22nd Nov 2005 07:00
Cranswick PLC22 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 interimresults. Highlights: • Turnover up 51 per cent at £217.4m (2004: £144.3m) • Pre-tax profit increased by 30 per cent to £13.6m (2004: £10.5m) • Earnings per share 19 per cent higher at 21.6p (2004: 18.2p) • Interim dividend up 15 per cent at 5.4p per share (2004: 4.7p) • Perkins Chilled Foods successfully integrated • Growth continues Chairman Martin Davey said: "The successful integration of Perkins, our largestacquisition to date, was a key feature of the period. The business delivered anexcellent result leading to the enlarged cooked meats activity turning in a verypositive performance." "The development of traditional dry cured bacon has now evolved from start-upphase through to volume output. The cost of developing the business has beenabsorbed, positive results are now coming through, and we believe there ispotential for significant growth in this business." "Agribusiness has seen a favourable change in fortunes from a year ago. Anincrease in sales of specialist piglet feeds and enhanced operating efficienciesfollowing a rationalisation of sites were contributory factors to thisimprovement." "The Company operates in a competitive environment but continues to seekopportunities to minimise the impact of this through improvements in operatingefficiencies. The Company has positions in markets which continue to grow andavailable capacity in a number of areas to enable it to meet future volumeincreases." "The Board continues to be confident in the prospects for Cranswick and themaintenance of its record of sustained growth." -ends- For further information: Martin Davey, Chairman 07775 576426John Lindop, Finance Director 07768 362592Bernard Hoggarth, Chief Executive, Food 07836 703434Cranswick plc Paul Quade 020 7248 8010CityRoad Communications 07947 186694 STATEMENT TO SHAREHOLDERS Results and review of activities It is pleasing to report record interim results achieved in a market place thatis challenging. By comparison to the same period last year turnover is up by 51per cent to £217.4m and operating profit is 49 per cent higher at £16.3m. Profitbefore tax is ahead by 30 per cent to £13.6m and earnings per share 19 per centhigher at 21.6p. The latter figures reflect the additional finance cost and theincrease in the number of shares in issue following the acquisition of PerkinsChilled Foods in January 2005. The food division, which includes agribusiness, accounted for 93 per cent ofturnover in the period and had an encouraging first half. Sales rose by 57 percent to £202.1m and operating profit by 56 per cent to £16.8m. Our products arepositioned in a number of growth sectors of the market which is contributing toan increase in underlying sales. The successful integration of Perkins, our largest acquisition to date, was akey feature of the period. Synergy benefits were achieved as anticipated. Thebusiness delivered an excellent set of results contributing sales of £63.9mwhich led to the enlarged cooked meats activity turning in a very positiveperformance. Agribusiness has seen a favourable change in fortunes from a year ago. Anincrease in sales of specialist piglet feeds and enhanced operating efficienciesfollowing a rationalisation of sites were contributory factors to thisimprovement. The rationalisation gave rise, as planned, to a reduction in salesof 12 per cent to £15.2m. There was further growth in sales of fresh pork, charcuterie and sandwichesalthough sales of sausages were 11 per cent down on a year ago as anticipatedfollowing the impact of the factory fire in 2004. Fresh pork was 11 per centahead, charcuterie 17 per cent and sandwiches 38 per cent. These gains wereachieved by a combination of winning new business and growth with existingcustomers augmented by branding initiatives. The development of traditional dry cured bacon which commenced in 2004 has nowevolved from start-up phase through to volume output and it has established areputation with the grocery retailers as a premium product gaining a gold medalat the Guild of Fine Food Retailers 'Great Taste Awards'. The cost of developingthe business has been absorbed, positive results are now coming through and webelieve there is potential for significant growth in this business. Sales in the pet division were comparable to the same period last year at £15.3malthough operating profits were £0.5m lower at £0.3m. The pet food businessexperienced production issues in the new facility which have now been overcomebut this impacted on operating costs and sales, which were marginally down on ayear ago. The business is now aggressively pursuing new sales opportunities toenable it to return to its growth track. The performance in the aquaticsactivity 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 thebusiness has remained strong with net borrowings reducing over the six monthperiod by £5.3m to £87.1m. Operating profit before depreciation generated £20.2mcompared to £13.5m in the same period last year, whilst capital expenditureamounted to £7.8m. The strategic disposal of the pig herd and the sale of one ofthe 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 theregister at the close of business on 2 December 2005. Shareholders will againhave 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 60years. Bernard has been with the Company for over 20 years and been a valuedmember of the management team that has developed the business from itsbeginnings as a manufacturer of animal feed. The Board extends its thanks toBernard for his input over that period. Outlook This period has been one of further growth for Cranswick as it continues itsdevelopment in the food sector. A major acquisition has been successfullyintegrated, a new business 'start-up' is evolving very encouragingly andbusinesses which experienced challenges in the last couple of years haveperformed well. There is a strong, experienced management team in place and a well investedasset base. The Company has positions in markets which continue to grow andavailable capacity in a number of areas to enable it to meet future volumeincreases. Notwithstanding this, the business operates in a competitive environment butcontinues to seek opportunities to minimise the impact of this throughimprovements in operating efficiencies wherever possible. Giving due consideration to all the above factors the Board continues to beconfident in the prospects for Cranswick and the maintenance of its record ofsustained 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* £'000 £'000 £'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 - - 707Finance 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 attributableto members of the parent company 9,587 7,531 16,230 -------- --------- ---------- Earnings per share:Basic 3 21.6p 18.2p 38.6pDiluted 3 21.5p 18.1p 38.3p Operating profit for the year ended 31 March 2005 is stated after chargingexceptional cost of sales of £2,642,000. * As restated for the adoption of International Financial Reporting Standardsaccounting policies as outlined in Note 1. CRANSWICK plc: CONSOLIDATED BALANCE SHEET UNAUDITED 30 September 2005 -------- ------- Half year Year to 31 March -------- ------- 2005 2004 2005 £'000 Restated* Restated* £'000 £'000AssetsGoodwill 111,857 41,451 110,413Property, plant and equipment 65,152 47,988 63,156 -------- ------- -------- 177,009 89,439 173,569 -------- ------- -------- Current assetsBiological assets 118 1,559 2,238Inventories 18,955 10,984 17,442Trade and other receivables 53,166 36,951 48,127Other financial assets - - 45Cash at bank and in hand 2,087 2,231 5,025 -------- ------- -------- 74,326 51,725 72,877 Non-current assets classified as heldfor sale 1,584 - 891 Total assets 252,919 141,164 247,337 Current liabilitiesTrade 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 liabilitiesInterest 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 -------- ------- -------- EquityCalled-up share capital 6 4,456 4,165 4,405Share premium account 6 40,220 28,185 38,250Share based payments 6 373 173 247Hedging and translation reserve 6 (386) 27 66Profit and loss account 6 55,349 43,105 49,908 -------- ------- --------Equity attributable to members of the 100,012 75,655 92,876parent 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* £'000 £'000 £'000Cash flows from operating activitiesCash generated from operations 21,042 10,903 25,565Interest 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 activitiesAcquisition of subsidiaries, net of cashacquired - - (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 activitiesProceeds from issue of share capital 1,580 - 9,834Proceeds from borrowings - - 95,000Issue 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 cashequivalents (4,257) (9,454) 15,333Cash and cash equivalents at beginning ofperiod 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 cashgenerated from operationsOperating profit before exceptionals 16,273 10,938 25,497Depreciation 3,934 2,533 5,786Release of government grants (18) (18) (36)(Profit)/loss on sale of property, plant andequipment (124) 2 (221)Share based payments 126 59 133Decrease/(increase) in inventories 606 (632) (510)Decrease in trade and other receivables (5,040) (3,731) (3,141)Increase/(decrease) in trade and otherpayables 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 statementsunder UK Generally Accepted Accounting Principles ("UK GAAP"). Following adirective issued by the EC in July 2002, the Group is required to prepare its2005/6 consolidated financial statements in accordance with InternationalFinancial Reporting Standards ("IFRS"). This interim report has been prepared using accounting policies consistent withthose which management expects to apply in the Group's first IFRS Annual Reportand Accounts for the year ending 31 March 2006. These policies are the same asthose published by the Group on 17 November 2005 within the 2004/05 IFRSrestatement, 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 withinIFRS 1 'First Time Adoption of IFRS' to apply IAS 32 'Financial Instruments:Presentation and Disclosure', and IAS 39 'Financial Instruments: Recognition andMeasurement' prospectively and not to retrospectively restate prior periodcomparatives upon adoption. Accordingly IAS 32 and IAS 39 are applied from 1April 2005 and the accounting policy for financial derivatives for the yearended 31 March 2005 is as set out in the Annual Report and Accounts for thatyear which was published in May 2005. An explanation of the impact of theadoption of IAS 32 and IAS 39 is included in note 6 below. The main impacts of IFRS on previously reported numbers for 2004/05 aresummarised as follows: Half year Year ----------- ------ ended ended ------- ------- 30 September 31 March -------------- ---------- 2004 2005 ------ ------ £'000 £'000 ------- ------- Profit before tax reported under UK GAAP 9,359 18,470Cessation of goodwill amortisation 1,188 3,235Charge 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 £197,000for the half year ended 30 September 2005 and £324,000 for the year ended 31March 2005. Financial information has been prepared on the basis of IFRS expected to be ineffect for the year ending 31 March 2006. The IFRS in effect at that date maydiffer owing to decisions taken by the EC on endorsement, interpretativeguidance issued by the International Accounting Standards Board ("IASB") or theInternational Financial Reporting Interpretations Committee ("IFRIC") and therequirements of company legislation. The interim report was approved by the Directors on 22 November 2005 and isunaudited. The information does not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985. The statutory accounts for theyear ended 31 March 2005 prepared under UK GAAP received an unqualified auditreport and have been filed with the Registrar of Companies. 2. Segmental analysis - half year ended 30 September Turnover Operating profit -------- -------- ------------- -------- 2005 2004 2005 2004 £'000 £'000 £'000 £'000 Food 202,108 128,975 16,790 10,750Pet 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 attributableto shareholders and on the weighted average number of shares in issue during theyear of 44,353,777 (2004: 41,458,375). The calculation of diluted earnings pershare is based on 44,682,131 shares (2004: 41,655,816). 4. Taxation: the tax charge for the six months ended 30 September 2005 reflectsthe 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 £'000 £'000 £'000 £'000 £'000Cash at bankand in hand 5,025 - (2,936) (2) 2,087Bank overdrafts (1,734) - (1,321) - (3,055) -------- --------- ------- -------- --------Cash and cashequivalents 3,291 - (4,257) (2) (968) -------- --------- ------- -------- -------- Other financialassets - 45 - (45) -Other financialliabilities - - - (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 £'000 £'000 £'000 payments reserve £'000 £'000 £'000As at 1April 4,405 38,250 247 21 49,922 92,8452005Impact ofadoption ofIAS 32 andIAS 39 - - - 45 (14) 31 ------ ------- -------- -------- -------- --------Restatedforadoption ofIAS 32 and IAS 39 4,405 38,250 247 66 49,908 92,876Profit forthe period - - - - 9,587 9,587Share basedpayments - - 126 - 54 180Cash flowhedges - - - (451) 135 (316)Scrip 7 434 - - - 441dividendShare options exercised 44 1,536 - - - 1,580Dividends - - - - (4,335) (4,335)Exchangedifferences - - - (1) - (1) ------ ------- -------- -------- -------- --------At 30September 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 assetat their fair value of £45,000 with a corresponding deferred tax provision of£14,000 and the opening balance sheet has been restated accordingly. These swapsmeet the special cash flow hedge criteria of IAS 39 and accordingly gains andlosses have been recognised directly in equity. There is no impact on reportedprofit in prior periods. 7. The Company intends to post the Interim Report to shareholders on 24 November2005. 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 ExchangeRelated Shares:
Cranswick