Crawshaw Group Regulatory News (CRAW)

Crawshaw Group PLC

Final Results

Crawshaw Group PLC ("the Company"), the meat focussed retailer, today reports its audited results for the year ended 31 January, 2014

Results highlights for the year to 31st January 2014.

· Sales for the year £21.0m (2013: £18.8m)

· Full year like for like sales up 11% (2013: 3%)

· EBITDA doubled to £1.4m (2013: £0.7m)

· Profit before tax £1.0m (2013: £0.3m)

· Earnings per share rose to 1.42p (2013: 0.31p)

· Net cash £1.0m (2013: £nil)

· LFL sales first 12 weeks of current year up 19% (2013: 1%)

Chairman's Statement

Results highlights for the year to 31st January 2014.

· Sales for the year £21.0m (2013: £18.8m)

· Full year like for like sales up 11% (2013: 3%)

· EBITDA doubled to £1.4m (2013: £0.7m)

· Profit before tax £1.0m (2013: £0.3m)

· Earnings per share rose to 1.42p (2013: 0.31p)

· Net cash £1.0m (2013: £nil)

· LFL sales first 12 weeks of current year up 19% (2013: 1%)

Sales and gross margin

In the period since our interim statement was issued on 26th September 2013 we have provided three trading updates outlining significant improvements in performance during the second half of the year. At the half year point we reported LFL sales to be up 5% (July 2012 : +4%), I am now pleased to confirm that in the 6 months to 31st January, LFL sales were up 18% (2013 : +2%).

Total sales for the year were £21.0m, 12% higher than the previous year (£18.8m). This can be broken down into full year like for like sales +11% (2013: 3%), plus the introduction of a new market site in Sheffield and a 11% rise in wholesale sales.

Gross margin levels have been consistent this year and have further strengthened to 43.8% (2013: 43.7%). Average spend per retail customer is up 13% versus the previous year due to competitive pricing via a focus on larger value packs and multi buy offers, slightly offset by a 1% reduction in customer numbers which is wholly driven by the VAT changes on the hot cooked product offer; customer numbers for our raw meat products are up over 10% versus last year.

We believe the excellent quality and value of our core products is driving increases in spend from both existing and new customers. In addition, ongoing improvements in IT, communications, management information and training have been delivered by the management team and are contributing to the performance in the year.

Costs

Total overheads were 3% higher at £8.2m (2013: £8.0m). This small increase is mainly attributable to volume increases in retail staff costs, however overheads in total as a proportion of sales is now down to 39% (2013 : 42%).

Profit

EBITDA for the year doubled to £1.4m (2013: £0.7m). This increase in profitability can be directly attributed to the improvements in like for like sales associated with management control of gross margin and overheads. Both operating profit and profit before tax was £1.0m (2012: £0.3m) and earnings per share rose to 1.42p (2013: 0.31p).

Dividend

The Board is delighted to propose the payment of a final dividend of 0.43 pence per share, which together with the interim dividend of 0.09 pence per share, paid on 25th October 2013, takes the total dividend for the year to 0.52 pence per share, an increase of over 2 and a half times (2013 : 0.20 pence per share). Shareholder approval will be sought at the Annual General Meeting, to be held on 26th June 2014, to pay the final dividend on 31st July, 2014 to shareholders on the register on 27th June, 2014. The ex-dividend date will be 25th June, 2014. For the first time, shareholders will have the opportunity to elect to reinvest their cash dividend and purchase existing shares in the Company through a Dividend Reinvestment Plan ('DRIP').

Cash

After working capital movements and taxation the cash generated from operating activities was significantly higher than last year at £1.4m (2013 £0.4m). Cash out flows during the year include £0.2m net on capital projects (leasehold improvements/vehicles & IT), £0.4m on the repayment of the mortgage and £0.2m on dividends. Cash balances at the end of January 2014 were £0.6m higher at £1.4m (2013: £0.8m).

As at 31st January 2014, we held net cash of £1.0m (2013: £nil).

New Shops

We opened our latest high street store in Sheffield on 21st March, and after combining two outlets into one in Lincoln earlier in the year, this brings our store total to 21.

One of the risks previously associated with our new store roll out was the high cost of capital investment. Over the last year we have spent time working with contractors to simplify layouts and equipment specifications where possible. This has resulted in a significant reduction in fit out costs and so enhanced potential returns.

Outlook

I am delighted to be able to report once again on a continued trading improvement. LFL sales over the first 12 weeks of the current year are up 19% and gross margin remains strong. I am also encouraged by the initial performance at our new Sheffield store, albeit early days.

Our customers are spending more with us and the improvements in trading performance are spread across most of our stores, giving me much confidence for the future.

Given the general improvements in trading performance and the reduction in fit out costs the Board are confident that further controlled expansion of our existing shop model will be a key driver of future growth.

Richard Rose

Chairman

28th April 2014.

Strategy and Business Model

Mission

To use our expertise to source, prepare and retail quality meat products at a price and a service level that delights our customers.

Principal Activities

The principal activity of the Group continues to be the operation of a chain of meat focused retail food stores. The Group operates from a head office in Rotherham, two distribution centres in Grimsby and Rotherham, plus 21 retail locations across Yorkshire, Lincolnshire, Nottinghamshire and Derbyshire.

Business Model

Our management team have extensive experience in sourcing quality meat products from tried and tested local and international suppliers at the lowest possible prices. Whilst we do buy longer term to ensure that we have a core range of products, we pride ourselves on identifying key lines in the spot market that offer terrific value to our customers.

We have our own distribution centres where we control additional processing and logistics as well as the production of our very own award winning sausages.

Our retail outlets are manned with skilled butchers who are happy to help customers with advice on choosing the right product, in the right quantities as well as how to cook it.

Our product range is split into 2 distinct areas:

· Traditional raw meat - we have a wide range of products sold either (i) loose in a serve over counter for the traditional experience or (ii) as multi buy packs on supermarket style multi deck counters which have all been cut and packaged in store.

· Hot and cold cooked food - Freshly prepared roast chickens, gammon and pork joints, hot roast sandwiches, shop cooked curries and casseroles, chicken and chips as well as other traditional deli products.

Operational Strategy

The Board is focussed on growing the business through identifying new profitable store locations and investing resources in a controlled expansion programme, whilst ensuring the core business continues to deliver quality products and excellent customer service at competitive prices.

· New store locations are regularly reviewed for suitability to grow/replace our existing retail estate.

· New products are researched, tested and trialled frequently.

· Customer feedback is sought and reviewed on an ongoing basis.

· Key price points from competitors are monitored regularly

· Our food safety management systems are continually reviewed and updated to ensure our procedures are in line with the highest standards.

As raw meat is a traded commodity, the business operates in an environment where input prices can fluctuate based on worldwide natural and economic factors such as a growing world population, climate change, exchange rates and changing dietary habits.

The Company's purchasing and sales strategy is designed to minimise these risks by ensuring (i) we sell a broad range of products and in particular, as we split into 2 complementary retail areas, we cover 2 distinct customer types rather than relying on one product, one customer and (ii) we use a broad range of tried and tested suppliers across the globe rather than relying on any specific supplier or region.

Food Safety

We protect our customers and our brand by sourcing quality products with full traceability. Further to this we invest continually to ensure our food safety management systems are implemented, delivered and audited at every location.

As the only independent retail butchers chain in England to have Primary Authority, we continue to work with the Environmental Health department at Wakefield Council. This gives each of our locations, our staff and our customers a level of consistency in food safety matters as we are all working to the same standards and interpretations of the regulations.

Crawshaws continue to recognise the importance of food safety and positive consistent progress has continued and our Hygiene Ratings have improved yet again in the year with 100% of the business being on 4 (Good) and 5 (Very Good) scores; 35% on 4 stars and 65% on 5 stars. Our factories have also consistently maintained standards whilst increasing throughput to match the increase in sales.

There has been investment in training which has not only provided legal compliance but has equipped Managers with further knowledge and confidence to maintain food safety. Customer feedback also indicates consistent quality control and that they are happy that their needs are being met.

The maintenance and continued development of the Company Food Safety Management System has been fundamental in maintaining standards across the Company. Whilst the Company will continue to face challenges, including changes in legislation, we are focused on maintaining food safety on a consistent basis. The horsemeat scandal in 2013 is a prime example of this where, backed by our Food Safety Management System we reacted with professionalism, in a timely manner and with no issues identified.

The focus on origin and traceability of products will continue to be managed as we recognise this as being essential if we are to meet the requirements of our customers and continue to supply safe and legal products.

KPIs and Risk Management

The performance of the business is regularly monitored against Key Performance Indicators (KPIs). Most of the KPIs identified below are discussed in more detail in the Chairman's Statement.

The principal risks and uncertainties affecting the Group include the following:

· Raw material availability and prices: the Group monitors raw material sources on a global basis and negotiates spot and forward purchase contracts based in sterling where appropriate with key suppliers. However, the volatility of international currency markets and their impact on spot raw material prices in sterling is an ongoing issue.

· Customer loss and Competition - There is an ongoing risk of customer loss from enhanced competition. The Groups strategy is to be aware of competitor pricing, to maintain customer loyalty through value pricing and varied promotions and to deliver superior service and product expertise at all times.

· Environmental risks: the Group places considerable emphasis upon environmental compliance in its business and not only seeks to ensure ongoing compliance with relevant legislation but also strives to ensure that environmental best practice is incorporated into its key processes.

· Major disruption/disaster: business continuity planning is reviewed regularly.

· Food Safety: compliance with legislation is continually assessed and monitored at every location.

· The effect of legislation or other regulatory activities: the Group monitors forthcoming and current legislation.

· Shrinkage: All retailers are exposed to customer and employee theft. The Group has a zero tolerance to theft and we continually review internal systems and controls. We maximise the use of CCTV surveillance in store and aim to prosecute where relevant.

Directors' Report

The directors present their report together with audited financial statements for the year ended 31 January 2014.

Crawshaw Group Plc ('the Company') is a public limited company incorporated and domiciled in the United Kingdom and under the Companies Act 2006.

The address of the Company's registered office is Crawshaw Group Plc, Unit 16, Bradmarsh Business Park, Bow Bridge Close, Rotherham, S60 1BY.

The Company has its primary listing on AIM, part of the London Stock Exchange.

The Group financial statements were authorised for issue by the Board of Directors on 28th April, 2014.

Further information on the activities of the business, the Group strategy and an indication of the outlook for the business are presented in the Chairman's Statement and the Strategy and Business Model sections of the report.

Results and Dividends

Reported under IFRS the Group profit before taxation is £984,789 (2013: £250,864). After a taxation charge of £164,241 (2013: £72,388) the Group profit for the year is £820,548 (2013: £178,476).

The directors propose a final dividend of 0.43 pence per share (2013: 0.20 pence) to be paid on 31st July 2014, to shareholders on the register at the close of business on 27th June 2014. The share price will be marked ex dividend with effect from the 25th June, 2014.

Dividend Reinvestment Plan ('DRIP')

For the first time this year shareholders can choose to reinvest any dividends received to purchase further shares in the Company through a DRIP. A DRIP application form is available from our registrar Capita Asset Services.

Substantial Shareholdings

At 31st March 2014, the directors had been notified of the following interests, of 3% and over, in the company's issued ordinary share capital:

Directors and their interests

The interests of the directors in the ordinary shares of the Company are shown below:

*Richard Rose's shareholding reflects the fact that his daughter, Jessica Rose, is now over the age of 18 and therefore her shares no longer fall to be incorporated within Richard's combined holding and also reflect the fact that by virtue of the fact Richard was a director (although not a controlling director or shareholder) of Electroswitch Limited, Richard had disclosed the Electroswitch Limited shareholding in Crawshaw as part of his shareholding. Since his resignation from the board of Electroswitch on 21 March 2014, this holding is no longer incorporated in his combined holding either.

The interests of the Directors in options to acquire shares are shown below:

Cash Flow Statements

For the period ended 31 January 2014

1. BASIS OF PREPARATION

The financial information set out above for the years ended 31 January 2014 and 2013 ("the financial information"), has been prepared with consistent accounting policies and in accordance with the International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and as effective at 31 January 2014.

The financial information set out above does not constitute the Company's consolidated statutory accounts for the periods ended 31 January 2014 or 31 January 2013 but is derived from those accounts. Statutory accounts for the period ended 31 January 2013 have been delivered to the Registrar of Companies, and those for the period ended 31 January 2014 will be delivered following the Company's Annual General Meeting. The auditors, KPMG Audit Plc, have reported on those accounts; their reports were unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation.

2. EARNINGS PER ORDINARY SHARE

Basic earnings per ordinary share is calculated by dividing the earnings attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year of 57,818,801 (31/1/13: 57,818,801).

Diluted EPS is calculated by dividing the profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue adjusted to assume conversion of all potentially dilutive ordinary shares from the start of the year giving a figure of 57,818,801 (31/1/13: 57,818,801).

The calculation of the basic and diluted earnings per share is based on the following data:

3. AGM AND DISPATCH OF ACCOUNTS

ANNUAL REPORT

The Annual Report will be posted to shareholders on 16th May, 2014 and will also be available from the Company's website at www.crawshawgroupplc.com on 9th May, 2014.

ANNUAL GENERAL MEETING

The Annual General Meeting will be held at Bradmarsh Business Park, Bow Bridge Close, Rotherham S60 1BY on 26 June 2014 at 12 noon.