Interim Results

Cranswick PLC 22 November 2005 Embargoed 7am Tuesday November 22 2005 CRANSWICK plc: RECORD INTERIM RESULTS Six months ended 30 September 2005 Cranswick plc, the food manufacturing business, announces record interim results. Highlights: â€¢ Turnover up 51 per cent at Â£217.4m (2004: Â£144.3m) â€¢ Pre-tax profit increased by 30 per cent to Â£13.6m (2004: Â£10.5m) â€¢ Earnings per share 19 per cent higher at 21.6p (2004: 18.2p) â€¢ Interim dividend up 15 per cent at 5.4p per share (2004: 4.7p) â€¢ Perkins Chilled Foods successfully integrated â€¢ Growth continues Chairman Martin Davey said: 'The successful integration of Perkins, our largest acquisition to date, was a key feature of the period. The business delivered an excellent result leading to the enlarged cooked meats activity turning in a very positive performance.' 'The development of traditional dry cured bacon has now evolved from start-up phase through to volume output. The cost of developing the business has been absorbed, positive results are now coming through, and we believe there is potential for significant growth in this business.' 'Agribusiness has seen a favourable change in fortunes from a year ago. An increase in sales of specialist piglet feeds and enhanced operating efficiencies following a rationalisation of sites were contributory factors to this improvement.' 'The Company operates in a competitive environment but continues to seek opportunities to minimise the impact of this through improvements in operating efficiencies. The Company has positions in markets which continue to grow and available capacity in a number of areas to enable it to meet future volume increases.' 'The Board continues to be confident in the prospects for Cranswick and the maintenance of its record of sustained growth.' -ends- For further information: Martin Davey, Chairman 07775 576426 John Lindop, Finance Director 07768 362592 Bernard Hoggarth, Chief Executive, Food 07836 703434 Cranswick plc Paul Quade 020 7248 8010 CityRoad Communications 07947 186694 STATEMENT TO SHAREHOLDERS Results and review of activities It is pleasing to report record interim results achieved in a market place that is challenging. By comparison to the same period last year turnover is up by 51 per cent to Â£217.4m and operating profit is 49 per cent higher at Â£16.3m. Profit before tax is ahead by 30 per cent to Â£13.6m and earnings per share 19 per cent higher at 21.6p. The latter figures reflect the additional finance cost and the increase in the number of shares in issue following the acquisition of Perkins Chilled Foods in January 2005. The food division, which includes agribusiness, accounted for 93 per cent of turnover in the period and had an encouraging first half. Sales rose by 57 per cent to Â£202.1m and operating profit by 56 per cent to Â£16.8m. Our products are positioned in a number of growth sectors of the market which is contributing to an increase in underlying sales. The successful integration of Perkins, our largest acquisition to date, was a key feature of the period. Synergy benefits were achieved as anticipated. The business delivered an excellent set of results contributing sales of Â£63.9m which led to the enlarged cooked meats activity turning in a very positive performance. Agribusiness has seen a favourable change in fortunes from a year ago. An increase in sales of specialist piglet feeds and enhanced operating efficiencies following a rationalisation of sites were contributory factors to this improvement. The rationalisation gave rise, as planned, to a reduction in sales of 12 per cent to Â£15.2m. There was further growth in sales of fresh pork, charcuterie and sandwiches although sales of sausages were 11 per cent down on a year ago as anticipated following the impact of the factory fire in 2004. Fresh pork was 11 per cent ahead, charcuterie 17 per cent and sandwiches 38 per cent. These gains were achieved by a combination of winning new business and growth with existing customers augmented by branding initiatives. The development of traditional dry cured bacon which commenced in 2004 has now evolved from start-up phase through to volume output and it has established a reputation with the grocery retailers as a premium product gaining a gold medal at the Guild of Fine Food Retailers 'Great Taste Awards'. The cost of developing the business has been absorbed, positive results are now coming through and we believe there is potential for significant growth in this business. Sales in the pet division were comparable to the same period last year at Â£15.3m although operating profits were Â£0.5m lower at Â£0.3m. The pet food business experienced production issues in the new facility which have now been overcome but this impacted on operating costs and sales, which were marginally down on a year ago. The business is now aggressively pursuing new sales opportunities to enable it to return to its growth track. The performance in the aquatics activity was similar to a year ago. Cash flow and borrowings Interest cover in the period was a comfortable 6.2 times. The cash flow of the business has remained strong with net borrowings reducing over the six month period by Â£5.3m to Â£87.1m. Operating profit before depreciation generated Â£20.2m compared to Â£13.5m in the same period last year, whilst capital expenditure amounted to Â£7.8m. The strategic disposal of the pig herd and the sale of one of the surplus sites in the period brought in additional funds. Dividend The interim dividend is being increased by 15 per cent to 5.4p per share (2004 - 4.7p). The dividend will be paid on 27 January 2006 to shareholders on the register at the close of business on 2 December 2005. Shareholders will again have the option to receive the dividend by way of scrip issue. Board Bernard Bell will retire from the Board in December on reaching the age of 60 years. Bernard has been with the Company for over 20 years and been a valued member of the management team that has developed the business from its beginnings as a manufacturer of animal feed. The Board extends its thanks to Bernard for his input over that period. Outlook This period has been one of further growth for Cranswick as it continues its development in the food sector. A major acquisition has been successfully integrated, a new business 'start-up' is evolving very encouragingly and businesses which experienced challenges in the last couple of years have performed well. There is a strong, experienced management team in place and a well invested asset base. The Company has positions in markets which continue to grow and available capacity in a number of areas to enable it to meet future volume increases. Notwithstanding this, the business operates in a competitive environment but continues to seek opportunities to minimise the impact of this through improvements in operating efficiencies wherever possible. Giving due consideration to all the above factors the Board continues to be confident in the prospects for Cranswick and the maintenance of its record of sustained growth Martin Davey Chairman 22 November 2005 CRANSWICK plc: GROUP INCOME STATEMENT UNAUDITED Six months ended 30 September 2005 Notes Half year Year to 31 -------- --------- March ---------- 2005 2004 2005 Restated* Restated* Â£'000 Â£'000 Â£'000 Turnover 2 217,438 144,314 318,538 Cost of sales (179,955) (118,279) (261,917) -------- --------- ---------- Gross profit 37,483 26,035 56,621 Operating expenses (21,210) (15,097) (33,766) -------- --------- ---------- Operating profit 2 16,273 10,938 22,855 Profit on disposal of property, plant and equipment - - 707 Finance costs (2,628) (441) (1,972) -------- --------- ---------- Profit before tax 13,645 10,497 21,590 Taxation 4 (4,058) (2,966) (5,360) -------- --------- ---------- Profit for the period attributable to members of the parent company 9,587 7,531 16,230 -------- --------- ---------- Earnings per share: Basic 3 21.6p 18.2p 38.6p Diluted 3 21.5p 18.1p 38.3p Operating profit for the year ended 31 March 2005 is stated after charging exceptional cost of sales of Â£2,642,000. * As restated for the adoption of International Financial Reporting Standards accounting policies as outlined in Note 1. CRANSWICK plc: CONSOLIDATED BALANCE SHEET UNAUDITED 30 September 2005 -------- ------- Half year Year to 31 March -------- ------- 2005 2004 2005 Â£'000 Restated* Restated* Â£'000 Â£'000 Assets Goodwill 111,857 41,451 110,413 Property, plant and equipment 65,152 47,988 63,156 -------- ------- -------- 177,009 89,439 173,569 -------- ------- -------- Current assets Biological assets 118 1,559 2,238 Inventories 18,955 10,984 17,442 Trade and other receivables 53,166 36,951 48,127 Other financial assets - - 45 Cash at bank and in hand 2,087 2,231 5,025 -------- ------- -------- 74,326 51,725 72,877 Non-current assets classified as held for sale 1,584 - 891 Total assets 252,919 141,164 247,337 Current liabilities Trade and other payables (53,184) (34,023) (47,940) Other financial liabilities (421) - - Tax liabilities (3,311) (3,194) (2,634) Interest bearing liabilities (15,446) (24,914) (13,559) -------- ------- -------- Total current liabilities (72,362) (62,131) (64,133) -------- ------- -------- Non-current liabilities Interest bearing liabilities (73,291) - (83,862) Deferred tax liabilities (4,686) (3,247) (4,489) Deferred income (94) (131) (112) Provisions (2,474) - (1,865) -------- ------- -------- Total non-current liabilities (80,545) (3,378) (90,328) -------- ------- -------- Total liabilities (152,907) (65,509) (154,461) -------- ------- -------- Net assets 100,012 75,655 92,876 -------- ------- -------- Equity Called-up share capital 6 4,456 4,165 4,405 Share premium account 6 40,220 28,185 38,250 Share based payments 6 373 173 247 Hedging and translation reserve 6 (386) 27 66 Profit and loss account 6 55,349 43,105 49,908 -------- ------- -------- Equity attributable to members of the 100,012 75,655 92,876 parent company -------- ------- -------- CRANSWICK plc: CONSOLIDATED CASH FLOW STATEMENT UNAUDITED for the six months ended 30 September 2005 Half year Year to 31 March 2005 2004 2005 Restated* Restated* Â£'000 Â£'000 Â£'000 Cash flows from operating activities Cash generated from operations 21,042 10,903 25,565 Interest paid (2,642) (413) (1,793) Tax paid (3,340) (3,270) (6,864) -------- -------- -------- Net cash from operating activities 15,060 7,220 16,908 -------- -------- -------- Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired - - (83,321) Purchase of property, plant and equipment (7,791) (12,729) (18,682) Proceeds from sale of equipment 871 240 1,806 -------- -------- -------- Net cash used in investing activities (6,920) (12,489) (100,197) -------- -------- -------- Cash flows from financing activities Proceeds from issue of share capital 1,580 - 9,834 Proceeds from borrowings - - 95,000 Issue costs of long-term borrowings - - (540) Repayment of borrowings (10,059) (800) (808) Payment of finance lease liabilities - (49) (49) Dividends paid (3,918) (3,336) (4,815) -------- -------- -------- Net cash used in financing activities (12,397) (4,185) 98,622 -------- -------- -------- Net (decrease)/increase in cash and cash equivalents (4,257) (9,454) 15,333 Cash and cash equivalents at beginning of period 3,291 (12,042) (12,042) Effect of foreign exchange rates (2) 21 - -------- -------- -------- Cash and cash equivalents at end of period (968) (21,475) 3,291 -------- -------- -------- Reconciliation of operating profit to cash generated from operations Operating profit before exceptionals 16,273 10,938 25,497 Depreciation 3,934 2,533 5,786 Release of government grants (18) (18) (36) (Profit)/loss on sale of property, plant and equipment (124) 2 (221) Share based payments 126 59 133 Decrease/(increase) in inventories 606 (632) (510) Decrease in trade and other receivables (5,040) (3,731) (3,141) Increase/(decrease) in trade and other payables 5,285 1,752 (1,028) Cash cost of exceptionals - - (915) -------- -------- -------- Cash generated from operations 21,042 10,903 25,565 -------- -------- -------- Notes to the interim accounts 1. Accounting policies Cranswick plc ('the Group') has previously prepared its financial statements under UK Generally Accepted Accounting Principles ('UK GAAP'). Following a directive issued by the EC in July 2002, the Group is required to prepare its 2005/6 consolidated financial statements in accordance with International Financial Reporting Standards ('IFRS'). This interim report has been prepared using accounting policies consistent with those which management expects to apply in the Group's first IFRS Annual Report and Accounts for the year ending 31 March 2006. These policies are the same as those published by the Group on 17 November 2005 within the 2004/05 IFRS restatement, which is available on the Group's website at www.cranswick.co.uk. As noted within the IFRS restatement the Group has taken the exemption within IFRS 1 'First Time Adoption of IFRS' to apply IAS 32 'Financial Instruments: Presentation and Disclosure', and IAS 39 'Financial Instruments: Recognition and Measurement' prospectively and not to retrospectively restate prior period comparatives upon adoption. Accordingly IAS 32 and IAS 39 are applied from 1 April 2005 and the accounting policy for financial derivatives for the year ended 31 March 2005 is as set out in the Annual Report and Accounts for that year which was published in May 2005. An explanation of the impact of the adoption of IAS 32 and IAS 39 is included in note 6 below. The main impacts of IFRS on previously reported numbers for 2004/05 are summarised as follows: Half year Year ----------- ------ ended ended ------- ------- 30 September 31 March -------------- ---------- 2004 2005 ------ ------ Â£'000 Â£'000 ------- ------- Profit before tax reported under UK GAAP 9,359 18,470 Cessation of goodwill amortisation 1,188 3,235 Charge for share based payments (59) (133) Biological assets 9 18 ----------- --------- Profit before tax restated under IFRS 10,497 21,590 ----------- --------- In addition, under IFRS there was a reduction in the taxation charge of Â£197,000 for the half year ended 30 September 2005 and Â£324,000 for the year ended 31 March 2005. Financial information has been prepared on the basis of IFRS expected to be in effect for the year ending 31 March 2006. The IFRS in effect at that date may differ owing to decisions taken by the EC on endorsement, interpretative guidance issued by the International Accounting Standards Board ('IASB') or the International Financial Reporting Interpretations Committee ('IFRIC') and the requirements of company legislation. The interim report was approved by the Directors on 22 November 2005 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 2005 prepared under UK GAAP received an unqualified audit report and have been filed with the Registrar of Companies. 2. Segmental analysis - half year ended 30 September Turnover Operating profit -------- -------- ------------- -------- 2005 2004 2005 2004 Â£'000 Â£'000 Â£'000 Â£'000 Food 202,108 128,975 16,790 10,750 Pet 15,330 15,339 286 802 -------- -------- -------- -------- 217,438 144,314 17,076 11,552 Central costs - - (803) (614) -------- -------- -------- -------- Group total 217,438 144,314 16,273 10,938 -------- -------- -------- -------- 3. 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 44,353,777 (2004: 41,458,375). The calculation of diluted earnings per share is based on 44,682,131 shares (2004: 41,655,816). 4. Taxation: the tax charge for the six months ended 30 September 2005 reflects the estimated effective rate for the full year. 5. Analysis of changes in net debt At Opening Cash Other At 31 March adjustment for flow non cash 30 September 2005 IAS 32 and 39 changes 2005 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Cash at bank and in hand 5,025 - (2,936) (2) 2,087 Bank overdrafts (1,734) - (1,321) - (3,055) -------- --------- ------- -------- -------- Cash and cash equivalents 3,291 - (4,257) (2) (968) -------- --------- ------- -------- -------- Other financial assets - 45 - (45) - Other financial liabilities - - - (421) (421) Bank loans (94,487) - 10,000 (54) (84,541) Loan notes (1,200) - 59 - (1,141) -------- --------- ------- -------- -------- Net debt (92,396) 45 5,802 (522) (87,071) -------- --------- ------- -------- -------- 6. Reconciliation of movements in equity Share Share Share Hedging Profit and loss Total capital premium based and translation Account Â£'000 Â£'000 Â£'000 payments reserve Â£'000 Â£'000 Â£'000 As at 1 April 4,405 38,250 247 21 49,922 92,845 2005 Impact of adoption of IAS 32 and IAS 39 - - - 45 (14) 31 ------ ------- -------- -------- -------- -------- Restated for adoption of IAS 32 and IAS 39 4,405 38,250 247 66 49,908 92,876 Profit for the period - - - - 9,587 9,587 Share based payments - - 126 - 54 180 Cash flow hedges - - - (451) 135 (316) Scrip 7 434 - - - 441 dividend Share options exercised 44 1,536 - - - 1,580 Dividends - - - - (4,335) (4,335) Exchange differences - - - (1) - (1) ------ ------- -------- -------- -------- -------- At 30 September 2005 4,456 40,220 373 (386) 55,349 100,012 ------ ------- -------- -------- -------- -------- On adoption of IAS 32 and IAS 39 at 1 April 2005 as described in Note 1, interest rate swaps held by the Group have been recognised as a financial asset at their fair value of Â£45,000 with a corresponding deferred tax provision of Â£14,000 and the opening balance sheet has been restated accordingly. These swaps meet the special cash flow hedge criteria of IAS 39 and accordingly gains and losses have been recognised directly in equity. There is no impact on reported profit in prior periods. 7. The Company intends to post the Interim Report to shareholders on 24 November 2005. Further copies will be available upon request from the Company Secretary, Cranswick plc, Cranswick, Driffield, East Yorkshire, YO25 9PF. This information is provided by RNS The company news service from the London Stock Exchange

Companies

Cranswick (CWK)

Full Archive

UK 100

Latest directors dealings

All directors dealings today