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 The company news service from the London Stock Exchange

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