TIDMCWK
RNS Number : 3510Q
Cranswick PLC
29 November 2016
CRANSWICK plc: INTERIM RESULTS
Strong H1 performance
29 November 2016
Cranswick plc ("Cranswick" or "the Company" or "the Group"), a
leading UK food producer, today announces its unaudited results for
the six months ended 30 September 2016.
Financial Highlights(1) :
-- Revenue ahead by 15.9% at GBP580.8m (2015: GBP501.0m)
-- Underlying(2) revenue up 8.0%
-- Adjusted Group operating margin(3) increased to 6.6% (2015: 6.2%)
-- Adjusted profit before tax(3) 23.9% higher at GBP37.9m (2015: GBP30.6m)
-- Adjusted earnings per share(3) up 16.6% at 58.3p (2015: 50.0p)
-- Dividend per share increased by 12.9% to 13.1p (2015: 11.6p)
-- Net debt at GBP2.9m (2015: GBP4.8m)
-- Statutory profit before tax up 38.4% to GBP40.4m (2015: GBP29.2m)
-- Statutory earnings per share 30.8% higher at 62.5p (2015: 47.8p)
Commercial and strategic progress:
Corporate activity
-- Strong contribution from Crown Chicken following acquisition
in April 2016 and integration proceeding to plan
-- Acquisition of Dunbia Ballymena on 16 November 2016 further
strengthens the Group's UK pork processing capability
-- Sale of sandwich business in July 2016
Continued investment in existing operations
-- Record H1 capital expenditure of GBP24m to support strong growth pipeline
-- Phase 2 upgrade to Norfolk primary processing facility, which
underpins drive for site USDA accreditation, completed in the
period
-- Work to commence shortly on new GBP25m Continental Foods facility in Bury, Lancashire
Export sales
-- Further strong progress in key export markets, with Far East revenues ahead by 83%
Martin Davey, Cranswick's Chairman commented:
"The business performed strongly during the first half of the
year.
"Crown has made a particularly positive contribution to the
business, is combining well with the Group's pre-existing poultry
activity and is being integrated in line with plan.
"The interim dividend is being increased by 12.9 per cent to
13.1 pence per share from 11.6 pence previously.
"Cranswick has made further commercial and strategic progress
during the period whilst working closely with customers to maintain
its focus on service, quality and innovation in delivering
appealing and competitively priced products to the consumer.
"The Board believes that Cranswick remains well positioned to
deliver our expectations for the current financial year and also to
meet the challenges that may arise as it continues its successful
long-term development".
(1) Financial Highlights reflect results from continuing
operations for all periods, which exclude the results of The
Sandwich Factory which was sold on 23 July 2016.
(2) underlying revenue excludes the contribution from Crown
Chicken, which was acquired on 8 April 2016, in the current
period.
(3) adjusted Group operating margin, adjusted profit before tax
and adjusted earnings per share exclude net IAS 41 valuation
movement on biological assets and the amortisation of customer
relationship intangible assets in both the current and prior
period. These are the measures used by the Board to assess the
Group's underlying performance.
Enquiries:
Cranswick plc
Mark Bottomley, Finance Director 01482 372 000
Powerscourt
Nick Dibden / Lisa Kavanagh / Samantha Trillwood 020 7250
1446
Note to Editors:
Cranswick was formed in the early 1970s by farmers in East
Yorkshire to produce animal feed and has since evolved into a
business focused on the supply of food products to the UK food
retail and food service sectors. Well known for the production of
gourmet sausages the Company is involved in the breeding and
rearing of premium British pigs and also supplies fresh pork, fresh
chicken, cooked meats, premium cooked poultry, air-dried bacon and
gammon, continental products and pastry products. Products are sold
primarily under retailers own labels including Sainsbury's 'Taste
The Difference' and Tesco's 'Finest' as well as under a number of
brands such as 'Simply Sausages', 'The Black Farmer', 'Bodega',
'Welly' and 'Woodall's'. Sales from continuing operations in the
year to March 2016 were GBP1,016 million and have grown more than
100 per cent over ten years.
Chairman's statement
The business performed strongly during the first half of the
year.
Results
Total revenue from continuing operations in the period to 30
September 2016 of GBP580.8 million was 16 per cent ahead of the
same period last year and was driven by strong volume growth across
most product categories.
Revenue for the current period includes the contribution from
Crown Chicken Limited ('Crown') following its acquisition on 8
April 2016. The results of The Sandwich Factory, which was sold in
July 2016, have been disclosed within discontinued operations in
both the current year and comparative figures.
Underlying revenue was 8 per cent higher than the same period
last year with corresponding volumes 16 per cent ahead.
Alongside record first-half sales it is pleasing to report to
Shareholders that adjusted profit before tax for the period
increased 24 per cent to GBP37.9 million from GBP30.6 million in
the corresponding period last year. This includes the contribution
from Crown since the date of acquisition.
Adjusted earnings per share on the same basis rose 17 per cent
to 58.3 pence compared to 50.0 pence previously.
Details of trading are covered in the Operating and Financial
reviews.
Investments
Crown has made a particularly positive contribution to the
business, is combining well with the Group's pre-existing poultry
activity and is being integrated in line with plan.
In addition, there is substantial ongoing capital investment
across the Group. During the period this totalled GBP24.5 million
and included significant projects within fresh pork, cooked meats
and sausage.
Financial position
Operating cash inflow increased to GBP38.4 million from GBP35.5
million in the same period last year and at the end of the period
net debt stood at GBP2.9 million, which compared to GBP4.8 million
a year earlier. Following the refinancing of the Group's banking
facility on 17 November 2016, the Company remains in a sound
financial position and further details are provided in the
Financial review.
Dividend
The interim dividend is being increased by 12.9 per cent to 13.1
pence per share from 11.6 pence previously. The dividend will be
paid on 27 January 2017 to Shareholders on the register at the
close of business on 9 December 2016. Shareholders will again have
the opportunity to receive the dividend by way of scrip issue.
Staff
The Group operates on a decentralised basis across product
categories, supported by business-wide collaboration in key areas.
Whilst the Board considers this to be the most appropriate format
for the Company it acknowledges that the continued success of
Cranswick would not be possible without talented and motivated
management teams supported by skilful and enthusiastic colleagues
at each site. On behalf of the Board I thank all our colleagues for
their commitment and contribution.
Outlook
Cranswick has made further commercial and strategic progress
during the period whilst working closely with customers to maintain
its focus on service, quality and innovation in delivering
appealing and competitively priced products to the consumer.
The Board believes that Cranswick remains well positioned to
deliver our expectations for the current financial year and also to
meet the challenges that may arise as it continues its successful
long-term development.
Martin Davey
Chairman
29 November 2016
Operating review
Reported revenue from continuing operations increased by 16 per
cent to GBP580.8 million. Growth was supported by a positive
contribution from Crown Chicken Limited ("Crown") which was
acquired on 8 April 2016. Underlying revenue grew by 8 per cent,
with corresponding volumes ahead 16 per cent as the benefit of
lower input prices in the early part of the year was passed on to
the Group's customers. New contract wins and a greater number of
pigs being processed through the Group's two primary processing
facilities underpinned the strong volume growth.
Adjusted Group operating profit from continuing operations
increased by 23.6 per cent to GBP38.2 million in the first half of
the financial year and adjusted Group operating margin improved by
0.4 per cent to 6.6 per cent of revenue. The improvement in Group
operating margin reflected the positive contribution from Crown,
the uplift in production volumes and a tight focus on cost control
and operational efficiencies across the Group.
The first half of the year has been particularly busy in terms
of corporate activity. The strategically important acquisition of
Crown at the beginning of the period was followed in July by the
sale of our sandwich business to Greencore plc. We now have a
focused portfolio of high growth, premium product categories, which
are produced from well invested highly efficient facilities.
Developing high quality, great tasting, innovative food products
which are ideally suited to the fast moving food-to-go and
convenience formats is a key component of our evolving growth
strategy.
On 16 November, after the period end, we acquired Dunbia
Ballymena, a leading Northern Irish pork processing business.
Dunbia Ballymena operates from a modern, purpose built facility in
Country Antrim, Northern Ireland and has a strategic,
well-established supply chain with strong links to the local
farming community. This acquisition strengthens our UK pork
processing business and provides us with greater control over our
supply chain, ensuring that we can maintain the production and
processing of high quality, farm assured pigs which is central to
our customers' requirements.
Corporate activity has been augmented by over GBP24 million of
capital investment during the period to add capacity, new
capability and drive further operating efficiency gains. The
expenditure was spread across our asset base as we continue to
successfully grow and develop our business. We have now invested in
excess of GBP200 million in our infrastructure over the last eight
years to give us some of the most efficient and well invested
production facilities in the UK food manufacturing sector. Further
detail on specific projects is provided in the category reviews
below.
Pig prices increased sharply during the period, particularly
during the second quarter of the year. The UK pig price rose 25 per
cent during the period, albeit from a low starting point, but was
on average still 5 per cent lower than during the same period last
year. The steep rise reflected an even more pronounced increase in
its European equivalent of 41 per cent resulting in the EU
reference price reaching parity with the UK price by the half year
end. The principal reason for the uplift in European prices was
strong demand for European pig meat from China.
The Wayland and Wold farming businesses continue to supply
approximately 20 per cent of the Group's British pig requirements.
Cranswick is the third largest pig producer in the UK and
represents 6 per cent of the total UK pig herd. More than 80 per
cent of the pigs produced from the two herds are bred outdoors
providing a complete farm to fork solution for the premium pork
ranges of the Group's two largest retail customers. Provenance and
end-to-end supply chain integrity are key differentiators enabling
the Group to lock in key long-term retail relationships.
Improvements in productivity together with rising pig prices as
referred to above resulted in an improved contribution from pig
production compared to the same period last year.
Total export volumes grew by 23 per cent during the period.
Volume growth in Far Eastern markets of 37 per cent together with
an 11 per cent increase into the US was offset by a 4 per cent
decline in sales to other export markets. The strong growth in
shipments to the Far East reflected an increase in pig numbers
processed at our two primary processing facilities and growth in
the number of products being supplied.
Fresh pork revenues grew by 3 per cent in the period with
corresponding volumes up 10 per cent, driven by strong export
growth, a buoyant wholesale market and the benefit of new,
long-term retail contracts. The number of British pigs processed
through the Group's two primary processing facilities increased by
9 per cent during the period. British pig meat accounts for over 80
per cent of total output with the balance being from meat procured
in the EU. Market data for the 52 weeks to 9 October highlighted
that UK retail fresh pork volumes fell 3 per cent year on year.
Much of the reason for this decline can be attributed to lower
promotional participation. We continue to work closely with our
customers and the Agriculture and Horticulture Development Board
(AHDB) to: rejuvenate the image of pork; differentiate pork from
other red meat proteins; communicate the health benefits of pork;
and highlight pork as an environmentally sustainable food. The next
phase of redevelopment of our Norfolk facility was completed
shortly after the half year end. The GBP6 million investment to
replace the previous abattoir has increased capacity, improved
efficiencies and will facilitate the site's push for USDA
accreditation.
Sausage sales were 16 per cent higher with volumes ahead by 40
per cent. New contract wins with the Group's two largest retail
customers for their "Butcher's Choice" ranges, which together
delivered 350 tonnes of incremental volume, underpinned this robust
category performance. Sausage production recommenced at our Norfolk
facility during the period to meet this increase in demand with
over 150 tonnes of sausage being produced each week from the site.
Sales of premium beef burgers from the Lazenby's facility also grew
strongly with volumes up 24 per cent compared to the same period
last year. New mixing and blending equipment has been successfully
commissioned to support the next phase of growth and development of
the facility. New product launches and increased volumes of festive
garnish ranges will ensure the Lazenby's site has an extremely busy
run in to Christmas. Over 40 million pigs in blankets are being
produced this year - double last year's total.
Bacon sales were 4 per cent lower despite strong volume growth
of 8 per cent as lower input prices were passed through to our
customers. The premium bacon sector continues to outperform the
overall category, but slower year on year growth compared to
previous periods highlighted the recent trend by our retail
customers to move away from promotional mechanics and multi-buy
offers.
Cooked meat sales increased by 13 per cent, with volumes 17 per
cent higher reflecting new business wins coming on stream
throughout the period. Three major new contracts, with business
secured for the long term and with built in pricing models to
address raw material price movements, leave the cooked meats
category in robust shape heading into the second half of the year.
The ongoing capital investment programme resulted in GBP13 million
being spent across the three cooked meats sites during the period
to upgrade the facilities, add capacity and introduce new
capability to produce "slow cook", "sous vide", "food on the go"
and "barbecue" ranges which have been added to our portfolio of
products following recent contract wins.
Sales of Crown fresh poultry grew by 8.3 per cent in the period
post acquisition compared to the same period in the prior year
reflecting strong volume growth. Crown, with its fully integrated
supply chain model, made a very positive contribution to the Group
during the period, is being integrated successfully and is forging
strong links with our premium cooked poultry and pig farming
operations.
Sales of premium cooked poultry grew by 13 per cent supported by
a 22 per cent uplift in volumes. The GBP9 million capital
investment programme which was completed at the start of the
current financial year has enabled new business to be secured and
produced more efficiently by using the latest in-line cooking and
spiral chilling techniques. This category is perfectly suited to
the latest consumer trends which are focused on quick, easy,
healthy and tasty meal solutions, with convenient protein a core
component. Latest market data shows the UK cooked poultry category
has grown at 4 per cent over the last 52 weeks, and that growth is
accelerating.
Sales of continental products increased by 14 per cent with
volumes up 18 per cent. The business continues to successfully
source new products from a complex array of high quality premium
suppliers across the Mediterranean region. The "Made in Manchester"
concept highlights the significant value add that the experienced
and innovative teams at the two Manchester facilities bring to this
fast growing category. The two facilities, which have served the
business so well since the Continental Fine Foods business was
acquired, are now operating at full capacity. To enable the
business to continue to grow and develop, a new GBP25 million
facility will be built in the North West of England which will
consolidate production from the two existing sites. The new site,
based at Bury in Lancashire, will increase current capacity by
approximately 70 per cent and will enable the existing and new
product ranges to be produced more efficiently.
Pastry sales were 1 per cent ahead of the prior year in revenue
terms with volumes 4 per cent lower. Further improvements in
operational performance at the site supported the modest sales
growth in what is the quieter half of the year. New product lines
continue to be launched, and these, together with a strong
Christmas and seasonal promotional programme, leave the pastry
business well placed to drive further volume growth moving into the
second half of the financial year.
We have made excellent commercial and strategic progress during
the period against the backdrop of turbulent economic conditions
and a challenging retail environment.
Cranswick is committed to delivering everyday great food
experiences to the UK consumer. This commitment is underpinned by a
constant focus on quality, value and a drive to innovate and bring
new and exciting products to market. The ongoing growth and
development of the Group is a testament to the continued efforts of
the highly skilled and committed people across the business.
Adam Couch
Chief Executive
29 November 2016
Financial review
The Group is presenting its interim financial information for
the six months to 30 September 2016 with comparative information
for the six months to 30 September 2015 and the year to 31 March
2016. Continuing operations exclude the results of The Sandwich
Factory, which was sold to Greencore plc on 23 July 2016, for both
the current and comparative periods.
Revenue
Reported revenue from continuing operations at GBP580.8 million
was 15.9 per cent ahead of the same period last year, driven by
double-digit volume growth across most product categories and
revenues from Crown, acquired in April 2016. Underlying revenue
from continuing operations, which excludes the contribution from
Crown in the current period, was 8.0 per cent higher than the prior
year, with corresponding volumes up 15.8 per cent as the benefit of
lower input prices during the early part of the period were passed
on to the Group's customers. Export sales to key Far East markets
were particularly strong and increased by 83 per cent.
Adjusted Group operating profit
Adjusted Group operating profit of GBP38.2 million, including
the contribution from Crown, increased by 23.6 per cent. Adjusted
Group operating margin was 6.6 per cent of sales compared the 6.2
per cent reported in the same period last year with the improvement
underpinned by strong sales volume growth, lower input costs in the
first quarter, operating efficiency improvements and the positive
contribution from Crown.
Finance costs
Net financing costs at GBP0.3 million were in line with the
first half of the prior year, with lower bank base rates being
offset by higher average borrowings.
On 17 November 2016, the Group successfully refinanced its
banking facility. The new agreement, which is on improved terms, is
unsecured and runs to November 2021 with the option to extend by up
to a further two years and comprises a revolving credit facility of
GBP160 million, including a committed overdraft of GBP20 million.
It also includes the option to access a further GBP40 million on
the same terms at any point during the term of the agreement. The
facility provides the business with generous headroom for the
future.
Adjusted profit before tax
Adjusted profit before tax was 23.9 per cent higher at GBP37.9
million (2015: GBP30.6 million).
Taxation
The tax charge as a percentage of profit before tax (including
discontinued operations) was 20.4 per cent (2015: 22.5 per cent).
The standard rate of corporation tax was 20 per cent (2015: 20 per
cent). The charge for the period was higher than the standard rate
of corporation tax due to the impact of disallowable expenses and
the deferred tax charge in relation to the net IAS 41 valuation
credit on biological assets offset by the benefit of the profit on
disposal of the Sandwich Factory which is not expected to be
chargeable to tax. The higher than standard rate charge in the
prior year reflected the impact of disallowable expenses including
the goodwill impairment charge.
Adjusted earnings per share
Adjusted earnings per share from continuing operations rose by
16.6 per cent to 58.3 pence (2015: 50.0 pence) in the six months to
30 September 2016. The average number of shares in issue was
50,024,000 (2015: 49,464,000).
Adjusted profit measures
The Group monitors performance principally through the adjusted
profit measures which exclude certain non-cash items including the
net IAS 41 valuation gain of GBP3.6 million on biological assets
(2015: charge of GBP0.6 million), amortisation of acquired
intangible assets of GBP1.0 million (2015: GBP0.7 million), profit
on sale of a business of GBP4.5 million (2015: GBPnil) and in the
prior year a goodwill impairment charge of GBP4.6 million. The
statutory results from continuing operations, including these
items, show a 38.4 per cent increase in profit before tax to
GBP40.4 million (2015: GBP29.2 million), a 37.9 per cent increase
in Group operating profit to GBP40.8 million (2015: GBP29.6
million) and a 30.8 per cent increase in earnings per share to 62.5
pence (2015: 47.8 pence).
Acquisition of Crown Chicken
On 8 April 2016, the Group acquired the whole of the issued
share capital of CCL Holdings Limited ('Crown') and its 100 per
cent owned subsidiary Crown Chicken Limited, a leading integrated
poultry producer based in East Anglia, for a net cash consideration
of GBP39.3 million. Further details of the transaction are set out
in note 9. Crown is being successfully integrated into the
Cranswick Group in line with plan and has made a positive
contribution to the Group's results. Further details of the
performance of the Crown business can be found in the Operating
review.
Sale of sandwich business
On 23 July 2016, the Group sold its sandwich business, The
Sandwich Factory Holdings Limited, to Greencore plc for net
proceeds of GBP16.0 million, which includes GBP1.0 million of
contingent consideration. Further details of the transaction are
set out in note 6. The after-tax results of the sandwich business
for both the current and comparative periods, including profit on
disposal of GBP4.5 million in the current year and impairment of
goodwill of GBP4.6 million in the prior year, are included in a
single line item 'Profit from discontinued operations' at the foot
of the income statement.
Cash flow and net debt
The net cash inflow from operating activities in the period was
GBP38.4 million (2015: GBP35.5 million) reflecting higher Group
operating profit offset by a working capital outflow of GBP7.6
million (2015: inflow of GBP0.9 million). Net debt increased by
GBP20.7 million in the six-month period to GBP2.9 million including
the GBP24.8 million net spend on corporate transactions and the net
GBP24.3 million invested in the Group's asset base. The period end
balance was however GBP2.0 million lower than at the previous half
year end. Net debt was just 0.7 per cent of Shareholders' funds
(2015: 1.4 per cent) as the Group's balance sheet continues to be
conservatively managed.
Pensions
The Group operates defined contribution pension schemes whereby
contributions are made to schemes administered by major insurance
companies. Contributions to these schemes are determined as a
percentage of employees' earnings. The Group also operates a
defined benefit pension scheme which has been closed to further
benefit accrual since 2004. The deficit on this scheme at 30
September 2016 was GBP8.2 million which compared to GBP4.4 million
at 31 March 2016, with the movement reflecting significantly lower
bond yields. Cash contributions to the scheme during the period, as
part of the programme to reduce the deficit, were GBP0.7 million.
The present value of funded obligations was GBP34.4 million and the
fair value of plan assets was GBP26.2 million.
The valuation of the defined benefit pension liability is
dependent upon market conditions and actuarial methods and
assumptions (including mortality assumptions). Such changes in
actuarial assumptions and the performance of the funds may result
in changes to amounts charged or released through the income
statement and the Group may be required to pay increased pension
contributions in the future. The Board regularly reviews its
pension strategy with reference to the value of assets and
liabilities under the pension scheme as well as the potential
impact of changes in actuarial assumptions.
Principal risks and uncertainties
There are a number of risks and uncertainties facing the
business in the second half of the financial year. The Board
considers these risks and uncertainties to be the same as those
described in the Report & Accounts for the year ended 31 March
2016, dated 24 May 2016, a copy of which is available on the
Group's website at www.cranswick.plc.uk. The principal risks and
uncertainties which are set out in detail on pages 30 to 33 of the
Report & Accounts for the year ended 31 March 2016 are:
Strategic Commercial Financial risks Operational
risks risks * Interest rate, curren risks
* Consumer demand * Reliance on key customers and exports cy, liquidity and credit ri * Business continuity
sk
* Competitor activity * Pig meat - availability and price * Recruitment and retention of workforce
* Business acquisitions
* Health and safety
* Disease and infection within pig herd / poultry flock
* Food scares and product contamination
* Cyber security
UK referendum on EU membership
The outcome of the UK referendum on EU membership and the
subsequent uncertainty over the nature and timing of the UK's exit
from the EU continue to drive volatility in currency markets and
uncertainty within the European labour market. The Group continues
to monitor and manage its business risks in these areas.
Events after the balance sheet date
On 16 November 2016, the Group acquired the whole of the issued
share capital of Dunbia Ballymena, a leading pork processing
business in Northern Ireland. Further details of the transaction
are set out in note 13.
Forward looking information
This interim report contains certain forward looking statements.
These statements are made by the Directors in good faith based on
the information available to them at the time of their approval of
this report and such statements should be treated with caution due
to the inherent uncertainties, including both economic and business
risk factors, underlying any such forward looking information.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the 'Operating review'. The financial position of
the Group, its cash flows, liquidity position and borrowing
facilities are described above. The Group has considerable
financial resources together with strong trading relationships with
its key customers and suppliers. As a consequence, the Directors
believe that the Group is well placed to manage its business risk
successfully.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
condensed consolidated interim financial statements.
Mark Bottomley
Finance Director
29 November 2016
Cranswick plc: Group income statement (unaudited)
for the six months ended 30 September 2016
Year to
Half year 31
------------------
Notes 2016 2015 March
GBP'000 GBP'000 2016 GBP'000
----------------------------------------------------- ----- -------- -------- -------------
Revenue 580,780 501,046 1,016,314
===================================================== ===== ======== ======== =============
Adjusted Group operating profit 38,183 30,897 65,056
Net IAS 41 valuation movement on biological assets 3,569 (637) (951)
Amortisation of customer relationship intangible
assets (992) (698) (1,396)
Group operating profit 4 40,760 29,562 62,709
Finance revenue - - 1
Finance costs (324) (344) (640)
===================================================== ===== ======== ======== =============
Profit before tax 40,436 29,218 62,070
Taxation 5 (9,154) (5,558) (13,022)
===================================================== ===== ======== ======== =============
Profit for the period from continuing operations 31,282 23,660 49,048
Discontinued operations:
Profit for the period from discontinued operations 6 4,836 (3,884) (3,653)
===================================================== ===== ======== ======== =============
Profit for the period 36,118 19,776 45,395
===================================================== ===== ======== ======== =============
Earnings per share (pence)
On profit for the period from continuing operations:
Basic 62.5 47.8 98.9
Diluted 62.2 47.6 98.5
===================================================== ===== ======== ======== =============
On adjusted profit for the period from continuing
operations:
Basic 58.3 50.0 102.8
Diluted 58.0 49.8 102.4
===================================================== ===== ======== ======== =============
On profit for the period:
Basic 72.2 40.0 91.5
Diluted 71.8 39.8 91.2
=================================== ==== ==== ======
On adjusted profit for the period:
Basic 58.9 51.5 104.7
Diluted 58.5 51.3 104.3
=================================== ==== ==== ======
Cranswick plc: Group statement of comprehensive income
(unaudited)
for the six months ended 30 September 2016
Year to
Half year 31 March
---------------------
Notes 2016 2015 2016
GBP'000 GBP'000 GBP'000
----------------------------------------------- --------------- ---------- --------- ----------
Profit for the period 36,118 19,776 45,395
================================================================ ========== ========= ==========
Other comprehensive income
Other comprehensive income to
be reclassified to profit or loss
in subsequent periods:
Cash flow hedges
(Losses)/profits arising
in the period 10 (531) (169) 61
Reclassification adjustments
for losses included in the income
statement (61) 210 210
Income tax effect 101 (8) (52)
================================================ ============== ========== ========= ==========
Net other comprehensive income
to be reclassified to profit
or loss in subsequent periods (491) 33 219
================================================ ============== ========== ========= ==========
Items not to be reclassified
to profit or loss in subsequent
periods:
Actuarial (losses)/gains on defined
benefit pension scheme (4,376) 44 14
Income tax effect 700 (9) (3)
================================================ ============== ========== ========= ==========
Net other comprehensive income
not being reclassified to profit
or loss in subsequent periods (3,676) 35 11
================================================ ============== ========== ========= ==========
Other comprehensive income, net
of tax (4,167) 68 230
================================================ ============== ========== ========= ==========
Total comprehensive income, net
of tax 31,951 19,844 45,625
================================================ ============== ========== ========= ==========
Cranswick plc: Group balance sheet (unaudited)
at 30 September 2016
As at
Half year 31 March
----------------------
Notes 2016 2015 2016
GBP'000 GBP'000 GBP'000
-------------------------------------- ------ ---------- ---------- ----------
Non-current assets
Intangible assets 147,593 140,372 139,674
Property, plant and equipment 204,375 168,751 178,477
Biological assets 800 526 537
====================================== ====== ========== ========== ==========
Total non-current assets 352,768 309,649 318,688
====================================== ====== ========== ========== ==========
Current assets
Biological assets 17,521 13,074 10,530
Inventories 57,241 50,616 46,163
Trade and other receivables 140,489 120,757 116,799
Financial assets - - 61
Cash and short-term deposits 11 8,358 14,623 17,817
====================================== ====== ========== ========== ==========
Total current assets 223,609 199,070 191,370
====================================== ====== ========== ========== ==========
Total assets 576,377 508,719 510,058
====================================== ====== ========== ========== ==========
Current liabilities
Trade and other payables (144,341) (123,962) (121,764)
Financial liabilities (4,680) (169) -
Provisions (60) (60) (60)
Income tax payable (8,207) (4,848) (6,507)
====================================== ====== ========== ========== ==========
Total current liabilities (157,288) (129,039) (128,331)
====================================== ====== ========== ========== ==========
Non-current liabilities
Other payables (1,405) (1,443) (1,340)
Financial liabilities (11,810) (23,657) (4,687)
Deferred tax liabilities (3,476) (3,837) (1,781)
Provisions (1,206) (1,395) (1,467)
Defined benefit pension
scheme deficit (8,214) (5,004) (4,449)
====================================== ====== ========== ========== ==========
Total non-current liabilities (26,111) (35,336) (13,724)
====================================== ====== ========== ========== ==========
Total liabilities (183,399) (164,375) (142,055)
Net assets 392,978 344,344 368,003
====================================== ====== ========== ========== ==========
Equity
Called-up share capital 5,031 4,971 4,984
Share premium account 72,573 67,660 69,014
Share-based payments 14,872 11,415 13,033
Hedging reserve (441) (136) 50
Retained earnings 300,943 260,434 280,922
Equity attributable to owners
of the parent 392,978 344,344 368,003
====================================== ====== ========== ========== ==========
Cranswick plc: Group statement of cash flows (unaudited)
for the six months ended 30 September 2016
Year
Half year to 31
March
--------------------
Notes 2016 2015 2016
GBP'000 GBP'000 GBP'000
Operating activities
Profit for the period 36,118 19,776 45,395
Adjustments to reconcile Group
profit for the period to net
cash inflows from operating
activities:
Income tax expense 9,228 5,752 13,276
Net finance costs 289 301 536
Gain on sale of property, plant
and equipment (134) (113) (76)
Depreciation of property, plant
and equipment 13,315 9,435 21,224
Amortisation of intangibles 992 698 1,396
Impairment of goodwill - 4,635 4,635
Profit on disposal of business (4,539) - -
Share-based payments 1,839 1,173 2,791
Difference between pension contributions
paid and amounts recognised
in the income statement (611) (575) (1,160)
Release of government grants (108) (56) (128)
Net IAS 41 valuation movement
on biological assets (3,569) 637 951
Decrease/(increase) in biological
assets 1,120 (2,448) (229)
(Increase)/decrease in inventories (10,235) (1,491) 2,962
(Increase)/decrease in trade
and other receivables (22,307) (3,669) 841
Increase in trade and other
payables 23,805 8,486 5,382
========================================== ====== ========= ========= =========
Cash generated from operations 45,203 42,541 97,796
Tax paid (6,846) (7,045) (13,962)
========================================== ====== ========= ========= =========
Net cash from operating activities 38,357 35,496 83,834
========================================== ====== ========= ========= =========
Cash flows from investing activities
Interest received - - 1
Acquisition of subsidiary, net
of cash acquired 9 (39,328) - -
Purchase of property, plant
and equipment (24,468) (13,392) (34,295)
Receipt of government grants - 228 229
Proceeds from sale of property,
plant and equipment 198 193 538
Proceeds from sale of discontinued 14,528 - -
operations
========================================== ====== ========= ========= =========
Net cash used in investing activities (49,070) (12,971) (33,527)
========================================== ====== ========= ========= =========
Cash flows from financing activities
Interest paid (220) (255) (444)
Proceeds from issue of share
capital 103 63 606
Proceeds from borrowings 11 11,000 - -
Repayment of borrowings - (2,000) (22,000)
Dividends paid (9,484) (9,651) (14,593)
Repayment of capital element (145) - -
of finance leases
========================================== ====== ========= ========= =========
Net cash from/(used in) financing
activities 1,254 (11,843) (36,431)
========================================== ====== ========= ========= =========
Net (decrease)/increase in cash
and cash equivalents 11 (9,459) 10,682 13,876
Cash and cash equivalents at
beginning of period 11 17,817 3,941 3,941
========================================== ====== ========= ========= =========
Cash and cash equivalents at
end of period 11 8,358 14,623 17,817
========================================== ====== ========= ========= =========
Cranswick plc: Group statement of changes in equity
(unaudited)
for the six months ended 30 September 2016
Share Share Share- Hedging Retained Total
capital premium based reserve earnings equity
payments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- ---------- --------- ---------- ---------
At 1 April 2016 4,984 69,014 13,033 50 280,922 368,003
========================== ========= ========= ========== ========= ========== =========
Profit for the period - - - - 36,118 36,118
Other comprehensive
income - - - (491) (3,676) (4,167)
========================== ========= ========= ========== ========= ========== =========
Total comprehensive
income - - - (491) 32,442 31,951
Share-based payments - - 1,839 - - 1,839
Scrip dividend 16 3,487 - - - 3,503
Share options exercised 31 72 - - - 103
Dividends - - - - (12,987) (12,987)
Deferred tax relating
to changes in equity - - - - (272) (272)
Corporation tax relating
to changes in equity - - - - 838 838
========================== ========= ========= ========== ========= ========== =========
At 30 September 2016 5,031 72,573 14,872 (441) 300,943 392,978
========================== ========= ========= ========== ========= ========== =========
At 1 April 2015 4,926 65,689 10,242 (169) 251,685 332,373
========================== ========= ========= ========== ========= ========== =========
Profit for the period - - - - 19,776 19,776
Other comprehensive
income - - - 33 35 68
========================== ========= ========= ========== ========= ========== =========
Total comprehensive
income - - - 33 19,811 19,844
Share-based payments - - 1,206 - - 1,206
Scrip dividend 12 1,941 - - - 1,953
Share options exercised 33 30 (33) - - 30
Dividends - - - - (11,604) (11,604)
Deferred tax relating
to changes in equity - - - - (161) (161)
Corporation tax relating
to changes in equity - - - - 703 703
========================== ========= ========= ========== ========= ========== =========
At 30 September 2015 4,971 67,660 11,415 (136) 260,434 344,344
========================== ========= ========= ========== ========= ========== =========
At 1 April 2015 4,926 65,689 10,242 (169) 251,685 332,373
========================== ========= ========= ========== ========= ========== =========
Profit for the year - - - - 45,395 45,395
Other comprehensive
income - - - 219 11 230
========================== ========= ========= ========== ========= ========== =========
Total comprehensive
income - - - 219 45,406 45,625
Share-based payments - - 2,791 - - 2,791
Scrip dividend 16 2,761 - - - 2,777
Share options exercised 42 564 - - - 606
Dividends - - - - (17,370) (17,370)
Deferred tax relating
to changes in equity - - - - 343 343
Corporation tax relating
to changes in equity - - - - 858 858
========================== ========= ========= ========== ========= ========== =========
At 31 March 2016 4,984 69,014 13,033 50 280,922 368,003
========================== ========= ========= ========== ========= ========== =========
Responsibility statement
The Directors confirm that to the best of their knowledge the
condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting and includes a
fair review of the information required by DTR 4.2.7R (an
indication of important events during the first six months and a
description of the principal risks and uncertainties for the
remaining six months of the year) and by DTR 4.2.8R (a disclosure
of related party transactions and changes therein) of the
Disclosure and Transparency Rules. The Board of Directors that
served during the six months ended 30 September 2016, and their
respective responsibilities, can be found on pages 46 and 47 of the
2016 Annual Report & Accounts.
On behalf of the Board
Martin Davey Mark Bottomley
Chairman Finance Director
29 November 2016
Notes to the interim accounts
1. Basis of preparation
This interim report was approved by the Directors on 29 November
2016 and has been prepared in accordance with the Disclosure and
Transparency Rules of the UK's Financial Conduct Authority and the
requirements of IAS 34 Interim Financial Reporting as adopted by
the European Union. The information does not constitute statutory
accounts within the meaning of Section 435 of the Companies Act
2006. The statutory accounts for the year ended 31 March 2016
prepared under IFRS as adopted by the European Union have been
filed with the Registrar of Companies. The report of the auditors
on the statutory accounts was not qualified and did not contain a
statement under Section 498(2) or (3) of the Companies Act 2006.
The interim report is unaudited but has been subject to an
independent review by Ernst & Young LLP pursuant to the
Auditing Practices Board guidance contained in ISRE 2410 (UK and
Ireland) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity".
The comparative information has been restated in accordance with
IFRS 5 to reflect operations classified as discontinued during the
period.
2. Accounting policies
The accounting policies applied by the Group in this interim
report are the same as those applied by the Group in the financial
statements for the year ended 31 March 2016.
Non-GAAP measures - Adjusted Group operating profit, adjusted
profit before tax and adjusted earnings per share
Adjusted Group operating profit, adjusted profit before tax and
adjusted earnings per share are defined as being before net IAS 41
valuation movement on biological assets, profit for the period from
discontinued operations, and other significant non-trading items
(being amortisation of acquired customer relationship intangibles).
These additional non-GAAP measures of performance are included as
the Directors believe that they provide a useful alternative
measure for Shareholders of the trading performance of the Group.
The reconciliation between Group operating profit and adjusted
Group operating profit is shown on the face of the Group income
statement.
A reconciliation to relevant GAAP measures is given below:
Underlying revenue
Year to
Half year 31 March
--------------------
2016 2015 2016
GBP'000 GBP'000 GBP'000
-------------------- --------- --------- ----------
Revenue 580,780 501,046 1,016,314
Crown Chicken 39,613 - -
===================== ========= ========= ==========
Underlying revenue 541,167 501,046 1,016,314
===================== ========= ========= ==========
Adjusted profit before tax
Year to
Half year 31 March
--------------------
2016 2015 2016
GBP'000 GBP'000 GBP'000
--------------------------------------- --------- --------- ----------
Profit before tax 40,436 29,218 62,070
Net IAS 41 valuation movement
on biological assets (3,569) 637 951
Amortisation of customer relationship
intangible assets 992 698 1,396
======================================== ========= ========= ==========
Adjusted profit before tax 37,859 30,553 64,417
======================================== ========= ========= ==========
A reconciliation of adjusted earnings per share is provided in
note 7.
The following accounting standards and interpretations became
effective, and were adopted by the Group, for the current reporting
period:
International Accounting Standards (IAS / Effective
IFRSs) date
Annual Improvements to IFRSs 2012-2014 Cycle 1 January
2016
The application of these standards has not had a material effect
on the net assets, results and disclosures of the Group.
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
3. Segmental analysis
IFRS 8 requires operating segments to be identified on the basis
of the internal financial information reported to the Chief
Operating Decision Maker ('CODM'). The Group's CODM is deemed to be
the Executive Directors on the Board, who are primarily responsible
for the allocation of resources to segments and the assessment of
performance of the segments.
The CODM assesses profit performance using adjusted profit
before taxation measured on a basis consistent with the disclosure
in the Group accounts.
The Group reported on just one reportable segment during the
period and the preceding financial year. The revenues of the Group
are not significantly impacted by seasonality.
Additions to property, plant and equipment during the period
totalled GBP24.5 million (2015: GBP12.2 million). Future capital
expenditure under contract at 30 September 2016 was GBP10.4 million
(2015: GBP4.3 million).
4. Group operating profit
Group operating costs Year
comprise: Half year to
31 March
----------------------
2016 2015 2016
GBP'000 GBP'000 GBP'000
---------------------------------------- ---- ---------- ---------- ----------
Cost of sales excluding net IAS
41 valuation movement on biological
assets 503,061 434,374 879,696
Net IAS 41 valuation movement
on biological assets* (3,569) 637 951
============================================== ========== ========== ==========
Cost of sales 499,492 435,011 880,647
============================================== ========== ========== ==========
Gross profit 81,288 66,035 135,667
========================================= === ========== ========== ==========
Selling and distribution costs 22,830 19,806 39,511
========================================= === ========== ========== ==========
Administrative expenses excluding
amortisation of customer relationship
intangible assets 16,706 15,969 32,051
Amortisation of customer relationship
intangible assets 992 698 1,396
========================================= === ========== ========== ==========
Administrative expenses 17,698 16,667 33,447
========================================= === ========== ========== ==========
Total operating costs 540,020 471,484 953,605
========================================= === ========== ========== ==========
* This represents the difference between operating profit
prepared under IAS 41 and operating profit prepared under
historical cost accounting, which forms part of the reconciliation
of adjusted operating profit.
5. Taxation
The tax charge for the period (including discontinued
operations) was GBP9.2 million (2015: GBP5.8 million) and
represents an effective rate of 20.4 per cent (2015: 22.5 per
cent). The charge for the period was higher than the standard rate
of corporation tax due to the impact of disallowable expenses and
the deferred tax charge in relation to the net IAS 41 valuation
credit on biological assets offset by the benefit of the profit on
disposal of the Sandwich Factory which is not expected to be
chargeable to tax.
A reduction to the standard rate of corporation tax in the UK
from 20 per cent to 17 per cent from 1 April 2020 was enacted
before the balance sheet date. Deferred tax is therefore provided
at 17 per cent.
6. Discontinued operations
On 23 July 2016, the Group disposed of its shareholding in The
Sandwich Factory Holdings Limited ('The Sandwich Factory'). The
disposal allows the Group to focus on its portfolio of high growth,
premium product categories.
The results of discontinued operations, which have been
separately disclosed as a single line item at the foot of the Group
income statement, were as follows:
Period Half year Year to
ended 23 to 30 September 31 March
July 2016 2015 2016
Result of discontinued operations GBP'000 GBP'000 GBP'000
-------------------------------------- ---------- ---------------- ---------
Revenue 18,761 28,102 53,290
Expenses (18,425) (27,200) (52,157)
Impairment of goodwill - (4,635) (4,635)
Operating profit 336 (3,733) (3,502)
Finance income 35 43 103
Profit before tax 371 (3,690) (3,399)
Income tax expense on ordinary
activities of the discontinued
operation (74) (194) (254)
Profit on disposal of business 4,539 - -
====================================== ========== ================ =========
Profit after tax 4,836 (3,884) (3,653)
====================================== ========== ================ =========
Earnings per share from discontinued
operations
Basic earnings per share 9.7 (7.8) (7.4)
Diluted earnings per share 9.6 (7.8) (7.3)
Statement of cash flows
The statement of cash flows
includes the following amounts
relating to discontinued operations:
Operating activities (1,208) 1,393 559
Investing activities (386) (426) (722)
Financing activities 35 43 103
====================================== ========== ================ =========
Net cash from discontinued
operations (1,559) 1,010 (60)
====================================== ========== ================ =========
A profit on disposal of GBP4.5 million arose on the sale of The
Sandwich Factory, being the difference between net proceeds of
GBP16.0 million, which includes GBP1.0 million of contingent
consideration, and the carrying value of net assets plus
attributable goodwill of GBP11.5 million.
7. Earnings per share
Basic earnings per share are based on profit for the period
attributable to Shareholders and on the weighted average number of
shares in issue during the period of 50,024,322 (31 March 2016:
49,600,431, 30 September 2015: 49,464,032). The calculation of
diluted earnings per share is based on 50,287,229 shares (31 March
2016: 49,791,856, 30 September 2015: 49,666,112).
Adjusted earnings per share
The Directors consider it appropriate to present an adjusted
measure of earnings per share on the face of the income statement
which excludes certain non-cash items to provide a more meaningful
measure of the underlying performance of the business. These items
include the amortisation of customer relationship intangible
assets, profit on disposal of business, impairment of goodwill, and
gains and losses from the IAS 41 valuation movement on biological
assets due to the volatility of pig prices.
Adjusted earnings per share are calculated using the weighted
average number of shares for both basic and diluted amounts as
detailed above.
Adjusted profit for the period and adjusted profit for the
period from continuing operations are derived as follows:
Year
Half year to
31 March
--------------------
2016 2015 2016
GBP'000 GBP'000 GBP'000
Profit for the period 36,118 19,776 45,395
Net IAS 41 valuation movement
on biological assets (3,569) 637 951
Tax on net IAS 41 valuation movement
on biological assets 607 (127) (171)
Amortisation of customer relationship
intangible assets 992 698 1,396
Tax on amortisation of customer
relationship intangible assets (169) (140) (251)
Impairment of goodwill - 4,635 4,635
Profit on disposal of business (4,539) - -
======================================== ========= ========= ==========
Adjusted profit for the period 29,440 25,479 51,955
Profit from discontinued operations (297) (751) (982)
======================================== ========= ========= ==========
Adjusted profit for the period
from continuing operations 29,143 24,728 50,973
======================================== ========= ========= ==========
8. Dividends - half year ended 30 September
Year
Half year to
31 March
--------------------
2016 2015 2016
GBP'000 GBP'000 GBP'000
Interim dividend for year ended
31 March 2016 of 11.6p per share - - 5,766
Final dividend for year ended
31 March 2016 of 25.9p (2015:
23.4p)
per share 12,987 11,604 11,604
========================================= ========= ========= ==========
12,987 11,604 17,370
==== =================================== ========= ========= ==========
The interim dividend for the year ending 31 March 2017 of 13.1
pence per share was approved by the Board on 29 November 2016 for
payment to Shareholders on 27 January 2017 and therefore has not
been included as a liability as at 30 September 2016.
9. Acquisitions
On 8 April 2016, the Group acquired 100 per cent of the issued
share capital of CCL Holdings Limited and its wholly owned
subsidiary Crown Chicken Limited ('Crown') for net cash
consideration of GBP39.3 million. The principal activities of Crown
Chicken Limited are the breeding, rearing and processing of fresh
chicken, as well as the milling of grain for the production of
animal feed. The acquisition provides the Group with a fully
integrated supply chain for its growing poultry business.
Fair values of the net assets at the date of acquisition were as
follows:
Provisional
fair value
GBP'000
Net assets acquired:
Customer relationships 2,938
Property, plant and equipment 17,501
Biological assets 4,805
Inventories 1,865
Trade and other receivables 9,900
Bank and cash balances 3,946
Trade and other payables (7,900)
Corporation tax liability (584)
Deferred tax liability (1,767)
Finance lease obligations (370)
=========================================== ============
30,334
Goodwill arising on acquisition 12,940
=========================================== ============
Total consideration 43,274
=========================================== ============
Satisfied by:
=========================================== ============
Cash 43,274
=========================================== ============
Net cash outflow arising on acquisition:
Cash consideration paid 43,274
Cash and cash equivalents acquired (3,946)
=========================================== ============
39,328
=========================================== ============
The fair values on acquisition are provisional due to the timing
of the transaction and will be finalised within twelve months of
the acquisition date.
All of the trade receivables acquired are expected to be
collected in full.
Included in the GBP12,940,000 of goodwill recognised above are
certain intangible assets that cannot be individually separated
from the acquiree and reliably measured due to their nature. These
items include the expected value of synergies and an assembled
workforce and the strategic benefits of vertical integration
including security of supply.
Transaction costs in relation to the acquisition of GBP0.4
million have been expensed within administrative expenses.
From the date of acquisition to 30 September 2016, the external
revenues of Crown were GBP39.6 million and the business contributed
a net profit after tax of GBP2.7 million to the Group. There is no
material difference between the revenue and profit contributed to
the Group had the acquisition taken place at the beginning of the
financial period and those presented.
10. Financial instruments
The Group's activities expose it to a number of financial risks
which include foreign currency risk, interest rate risk, credit
risk and liquidity risk. The Board considers the Group's financial
instruments risk management strategy to be the same as described
within the Directors' Report on page 74 of the Report &
Accounts for the year ended 31 March 2016.
Fair value of financial instruments
All derivative financial instruments are shown in the balance
sheet at fair value as follows:
Half year Year to
------------------------------------------
2016 2015 31 March 2016
------------------ -------------------- -------------------- --------------------
Book Fair Book Fair Book Fair
value value value value value value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Forward currency
contracts (531) (531) (169) (169) 61 61
================== ========= ========= ========= ========= ========= =========
The book value of trade and other receivables, trade and other
payables, cash balances, overdrafts, amounts outstanding under the
revolving credit facility and finance leases and hire purchase
contracts equates to fair value for the Group.
Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities.
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data.
Transfers between levels of the fair value hierarchy are deemed
to have occurred at the end of the reporting period. There were no
such transfers in the period.
The Group's forward currency contracts are measured using Level
2 of the fair value hierarchy. The valuations are provided by the
Group's bankers from their proprietary valuations models and are
based on mid-market levels as at close of business on the Group's
reporting date.
The Group's 3.3 per cent retained shareholding in the aquatics
business Tropical Marine Centre (2012) Limited would have been
classified as Level 3; however as the investment is an unquoted
entity and cannot be reliably measured the Directors consider that
its value is immaterial and no fair value has been applied.
11. Analysis of Group net funds/(debt)
At Cash Non-cash At
31 March flow movements 30 September
2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- --------- ----------- --------------
Cash and cash equivalents 17,817 (9,459) - 8,358
Revolving credit - (11,000) - (11,000)
Finance leases and hire
purchase contracts - 145 (370) (225)
=========================== ========== ========= =========== ==============
Net funds/(debt) 17,817 (20,314) (370) (2,867)
=========================== ========== ========= =========== ==============
Net funds/debt is defined as cash and cash equivalents and loans
receivable less interest bearing liabilities net of unamortised
issue costs.
12. Related party transactions
During the period the Group entered into transactions, in the
ordinary course of business, with its subsidiaries which are
related parties. Balances and transactions with subsidiaries are
eliminated on consolidation.
13. Events after the balance sheet date
Acquisitions
On 16 November 2016, the Group acquired 100 per cent of the
issued share capital of Dunbia Ballymena for an initial cash
consideration of GBP16.9 million with further contingent
consideration of up to GBP1.25 million. The principal activity of
Dunbia Ballymena is primary pork processing. The acquisition
enhances Cranswick's pig processing capability and establishes a
significant presence in Northern Ireland. The fair values on
acquisition are still being assessed due to the recentness of the
transaction and will be finalised within twelve months of the
acquisition date. Transaction costs of GBP0.3 million will be
expensed within administrative expenses.
Bank facility
On 17 November 2016, the Group refinanced its banking facility,
taking out a new agreement with Lloyds Bank plc, National
Westminster Bank plc, HSBC Bank plc and Santander UK plc, with
Lloyds Bank plc acting as agents.
The new facility which runs to November 2021 with the potential
to extend for a further 2 years, comprises a revolving credit
facility of GBP160 million, including a committed overdraft
facility of GBP20 million.
INDEPENT REVIEW REPORT TO CRANSWICK PLC
Introduction
We have been engaged by the Company to review the condensed set
of consolidated financial statements in the half-yearly financial
report for the six months ended 30 September 2016 which comprises
the Group income statement, Group statement of comprehensive
income, Group balance sheet, Group statement of cash flows, Group
statement of changes in equity and the related notes. We have read
the other information contained in the half yearly financial report
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of consolidated financial
statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting", as adopted by the European
Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of consolidated financial statements in the
half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of consolidated
financial statements in the half-yearly financial report for the
six months ended 30 September 2016 is not prepared, in all material
respects, in accordance with International Accounting Standard 34
as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Ernst & Young LLP
Hull
29 November 2016
This information is provided by RNS
The company news service from the London Stock Exchange
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