Interim Results
Cranswick PLC
18 November 2003
CRANSWICK plc: INTERIM RESULTS FOR
THE SIX MONTHS ENDED SEPTEMBER 30 2003
Cranswick plc, the food manufacturer, announces its unaudited results for the
six months ended September 30 2003.
Highlights:
• Pre-tax profit up by 10 per cent to £11.5m (2002: £10.5m)*
• Turnover increased by 10 per cent to £134m (2002: £122m)
• Earnings per share at 19.5p, up 7 per cent*
• Interim dividend up 10 per cent at 4.4p (2002: 4.0p)
• Food sales rise by 20 per cent
• Expansion of pet business
• Strong cash inflow from operating activities
*prior to goodwill amortisation
Cranswick Chief Executive, Martin Davey, said: 'The results are in line with the
Board's expectations and, considering the tough trading environment, the
achievement of record interim profits reflects favourably on all at Cranswick.
These results include contributions from our two sandwich businesses. Both
businesses performed well and had a positive impact on the results.
'The recently completed relocation of the pork retail packing activity to the
primary processing site, which incurred capital expenditure of £5 million,
reduces handling, packaging and transportation of product and streamlines the
production process bringing consequent savings.
'Net borrowings at 30 September amounted to £14.8 million, 22 per cent of
shareholders funds, with interest cover going forward remaining at extremely
comfortable levels'.
'The first half was pleasing though the second half outcome will be aggravated
by a likely reduction in weekly sales volume in the sandwich business and by the
recent substantial increase in the prices of cereals and other animal feed raw
materials. Investment in operational efficiencies continues to be made to
offset, as far as possible, the impact of this.'
-ends-
Note to Editors:
Cranswick is a Yorkshire-based business whose activities are focused in the
food, agribusiness and pet sectors. Food products, principally fresh pork,
gourmet sausages, delicatessen cooked meats, sandwiches and continental foods
accounted for 75 per cent of sales.
Agribusiness activities embracing pig and poultry feed production, pig rearing
and pig marketing represented 15 per cent of sales. The supply of pet food and
aquatic products comprised 10 per cent of sales.
For further information:
Martin Davey, Chief Executive 07775 576426
John Lindop, Finance Director 07768 362592
Paul Quade 020 7334 0243
CityRoad Communications 07947 186694
Statement to Shareholders
Results
The results for the period are in line with the Board's expectations and,
considering the tough trading environment, the achievement of record interim
profits reflects favourably on all at Cranswick. Turnover rose 10 per cent to
£134m, profit before tax and goodwill amortisation increased 10 per cent to
£11.5m and earnings per share, prior to goodwill amortisation, are up 7 per cent
to 19.5p. These results include
contributions from our two sandwich businesses North Wales Foods and The
Sandwich Factory, acquired in October 2002 and May 2003 respectively. Both
businesses performed well and had a positive impact on the results contributing
£1.5m of operating profit.
Dividend
The interim dividend is being increased by 10 per cent to 4.4p per share. The
dividend will be paid on 23 January 2004 to shareholders on the register at the
close of business on 5 December 2003. Shareholders will again have the option to
receive the dividend by way of scrip issue.
Review of activities
The food business, which accounted for 75 per cent of turnover, grew sales by 20
per cent to £101m. The sandwich activities generated £12m of this though weekly
sales volumes in the second half are anticipated to be lower. Sales of summer
eating products, sausages and continental foods were significantly ahead of the
same period a year ago, continuing the growth trend of recent years. Investment
is ongoing so as to achieve additional operational efficiencies in the food
businesses and the recently completed relocation of the pork retail packing
activity to the primary processing site reflects this. This particular project,
which incurred capital expenditure of £5m, reduces handling, packaging and
transportation of product and streamlines the production process bringing
consequent savings. Efficiencies will continue to be sought to offset the impact
on margins brought about by higher raw material costs and pressure on selling
prices.
Agribusiness, which includes pig marketing and the manufacture of pig and
poultry feed, experienced a 30 per cent reduction in sales to £19m. This is
attributable to the further reduction in UK pig numbers of over 11 per cent and
the higher level of internal sales. Gross sales in pig marketing were 13 per
cent lower but, as a result of higher internal sales to the pork processing
activity, third party sales show a 48 per cent fall to £7m. Animal feed sales
were 12 per cent lower at £12m and with excess capacity in the sector following
the reduction in livestock numbers in recent years competitor activity is
strong.
Sales in the pet and aquatics activity increased by 37 per cent to £14m with the
majority of this rise occurring in pet foods which is especially encouraging
given that it is supported by a long term supply agreement. The main pet food
plant has been working at close to full capacity and last month work commenced
on the construction of a new production facility which will bring additional
capacity and operational efficiencies. The fish and aquatic products business
performed well and also gained sales. Plans are in place to open a third
aquatics facility during 2004 to be based in the south-west of the country to
develop sales further. The second site was opened almost 3 years ago in
Manchester and has performed well giving the confidence to continue this
controlled growth.
Cash flow and borrowings
The net cash inflow from operating activities for the six months remained strong
at £9.3m, particularly so given that this is after making good the underpayments
to pig producers amounting to £3.15m provided for in last year's accounts. The
major item which turned this operating inflow into a cash outflow before
financing of £16.5m was the £15.0m acquisition for cash of The Sandwich Factory
in May 2003. Tax and dividend payments were, as expected, ahead of the same
period last year and capital expenditure on a cash basis amounted to £4.0m, of
which £2.3m related to the retail packing facility at the pork processing plant
which was completed in October 2003. The £3.5m of loan notes issued during the
previous financial year in respect of the earn-out for Continental Fine Foods
were repaid in July 2003 leaving a decrease in cash for the six months of
£20.0m. Net borrowings at 30 September 2003 amounted to £14.8m, 22 per cent of
shareholders' funds, with interest cover going forward remaining at extremely
comfortable levels.
Outlook
As has been stated previously the Company is operating in a challenging trading
environment, in particular margin pressure in the food business and the
difficulties in agribusiness with the further decline in the UK pig herd. Set
against this background the first half performance was pleasing though the
second half outcome will be aggravated by a likely reduction in weekly sales
volumes in the sandwich business and by the recent substantial increase in the
prices of cereals and other animal feed raw materials. Investment in operational
efficiencies continues to be made to offset as far as possible the impact of
this.
The Company has quality assets in each of its businesses managed by a stable and
experienced management team seeking further opportunities to continue the
successful and controlled development of the Company.
Jim Bloom Martin Davey
Chairman Chief Executive
18 November 2003
CRANSWICK plc
UNAUDITED PROFIT AND LOSS ACCOUNT
for the six months ended 30 September 2003
Half Year Year to
31 March
2003 2002 2003
£'000 £'000 £'000
Turnover 133,784 121,921 237,686
Operating profit 10,618 9,889 19,383
Operating profit before goodwill amortisation 11,691 10,592 20,825
Interest charge 168 85 1,072
Profit before taxation & goodwill amortisation 11,523 10,507 19,753
Goodwill amortisation 1,073 703 1,442
Profit before taxation 10,450 9,804 18,311
Taxation 3,457 3,100 5,828
Profit after taxation 6,993 6,704 12,483
Equity dividends 1,819 1,609 4,930
Retained profit 5,174 5,095 7,553
Earnings per share : adjusted 19.5p 18.3p 34.2p
: basic 16.9p 16.5p 30.6p
: diluted 16.8p 16.4p 30.4p
Dividends per share 4.4p 4.0p 12.0p
Notes:
1. Basic earnings per share is based on the profit after taxation of £6,993,000
(2002 - £6,704,000) and the average number of ordinary shares in issue of
41,278,041 (2002 - 40,510,627). The calculation of diluted earnings per
share is based on 41,665,098 (2002 - 40,954,006) ordinary shares. Adjusted
earnings per share is stated before goodwill amortisation of £1,073,000
(2002 - £703,000) based on 41,278,041 (2002 - 40,510,627) ordinary shares.
2. The taxation charge for the six months to 30 September 2003 reflects the
estimated rate for the full year.
3. The accounting policies used in the preparation of the interim report for the
six months to 30 September 2003 are the same as those used for the statutory
accounts for the year ended 31 March 2003.
4. The interim report has been approved by the Board of Directors and is
unaudited. This information does not constitute statutory accounts within
the meaning of Section 240 of The Companies Act 1985.
5. The statutory accounts for the year ended 31 March 2003 received an
unqualified audit report and have been filed with the Registrar of
Companies. Comparative figures for the year to 31 March 2003 have been
extracted from these accounts and are stated after an exceptional operating
charge of £1,590,000, an exceptional interest charge of £900,000, less a
taxation credit of £747,000. Prior to these exceptional items the profit
before taxation and goodwill amortisation was £22,243,000.
6. The Company intends to post the Interim Report to shareholders on 18 November
2003. Further copies will be available upon request from the Company
Secretary, Cranswick plc, Cranswick, Driffield, East Yorkshire, YO25 9PF.
CRANSWICK plc
UNAUDITED BALANCE SHEET
as at 30 September 2003
Half Year Year to
31 March
2003 2002 2003
£'000 £'000 £'000
Fixed Assets
Intangible fixed assets 41,773 27,195 28,807
Tangible fixed assets 34,729 28,865 30,491
76,502 56,060 59,298
Current assets
Stocks 9,948 8,137 8,863
Debtors 32,631 27,396 27,045
Cash at bank and in hand 2,069 8,029 8,083
44,648 43,562 43,991
Creditors - amounts falling due within one year
Loan notes payable 1,316 1,346 4,816
Loan notes to be issued - 3,500 -
Bank overdraft 15,487 1,517 1,482
Hire purchase 99 106 100
Creditors 29,892 27,901 27,466
Corporation tax 3,582 3,743 2,702
Proposed equity dividends 1,819 1,609 3,325
52,195 39,722 39,891
Net current (liabilities)/assets (7,547) 3,840 4,100
Hire purchase due after more than one year - (87) (49)
Deferred taxation (1,994) (1,846) (1,926)
Government grants (166) (202) (184)
Total assets less liabilities 66,795 57,765 61,239
Capital and reserves
Share capital 4,151 4,088 4,143
Reserves 62,644 53,677 57,096
66,795 57,765 61,239
CRANSWICK plc
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 September 2003
Half Year Year to
31 March
2003 2002 2003
Operating activities £'000 £'000 £'000
Net cash inflow from operating activities 9,297 14,447 25,564
Returns on investment and servicing of finance
Bank interest (paid)/received (203) 23 205
Loan note interest paid (140) - (214)
Hire purchase interest paid - (1) (1)
(343) 22 (10)
Taxation paid (2,971) (2,597) (6,608)
Capital expenditure and financial investment
Purchase of tangible fixed assets (3,978) (3,240) (7,086)
Proceeds of sale of tangible fixed assets 94 172 385
(3,884) (3,068) (6,701)
Acquisitions and disposals
Purchase of subsidiary undertaking (15,122) - (3,272)
Net cash acquired with subsidiary undertaking (493) - 740
(15,615) - (2,532)
Equity dividends paid (2,975) (2,627) (4,004)
Cash (outflow)/inflow before financing (16,491) 6,177 5,709
Financing
Loan note repayments (3,500) (11,857) (12,029)
Capital element of hire purchase payments (50) (63) (107)
Issue of ordinary share capital - - 765
Net cash outflow from financing (3,550) (11,920) (11,371)
Decrease in cash in the period (20,041) (5,743) (5,662)
Reconciliation of operating profit to net cash inflow
from operating activities
Operating profit 10,618 9,889 19,383
Goodwill amortisation 1,073 703 1,442
Depreciation (net of government grants) 2,183 1,803 3,959
(Profit)/loss on sale of tangible fixed assets (20) 1 18
Increase in stocks (493) (484) (1,130)
(Increase)/decrease in debtors (3,346) (183) 346
(Decrease)/increase in creditors (718) 2,718 1,546
Net cash inflow from operating activities 9,297 14,447 25,564
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