Cranswick Stock

Good morning, everybody, and welcome to our 2026 results presentation. Delighted to welcome you all here today in another hall this time at Butcher's Hall. Alongside myself is Mark, Jim, when he gets his water down here and also several more members of our senior leadership team, which most of you will be familiar with.

Please grab hold of them at the end of the presentation if there's any burning questions, but there's three of us here as well. So hopefully, we'll be able to cover any questions that you may have after the formal presentation has been completed. If we can just turn your attention to the agenda to begin with, I'm going to comment on the progress throughout the year, Mark, as usual, on the financials. And then Jim will give you as usual incisive information regarding the commercial environment that we're facing into, and then we'll open it up to Q&A at the end of that procedure.

First of all, turning to Page 3 on the agenda. This is a slide we dwell on quite a lot and now having entered our 36 year of unbroken dividend growth, one that we want to continue to dwell upon, hopefully, for some years to come. But on Page 4, on the highlights, we've delivered a strong strategic year of growth and financial progress. This reflects the proven business model that you'll be familiar with and the disciplined execution of the long-term priorities. We've increased revenue by 9.5%. This has been underpinned by volume growth of more than 8%.

And in the U.K. Food business, then this was complemented by a record Christmas trading period that delivered revenue growth across all our product categories. Adjusted operating margin increased to 7.9%, reflecting a strong contribution, particularly from the poultry farming operations, investment in our automation, excellent capacity utilization and tight cost control. Investment across the asset base has continued at record levels with GBP 163 million spent throughout the financial year.

And we continue to deploy capital at record rates while still maintaining the ROCE at over--at 18.5%. Just looking on to the next slide. We've achieved these results through very strong operational performance, which is very much a signature of ours. This reflects the enduring strength of the customer relationships that we have, the quality and scale of the asset base and the increasing competitive advantage of the vertically integrated supply chain that we operate. And all this is complemented by the sheer quality of the--our colleagues across the business. Across our core categories, demand for the products remains strong. We're in two of the most versatile and value-driven proteins in the marketplace, and this is supported by close alignment with our strategic retail partners and an unrelenting focus on the quality, service and innovation.

We're announcing today two key developments for our poultry processing business. The first one is the extended relationship that we have grown with Morrisons. This is now a 10-year agreement. This covers our facility at Eye. It also covers our two value-added facilities Hull, and that's been complemented by investment that's been completed in those two sites over the last year as well. And secondly, and most importantly, we're now committing to a further GBP 56 million investment at the existing facility in Eye. This will lift capacity by a further 25% by the summer of next year.

And once complete, we will have the capacity to process double the number of birds that were originally envisaged back in 2019. I'll come back to that later on in the presentation. I've already mentioned the record GBP 163 million investment across the business. And this included within this is a significant progress on the major pipeline of product in capital projects undertaken. During the year, we completed the GBP 30 million expansion of the two added value facilities and GBP 27 million at our Worsley facility near Manchester on Hummus and fit out of that facility. The GBP 100 million investment in our flagship whole port primary processing site is progressing to plan with a highly automated on-site cold store facility now fully operational.

And we spent GBP 40 million across our farming and feed milling operations to expand and strengthen our vertically integrated supply chain. Both the Blakemans and the JSR Genetics businesses continue to perform ahead of our initial expectations. And I'll cover the benefits of these acquisitions in more detail later in the presentation. As we enter the new financial year, I'm encouraged by the continued development of the business and the robust demand for the product ranges. And trading in the early part of the current financial year has been in line with expectations. I'll now hand over to Mark, and then Jim will cover Mark afterwards, but Mark will cover the financial details in more detail. Thank you.

Good morning, everybody. Thanks, Adam. I'll now take you through the group's FY '26 financial performance and how we've effectively allocated and deployed capital over the last 12 months. And starting on Page 7 of the slide deck. FY '26 was another year of strong volume-led growth with record results and further strategic progress across the group. Revenue increased by 9.5%. Adjusted profit before tax rose by 11.2% and adjusted earnings per share and dividends per share were ahead by 10.4% and 11.4%, respectively. Cash generation remains a clear strength with free cash flow of GBP 268.4 million, up 25.7% year-on-year. And consequently, net debt, excluding leases, increased by only GBP 25.3 million in the year despite record CapEx of GBP 163.4 million and GBP 32.1 million of cash deployed on M&A. Turning then to Page 8 and looking at the financials in a little bit more detail.

As I mentioned, reported revenue increased by 9.5% to GBP 2,982.5 million with like-for-like growth of 6.8%, reflecting continued strong volume momentum across the group. Adjusted operating profit increased by 14.5% to GBP 237 million, with adjusted operating margin strengthening to 7.9%, up 35 basis points year-on-year and well ahead of our medium-term target. Adjusted profit before tax of GBP 220 million was 11.2% ahead of the prior year, reflecting strong operational delivery and continued discipline across the business. Adjusted EPS increased by 10.4% to 301.7p, driven by growth in adjusted profit before tax, partly offset by a modestly higher adjusted tax rate. And we are proposing to increase the final dividend by 12.5% to 85.5p per share. And this, together with the interim dividend of 27p per share gives a full year dividend of 112.5p, and that's up 11.4% year-on-year.

And as Adam mentioned, extends our record of consecutive annual dividend growth to 36 years. Return on capital employed was maintained at 18.5%, demonstrating our ability to deploy capital at scale while sustaining attractive returns. Turning now to the revenue bridge on Page 9 and looking at that in more detail. Reported revenue growth of 9.5% was underpinned by strong volume performance. U.K. food volumes increased by 8.3%, supported by new business wins and another record Christmas trading period. And in fact, U.K. food volumes accelerated from 7% in H1 to 9.5% in H2. Growth was broad-based with both volume and value expansion across all product categories.

Jim will come back to category performance in more detail, but there are three points I'll just highlight here. Poultry revenue increased by 13.9% with strong performance across fresh, prepared and cooked poultry, reinforcing the category strategic importance to the group. Gourmet revenue was up 15.3%, reflecting both strong consumer demand for premium added value ranges and the positive contribution from Blakemans, which has broadened our offer, expanded customer reach and generated cost synergies. And finally, Pet Products revenue grew by 29.8%, reflecting the successful expansion of the Pets at Home relationship, improved sales mix and continued development into an adjacent growth category.

Now from sales and looking at margin on Page 10. Targeted capital deployment and operational execution have continued to drive margin progression across each of our key metrics with margin improvement now delivered for five consecutive half year periods. And compared to H2 FY '25, gross margin increased by 62 basis points to 16.2%. EBITDA margin increased by 73 basis points to 11.6% and operating margin was 49 basis points higher at 8.2%. This sustained margin progression reflects structural and operational strength across the business, including the strong contribution from our integrated pig and poultry supply chains, strategic acquisitions, capital investment, excellent capacity utilization and, of course, disciplined cost control.

Now looking -- moving on to Page 11 and looking at our cash flow. We delivered strong free cash flow with record investment. Net debt increased by GBP 68.4 million to GBP 240.8 million, including lease liabilities of GBP 175.8 million. Strong EBITDA-related inflows of GBP 336.4 million were absorbed by investment in working capital and biological assets of GBP 26 million, including investment in long-term strategic partnerships. Tax paid of GBP 47.3 million, which was GBP 5.8 million higher than FY '25, reflecting the step change in profit. Record net investment of GBP 194 million across CapEx and acquisitions, which I'll come back to later in the presentation; and dividends of GBP 55.1 million, up GBP 5.6 million year-on-year, reflecting the increase in the FY '25 final and FY '26 interim dividends. Employee benefit trust share purchases were GBP 22.1 million, and we made lease payments of GBP 26.5 million.

So lease liabilities increased by GBP 43.1 million, primarily to support growth in fresh poultry as we transitioned to lower stocking densities and continue to add capacity. Importantly, we retained our an investment-grade balance sheet throughout this period of our elevated investment program with net debt, excluding lease liabilities of just 0.2x EBITDA, preserving substantial financial flexibility. And looking at cash generation over the long term on Slide 12. Our cash generation has been consistently strong over the long term with nearly GBP 1.4 billion of free cash flow generated over the last 8 years. That cash flow has been allocated in a disciplined manner, balancing reinvestment, value-accretive acquisitions and shareholder returns. We've reinvested more than GBP 800 million in capital expenditure and over GBP 200 million in acquisitions, strengthening the business and extending our competitive advantage. We've also returned nearly GBP 300 million to shareholders through our progressive dividend policy.

And on the right-hand side of that slide, you can see that following a successful refinancing process earlier in the financial year, we now have a GBP 360 million revolving credit facility through to July 2029 with the option to extend for a further 2 years and to access a further GBP 90 million on the same terms. This gives us substantial headroom to support our growth strategy. Now as I mentioned, coming back to CapEx and looking at that in more detail on Slide 13. We invested a record GBP 163 million across our asset base in FY '26, in line with our framework of investing around 50% of EBITDA to support capacity expansion, efficiency improvement and long-term growth. This included GBP 40 million in farming and GBP 123 million across our industry-leading operating asset base. And as Adam mentioned, we're announcing today a new GBP 56 million commitment at our fresh poultry facility in Eye to increase capacity by a further 25% by summer '27. And again, Adam will come back and comment on this in more detail in a moment or two. We also made significant progress across our pipeline of earnings-enhancing capital projects.

And highlights on this slide include the GBP 100 million multiphase expansion of our Hull Fresh Pork primary processing facility, which is progressing well and will substantially increase site capacity alongside a newly highly automated on-site cold store, which is now fully operational, completion of the GBP 30 million expansion of the two value-added poultry sites and that GBP 27 million fit-out of the Hummus Dips facility in Worsley. Turning now to Slide 14 and looking at return on capital. Return on capital was maintained at 18.5% for a third consecutive year and ahead of our long-term average despite a GBP 283 million increase in average capital employed over that 3-year period. This reflects a proven track record of disciplined capital deployment while sustaining attractive returns and remains a core part of our investment case.

Turning to Slide 15. This slide provides a useful reminder of how our guiding principles, strategic enablers and established growth strategy combined to create value. We continue to execute consistently against this model. And in FY '26, again delivered ahead of each of our medium-term targets, reinforcing our long-term value creation credentials. Turning now to Slide 16. It is a busy slide, but I'll just pick out a couple of points here. This chart illustrates the strength of our business model and strategy and how they continue to support sustainable long-term compounding growth. Over the last 5 years, we've delivered 9.5% compound annual revenue growth and improved operating margin by almost 100 basis points. Consistently strong cash generation has enabled us to invest at pace in our asset base and in targeted M&A, including this year, Blakemans and the Fridaythorpe feed mill.

And we've sustained a return on capital employed in the high teens, well ahead of our weighted average cost of capital. The resilience of our business model has been proven repeatedly, supporting continued investment, strong cash generation and that 36 consecutive year of dividend growth. These strengths underpinned by this resilient business model and our industry-leading asset base continue to differentiate Cranswick and position the group well for further development in the current year and beyond. Now turning to Page 17 and looking at our capital allocation framework. Our resilient business model is supported by a clear and disciplined capital allocation framework, which remains central to long-term value creation. As a reminder, we will continue to invest in the business to support our growth strategy with medium-term CapEx guidance of around 50% of EBITDA to add capacity, capability and automation.

As I mentioned, in FY '26, we invested GBP 163 million, and we continue to see a strong forward pipeline. We will continue to pursue complementary bolt-on M&A with returns ahead of group WACC. During the year, this included, as I mentioned, the GBP 32 million acquisition of Blakemans and the purchase of the Fridaythorpe feed mill. We will maintain a progressive dividend policy with cover of at least 2.5x -- in FY '26, that cover extended to 2.7x despite that 11.4% increase in the dividend. And we will maintain an investment-grade balance sheet with targeted leverage, excluding leases of less than 2x EBITDA. So to summarize, we delivered revenue growth of 9.5% with U.K. food volumes of 8.3%, adjusted profit before tax of 11.2% and adjusted earnings per share up 10.4%.

Cash generation remains strong, and our balance sheet continues to provide substantial resilience and flexibility. We are investing at record levels across our asset base to expand capacity, enhance capability and drive efficiency gains. And of course, we're continuing to increase our dividend. Our business model remains robust, cash generative and disciplined in its deployment of capital, positioning the group to continue delivering sustainable growth and attractive returns to shareholders over the long term. I'll now hand you over to Jim, who will talk you through the commercial performance in more detail.

Thank you, Mark, and good morning, ladies and gentlemen. So in the usual format, I'm going to focus on the commercial developments of the group, looking at the broader market context before outlining our progress in '25, '26 and then concluding with the outlook for the current financial year. So just moving on to the slide of the retail and consumer trends. And the U.K. retail market obviously remains extremely competitive. But the key point I would point to is where fresh and chilled growth is actually running at 5.7%, so considerably ahead of the read on total grocery. The growth in the recent year has been led by Sainsbury's and Tesco, up 7.4% and 7.3%, respectively, so very much leading the charge for the larger format retailers.

And this has been at the expense of Asda, where we're continuing to see decline down 2.4% and Morrisons actually growing at 2.8%, but behind the market and therefore, losing share. M&S are continuing their growth, very much fueled by their premium focus, but also by products kind of going viral and appealing to that younger TikTok generation. And the discounters, of course, remain a really important part of the market landscape, Lidl leading the charge here, up 13.2%, the fastest grower of all retailers and Aldi up 7%. So once again, returning to growth following a period of underlying volume decline. And I think when you look at this chart, reflecting on it, it's worthy of note that Aldi is now bigger than Asda and actually, M&S in food isn't far behind Morrisons. So quite a far cry from the old days of the big four.

And I think it'd be quite interesting how this chart looks in a year or maybe 2 years' time. I think it could be rather different. From a category perspective, protein is central to the consumer diet and pork has actually been the standout performer. Pork is now the fastest-growing protein, leveraging its value credentials and sales of pork mince were actually up 31% year-on-year as it substituted for beef mince at literally twice the price. Chicken growth, of course, continues to increase with its affordability and health credentials. And if you look at overall beef demand, it remains there, but price inflation has really started to affect accessibility for many households, impacting volumes they're down 8.9%. So these are some pretty stark figures that we wouldn't be used to. Clearly, no growth coming from meat substitutes with volumes in significant retreat with the ultra-processed connotations, poor health, poor taste and also expensive.

And volumes are holding up well, though overall in the marketplace and meat consumption continues to grow as that key source of protein in a healthy diet that I mentioned. So moving over the page and obviously, inflation and price flows have once again been key. So over the last financial year, this has been very much about the continued rise in increases in both living wage and national insurance costs very much weighing down on employers. We did successfully manage these headwinds through our open book structured price mechanisms that we have in place with all our key customers. And really, this disciplined and transparent approach allows us to recover cost inflation and keep our margins stable. Looking on to this year, I think we're once again in a year of volatility with input costs, and we certainly see this as an ongoing feature of our market.

Pig price has actually been reducing in the U.K. and now we're showing one of the larger gaps to the EU pig price. There are actually a lot of pigs available right now in the U.K. marketplace due in some part to productivity gains, but also some quiet expansion of the herd by independent producers. And this will be leading to some excess pigs in the market over the next year. Feed prices were actually reducing, but they're starting to tick up again post the conflict in the Middle East. And that conflict is, of course, impacting the current year, mainly at the minute in the impact on fuel prices. Packaging prices are about to move up imminently.

And of course, we're seeing those elevated fertilizer prices as well, likely to lead to impact on base agri commodities further in the future. We're tracking all the impacts of this closely and in consultation with our key retailer partners on a weekly basis. So we have a strong level of confidence of managing these and getting them through the next model reset. The other point with this, when you look at the overall affordability despite the inflationary pressures is that pork and chicken prices have inflated way behind all of the proteins. So it compounds that proposition of pork being the best value proposition in the protein category. So moving on the page and in terms of our commercial performance for last year. So pork sales were up 3% year-on-year.

Retail sales very much driving the growth, particularly with that performance in Tesco, Sainsbury's and M&S. The overall volume actually was up 5%, reflecting that reduction in pig and feed prices year-on-year. Sales in convenience were up 7.3%, with volume up 1.8%, reflecting a change in product mix and towards more premium and value-added ranges. We had an excellent performance in the Gourmet business, up 15.3%. Again, the premium ranges outperforming, coupled with that integration of the Blakeman sales ledger into the group. And sausage and bacon within that did particularly well with volumes at record levels over that key festive trading period. Our poultry business up 13.9% with increased numbers processed at up to peaking at 1.6 million birds a week, but also new value-added ready-to-eat chicken volumes with a premium retailer.

And at Cranswick Pet products, sales were up 29.8%, reflecting a better quality sales and price value mix as we delivered the first year -- or the first full year, I should say, of our initial Pets at Home volume. And we've recently actually onboarded the AVA range, which now gives us sole supply of the dry kibble range across dog and cat food. From a channel perspective, retail sales were up 9%, ahead of group and ahead of market. And even as our biggest channel is taking an ever-increasing share of our group revenue. Manufacturing sales actually in line up 9% Food service has been a challenging market, but our sales grew by 35%, onboarding the Blakemans acquisition while also actually being aligned to the best performing of the out-of-home brands, which has actually protected the downside from that point of view.

Export sales declined by 1%, reflecting lower prices, particularly in China due to global supply of pig meat. So moving over on to Page 5 of innovation and obviously, one of my favorite slides, but really, this is a key driver of our growth, closely aligned to some of these evolving consumer trends and that desire for better, healthier and more convenient foods. Therefore, healthy, protein-rich and minimally processed product ranges are absolutely at the forefront of our product development plans. So one to call out would be our M&S -- just six ingredient sausages range, and they've been a standout success and really demonstrate our ability to lead in this space. This is a range that kind of went viral on TikTok, with six ingredient sausages, and they've now become the top-selling sausages in the M&S range.

They're only containing store covered ingredients, no preservatives and no additives. In a similar vein, we actually removed all the ultra-process ingredients for M&S' roast poultry range as we onboarded that volume in the summer of last year. And we've just launched ready-to-cook and ready-to-eat versions of the -- just 6 Dinky sausages, again, with UPF-free ingredients completely removed. So I think you can expect more and more innovation from us in this kind of space. Moving on to premium. Of course, premiums are a huge part of our strategy and really that continued expansion we've done of premium and chef-led ranges across our range with our retail partners.

These ranges are resonating really strongly with consumers seeking higher-quality restaurant style experiences in the home. An example of that would be Tesco Finest Chefs collection range, which showcased how far we can actually push the boundaries of quality within our chilled center-of-plate meals to deliver a true chefs quality. Our M&S Tom Carriage Brief Wellingtons for customer food to order, again spike media retention over Christmas, and we work with them on products such as also a Korean rib Rack and a Tom Carriage Steak and Kidney Pie from Yorkshire Baker. Super premium sausages and bacon really focusing on making the very best product we can with the Sainsbury's Taste the Difference Discovery Gourmet sausages and the Tesco finest Woodall's Signature bacon pushing the boundaries of quality in this space.

Our new premium Hummus Dips ranges highlight our authentic and premium production methodology, completely differentiating us from the competition. That Pickybits moment is not just about picnicking though, it also stretches into hot eating and sharing occasions in our Mezze and Tapas ranges from the Continental business. On to convenience, and we're capitalizing on some of these changing eating occasions, particularly the growth of sharing and grazing formats, that Pickybits I just mentioned a second ago, Mediterranean inspired dishes and convenient premium meal solutions are all areas where we continue to innovate and grow.

One example might be our Halloumi Kebabs. We're already actually the U.K.'s largest importer of Halloumi in the U.K., but we're now looking to add value to these such as the new fire pit range in Tesco for Halloumi Kebabs. -- and Mediterranean grazing with convenient platter formats also helps customers discover these new combinations even when they're on the go, things like the taste of different snack platers I've got there are the Tesco Finest Caprese platter with Sicilian Nocellara olives, marinated Sicilian cherry tomatoes and mozzarella pearls along with bruschetta bites. Examples of all these ranges, as always, are available at the back of the room. And really, I think these now highlight the broad product range that the Cranswick Group has to offer, now very much a value-added food producer operating over many exciting growth categories.

So moving on to Page 22 and the commercial outlook. we're looking in a place where all categories are well set up for growth. The outlook for this financial year looks positive with growth opportunities across all product areas based on that strategy of building on long-term consumer partnerships and leading innovation with iconic and differentiated product ranges. So in terms of Pig meat, the volume from the Sainsbury's 10-year deal has now been onboarded successfully, and we look forward to growing this volume with them in partnership going forward. We are driving innovation and further premiumization in pig meat and those healthy value-added ranges. We've also managed to secure some retail frozen volume with two retailers post the acquisition of Blakemans with that new capability for retail-ready frozen sausages as we integrate that business into the wider group.

In poultry, we've onboarded some new premium breaded chicken lines over recent times and have actually just been notified of a single significantly large ready-to-eat chicken order with the U.K.'s largest retailer, which will actually onboard in the autumn of this year. In Continental, the business continues to grow with our exceptional innovation pipeline and an ever broadening product portfolio as well as the new Hummus facility now fully commissioned and delivering efficiencies. The Pet business is well placed to grow again with the award of sole supply contract for all of the dry pet food for pets at home, adding further volume to our 10-year partnership agreement.

So in summary, we've delivered another year of strong commercial progress. We've grown volumes, strengthened our customer partnerships and continue to lead through innovation whilst maintaining margin discipline in a volatile and competitive environment. So I remain confident in the outlook and in our strategy to deliver sustainable long-term growth. I'll now hand back to Adam for the operating and strategic review. Thank you.

Thank you, Jim. I'll just briefly recap on the strategy on the update of the recent acquisitions and the further expansion of the Eye facility and then quickly move on to Q&A. But the growth strategy continues to build on the strength of the business, as both Jim and Mark have alluded to. We continue to grow the cash-generative core range through the focus on quality, the affordability of the healthy proteins that we produce, and we continue to invest in the supply chain and across the asset base. We'll continue to diversify and strengthen the business through a focus on the innovation and complementary acquisitions that have become the hallmark of our growth and success.

Over the last 10 years, we've delivered compound annual revenue growth in excess of 11% -- adjusted profits before tax, earnings per share and dividend per share are all comfortably in excess of the 11% over that period. With a continued focus on the strategy of consolidation, expansion and diversification, we're confident we'll continue to deliver strong and sustainable compound growth over the long term. Just briefly on to Page 26, recap on the three recent additions to the group as it demonstrate the successful onboarding and the delivery of this ambitious growth. The acquisition of JSR Genetics just over a year ago and the addition of dedicated pig genetics production has significantly enhanced the competitive advantage of our vertically integrated supply chain. Seamless Feedback from the downstream breeding, rearing and processing operations and enhanced genetic selection is driving the benefits across the farm productivity and product quality.

This genetics is the leader in the marketplace by quite some distance. It drives the core business. It enables innovation in the pork products, and it strengthens the customer partnerships that have become a hallmark again of what we do. With the Blakemans acquisition during the first half of the year, this is a well-invested manufacturer of raw and cooked sausage. This acquisition enables us to more effectively serve the identified white space in the food service sector where Blakemans is focused. By bringing this into the group and the business into the group along with the colleagues, we've unlocked significant procurement synergies for the business and strengthen the strategic customer relationships. Blakeman's product range is in strong demand. It reflects very good value for money, and we've now secured its first ever retail listing with a frozen range for one of our leading retail partners. We're investing in automated pigs and blankets production at the site to further enhance our capacity as we anticipate continued growth for these products continuing.

And finally, the Fridaythorpe Mill, the addition of this mill represents a step change in our feed milling operations. Alongside ongoing capacity expansion in the existing estate, Fridaythorpe significantly increases our self-sufficiency in pig feed milling. Through bringing this production capacity in-house and matching it with our demand, we can rationalize the ranges, rationalize the diets, maximize operating efficiencies whilst also capturing margin in the supply chain. Just turning to Page 27. As briefly mentioned, I'm very pleased today to announce today that we are now committed to a further 25% increase in the fresh poultry capacity at our existing facility in Eye. This is a GBP 56 million investment. When we first commissioned the site, it was designed for a capacity of 1 million birds. By the end of 2027, we will increase this to over 2 million birds per week.

This will be achieved through the addition of second processing line and a small expansion of the site footprint. This new investment supports our ambitious poultry plans, giving us significant headroom for growth. I would also highlight that we're continuing to make good progress on the search for a suitable second location. We have the balance sheet and the management resources available to deliver this project, and there are a number of sites that we hopefully are getting close to succeeding on. On Page 28, over the last 12 months, we've delivered strong volume-led growth, strengthened our operating margin and the recent acquisitions are performing ahead of expectations.

We have a substantial capital investment pipeline with major growth projects underway across our fresh and added value pork, poultry, Mediterranean food and farming operations and continue, as you will be aware, to deploy capital at pace across the business, generating strong associated returns and adding significant headroom for future growth. We've made a positive start to the new financial year with trading in early part of the year in line with expectations and robust demand for the product ranges continuing. And finally, before moving on to Q&A, I just want to give a good shout out to our colleagues.

This is only -- our success is entirely down to the people that we employ within this business. They are quite amazing. And the success of this business is entirely down to them. The focus on the quality of the service and the operational excellence continues to distinguish and put clear blue sky between ourselves and the competition. And I'd like to thank them all for their outstanding contribution to the year. Thank you, everybody, for coming today. I really appreciate your attendance today. Well, thank you very much.

Good morning, everybody, and welcome to our interim results presentation. Delighted once again to welcome you to Butcher's Hall. Alongside myself and Mark presenting, there's also several members -- more of our senior leadership team here that will be available for you to ask any further questions at the end of the formal presentation.

If I can just direct your attention, please, to the agenda on Page 1. I'm going to comment on the progress that we've made throughout the course of the first half of the year. Mark, as usual, will run through the financials, and then Jim, to give a more in-depth view of his take on the wider commercial market, which I know you guys will take an awful lot of interest in.

But if I can just direct your attention, please, to Page 3 of the deck. We've made substantial progress in delivering on the strategy in the first half of this year. Our revenue increased by more than 10%. This was underpinned by volume growth of 7% in our U.K. food business, and we've delivered revenue growth across all of our product categories. Adjusted operating margin increased to 7.7%, and this reflects a strong contribution from our poultry farming operations, investment in the automation throughout the course of the business and excellent capacity utilization along with tight cost budgetary controls.

Investment across the asset base has continued at record levels with almost GBP 90 million spent in the first half. The GBP 100 million investment program at our facility in Hull on our primary processing site continues unabated, and this will take our throughput of pigs from that site from its current level at 35,000 pigs a week to a maximum capacity of 50,000 pigs on that site.

In mid-September, we completed the purchase of the Fridaythorpe mill. This is based in East Yorkshire and this was purchased from AB Agri, and this increases greatly our pig self-sufficiency and brings it more in line with our poultry capacity. Integration of the recent Blakemans acquisition as long as JSR Genetics has gone particularly well, and I'll come back on to that in the strategic performance of the business later on. And I'll cover the benefits of all these additions and how the effect that that's having in the wider business.

If I can just ask you to turn to Page 4 on the financial metrics. This demonstrates that we've now delivered another record performance in the first half of the year and that we continue to deliver on the ambitious growth plans that we set out before now. I've already highlighted the strong volume-led growth and improvement in operating margins. And indeed, the adjusted EPS was 9.3% ahead of the corresponding period last year.

Our cash generation was in line with our medium-term target at 90%. And despite the record capital expenditure and the money spent on acquisitions, our leverage remains extremely low, and we have maintained our return on capital employed at just over 18% as we continue to effectively deploy capital and generate these strong returns. And following on from that, we'll be announcing today the increase of the interim dividend by 8% to 27p per share.

And I'll now hand over to Mark, who will cover in more detail, the financials.

Thanks, Adam. Good morning, everyone. As always, I'll just spend the next few minutes running through the half 1 financial highlights. And throughout the presentation, unless I say otherwise, I'll be referring to adjusted numbers, which exclude the impact of IAS 41, which you'll see has had quite a bit of volatility on the statutory measures and amortization of acquired intangibles and impairment of intangible assets. If you want to see the reconciliations between adjusted and statutory measures, they're shown in the appendix at the back of the slide deck.

So turning to the financial highlights on Page 6 of the deck. And just continuing what Adam has just talked us through, we've delivered another period of strong growth across all key metrics. Double-digit revenue growth, a 9.7% increase in adjusted PBT and strong EPS and DPS growth as well. Our cash conversion continues to be strong, with free cash flow of GBP 97 million. And net debt excluding leases increased by GBP 126.4 million over the period, reflecting record capital expenditure, the acquisition of Blakemans and the Fridaythorpe Mill, and growth in working capital, particularly our stock build as we build towards our peak Christmas trading period.

Turning to Page 7 and looking at the numbers in a little bit more detail. Reported revenue up 10.4%, well ahead of our medium-term target, with like-for-like revenues up just under 8%. Adjusted gross margin was 29 basis points higher at 15.6%. And adjusted operating profit increased by 13.5% to GBP 113 million, with operating margin strengthening to 7.7%, 21 basis points higher than H1 FY '25 and 88 basis points higher than the same period 2 years ago.

Adjusted profit before tax at GBP 105.1 million was 9.7% ahead. And adjusted EPS at 144.4p per share, increased by 9.3% compared to 132.1p last year, reflecting the growth in adjusted PBT. And as Adam mentioned, we're proposing to increase the interim dividend by 2p per share or 8% to 27p per share. And again, that's nearly a 20% increase over the past 2 years. And again, as Adam mentioned, and very pleasingly, our return on capital employed remains extremely strong at 18.2%.

So moving on to the next page, Page 8. As I've already highlighted, reported revenue growth was 10.4%, underpinned by volume growth in U.K. food of 7%, reflecting new business wins and strong demand for our premium products as the U.K. consumer continues to appreciate the quality, the value and the versatility of our core pork and poultry categories.

Performance is strong across the board with growth in all our product categories. Jim will talk you through this in a lot more detail in a moment or two, but just a couple of key call-outs. Poultry revenue up 18.5%, with the onboarding of new premium retail added value business driving an improved sales mix and increased volumes, and also higher pricing in fresh poultry, reflecting the rapid and successful upscaling of our poultry farming estate to effectively transition to the new lower stocking density standard. And poultry now represents 20.9% of group revenue. Gourmet revenue up 15.9%, reflecting the acquisition of Blakemans and strong demand for our premium added value gourmet product ranges. And pet revenue, while small in the context of the group, was up 13.6%, reflecting further expansion of the Pets at Home relationship.

Now moving on to margins. On Page 9, through consistent targeted investment and focused delivery of our strategy, we've again delivered strong progression across all key margin metrics. Compared to H1 FY '25, gross margin increased by 29 basis points to 15.6%; EBITDA margin was up by 28 basis points to 11%; and our operating margin was 21 basis points higher at 7.7%, comfortably above our medium-term target of 7.5%. This margin progression reflects a strong and growing contribution from our integrated poultry supply chain, investment in process automation, excellent capacity utilization and our relentless focus on cost control.

Now moving on to cash flow and then on to the balance sheet on Page 10. Net debt increased by GBP 99.9 million to GBP 272.3 million, which includes GBP 145 million of lease liabilities. You can see a strong EBITDA inflow of GBP 161.4 million, and that was offset by a GBP 46 million investment in working capital and biological assets, reflecting investment in new long-term strategic partnerships and a very strong Christmas stock build. Tax paid in the period of GBP 20.9 million was just GBP 0.3 million higher than a year ago. And as we've already mentioned a couple of times, record capital expenditure and spend on acquisitions of GBP 121 million, which compares to GBP 51.1 million in the same period last year, and I'll come on to that in a little bit more detail shortly.

Dividends paid in the year were GBP 40.6 million, GBP 4.5 million up on last year, reflecting the 12.9% increase in the FY '25 final dividend. And as we continue to broaden out our poultry farming estate, a GBP 12.3 million increase in lease liabilities, particularly, as I mentioned, in relation to that move to lower stocking densities, where effectively, you need 20% more space now to grow the same number of birds. Notwithstanding this period of record investment, we've maintained our investment-grade balance sheet with very modest levels of bank debt and gearing, including IFRS 16 lease liabilities remains below 1x leverage.

Looking at cash generation over the longer term on Page 11. Our cash generation over the last 7.5 years, and indeed, going back much further, has been consistently strong. We generated over GBP 1.2 billion of free cash flow over this period. How do we use that? Well, GBP 738 million has been reinvested to strengthen, expand and diversify our asset base, and we spent GBP 225 million over that period on accretive acquisitions. We've also returned almost GBP 276 million to our shareholders through our progressive cash dividend policy. And over the 5 years to March 2025, we've increased our dividend by 67% and we delivered our 35th year of unbroken dividend growth and remain on track to deliver our 36th.

Following a highly competitive refinancing process which successfully completed during the period, we secured a new GBP 360 million revolving credit facility which extends through to July' '29, with the option to extend for a further 2 years. We also have the option to access a further GBP 90 million on the same terms, which lifts our total facility now to GBP 450 million from GBP 300 million previously, and provides generous headroom to support the next stage of our ambitious growth plans.

Turning now and looking at CapEx in a little bit more detail. As I said, during the first half, we invested a record GBP 89 million across our asset base, with GBP 25 million of this spent on farming and feed milling and the balance of GBP 64 million spread across our industry-leading asset base. Total expenditure in the period was just over 55% of EBITDA, which is slightly ahead of our medium-term guidance ratio of 50%. But I expect that rate of CapEx to continue through this year now, so we'll spend an equivalent amount in H2 to the amount we spent in H1.

As you can see, we've made significant progress across our pipeline of major capital projects. As Adam mentioned again, the transformational GBP 100 million multiphase expansion project at our [ Hull pork ] primary processing facility is progressing to plan. The GBP 25 million fit out of the hummus and dips facility in Worsley, Manchester is nearing completion. And the GBP 30 million expansion of the 2 added value poultry sites in Hull is now complete, with new premium retail business onboarded. The GBP 30 million throughput expansion project at the Eye site is ongoing. And last but by no means least, we've committed a further GBP 14 million at our Lincoln pet food facility to create capacity to manufacture new high meat content products for newly secured business with Pets at Home.

And I think it's just worth referencing because I did have a few questions about this when we -- a couple of weeks ago. The GBP 40 million of investment in our pig farming business, which we called out following the recent publication of the independent review of our pig farming operations, is not new incremental CapEx. This investment was already in the pipeline, but will now be fast tracked and completed over the next 3 years.

Turning to Page 13. And looking at ROCE, we have a proven track record of delivering attractive return on capital whilst deploying capital with discipline and at pace. This has been a fundamental element of our successful growth strategy. ROCE has remained in the high teens despite a threefold increase in capital employed over the past 10 years and remains above 18%, even with the record pipeline of CapEx.

Turning to Page 14. This slide provides a reminder of our value creation model and our medium-term targets, and we continue to successfully deliver against this model and we've again outperformed our medium-term targets.

On Page 15, we presented this slide for the first time in our Capital Markets Day a few months ago. It explains how our business model and strategy have been created and developed to deliver strong compound growth. Our H1 FY '26 results provide further compelling evidence of this capability.

Over the last 5 years, we've overlaid operating margin expansion of 104 basis points on to 9.5% compound revenue growth. We've consistently generated strong cash flows, which allow us to invest at pace across our asset base and in targeted M&A. And the Blakemans acquisition and the Fridaythorpe Mill purchase, which both completed during the period, are the latest in a long line of successful bolt-on earnings-enhancing deals. We have driven and maintained a return on capital employed in the high teens, well ahead of our WACC, and our business model and our strategy are built on solid foundations, underpinned by an unparalleled quality asset base, depth of management and balance sheet robustness.

Moving on to the capital allocation framework. We have a well-established framework and we will continue to invest in the business to support our growth strategy. We'll maintain an investment-grade balance sheet and we'll maintain a progressive dividend policy with cover of at least 2.5x EPS to DPS. And we'll continue to explore complementary targeted bolt-on M&A.

So briefly to recap from me, we've grown revenue by 10.4%, underpinned by 7% volume growth in U.K. food, increased PBT by 9.7%, and lifted adjusted earnings per share by 9.3%. We've invested at record levels across our asset base to further strengthen the foundations of the business and build the capability to deliver long-term sustainable growth. Our cash generation is strong and our balance sheet remains in excellent shape. We're increasing our interim dividend by 8%, and we have a sustainable and compelling business model, which will drive strong returns and compound growth over the long term as we continue to deploy capital at scale and at pace.

I'll now hand over to Jim, who will update you on our commercial progress.

Good morning, everyone, and thank you, Mark. So yes, I'll just take the next few minutes just to walk you through market context for our key categories, highlighting this year's commercial achievements, and then share our priorities and opportunities as we look further ahead.

So if I turn your attention firstly to Page 18. As we all know, the U.K. consumer environment remains challenging. It's cost of living pressures, political uncertainty continue to weigh on consumer confidence, and value therefore is still a primary driver of many purchase decisions. Whilst disposable incomes, on the other hand, have actually improved in real terms, food prices still remain a major concern for many customers. We've seen a clear shift away from out-of-home dining, which has created a number of opportunities for retail innovation and premiumization, which I'll come on to later, and also health and protein-rich diets are increasingly important to consumers, and actually return to scratch cooking is now evident as customers seek affordable ways of feeding themselves in a healthy way in the home.

So actually, the U.K. retail sector continues to grow, both in volume and also driven by inflation, driving the top line higher. Market share gains in absolute terms, as I'm sure you're aware, are very much driven by Tesco and Sainsbury's, well, actually, Ocado, M&S and Waitrose are starting to see some growth from a percentage point of view, really highlighting that premium opportunity and that affordable treat. The discounters, of course, though most notably Lidl, of late, maintain momentum with a compelling value proposition. It's fair to note that Lidl's trading intensity is well below that of Aldi. So I think there's still potential for further growth from the Lidl camp going forward.

The food service market is incredibly challenging. With raw material inflation, a lot of food service operators are very exposed to beef prices, which I'll come on to later. Of course, rising labor costs, all that impacting volumes and their price mix, it's becoming increasingly more expensive for shoppers to eat out of the home, therefore impacting on volume. The value-led operators in the food service sector, such as McDonald's and Greggs, however, are proving more resilient, and a lot of the new entrants in this market are targeting the growth in fried chicken.

So just quickly moving on to Page 19, and this is just really showing the volume change within the various pig, poultry, beef and lamb categories, particularly. And what you can see here is strong growth at the pig and poultry and where affordability is key, but also that versatility in the health context as well. Beef prices have risen by something like 23% in recent months, impacting volumes by nearly 12%. So these are quite profound numbers. Similar numbers on lamb volumes actually [ off ] by 21%. So a real change in the kind of mix of how consumers are managing their budget in this in this space. And one thing to call out is pork minced volumes have actually increased by about 1/3 year-on-year as consumers are switching out of beef. So some pretty profound numbers here.

So moving over the page -- on to Page 20 and just looking at our major categories. We've delivered positive growth at top line everywhere. And in most cases, very much driven by volume. So pork volumes up by 7.7%. Value was slightly behind that, really reflecting the reduction in pig price that we've seen over the period. Convenience division growing sales by 7.1%, with volume growth of 2%; poultry growing at top line by 18.5%, reflecting a couple of things there, basically -- mainly the increase in the value-added sales, but also the cost inflation associated with that move to the 30-kilo stocking density as well.

We actually also temporarily reduced the kill in the poultry sector as we transition to the agricultural footprint being lower stocking. However, that's now where we reestablished and we'll be moving forward with that again. Pet products growing by 13.6%, reflecting those better quality sales from particularly Pets at Home and reducing our lower value portfolio. And we've also seen a bounce in export sales following the reapproval of China this time last year.

So moving over to the page -- on to Page 21. Obviously, as I often call out innovation being the lifeblood of this business. And we often talk about keeping our products relevant to the consumer premium affordable, convenient and healthy products. In many cases, actually, we combine a number of these attributes.

Value, as I've been talking about today, is clearly a key part of the strategy. And during the year, we've launched several value-oriented products, often there's Aldi price match SKUs at the entry tier in some of the major supermarkets. But also looking at automating things like the marinade products you see there to make that affordable and convenient midweek meal.

It's also a key theme now that many baskets are actually containing a blend of both the value and the premium things. So where consumers see value in the trade up, they're very happy to do that. However, when there's base commodities that they don't see a perceived difference in the product, they're very happy to buy into the value ranges as well.

Premium, of course, has always been a major focus area, and the current market conditions are allowing for even more premium products. And we've actually developed a number of super premium ranges here, such as the Tesco Finest Chef's Collection range you can see there, and some super premium ranges in sausages, also a collaboration with Tom Kerridge with M&S as well. So customers are really willing to pay a lot more, and that's often reflecting that trade down from the out-of-home space I mentioned.

A lot of expansion in the convenience snacking solutions there. You can see some of our mini cooked sausages there and some of the platinum selection packs from Continental as well. And then finally, reinforcing health as well where we've been taking some of the ultra-process type ingredients out of our products and looking to much cleaner deck, more home cook style products there, which is working extremely well for us.

So moving on to Page 22. And looking ahead, I think we're very well positioned for the group's largest ever Christmas. Record volumes of pigs in blankets with 120 million units planned this year. We've got more premium gammons than ever. We're offering more sous-vide turkeys to more customers. In the last quarter of next -- sorry, in the last quarter of the financial year and the first calendar year, we're actually onboarding the additional volume from that Sainsbury's 10-year deal as we move towards a self supply pig meat scenario there. We've also actually been awarded sole supply of all Pets at Home owned brands of dry dog food, and that's adding the -- particularly their AVA brand and their grocery label products. They are transitioning into our factory between now and the end of January.

Looking ahead, priorities remain very clear under quality, value, innovation and that great customer service through our people. And this year, we were very proud to receive the Advantage Survey -- Own-Label Supplier of the Year Award, a recognition of those strong partnerships that are really key to our strategy going forward. We know there's always room to improve, and it also gives us good metrics there and where we can do an even better job working towards being our customers' most trusted supplier.

So really, just to summarize on this, we expect growth to continue through these expanded partnerships, premiumization, continued efficiency gains, supported by these long-term agreements with key customers in those retail and pet categories.

So I will now hand you back to Adam to cover the operating and strategic review. Thank you.

Yes. Thank you. Thanks, Jim. I'll now just briefly update you on the strategy as well as cover some of the more salient points over these last few months before moving on to the Q&A.

So if we could just turn your attention, please, to Page 25. The growth strategy continues to build on the key strengths of this business and has remained very consistent, as you will know, over many years. We continue to grow the cash-generative nature of the core range through our focus on high-quality, affordable, healthy proteins and added value proteins and products that resonate with our consumers. We continue to invest in the supply chain and across the asset base to drive both growth as well as efficiency, and we will further deliver expansion through our focus on the white space opportunities, as Jim has touched upon, and unlocking those adjacent categories.

We will look to extend our operational leadership and increased capacity through the significant pipeline of ROCE-enhancing investment projects. With increased capacity, we intend to gain further market share. And we continue to diversify and strengthen this business through the focus on innovation and the complementary acquisitions that we've made to date across both the supply chain and across the adjacent categories and the markets, and we'll drive and expand these categories as we diversify further into them.

Over the last 10 years, we've delivered compound annual growth in excess of 10%. Adjusted PBT, EPS and dividend per share are all comfortably in excess of this 10% over the same period. And with a continued focus on the strategy of consolidate, expand and diversify, I'm confident that we'll continue to deliver strong and sustainable compound growth for the long term.

I just want to cover briefly in more detail on the 3 recent acquisitions that have undertaken throughout the course of this year and demonstrate the successful delivery of these growth plans. JSR Genetics is a business that we've known for a lot of the years, it's probably the best part of 30 years in my instance anyway. And we are now the only U.K. processor with our own dedicated pig genetics production capability. Integration into the group is now both well progressed. And with available genetics production capacity is now fully utilized from internal demand and performance is ahead of expectations by quite some pace.

As a result, we're now extending further and investing further to expand the production capacity at this genetics production sites. To give you an idea, we've got about 45% and about 40% of the dam line and sire line addressable market in the U.K. So it's a very substantial business this when it comes to the genetic makeup of it. Seamless feedback from the downstream breeding, rearing and processing operations and enhanced genetic selection is driving benefits across the farm productivity, animal welfare and product quality. The vertical integration drives the core, at the same time, enables innovation in the products, strengthening the customer proposition and relationships that we are able to promote with a competitive advantage.

Blakemans is another business that we've known for the best part of 2.5 decades, and we acquired this business back in May. It's a well-invested manufacturer of raw and cooked sausage. The business specializes in producing for the food service sector, and it has a strong demand in its marketplace, reflecting great value for money vis-a-vis other proteins currently served in the food service outlets. This acquisition is, therefore, highly complementary to our existing retail-focused gourmet product business, and it enables us to more effectively serve identified white space in the food service sector.

By bringing Blakemans into the group, we've also been able to unlock significant procurement advantages and synergies for the business. And through this vertical integration, we've also strengthened our relationship with customers in the food service sector, such as Greggs, that was already a supplier via ourselves into that marketplace.

Fridaythorpe Mill was acquired back in September but just finished, and this again represents a step change in our feed milling operations. And alongside ongoing capacity into our existing estate, Fridaythorpe has the potential to increase our self-sufficiency on pig feed dramatically. Through bringing this production capacity in-house and matching it with our demand, we can rationalize diets, we can maximize the operating efficiency, whilst also capturing margin in the supply chain.

Just turning on to Page 27. The independent veteran review that we committed to back in May has now concluded. And on the 11th of November, we published the summary findings and recommendations on our website. We welcome those recommendations highlighted by the report, and we will improve our practices relating to the health and welfare of the pigs that we produce. The 6-point plan, along with the GBP 40 million of capital expenditure Mark alluded to before, will enable us to lead wider industry and continue to strengthen our animal welfare standards across our farming operations.

And finally, on the final page, turning to Page 28. Trading through the first half of this year has been strong. We've delivered volume-led revenue and earnings growth driven by new business wins, with a positive contribution from recent acquisitions and strengthened alignment to our key long-standing retail partners. We have a substantial capital investment pipeline, with major growth projects underway across both pork as well as poultry, mediterranean foods and our pet food businesses. We continue to deploy capital at pace across these businesses, laying strong foundations for the future growth of the business. Our Christmas order book looks extremely strong and demand for our products remain high as the U.K. consumer continues to appreciate the quality, the value proposition and versatility of our core pork and poultry ranges. And the outlook for the financial year remains in line with the Board's expectations.

And finally, before moving on to Q&A, I want to thank our colleagues for the ongoing support and commitment. The successful performance of this business is entirely down to them. When we have a problem, we deal with it. They absolutely step up to the plate every single time. So I want to put my thanks to that on the record. The culture that we fostered centers around a clear ambition to deliver strong, sustainable growth, and will allow Cranswick to continue to prosper both in the current financial year and over the long term. Thank you for attending today.