Interim Results
Cranswick PLC
20 November 2006
Embargoed 7am Monday 20 November 2006
CRANSWICK plc: RECORD INTERIM RESULTS
Cranswick plc, the food producer, announces its unaudited interim results for
the six months ended 30 September 2006.
Highlights:
•Turnover increased 14 per cent at £248m (2005: £217m)
•Profit before tax up 13 per cent at £15.5m (2005: £13.6m)
•Earnings per share rose 12 per cent to 24.2p per share (2005: 21.6p)
•Interim dividend of 5.9p per share (2005: 5.4p) - a rise of 9 per cent
•Organic growth drives strong cashflow
•Acquisition of DeliCo since period end
Cranswick Chairman, Martin Davey, said: 'It is pleasing to be reporting
continued growth at Cranswick in the six months to September. Record sales and
profits were achieved and cash generation was particularly encouraging.
The business is positioned in a number of premium categories which are showing
strong growth and this coupled with increased market share is driving sales.
The Board recently announced the acquisition of DeliCo, a producer of pre-packed
cooked meats, which will provide capacity to enable Cranswick to accelerate the
development of its customer base and facilitate its record of growth.
The Company has talented operational management teams, is well positioned in a
number of growth markets and has capacity available in most production
facilities to meet the anticipated increase in activity. The Board looks with
optimism at the ongoing development of Cranswick'.
For further information:
Cranswick plc:
Martin Davey, Chairman 07775 576426
John Lindop, Finance Director 07768 362592
Bernard Hoggarth, Chief Executive, Food 07836 703434
CityRoad Communications 020 7248 8010
Paul Quade 07947 186694
STATEMENT TO SHAREHOLDERS
Results and review of activities
It is pleasing to be reporting continued growth at Cranswick for the six months
ended 30 September 2006. Record sales and profits were achieved and cash
generation was particularly encouraging.
Turnover for the six months of £248m was 14 per cent up on the same period last
year reflecting strong organic growth. Profit before tax rose 13 per cent to
£15.5m and earnings per share of 24.2p was 12 per cent ahead of the comparative
interim period. These figures include an exceptional gain of £0.3m on the sale
of a surplus freehold property.
Sales in the food division, which includes the original agribusiness activity,
totalled £232m accounting for 94 per cent of total Company sales. This compared
to food division sales of £202m for the corresponding period in 2005. The 15 per
cent increase in sales is all organic growth. The business is positioned in a
number of premium categories which are showing strong growth and this coupled
with increased market share is driving sales.
Fresh pork sales were up 29 per cent and sausages 27 per cent. These exceptional
increases were made possible by the strategic investment in capacity in recent
years. In addition charcuterie and cooked meats both recorded good increases
over the previous year's comparable figures. In cooked meats our pre-packed free
range turkey breast sold under Sainsbury's Taste the Difference range was named
'Best Ready to Eat Product' in recent industry awards. Total sales of pre-packed
cooked meats were 18 per cent higher than previously, significantly ahead of the
growth in the market.
Sales of 'Jack Scaife' traditional dry cured bacon advanced by in excess of 70
per cent, albeit from a low base, bearing testimony to the confidence that we
have in this award winning product. During the period Cranswick's shareholding
in the Jack Scaife joint venture increased to 85 per cent. The joint venture
celebrated its second anniversary earlier this year and a sign of the progress
made so far is that we are now looking for additional production capacity in
anticipation of continued growth.
Sandwich sales achieved more modest rates of growth, in comparison to the 19 per
cent achieved in the previous twelve months, although recent business wins
indicate that the second half growth will be stronger than the first.
Agribusiness sales were up 24 per cent at almost £19m reflecting increases in
both animal feed and pig marketing. Export sales of piglet feed were
particularly encouraging.
There was an improved performance from the pet business compared to a year ago.
This was driven principally by better returns in pet foods, despite volumes
being almost unchanged from the comparative period, and increased sales in the
aquatics business. The surplus freehold site at Bishop Burton was sold in
September generating proceeds of £0.8m and an exceptional gain of £0.3m.
Acquisition of DeliCo
The Board recently announced the acquisition of DeliCo. This was subsequent to
the end of the six month period and so these results are not impacted.
DeliCo is a producer of pre-packed cooked meats based in Milton Keynes. The
company began trading in 2000 from new purpose-built premises extending to
98,000 square feet in which capacity utilisation was running at about 25 per
cent prior to acquisition.
DeliCo will provide capacity to enable Cranswick to accelerate the development
of its customer base and facilitate its record of growth. The plant is amongst
the most modern in the United Kingdom for the provision of pre-packed cooked
meats.
The pre-packed cooked meats market in the UK is valued at in excess of £1.3bn
and continues to grow strongly - in the year to 10 September 2006 the market was
up 8 per cent year on year (TNS Superpanel). Cranswick entered the pre-packed
cooked meats market with the acquisition of Perkins Chilled Foods in January
2005. Perkins was merged with Cranswick's existing cooked meats business and
renamed Cranswick Convenience Foods ('CCF'). In the year to 31 March 2006 sales
at CCF reached £150m compared to £57m previously and further growth has been
seen in the current year.
DeliCo will be integrated into CCF. Jeff Winter, managing director, will
continue in that position and we welcome Jeff and his colleagues to Cranswick.
Cashflow and borrowings
The cashflow of the business has remained strong with net borrowings reducing
over the six month period by £5.8m to £71.3m.
Operating profit before depreciation generated £21.9m compared to £20.2m in the
same period last year, whilst capital expenditure amounted to £5.2m, £2.6m lower
than previously. Working capital increased by £1.2m reflecting higher sales
activity. As a result the interest charge in the period was down from £2.6m to
£2.1m and the interest cover improved from 6.2 times to 8.2 times.
Dividend
The interim dividend is being increased by 9 per cent to 5.9p per share (2005 -
5.4p). The dividend will be paid on 26 January 2007 to shareholders on the
register at the close of business on 1 December 2006. Shareholders will again
have the option to receive the dividend by way of scrip issue.
Employees
The further progress made by the Company in the current year would not have been
possible without the contribution from all at Cranswick and on behalf of the
Board I wish to thank them for their commitment and expertise.
Outlook
The Board is pleased with the progress made in the current year.
Looking further ahead the Company has talented operational management teams, is
well positioned in a number of growth markets and has capacity available in most
production facilities to meet the anticipated increase in activity. Any further
capacity that needs to be added as the Company continues its growth will be met
by the strong cashflow of the business.
The Board looks with optimism at the ongoing development of Cranswick.
Martin Davey
Chairman
20 November 2006
CRANSWICK plc: GROUP INCOME STATEMENT
(UNAUDITED)
for the six months ended 30 September 2006
Half Year Year to
Notes 31 March
-------- --------- ----------
2006 2005 2006
£'000 £'000 £'000
Revenue 3 247,796 217,438 441,178
Cost of sales (208,407) (179,955) (364,388)
-------- --------- ----------
Gross profit 39,389 37,483 76,790
Operating expenses (22,087) (21,210) (42,720)
-------- --------- ----------
Operating profit 3 17,302 16,273 34,070
Profit on disposal of property, 281 - 2,079
plant and equipment -------- --------- ----------
Profit before finance and 17,583 16,273 36,149
taxation
Finance revenue 1 - 25
Finance costs (2,098) (2,628) (5,076)
-------- --------- ----------
Profit before tax 15,486 13,645 31,098
Taxation 4 (4,646) (4,058) (8,278)
-------- --------- ----------
Profit for the period 10,840 9,587 22,820
-------- --------- ----------
Profit for the period attributable to:
Equity holders of the parent 10,825 9,587 22,784
Minority interest 15 - 36
-------- --------- ----------
10,840 9,587 22,820
-------- --------- ----------
Earnings per share:
Basic 5 24.2p 21.6p 51.2p
Diluted 5 24.0p 21.5p 50.8p
CRANSWICK plc: GROUP BALANCE SHEET
(UNAUDITED)
30 September 2006
Notes Half year Year to
31 March
-------- --------- ----------
2006 2005 2006
£'000 £'000 £'000
Non-current assets
Goodwill 111,963 111,857 111,921
Property, plant and equipment 68,248 65,152 67,725
-------- ------- --------
180,211 177,009 179,646
-------- ------- --------
Current assets
Inventories 21,345 19,073 18,555
Trade and other receivables 58,098 53,166 54,027
Other financial assets - - 106
Cash and cash equivalents 4,520 2,087 5,000
-------- ------- --------
Total current assets 83,963 74,326 77,688
-------- ------- --------
Non-current assets classified as - 1,584 688
held for sale
Total assets 264,174 252,919 258,022
Current liabilities
Trade and other payables (58,517) (53,184) (53,376)
Other financial liabilities (18,690) (15,867) (19,422)
Income tax payable (4,218) (3,311) (3,138)
Provisions (334) - (334)
-------- ------- --------
Total current liabilities (81,759) (72,362) (76,270)
-------- ------- --------
Non-current liabilities
Other payables (55) (94) (76)
Other financial liabilities (57,149) (73,291) (62,720)
Deferred tax liabilities (4,561) (4,686) (4,657)
Provisions (1,727) (2,474) (1,877)
-------- ------- --------
Total non-current liabilities (63,492) (80,545) (69,330)
-------- ------- --------
Total liabilities (145,251) (152,907) (145,600)
-------- ------- --------
Net assets 118,923 100,012 112,422
-------- ------- --------
Equity
Called-up share capital 7 4,474 4,456 4,467
Share premium account 7 41,260 40,220 40,797
Share based payments reserve 7 654 373 531
Hedging and translation reserves 7 (56) (386) (13)
Retained earnings 7 72,570 55,349 66,604
-------- ------- --------
Equity attributable to members of 118,902 100,012 112,386
the parent company
Minority interest 7 21 - 36
-------- ------- --------
Total equity 118,923 100,012 112,422
-------- ------- --------
CRANSWICK plc: GROUP CASHFLOW STATEMENT
(UNAUDITED)
for the six months ended 30 September 2006
Half year Year to
31 March
2006 2005 2006
£'000 £'000 £'000
-------- -------- --------
Operating activities
Profit before finance and taxation 17,583 16,273 36,149
Adjustments to reconcile group profit before
finance and taxation to net cash inflows from
operating activities:
Depreciation 4,343 3,934 8,087
Share based payments 123 126 284
Release of government grants (21) (18) (36)
Profit on sale of property, plant and (347) (124) (2,220)
equipment
(Increase)/decrease in inventories (2,790) 606 1,125
Increase in trade and other receivables (4,220) (5,040) (5,751)
Increase in trade and other payables 5,801 5,285 4,200
-------- -------- --------
Cash generated from operations 20,472 21,042 41,838
Tax paid (3,562) (3,340) (6,954)
-------- -------- --------
Net cash from operating activities 16,910 17,702 34,884
-------- -------- --------
Cashflows from investing activities
Interest received 1 - 25
Acquisition of subsidiaries (73) - -
Purchase of property, plant and equipment (5,155) (7,791) (14,064)
Proceeds from sale of property, plant and 1,070 871 3,929
equipment -------- -------- --------
Net cash used in investing activities (4,157) (6,920) (10,110)
-------- -------- --------
Cashflows from financing activities
Interest paid (2,446) (2,642) (5,119)
Proceeds from issue of share capital 34 1,580 1,691
Repayment of borrowings (7,675) (10,059) (18,753)
Dividends paid (4,523) (3,918) (5,847)
-------- -------- --------
Net cash used in financing activities (14,610) (15,039) (28,028)
-------- -------- --------
Net decrease in cash and cash equivalents (1,857) (4,257) (3,254)
Cash and cash equivalents at beginning of 46 3,291 3,291
period
Effect of foreign exchange rates (10) (2) 9
-------- -------- --------
Net cash and cash equivalents (1,821) (968) 46
-------- -------- --------
Notes to the interim accounts
1. Basis of preparation
This interim report was approved by the Directors on 20 November 2006 and is
unaudited. 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 2006 prepared under IFRS received an unqualified audit
report and have been filed with the Registrar of Companies.
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 2006.
3. Segmental analysis - half year ended 30 September
Turnover Operating profit
-------- -------- -------- --------
2006 2005 2006 2005
£'000 £'000 £'000 £'000
Food 232,116 202,108 17,638 16,790
Pet 15,680 15,330 665 286
-------- -------- -------- --------
247,796 217,438 18,303 17,076
Central costs - - (1,001) (803)
-------- -------- -------- --------
Group total 247,796 217,438 17,302 16,273
-------- -------- -------- --------
4. Taxation: the tax charge for the six months ended 30 September 2006 reflects
the estimated effective rate for the full year.
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 44,685,046 (2005: 44,353,777) excluding shares held by Cranswick
Trustees Limited. The calculation of diluted earnings per share is based on
45,148,356 shares (2005: 44,682,131).
6. Analysis of Group net debt
At Cash Other At
31 March flow non cash 30 September
2006 changes 2006
£'000 £'000 £'000 £'000
Cash and cash equivalents 5,000 (470) (10) 4,520
Overdrafts (4,954) (1,387) - (6,341)
-------- ------- -------- ----------
Net cash and cash 46 (1,857) (10) (1,821)
equivalents
Other financial liabilities (146) - 92 (54)
Revolving credit (2,000) 2,000 - -
Bank loans (73,970) 5,625 (54) (68,399)
Loan notes (1,072) 50 - (1,022)
-------- ------- -------- ----------
Net debt (77,142) 5,818 28 (71,296)
-------- ------- -------- ----------
7. Reconciliation of movements in equity
Share Share Share Hedging Retained Minority Total
capital premium based and translation earnings interest equity
payments
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 4,467 40,797 531 (13) 66,604 36 112,422
2006
Profit for - - - - 10,825 15 10,840
the period
Share based - - 123 - 89 - 212
payments
Cash flow - - - (37) 11 - (26)
hedges
Scrip 6 430 - - - - 436
dividend
Share options 1 33 - - - - 34
exercised
Dividends - - - - (4,959) - (4,959)
Exchange - - - (6) - - (6)
differences
Purchase of - - - - - (30) (30)
minority
interest
------ ------- ------- --------- ------- ------- -------
At 30 4,474 41,260 654 (56) 72,570 21 118,923
September ------ ------- ------- --------- ------- ------- -------
2006
8. The Company intends to post the Interim Report to shareholders on 22 November
2006. 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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