Final Results
Cranswick PLC
21 May 2002
CRANSWICK plc: ANNUAL RESULTS
CONTINUE UNBROKEN GROWTH
Cranswick plc, the Yorkshire-based food producer, announces its audited results
for the year ended March 31 2002.
Highlights:
• Pre-tax profit up 49 per cent at £17.5m (2001: £11.7m)*
• Turnover increases 17 per cent to £225.6m (2001: £192.6m)
• Earnings per share rise 44 per cent to 63.0p (2001: 43.7p)*
• Recommended 33 per cent increase in final dividend to 16.0p (2001: 12.0p)
• Proposed one for one share bonus issue
• Successful integration of Continental Fine Foods
• Good start to current year
*Prior to goodwill amortisation
Cranswick Chairman, Jim Bloom, said: 'This has been another successful year for
the Company. The growth momentum has continued. The Company finished the year
with minimal net borrowings following a year of strong cash generation and is
well poised to continue its development.
'Cranswick's strong track record is evidenced by the compound rates of growth
over the past five and ten years. Over five years profit has risen by a compound
rate of 36 per cent per annum, earnings per share by 26 per cent per annum and
dividends by 17 per cent per annum.
'Continental Fine Foods, acquired in July 2001, has performed particularly well
and recorded sales significantly ahead of the comparable period pre-acquisition.
'The current year has started well and with a conservative financial structure
to support an unchanged strategy for the ongoing development of the Company, the
Board looks to the future with optimism'.
-ends-
For further information:
Cranswick plc
Martin Davey, Chief Executive 07775 576426
John Lindop, Finance Director 07768 362592
CityRoad Communications 020 7334 0243
Paul Quade 07947 186694
CRANSWICK
STATEMENT TO SHAREHOLDERS
Results
It is very pleasing to be able to report that the progress of Cranswick
continues. Increased sales, profits and earnings per share as well as the
successful integration of Continental Fine Foods ('Continental') were highlights
of a year where the growth momentum was maintained.
Turnover was up 17 per cent to £225.6m, including an 8 month contribution from
Continental and is considered in more detail below. An increase in profit of 49
per cent continues the unbroken growth record. Prior to goodwill amortization,
profit before taxation rose from £11.7m to £17.5m and earnings per share moved
up 44 per cent to 63.0p from 43.7p previously.
The Company finished the year with minimal net borrowings following a year of
strong cash generation and is well poised to continue its development.
Dividend
The Board is proposing a final dividend of 16.0p per ordinary share. Having paid
an interim dividend of 5.5p per share in January 2002 this makes a total
dividend for the year of 21.5p per ordinary share, an increase of 30 per cent on
last year's 16.5p. The final dividend, if approved by shareholders, will be paid
on 13 September 2002 to shareholders on the register at the close of business on
2 August 2002. Shareholders will again have the option to receive the dividend
by way of scrip issue.
Share bonus issue
The Board is proposing a bonus issue of one new ordinary share for each existing
ordinary share held on the bonus issue record date, 29 July 2002. The bonus
issue is subject to approval by shareholders at the Annual General Meeting of
the Company to be held on 29 July 2002. Dealings in the new shares will commence
on 30 July 2002 and share certificates will be posted on 2 August 2002. If the
bonus issue is approved at the Annual General Meeting, the final dividend will
be adjusted to 8.0p per share.
Cash flow
Cash generation remained very strong for the year with cash inflow from
operating activities up to £22.3m from £15.8m in the previous year. There was
£4.5m spent on fixed assets, £7.1m went out by way of taxation and dividends,
and the opportunity was taken to repay all the Company's medium term loans
amounting to £5.3m. With a small placing following the Continental acquisition
bringing in £4.5m, cash increased in the year by £10.0m. Net borrowings reduced
by £3.8m to £1.2m after taking into account £11.8m of loan notes issued in
respect of the acquisition of Continental and the purchase of the outstanding
minority interest in Cranswick Gourmet Sausage Co.
Consistent growth
The strong track record of the Company is evidenced by the compound rates of
growth over both the past five and ten years. Profit before tax and goodwill
amortisation has risen to record levels annually. Over five years profit has
risen from £5.0m for the year ended March 1998 to £17.5m this year, a compound
rate of increase of 36 per cent per annum; earnings per share have risen from
24.7p to 63.0p and dividends per share from 11.5p to 21.5p, compound rates of
increase of 26 per cent and 17 per cent per annum respectively.
Over ten years the compound rates of increase are 26 per cent per annum in
profits, 19 per cent in earnings per share per annum and 12 per cent per annum
in dividends per share.
This excellent track record underlines the management strategy for the
development of Cranswick.
Review of activities - food
Sales in the food activity, which accounts for two-thirds of the Company's
turnover, increased by 22 per cent to £148.9m. This includes sales at
Continental for the eight months from 30 July 2001, the date of acquisition.
Turnover in fresh pork at £68.5m was marginally below last year and was impacted
by the ban on export sales introduced following the foot and mouth outbreak.
Exports have since resumed. Sales of sausage and cooked meat at £56.4m showed an
increase of 11 per cent compared to last year. Continental has performed
particularly well and recorded sales of £24.0m, significantly ahead of the
comparable period pre-acquisition.
In the fresh pork activity work has commenced on the new retail packing facility
adjacent to the primary processing plant and is due for completion in early
2003.This will significantly reduce the amount of handling of the product
bringing with it factory efficiencies. Focus on product development has included
pork joints with date, orange and brandy stuffing as well as fresh mint and
shallot stuffing in addition to the launch of a range of kebab and marinaed
products. Barbecue and summer eating ranges have proved popular previously and
with increased volumes forecast by existing customers plus new customers gained
for the 2002 season, additional kebab production facilities have been installed
at the Lazenby site to complement those at Cottingham.
Investment was made during the year in the cooked meats and sausage business.
The Sutton Fields factory has been extended, installation and commissioning of
plant is anticipated during the first half of the current year. In addition an
adjacent site has also been acquired and will be an important asset in the
continued growth of the food activity. The Thornaby and Cottingham sausage
production facilities were also the subject of investment aimed at increasing
capacity and improving operating efficiencies.
During the year there has been a focus on developing the profile and sales
levels within the food service sector with dedicated account managers growing
the volumes with customers such as Whitbread and J D Wetherspoon. As a result
sausage sales into this sector increased substantially. With potential for sales
into this area for cooked meats, fresh pork and product from Continental there
are major opportunities.
At the retail level further progress has been made in developing the Lazenby
brand. Last year saw the launch of the 'Best of British' range of sausages under
this brand and this is now being followed with the 'Better Because' range of
reduced fat, GMO free , gluten free sausages aimed at a growing sector of the
market requiring this type of product. The range has been listed by most of the
major retailers. Another premium brand produced at Lazenby's, 'Duchy Originals',
had a substantial increase in sales producing higher royalties for the Prince of
Wales's charitable foundation.
Continental, selling product under customers own label as well as its own '
Global Deli' brand, has integrated well into Cranswick and has allowed the food
business to present a wider portfolio of products to existing and potential
customers in both the food service and retail sectors.
Continued investment in the food business in conjunction with a wider range of
products and growing customer base puts the food activity in a strong position
to continue along its growth path.
Review of activities - agribusiness
The agribusiness activity of pig and poultry feed manufacture and the marketing
of pigs did well to produce a better performance than last year against a
background of a further reduction in UK pig numbers. Despite a 9 per cent fall
in numbers sales were 8 per cent ahead of last year at £56.4m, representing a
quarter of Cranswick's total sales. In pig marketing sales were up 4 per cent to
£27.8m on the back of increased pigs being traded whilst feed sales rose 12 per
cent to £28.6m, reflecting a marginal increase in volumes and higher selling
prices following a rise in raw material costs.
The Wellingore mill moved into profit following a break-even position last time.
The business, which was purchased in March 2000 to provide additional
manufacturing capacity, was loss-making at the time of acquisition and has since
undergone a programme of cost reduction. Since acquisition there has been focus
on poultry feed sales, in addition to pig feed, and this accounts for over 30
per cent of the sales at this location.
The feasibility of introducing poultry feeds into the Driffield mill is being
assessed and these would be manufactured alongside the pig feed produced there.
The range of piglet diets produced at this mill maintained sales volumes in the
UK and recorded an increase in the export market. This was particularly pleasing
and is testimony to the growing reputation that the diets have in Europe.
The pig marketing activity which specialises in the purchase of live pigs for
sale to pig rearers and meat processors in the UK increased its market coverage
with the appointment of additional personnel during the final quarter. Initial
signs are particularly encouraging with significant increases in the numbers of
pigs traded.
The resilience of the agri activity and its ability to progress despite the
reduction in the UK pig herd marks it out as one of the stronger players in the
sector and gives confidence for the future.
Review of activities - pet
Sales from this activity which comprises the food business of Buckton's and the
Tropical Marine aquatics business rose 9 per cent to £20.3m, representing just
less than a tenth of Company sales. Food sales were up 7 per cent to £12.4m with
sales of convenience packs making good progress. Several trade shows were
attended during the year creating interest from new customers and providing the
opportunity to publicise the extended product range, which includes a wider
selection of feeding devices for garden birds. Buckton's has continued the
strategic withdrawal from the trading of imported raw materials to focus on the
development of direct growing contracts with farmers for the supply of products
such as sunflowers, pulses and maize. This improves efficiency in raw material
sourcing and provides greater control over the quality and supply.
Turnover in the aquatics business was up 13 per cent to £7.9m with increases in
both fish sales and dry goods. The opening of the Manchester facility in April
last year was successful in attracting new customers to Tropical Marine's
products and performed ahead of initial expectations. The close relationship
between Tropical Marine and 'The Deep', the recently opened visitor attraction
in Hull, meant that fish supplied by the business were showcased to more than
110,000 visitors in only its first month of opening. New products launched in
the year included the Clear Stream Filter UV unit targeted at the water garden
and pond market as well as the addition of the San Francisco Bay brand of frozen
fish foods, enabling Tropical Marine to gain a listing with one of the largest
pet multiples in the country.
The pet business has established a strong presence in each of its two areas and
will be looking to seek opportunities in which to continue its development.
Outlook
This has been another successful year for the Company. The growth momentum has
continued. Management teams in the individual business units have proven yet
again their ability to drive their operations forward and to work together for
the benefit of Cranswick. The current year has started well and with a
conservative financial structure to support an unchanged strategy for the
ongoing development of the Company the Board looks to the future with optimism.
Jim Bloom Martin Davey
Chairman Chief Executive
21 May 2002
CRANSWICK
AUDITED
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2002
2002 2001
£'000 £'000
Turnover 225,551 192,612
Operating profit before goodwill amortisation 17,979 12,323
Interest charge 515 579
Profit on ordinary activities before taxation and goodwill amortisation 17,464 11,744
Goodwill amortisation 1,201 816
Profit on ordinary activities before taxation 16,263 10,928
Taxation 4,993 3,385
Profit on ordinary activities after taxation 11,270 7,543
Equity minority interest - 104
Profit attributable to shareholders 11,270 7,439
Equity dividends 4,371 3,135
Retained profit for the year 6,899 4,304
Earnings per share (pence)
Basic 57.0p 39.4p
Adjusted for goodwill amortisation 63.0p 43.7p
Dividends per share (pence) 21.5p 16.5p
Notes
1. The profit and loss accounts for the years ended 31 March 2002 and 2001
are not statutory accounts within the meaning of
Section 240 (5) of the Companies Act 1985. The auditors of Cranswick, Ernst &
Young LLP, have made a report under Section
235 of the Act on the statutory accounts of Cranswick for the financial year
ended 31 March 2001. Such report was
unqualified and did not contain a statement under Section 237(2), (3) or (4) of
the Act and such accounts have been delivered to
the Registrar of Companies. The statutory accounts for the year ended 31 March
2002 incorporate an unqualified audit report
(which does not contain a statement under Section 237(2), (3) or (4) of the Act)
and will be delivered to the Registrar of
Companies following the Annual General Meeting of Cranswick.
2. Basic earnings per share are based on profit attributable to shareholders
and on the weighted average number of shares in issue
during the year of 19,779,885 (2001: 18,889,565). Adjusted earnings per share
are based on profit attributable to shareholders
adjusted for goodwill amortisation.
3. Subject to shareholders' approval the final dividend will be paid on 13
September 2002 to shareholders on the register on
2 August 2002.
4. The Company has adopted FRS 19 on deferred taxation during the current
year. As a result, a prior year adjustment £593,000 has been made against
revenue reserves at 1 April 2000 to incorporate a full provision for deferred
taxation as at that date in accordance with FRS 19. As a result, the balance
sheet as at 31 March 2001 has been restated.
5. The Company intends to post the Report and Accounts to shareholders on 5
July 2002. Further copies will be available upon
request from the Company Secretary, Cranswick plc, Cranswick, Driffield, East
Yorkshire, YO25 9PF
CRANSWICK
AUDITED
CONSOLIDATED BALANCE SHEET
31 March 2002
2001
2002 (As restated)
£'000 £'000
Fixed Assets
Intangible assets 27,898 15,982
Tangible assets 27,907 25,296
55,805 41,278
Current assets
Stocks 7,653 7,234
Debtors 27,129 21,001
Cash at bank and in hand 13,811 3,372
48,593 31,607
Creditors - amounts falling due within one year
Loan notes payable 13,203 1,516
Bank loans - 1,875
Bank overdraft 1,559 1,144
Hire purchase 107 132
Trade and other creditors 28,823 18,487
Corporation tax 3,240 2,154
Proposed equity dividend 3,265 2,284
50,197 27,592
Net current (liabilities) / assets (1,604) 4,015
Total assets less current liabilities 54,201 45,293
Creditors - amounts falling due after more than one year
Bank loans and hire purchase 149 3,674
Provision for liabilities and charges
Deferred taxation 1,846 1,909
Accruals and deferred income
Government grants 184 221
52,022 39,489
Capital and reserves
Called-up share capital 2,037 1,902
Share premium account 27,345 20,593
Profit and loss account 22,640 16,715
Equity shareholders' funds 52,022 39,210
Equity minority interest - 279
52,022 39,489
CRANSWICK
AUDITED
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2002
2002 2001
£'000 £'000
Operating activities
Net cash inflow from operating activities 22,290 15,760
Returns on investment and servicing of finance
Hire purchase interest paid (7) (21)
Bank interest paid (648) (588)
(655) (609)
Taxation paid (4,629) (3,412)
Capital expenditure and financial investment
Purchase of tangible fixed assets (4,456) (3,276)
Proceeds of sale of tangible fixed assets 221 266
(4,235) (3,010)
Acquisition and disposals
Purchase of subsidiary undertaking (170) -
Net cash acquired with subsidiary undertaking 1,931 -
Part purchase of minority interest (142) (631)
1,619 (631)
Equity dividends paid (2,500) (2,773)
Cash inflow before financing 11,890 5,325
Financing
Issue of ordinary share capital 4,703 65
Medium term loan repayments (5,312) (1,407)
Loan note repayments (112) (108)
Capital element of hire purchase payments (1,145) (273)
Net cash outflow from financing (1,866) (1,723)
Increase in cash in the year 10,024 3,602
RECONCILIATION OF OPERATING PROFIT TO NET
CASH INFLOW FROM OPERATING ACTIVITIES
Group
2002 2001
£'000 £'000
Operating profit before goodwill amortisation 17,979 12,323
Depreciation, net of government grants 3,752 2,800
Loss on sale of tangible fixed assets 192 99
Decrease /(increase) in stocks 441 (1,045)
Increase in debtors (2,046) (932)
Increase in creditors 1,972 2,515
Net cash inflow from operating activities 22,290 15,760
This information is provided by RNS
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