Cranswick Regulatory News (CWK)

19 Nov 2007 07:01

Cranswick PLC19 November 2007 CRANSWICK plc: INTERIM RESULTS GROWTH CONTINUES Cranswick plc, the food producer, announces its unaudited results for the sixmonths ended September 30 2007. Highlights: •Sales up 22 per cent at £303.2m (2006: £247.8m) •Profit before tax rose 16 per cent to £18.0m (2006: £15.5m) •Earnings per share up 14.5 per cent at 27.7p (2006: 24.2p) •Dividend increased by 10 per cent to 6.5p (2006: 5.9p) •Strong cash generation Cranswick Chairman Martin Davey said: "The Company has generated further stronggrowth in sales and achieved record interim profits. Sales were 22 per centahead of the same period last year all of which was organic. "In the food business the Company is gaining market share through thedevelopment of its customer base and this, along with being positioned in anumber of premium categories which are showing good growth, is driving sales. "A range of premium sausages under the 'Simply Sausage' brand was launchedduring the period and listings have been successfully gained with a number ofgrocery retailers. "The new premium bacon factory for Cranswick Gourmet Bacon Company has recentlyseen production commence and this follows on from the acquisition of theminority shareholding in that business. "The Board is pleased with the continued progress made by the Company. Thecompound annual growth in sales in the previous five years has been 18 per centper annum which has been achieved by a combination of organic and acquisitivedevelopment. The rate of growth in the six months to September 2007 has been inexcess of this and we see opportunities ahead to enable the Company to continueits successful development." -ends- For further information: Martin Davey, Chairman 07775 576426Bernard Hoggarth, Chief Executive Food 07836 703434John Lindop, Finance Director 07768 362592Cranswick plc Paul Quade 07947 186694CityRoad Communications 020 7248 8010 STATEMENT TO SHAREHOLDERS Results and review of activities The Company has generated further strong growth in sales and achieved recordinterim profits in the six months ended 30 September 2007. The overallperformance was pleasing and in line with management's expectations. Sales were 22 per cent ahead of the same period last year at £303.2m. Thisincrease was entirely organic growth notwithstanding the sale of the animal feedbusiness in May and the acquisition of DeliCo in November 2006. Profit beforetax was up 16 per cent at £18.0m compared to the same period last year and cashflow was particularly encouraging. The increase in basic earnings per share of14.5 per cent to 27.7p takes into account a slight reduction in the rate ofcorporation tax and a small increase in the number of shares in issue. Sales in the food business at £285.1m accounted for 94 per cent of total Companysales. The increase in sales over the corresponding period last year was 23 percent and most product categories achieved double digit growth. The Company isgaining market share through the development of its customer base and this,along with being positioned in a number of premium categories which are showinggood growth, is driving sales. The business has absorbed some raw material priceinflation in certain areas. In addition margins in individual product categoriesare, as usual, subject to varying dynamics which, in this period, included costsassociated with the outbreak of foot and mouth disease and start up costs of thenew 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 duringthe period and listings have been successfully gained with a number of groceryretailers. To support both this and the ongoing growth in the underlyingbusiness there has been recent investment in additional production capacity inthe sausage production facility. Investment has also been made in other areas ofthe food business to provide the production capacity to meet the anticipatedfurther growth in sales. In particular the new premium bacon factory forCranswick Gourmet Bacon Company has recently seen production commence and thisfollows on from the acquisition of the minority shareholding in that business.There are plans to maintain this programme of investment to both add capacityand enhance operating efficiencies elsewhere in the Group. In the pet division sales rose 15 per cent to £18.0m. The Pet Products businessexperienced challenging trading conditions brought about by substantialincreases in raw material prices whilst the Tropical Marine aquatics businessperformed particularly strongly and since September has successfullycommissioned the replacement building for the warehouse damaged by fire inDecember 2006. Cashflow and borrowings The cashflow of the business has remained strong with net borrowings reducingover the six month period by £3.3m to £72.6m notwithstanding capital expenditureof £12.7m of which £8.1m related to the new bacon facility. The disposal of theanimal feed business in May generated funds of £5.6m with further sums tofollow. The net interest charge rose slightly to £2.2m but interest coverimproved from 8.4 times to 9.1 times. Dividend The interim dividend is being increased by 10 per cent to 6.5p per share. Thedividend will be paid on 25 January 2008 to shareholders on the register at theclose of business on 30 November 2007 and shareholders will again have theoption to receive the dividend by way of scrip issue. Employees The Company now provides employment for 4,500 people, many of whom have becomeshareholders as a result of the SAYE Share Option Scheme, and on behalf of theBoard I thank each one for their contribution to the ongoing successfuldevelopment of Cranswick. Outlook The Board is pleased with the continued progress made by the Company. Thecompound annual growth in sales in the previous five years has been 18 per centper annum which has been achieved by a combination of organic and acquisitivedevelopment. The rate of growth in the six months to September 2007 has been inexcess of this and we see opportunities ahead to enable the Company to continueits 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 £'000 £'000 £'000 Revenue 3 303,158 247,796 524,823Cost of sales (258,793) (208,407) (438,508) -------- --------- ----------Gross profit 44,365 39,389 86,315Operating expenses (24,203) (21,806) (48,958) -------- --------- ----------Operating profit 3 20,162 17,583 37,357Finance revenue 91 1 6Finance costs (2,297) (2,098) (4,707) -------- --------- ----------Profit before tax 17,956 15,486 32,656Taxation 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 22,574Minority interest 52 15 80 -------- --------- ---------- 12,749 10,840 22,654 -------- --------- ----------Earnings per share:Basic 5 27.7p 24.2p 50.2pDiluted 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 £'000 £'000 £'000Income and expense recognised directlyin equity Profit/(loss) on effective cash flowhedges taken to equity 244 (37) 369 Exchange differences on retranslation of foreign operations (2) (6) (5)Deferred tax recognised directly in equity (411) 100 300Corporation 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 23,950Minority 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 £'000 £'000 £'000Non-current assetsGoodwill 117,756 111,963 117,520Property, plant and equipment 85,707 68,248 80,277 -------- ------- -------- 203,463 180,211 197,797 -------- ------- -------- Current assetsInventories 26,963 21,345 24,626Trade and other receivables 73,267 58,098 66,416Other financial assets 574 - 330Cash and cash equivalents 6,869 4,520 2,262 -------- ------- --------Total current assets 107,673 83,963 93,634 -------- ------- -------- Non-current assets classified as heldfor sale 280 - - Total assets 311,416 264,174 291,431 Current liabilitiesTrade 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 liabilitiesOther 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 -------- ------- -------- EquityCalled-up share capital 8 4,602 4,474 4,595Share premium account 8 47,640 41,260 47,204Share based payments reserve 8 1,488 654 1,018Hedging and translation reserves 8 593 (56) 351Retained earnings 8 89,301 72,570 82,564 -------Equity attributable to members of the 143,624 118,902 135,732parent companyMinority 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 £'000 £'000 £'000Operating activitiesProfit before finance and taxation 20,162 17,583 37,357Adjustments to reconcile group profit beforefinance and taxation to net cash inflows fromoperating activities:Depreciation 4,982 4,343 9,252Share based payments 470 123 487Release of government grants (18) (21) (39)Profit on sale of goodwill, property andequipment (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 41,830Tax paid (4,150) (3,562) (7,936) -------- -------- --------Net cash from operating activities 21,406 16,910 33,894 -------- -------- -------- Cashflows from investing activitiesInterest received 91 1 6Acquisition of subsidiaries (55) (73) (13,506)Purchase of property, plant and equipment (12,697) (5,155) (11,979)Proceeds from sale of property, plant andequipment 2,693 1,070 1,147Proceeds from sale of subsidiary 500 - - -------- -------- --------Net cash used in investing activities (9,468) (4,157) (24,332) -------- -------- -------- Cashflows from financing activitiesInterest paid (3,038) (2,446) (3,966)Proceeds from issue of share capital 213 34 1,776Proceeds from borrowings - - 10,000Issue 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 ofperiod (494) 46 46Effect 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 offinancial statements has been prepared in accordance with IAS 34 InterimFinancial Reporting and includes a fair review of the information required byDTR 4.2.7R (an indication of important events during the first six months and adescription of the principle risks and uncertainties for the remaining sixmonths of the year) and by DTR 4.2.8R (a disclosure of related partytransactions and charges therein) of the Disclosure and Transparency Rules. By order of the Board M Davey J LindopChairman 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 hasbeen prepared in accordance with the Disclosure and Transparency Rules of theUK's Financial Services Authority and the requirements of IAS 34 InterimFinancial Reporting as adopted by the European Union. The information does notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985. The statutory accounts for the year ended 31 March 2007 prepared underIFRS received an unqualified audit report and have been filed with the Registrarof Companies. The interim report has not been audited pursuant to the AuditingPractices Board guidance on 'Review of Interim Financial Information' and doesnot 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 sameas those applied by the Group in the financial statements for the year ended 31March 2007. In the current financial year, the Group will adopt IFRS 7 FinancialInstruments: Disclosures and the amendment to IAS 1 Presentation of FinancialStatements for the first time. As these are disclosure standards, there will beno impact on income or net assets. 3. Segmental analysis - half year ended 30 September Turnover Operating profit ------------------- ------------------------ 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Food 285,148 232,116 20,905 17,638Pet 18,010 15,680 517 946 -------- -------- -------- -------- 303,158 247,796 21,422 18,584Central costs - - (1,260) (1,001) -------- -------- -------- --------Group total 303,158 247,796 20,162 17,583 -------- -------- -------- -------- Assets Liabilities ------------------- ------------------------ 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Food 283,010 238,810 67,197 53,198Pet 20,510 20,648 3,810 2,220 -------- -------- -------- -------- 303,520 259,458 71,007 55,418Unallocated 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 £401,000 profit on thedisposal of the feed mill activities (2006: £281,000 profit on sale of propertyincluded in Pet activities). Unallocated assets and liabilities comprise certain items of property, plant andequipment, non-current assets classified as held for sale, loan notes, net debtand taxation balances. Since 30 September 2006, the acquisition of Delico Limited and the constructionof the new Gourmet Bacon factory have increased assets within the Food segment.Future capital expenditure under contract at 30 September 2007 was £4.7m (2006:£0.5m). 4. Taxation: the tax charge for the six months ended 30 September 2007 reflectsthe estimated effective rate for the full year of 29%. This is lower than thestandard rate of corporation tax for the year due to a credit of £0.5m whichreflects the impact on the deferred tax position of the reduction in thestandard 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 attributableto shareholders and on the weighted average number of shares in issue during theyear of 45,785,554 (2006: 44,685,046) excluding shares held by CranswickTrustees Limited. The calculation of diluted earnings per share is based on46,190,021 shares (2006: 45,148,356). 6. Dividends - half year ended 30 September Half year Year to 31 March --------------- 2007 2006 2007 £'000 £'000 £'000 Interim for year ended 31 March 2007 of 5.9p per share - - 2,667Final 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 wasapproved by the Board on 19 November 2007 for payment to shareholders in January2008 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 £'000 £'000 £'000 £'000 Cash and cash equivalents 2,262 4,604 3 6,869Overdrafts (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 £'000 £'000 payments £'000 £'000 £'000 £'000 £'000As at 1 April 2007 4,595 47,204 1,018 351 82,564 103 135,835Profit forthe period - - - - 12,697 52 12,749Share basedpayments - - 470 - - - 470Cash flowhedges - - - 244 - - 244Scrip dividend 3 227 - - - - 230Shareoptions exercised 4 209 - - - - 213Dividends - - - - (5,587) - (5,587)Exchangedifferences - - - (2) - - (2)Deferredtaxrecogniseddirectly in reserves - - - - (411) - (411)Corporationtaxrecogniseddirectly in reserves - - - - 38 - 38Purchase ofminorityinterest - - - - - (155) (155) ------ ------- ------- -------- ------- ------- -------At 30September 2007 4,602 47,640 1,488 593 89,301 - 143,624 ------ ------- ------- -------- ------- ------- ------- As at 1April 2006 4,467 40,797 531 (13) 66,604 36 112,422Profit forthe period - - - - 10,825 15 10,840 Share basedpayments - - 123 - - - 123Cash flowhedges - - - (37) - - (37)Scrip dividend 6 430 - - - - 436Shareoptions 1 33 - - - - 34exercisedDividends - - - - (4,959) - (4,959)Exchangedifferences - - - (6) - - (6)Deferredtaxrecogniseddirectly in reserves - - - - 100 - 100Purchase ofminorityinterest - - - - - (30) (30) ------ ------- ------- -------- ------- ------- -------At 30September 2006 4,474 41,260 654 (56) 72,570 21 118,923 ------ ------- ------- -------- ------- ------- ------- As at 1April 2006 4,467 40,797 531 (13) 66,604 36 112,422Profit forthe period - - - - 22,574 80 22,654Share basedpayments - - 487 - - - 487Cash flowhedges - - - 369 - - 369Scrip dividend 15 1,144 - - - - 1,159Shareoptions exercised 65 1,711 - - - - 1,776Share issues 48 3,552 - - - - 3,600Dividends - - - - (7,626) - (7,626)Exchangedifferences - - - (5) - - (5)Deferred taxrecogniseddirectly in reserves - - - - 300 - 300Corporationtaxrecogniseddirectly in reserves - - - - 712 - 712Purchase ofminorityinterest - - - - - (13) (13) ------ ------- ------- -------- ------- ------- -------At 31 March2007 4,595 47,204 1,018 351 82,564 103 135,835 ------ ------- ------- -------- ------- ------- ------- 9. The Board considers that the principal risks and uncertainties facing thebusiness in the second half of the financial year are as described on pages 19and 23 of the Report & Accounts for the year ended 31 March 2007 dated 21 May2007, a copy of which is available on the Company's website atwww.cranswick.co.uk. 10. In the ordinary course of business, transactions between the parent companyand subsidiary undertakings occurred during the period. These are eliminated onconsolidation. 11. The Company intends to post the Interim Report to shareholders on 21November 2007. Further copies will be available upon request from the CompanySecretary, 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