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: â€¢Sales up 22 per cent at Â£303.2m (2006: Â£247.8m) â€¢Profit before tax rose 16 per cent to Â£18.0m (2006: Â£15.5m) â€¢Earnings per share up 14.5 per cent at 27.7p (2006: 24.2p) â€¢Dividend increased by 10 per cent to 6.5p (2006: 5.9p) â€¢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 Â£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 Â£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 Â£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 Â£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 Â£3.3m to Â£72.6m notwithstanding capital expenditure of Â£12.7m of which Â£8.1m related to the new bacon facility. The disposal of the animal feed business in May generated funds of Â£5.6m with further sums to follow. The net interest charge rose slightly to Â£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 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'000 Â£'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 Â£401,000 profit on the disposal of the feed mill activities (2006: Â£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 Â£4.7m (2006: Â£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 Â£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 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 payments Â£'000 Â£'000 Â£'000 Â£'000 Â£'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. This information is provided by RNS The company news service from the London Stock Exchange

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