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: â€¢Turnover increased 14 per cent at Â£248m (2005: Â£217m) â€¢Profit before tax up 13 per cent at Â£15.5m (2005: Â£13.6m) â€¢Earnings per share rose 12 per cent to 24.2p per share (2005: 21.6p) â€¢Interim dividend of 5.9p per share (2005: 5.4p) - a rise of 9 per cent â€¢Organic growth drives strong cashflow â€¢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 Â£248m was 14 per cent up on the same period last year reflecting strong organic growth. Profit before tax rose 13 per cent to Â£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 Â£0.3m on the sale of a surplus freehold property. Sales in the food division, which includes the original agribusiness activity, totalled Â£232m accounting for 94 per cent of total Company sales. This compared to food division sales of Â£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 Â£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 Â£0.8m and an exceptional gain of Â£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 Â£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 Â£150m compared to Â£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 Â£5.8m to Â£71.3m. Operating profit before depreciation generated Â£21.9m compared to Â£20.2m in the same period last year, whilst capital expenditure amounted to Â£5.2m, Â£2.6m lower than previously. Working capital increased by Â£1.2m reflecting higher sales activity. As a result the interest charge in the period was down from Â£2.6m to Â£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 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'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. This information is provided by RNS The company news service from the London Stock Exchange

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