork journey has taken us 50 years to get here, hasn't it? So I think we've got to understand the time line on that. But that's certainly the scale of our ambition, absolutely, yes. And then our share will be probably actually slightly ahead of even fresh pork [indiscernible]. So that's generally about moving sideways into some of these adjacent categories on the Mediterranean Foods side of the business.

Sure. There would be a 50-year journey. I assume it would be a 50-year journey into...

[indiscernible]

[indiscernible] Is it a 10-year view or...