Interim Results
Cranswick PLC
19 November 2007
CRANSWICK plc: INTERIM RESULTS
GROWTH CONTINUES
Cranswick plc, the food producer, announces its unaudited results for the six
months ended September 30 2007.
Highlights:
•Sales up 22 per cent at £303.2m (2006: £247.8m)
•Profit before tax rose 16 per cent to £18.0m (2006: £15.5m)
•Earnings per share up 14.5 per cent at 27.7p (2006: 24.2p)
•Dividend increased by 10 per cent to 6.5p (2006: 5.9p)
•Strong cash generation
Cranswick Chairman Martin Davey said: 'The Company has generated further strong
growth in sales and achieved record interim profits. Sales were 22 per cent
ahead of the same period last year all of which was organic.
'In the food business the Company is gaining market share through the
development of its customer base and this, along with being positioned in a
number of premium categories which are showing good growth, is driving sales.
'A range of premium sausages under the 'Simply Sausage' brand was launched
during the period and listings have been successfully gained with a number of
grocery retailers.
'The new premium bacon factory for Cranswick Gourmet Bacon Company has recently
seen production commence and this follows on from the acquisition of the
minority shareholding in that business.
'The Board is pleased with the continued progress made by the Company. The
compound annual growth in sales in the previous five years has been 18 per cent
per annum which has been achieved by a combination of organic and acquisitive
development. The rate of growth in the six months to September 2007 has been in
excess of this and we see opportunities ahead to enable the Company to continue
its successful development.'
-ends-
For further information:
Martin Davey, Chairman 07775 576426
Bernard Hoggarth, Chief Executive Food 07836 703434
John Lindop, Finance Director 07768 362592
Cranswick plc
Paul Quade 07947 186694
CityRoad Communications 020 7248 8010
STATEMENT TO SHAREHOLDERS
Results and review of activities
The Company has generated further strong growth in sales and achieved record
interim profits in the six months ended 30 September 2007. The overall
performance was pleasing and in line with management's expectations.
Sales were 22 per cent ahead of the same period last year at £303.2m. This
increase was entirely organic growth notwithstanding the sale of the animal feed
business in May and the acquisition of DeliCo in November 2006. Profit before
tax was up 16 per cent at £18.0m compared to the same period last year and cash
flow was particularly encouraging. The increase in basic earnings per share of
14.5 per cent to 27.7p takes into account a slight reduction in the rate of
corporation tax and a small increase in the number of shares in issue.
Sales in the food business at £285.1m accounted for 94 per cent of total Company
sales. The increase in sales over the corresponding period last year was 23 per
cent and most product categories achieved double digit growth. The Company is
gaining market share through the development of its customer base and this,
along with being positioned in a number of premium categories which are showing
good growth, is driving sales. The business has absorbed some raw material price
inflation in certain areas. In addition margins in individual product categories
are, as usual, subject to varying dynamics which, in this period, included costs
associated with the outbreak of foot and mouth disease and start up costs of the
new business at DeliCo. The increase in sales has offset the impact of these.
A range of premium sausages under the 'Simply Sausage' brand was launched during
the period and listings have been successfully gained with a number of grocery
retailers. To support both this and the ongoing growth in the underlying
business there has been recent investment in additional production capacity in
the sausage production facility. Investment has also been made in other areas of
the food business to provide the production capacity to meet the anticipated
further growth in sales. In particular the new premium bacon factory for
Cranswick Gourmet Bacon Company has recently seen production commence and this
follows on from the acquisition of the minority shareholding in that business.
There are plans to maintain this programme of investment to both add capacity
and enhance operating efficiencies elsewhere in the Group.
In the pet division sales rose 15 per cent to £18.0m. The Pet Products business
experienced challenging trading conditions brought about by substantial
increases in raw material prices whilst the Tropical Marine aquatics business
performed particularly strongly and since September has successfully
commissioned the replacement building for the warehouse damaged by fire in
December 2006.
Cashflow and borrowings
The cashflow of the business has remained strong with net borrowings reducing
over the six month period by £3.3m to £72.6m notwithstanding capital expenditure
of £12.7m of which £8.1m related to the new bacon facility. The disposal of the
animal feed business in May generated funds of £5.6m with further sums to
follow. The net interest charge rose slightly to £2.2m but interest cover
improved from 8.4 times to 9.1 times.
Dividend
The interim dividend is being increased by 10 per cent to 6.5p per share. The
dividend will be paid on 25 January 2008 to shareholders on the register at the
close of business on 30 November 2007 and shareholders will again have the
option to receive the dividend by way of scrip issue.
Employees
The Company now provides employment for 4,500 people, many of whom have become
shareholders as a result of the SAYE Share Option Scheme, and on behalf of the
Board I thank each one for their contribution to the ongoing successful
development of Cranswick.
Outlook
The Board is pleased with the continued progress made by the Company. The
compound annual growth in sales in the previous five years has been 18 per cent
per annum which has been achieved by a combination of organic and acquisitive
development. The rate of growth in the six months to September 2007 has been in
excess of this and we see opportunities ahead to enable the Company to continue
its successful development.
Martin Davey
Chairman
19 November 2007
CRANSWICK plc: GROUP INCOME STATEMENT
(UNAUDITED)
for the six months ended 30 September 2007
-------- ---------
Notes Half Year Year to
31 March
-------- ---------
2007 2006 2007
£'000 £'000 £'000
Revenue 3 303,158 247,796 524,823
Cost of sales (258,793) (208,407) (438,508)
-------- --------- ----------
Gross profit 44,365 39,389 86,315
Operating expenses (24,203) (21,806) (48,958)
-------- --------- ----------
Operating profit 3 20,162 17,583 37,357
Finance revenue 91 1 6
Finance costs (2,297) (2,098) (4,707)
-------- --------- ----------
Profit before tax 17,956 15,486 32,656
Taxation 4 (5,207) (4,646) (10,002)
-------- --------- ----------
Profit for the period 12,749 10,840 22,654
-------- --------- ----------
Attributable to:
Equity holders of the parent 12,697 10,825 22,574
Minority interest 52 15 80
-------- --------- ----------
12,749 10,840 22,654
-------- --------- ----------
Earnings per share:
Basic 5 27.7p 24.2p 50.2p
Diluted 5 27.5p 24.0p 49.8p
CRANSWICK plc: GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE (UNAUDITED)
for the six months ended 30 September 2007
-------- ---------
Notes Half Year Year to
31 March
-------- ---------
2007 2006 2007
£'000 £'000 £'000
Income and expense recognised directly
in equity
Profit/(loss) on effective cash flow
hedges taken to equity 244 (37) 369
Exchange differences on retranslation of
foreign operations (2) (6) (5)
Deferred tax recognised directly in equity (411) 100 300
Corporation tax recognised directly in equity 38 - 712
-------- --------- ----------
Net income recognised directly in equity (131) 57 1,376
Profit for the year 12,749 10,840 22,654
-------- --------- ----------
Total recognised income and expense for the
year 12,618 10,897 24,030
-------- --------- ----------
Attributable to:
Equity holders of the parent 12,566 10,882 23,950
Minority interest 52 15 80
-------- --------- ----------
12,618 10,897 24,030
-------- --------- ----------
CRANSWICK plc: GROUP BALANCE SHEET
(UNAUDITED)
30 September 2007
-------- -------
Notes Half year As at
31 March
-------- -------
2007 2006 2007
£'000 £'000 £'000
Non-current assets
Goodwill 117,756 111,963 117,520
Property, plant and equipment 85,707 68,248 80,277
-------- ------- --------
203,463 180,211 197,797
-------- ------- --------
Current assets
Inventories 26,963 21,345 24,626
Trade and other receivables 73,267 58,098 66,416
Other financial assets 574 - 330
Cash and cash equivalents 6,869 4,520 2,262
-------- ------- --------
Total current assets 107,673 83,963 93,634
-------- ------- --------
Non-current assets classified as held
for sale 280 - -
Total assets 311,416 264,174 291,431
Current liabilities
Trade and other payables (74,718) (58,517) (65,073)
Other financial liabilities (23,742) (18,690) (16,933)
Income tax payable (5,775) (4,218) (3,834)
Provisions (294) (334) (289)
-------- ------- --------
Total current liabilities (104,529) (81,759) (86,129)
-------- ------- --------
Non-current liabilities
Other payables (19) (55) (37)
Other financial liabilities (55,979) (57,149) (61,544)
Deferred tax liabilities (5,677) (4,561) (6,150)
Provisions (1,588) (1,727) (1,736)
-------- ------- --------
Total non-current liabilities (63,263) (63,492) (69,467)
-------- ------- --------
Total liabilities (167,792) (145,251) (155,596)
-------- ------- --------
Net assets 143,624 118,923 135,835
-------- ------- --------
Equity
Called-up share capital 8 4,602 4,474 4,595
Share premium account 8 47,640 41,260 47,204
Share based payments reserve 8 1,488 654 1,018
Hedging and translation reserves 8 593 (56) 351
Retained earnings 8 89,301 72,570 82,564
-------
Equity attributable to members of the 143,624 118,902 135,732
parent company
Minority interest 8 - 21 103
-------- ------- --------
Total equity 143,624 118,923 135,835
-------- ------- --------
CRANSWICK plc: GROUP CASHFLOW STATEMENT
(UNAUDITED)
for the six months ended 30 September 2007
-------------
Half year Year to
31 March
-------------
2007 2006 2007
£'000 £'000 £'000
Operating activities
Profit before finance and taxation 20,162 17,583 37,357
Adjustments to reconcile group profit before
finance and taxation to net cash inflows from
operating activities:
Depreciation 4,982 4,343 9,252
Share based payments 470 123 487
Release of government grants (18) (21) (39)
Profit on sale of goodwill, property and
equipment (438) (347) (250)
Increase in inventories (2,401) (2,790) (5,329)
Increase in trade and other receivables (6,886) (4,220) (9,141)
Increase in trade and other payables 9,685 5,801 9,493
-------- -------- --------
Cash generated from operations 25,556 20,472 41,830
Tax paid (4,150) (3,562) (7,936)
-------- -------- --------
Net cash from operating activities 21,406 16,910 33,894
-------- -------- --------
Cashflows from investing activities
Interest received 91 1 6
Acquisition of subsidiaries (55) (73) (13,506)
Purchase of property, plant and equipment (12,697) (5,155) (11,979)
Proceeds from sale of property, plant and
equipment 2,693 1,070 1,147
Proceeds from sale of subsidiary 500 - -
-------- -------- --------
Net cash used in investing activities (9,468) (4,157) (24,332)
-------- -------- --------
Cashflows from financing activities
Interest paid (3,038) (2,446) (3,966)
Proceeds from issue of share capital 213 34 1,776
Proceeds from borrowings - - 10,000
Issue costs of long-term borrowings - - (40)
Repayment of borrowings (7,775) (7,675) (11,395)
Dividends paid (5,357) (4,523) (6,467)
-------- -------- --------
Net cash used in financing activities (15,957) (14,610) (10,092)
-------- -------- --------
Net decrease in cash and cash equivalents (4,019) (1,857) (530)
Cash and cash equivalents at beginning of
period (494) 46 46
Effect of foreign exchange rates 3 (10) (10)
-------- -------- --------
Net cash and cash equivalents (4,510) (1,821) (494)
-------- -------- --------
Responsibility Statement
The Directors confirm that to the best of their knowledge the condensed set of
financial statements has been prepared in accordance with IAS 34 Interim
Financial Reporting and includes a fair review of the information required by
DTR 4.2.7R (an indication of important events during the first six months and a
description of the principle risks and uncertainties for the remaining six
months of the year) and by DTR 4.2.8R (a disclosure of related party
transactions and charges therein) of the Disclosure and Transparency Rules.
By order of the Board
M Davey J Lindop
Chairman Finance Director
19 November 2007
Notes to the interim accounts
1. Basis of preparation
This interim report was approved by the Directors on 19 November 2007 and has
been prepared in accordance with the Disclosure and Transparency Rules of the
UK's Financial Services Authority and the requirements of IAS 34 Interim
Financial Reporting as adopted by the European Union. The information does not
constitute statutory accounts within the meaning of Section 240 of the Companies
Act 1985. The statutory accounts for the year ended 31 March 2007 prepared under
IFRS received an unqualified audit report and have been filed with the Registrar
of Companies. The interim report has not been audited pursuant to the Auditing
Practices Board guidance on 'Review of Interim Financial Information' and does
not include all of the information required for full annual statements.
2. Accounting policies
The accounting policies applied by the Group in this interim report are the same
as those applied by the Group in the financial statements for the year ended 31
March 2007. In the current financial year, the Group will adopt IFRS 7 Financial
Instruments: Disclosures and the amendment to IAS 1 Presentation of Financial
Statements for the first time. As these are disclosure standards, there will be
no impact on income or net assets.
3. Segmental analysis - half year ended 30 September
Turnover Operating profit
------------------- ------------------------
2007 2006 2007 2006
£'000 £'000 £'000 £'000
Food 285,148 232,116 20,905 17,638
Pet 18,010 15,680 517 946
-------- -------- -------- --------
303,158 247,796 21,422 18,584
Central costs - - (1,260) (1,001)
-------- -------- -------- --------
Group total 303,158 247,796 20,162 17,583
-------- -------- -------- --------
Assets Liabilities
------------------- ------------------------
2007 2006 2007 2006
£'000 £'000 £'000 £'000
Food 283,010 238,810 67,197 53,198
Pet 20,510 20,648 3,810 2,220
-------- -------- -------- --------
303,520 259,458 71,007 55,418
Unallocated 7,896 4,716 96,785 89,833
-------- -------- -------- --------
Group total 311,416 264,174 167,792 145,251
-------- -------- -------- --------
Operating profit for the Food activities includes £401,000 profit on the
disposal of the feed mill activities (2006: £281,000 profit on sale of property
included in Pet activities).
Unallocated assets and liabilities comprise certain items of property, plant and
equipment, non-current assets classified as held for sale, loan notes, net debt
and taxation balances.
Since 30 September 2006, the acquisition of Delico Limited and the construction
of the new Gourmet Bacon factory have increased assets within the Food segment.
Future capital expenditure under contract at 30 September 2007 was £4.7m (2006:
£0.5m).
4. Taxation: the tax charge for the six months ended 30 September 2007 reflects
the estimated effective rate for the full year of 29%. This is lower than the
standard rate of corporation tax for the year due to a credit of £0.5m which
reflects the impact on the deferred tax position of the reduction in the
standard rate of corporation tax from 30% to 28% (effective from April 2008)
which was enacted during the period.
5. Earnings per share: 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 45,785,554 (2006: 44,685,046) excluding shares held by Cranswick
Trustees Limited. The calculation of diluted earnings per share is based on
46,190,021 shares (2006: 45,148,356).
6. Dividends - half year ended 30 September
Half year Year to
31 March
---------------
2007 2006 2007
£'000 £'000 £'000
Interim for year ended 31 March 2007 of 5.9p per
share - - 2,667
Final for year ended 31 March 2007 of 12.2p
(2006; 11.1p) per share 5,587 4,959 4,959
------ ------ --------
5,587 4.959 7,626
------ ------ --------
The interim dividend for the year ended 31 March 2008 of 6.5p per share was
approved by the Board on 19 November 2007 for payment to shareholders in January
2008 and therefore has not been included as a liability as at 30 September 2007.
7. Analysis of Group net debt
At Cash Other At
31 March flow non cash 30 September
2007 changes 2007
£'000 £'000 £'000 £'000
Cash and cash equivalents 2,262 4,604 3 6,869
Overdrafts (2,756) (8,623) - (11,379)
-------- ------- -------- ----------
Net cash and cash equivalents (494) (4,019) 3 (4,510)
Other financial assets 306 - (19) 287
-------- ------- -------- ----------
(188) (4,019) (16) (4,223)
Revolving credit (2,000) 2,000 - -
Bank loans (72,794) 5,625 (60) (67,229)
Loan notes (927) 150 (336) (1,113)
-------- ------- -------- ----------
Net debt (75,909) 3,756 (412) (72,565)
-------- ------- -------- ----------
8. Reconciliation of movements in equity
Share Share Share Hedging Retained Minority Total
capital premium based and translation earnings interest equity
£'000 £'000 payments £'000 £'000 £'000 £'000
£'000
As at
1 April
2007 4,595 47,204 1,018 351 82,564 103 135,835
Profit for
the period - - - - 12,697 52 12,749
Share based
payments - - 470 - - - 470
Cash flow
hedges - - - 244 - - 244
Scrip
dividend 3 227 - - - - 230
Share
options
exercised 4 209 - - - - 213
Dividends - - - - (5,587) - (5,587)
Exchange
differences - - - (2) - - (2)
Deferred
tax
recognised
directly in
reserves - - - - (411) - (411)
Corporation
tax
recognised
directly in
reserves - - - - 38 - 38
Purchase of
minority
interest - - - - - (155) (155)
------ ------- ------- -------- ------- ------- -------
At 30
September
2007 4,602 47,640 1,488 593 89,301 - 143,624
------ ------- ------- -------- ------- ------- -------
As at 1
April 2006 4,467 40,797 531 (13) 66,604 36 112,422
Profit for
the period - - - - 10,825 15 10,840
Share based
payments - - 123 - - - 123
Cash flow
hedges - - - (37) - - (37)
Scrip
dividend 6 430 - - - - 436
Share
options 1 33 - - - - 34
exercised
Dividends - - - - (4,959) - (4,959)
Exchange
differences - - - (6) - - (6)
Deferred
tax
recognised
directly in
reserves - - - - 100 - 100
Purchase of
minority
interest - - - - - (30) (30)
------ ------- ------- -------- ------- ------- -------
At 30
September
2006 4,474 41,260 654 (56) 72,570 21 118,923
------ ------- ------- -------- ------- ------- -------
As at 1
April 2006 4,467 40,797 531 (13) 66,604 36 112,422
Profit for
the period - - - - 22,574 80 22,654
Share based
payments - - 487 - - - 487
Cash flow
hedges - - - 369 - - 369
Scrip
dividend 15 1,144 - - - - 1,159
Share
options
exercised 65 1,711 - - - - 1,776
Share issues 48 3,552 - - - - 3,600
Dividends - - - - (7,626) - (7,626)
Exchange
differences - - - (5) - - (5)
Deferred tax
recognised
directly in
reserves - - - - 300 - 300
Corporation
tax
recognised
directly in
reserves - - - - 712 - 712
Purchase of
minority
interest - - - - - (13) (13)
------ ------- ------- -------- ------- ------- -------
At 31 March
2007 4,595 47,204 1,018 351 82,564 103 135,835
------ ------- ------- -------- ------- ------- -------
9. The Board considers that the principal risks and uncertainties facing the
business in the second half of the financial year are as described on pages 19
and 23 of the Report & Accounts for the year ended 31 March 2007 dated 21 May
2007, a copy of which is available on the Company's website at
www.cranswick.co.uk.
10. In the ordinary course of business, transactions between the parent company
and subsidiary undertakings occurred during the period. These are eliminated on
consolidation.
11. The Company intends to post the Interim Report to shareholders on 21
November 2007. Further copies will be available upon request from the Company
Secretary, Cranswick plc, 74 Helsinki Road, Sutton Fields, Hull, HU7 0YW.
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