20th Nov 2006 07:01
Cranswick PLC20 November 2006 Embargoed 7am Monday 20 November 2006 CRANSWICK plc: RECORD INTERIM RESULTS Cranswick plc, the food producer, announces its unaudited interim results forthe 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 reportingcontinued growth at Cranswick in the six months to September. Record sales andprofits were achieved and cash generation was particularly encouraging. The business is positioned in a number of premium categories which are showingstrong growth and this coupled with increased market share is driving sales. The Board recently announced the acquisition of DeliCo, a producer of pre-packedcooked meats, which will provide capacity to enable Cranswick to accelerate thedevelopment of its customer base and facilitate its record of growth. The Company has talented operational management teams, is well positioned in anumber of growth markets and has capacity available in most productionfacilities to meet the anticipated increase in activity. The Board looks withoptimism at the ongoing development of Cranswick". For further information: Cranswick plc: Martin Davey, Chairman 07775 576426John Lindop, Finance Director 07768 362592Bernard Hoggarth, Chief Executive, Food 07836 703434 CityRoad Communications 020 7248 8010Paul Quade 07947 186694 STATEMENT TO SHAREHOLDERS Results and review of activities It is pleasing to be reporting continued growth at Cranswick for the six monthsended 30 September 2006. Record sales and profits were achieved and cashgeneration was particularly encouraging. Turnover for the six months of £248m was 14 per cent up on the same period lastyear 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 comparativeinterim period. These figures include an exceptional gain of £0.3m on the saleof 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 comparedto food division sales of £202m for the corresponding period in 2005. The 15 percent increase in sales is all organic growth. The business is positioned in anumber of premium categories which are showing strong growth and this coupledwith increased market share is driving sales. Fresh pork sales were up 29 per cent and sausages 27 per cent. These exceptionalincreases were made possible by the strategic investment in capacity in recentyears. In addition charcuterie and cooked meats both recorded good increasesover the previous year's comparable figures. In cooked meats our pre-packed freerange 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-packedcooked meats were 18 per cent higher than previously, significantly ahead of thegrowth in the market. Sales of 'Jack Scaife' traditional dry cured bacon advanced by in excess of 70per cent, albeit from a low base, bearing testimony to the confidence that wehave in this award winning product. During the period Cranswick's shareholdingin the Jack Scaife joint venture increased to 85 per cent. The joint venturecelebrated its second anniversary earlier this year and a sign of the progressmade so far is that we are now looking for additional production capacity inanticipation of continued growth. Sandwich sales achieved more modest rates of growth, in comparison to the 19 percent achieved in the previous twelve months, although recent business winsindicate that the second half growth will be stronger than the first. Agribusiness sales were up 24 per cent at almost £19m reflecting increases inboth animal feed and pig marketing. Export sales of piglet feed wereparticularly 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 volumesbeing almost unchanged from the comparative period, and increased sales in theaquatics business. The surplus freehold site at Bishop Burton was sold inSeptember 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 tothe 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. Thecompany began trading in 2000 from new purpose-built premises extending to98,000 square feet in which capacity utilisation was running at about 25 percent prior to acquisition. DeliCo will provide capacity to enable Cranswick to accelerate the developmentof its customer base and facilitate its record of growth. The plant is amongstthe most modern in the United Kingdom for the provision of pre-packed cookedmeats. The pre-packed cooked meats market in the UK is valued at in excess of £1.3bnand continues to grow strongly - in the year to 10 September 2006 the market wasup 8 per cent year on year (TNS Superpanel). Cranswick entered the pre-packedcooked meats market with the acquisition of Perkins Chilled Foods in January2005. Perkins was merged with Cranswick's existing cooked meats business andrenamed Cranswick Convenience Foods ('CCF'). In the year to 31 March 2006 salesat CCF reached £150m compared to £57m previously and further growth has beenseen in the current year. DeliCo will be integrated into CCF. Jeff Winter, managing director, willcontinue 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 reducingover the six month period by £5.8m to £71.3m. Operating profit before depreciation generated £21.9m compared to £20.2m in thesame period last year, whilst capital expenditure amounted to £5.2m, £2.6m lowerthan previously. Working capital increased by £1.2m reflecting higher salesactivity. 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 theregister at the close of business on 1 December 2006. Shareholders will againhave 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 beenpossible without the contribution from all at Cranswick and on behalf of theBoard 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, iswell positioned in a number of growth markets and has capacity available in mostproduction facilities to meet the anticipated increase in activity. Any furthercapacity that needs to be added as the Company continues its growth will be metby 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 - 2,079plant and equipment -------- --------- ---------- Profit before finance and 17,583 16,273 36,149taxation Finance revenue 1 - 25Finance 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 22,784Minority interest 15 - 36 -------- --------- ---------- 10,840 9,587 22,820 -------- --------- ---------- Earnings per share:Basic 5 24.2p 21.6p 51.2pDiluted 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 £'000Non-current assetsGoodwill 111,963 111,857 111,921Property, plant and equipment 68,248 65,152 67,725 -------- ------- -------- 180,211 177,009 179,646 -------- ------- --------Current assetsInventories 21,345 19,073 18,555Trade and other receivables 58,098 53,166 54,027Other financial assets - - 106Cash 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 688held for sale Total assets 264,174 252,919 258,022 Current liabilitiesTrade 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 liabilitiesOther 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 -------- ------- -------- EquityCalled-up share capital 7 4,474 4,456 4,467Share premium account 7 41,260 40,220 40,797Share based payments reserve 7 654 373 531Hedging and translation reserves 7 (56) (386) (13)Retained earnings 7 72,570 55,349 66,604 -------- ------- --------Equity attributable to members of 118,902 100,012 112,386the parent companyMinority 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 activitiesProfit before finance and taxation 17,583 16,273 36,149Adjustments to reconcile group profit beforefinance and taxation to net cash inflows fromoperating activities:Depreciation 4,343 3,934 8,087Share based payments 123 126 284Release 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 1,125Increase 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 41,838Tax paid (3,562) (3,340) (6,954) -------- -------- --------Net cash from operating activities 16,910 17,702 34,884 -------- -------- --------Cashflows from investing activitiesInterest received 1 - 25Acquisition 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 3,929equipment -------- -------- --------Net cash used in investing activities (4,157) (6,920) (10,110) -------- -------- -------- Cashflows from financing activitiesInterest paid (2,446) (2,642) (5,119)Proceeds from issue of share capital 34 1,580 1,691Repayment 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 3,291periodEffect 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 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 2006 prepared under IFRS received an unqualified auditreport 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 sameas those applied by the Group in the financial statements for the year ended 31March 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 16,790Pet 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 reflectsthe estimated effective rate for the full year. 5. 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 44,685,046 (2005: 44,353,777) excluding shares held by CranswickTrustees Limited. The calculation of diluted earnings per share is based on45,148,356 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) 4,520Overdrafts (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 £'000As at 1 April 4,467 40,797 531 (13) 66,604 36 112,4222006 Profit for - - - - 10,825 15 10,840the period Share based - - 123 - 89 - 212payments Cash flow - - - (37) 11 - (26)hedges Scrip 6 430 - - - - 436dividend Share options 1 33 - - - - 34exercised Dividends - - - - (4,959) - (4,959) Exchange - - - (6) - - (6)differences Purchase of - - - - - (30) (30)minorityinterest ------ ------- ------- --------- ------- ------- -------At 30 4,474 41,260 654 (56) 72,570 21 118,923September ------ ------- ------- --------- ------- ------- -------2006 8. The Company intends to post the Interim Report to shareholders on 22 November2006. 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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