TIDMCWK
RNS Number : 7428X
Cranswick PLC
24 November 2014
CRANSWICK plc: INTERIM RESULTS
Positive earnings momentum
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 2014.
Financial Highlights:
-- Revenues of GBP481.5 million (2013: GBP483.5 million)
-- Adjusted Group operating margin(1) of 5.4 per cent (2013: 4.9 per cent)
-- Adjusted profit before tax(1) up by 11.4 per cent to GBP25.8 million (2013: GBP23.2 million)
-- Adjusted earnings per share(1) 7.3 per cent ahead at 41.1 pence (2013: 38.3 pence)
-- Dividend per share 6.0 per cent higher at 10.6 pence (2013: 10.0 pence)
-- Net debt reduced by 39.8 per cent to GBP22.4 million (2013: GBP37.2 million)
-- Statutory profit before tax of GBP24.6 million (2013: GBP26.1 million)
-- Statutory earnings per share of 39.2 pence (2013: 43.5 pence)
Operational Highlights:
-- Extension of the Delico cooked meats facility in Milton
Keynes completed on time and to budget
-- Significant upgrade to the Norfolk fresh pork site, which is nearing completion
-- Acquired Benson Park Limited, a leading producer of premium
British cooked poultry, subsequent to the half year end
Martin Davey, Cranswick's Chairman commented:
"It is pleasing to report to Shareholders that adjusted profit
before tax for the six months increased 11.4 per cent to GBP25.8
million from GBP23.2 million in the corresponding period last year.
Earnings per share on the same basis rose 7.3 per cent to 41.1
pence compared to 38.3 pence previously.
"Subsequent to the period end, the Company acquired Benson Park
Limited, a Hull based, leading producer of premium British cooked
poultry which serves the fast growing food to go sector. This is an
important acquisition for Cranswick in meeting the Company's stated
strategic aim of broadening both the protein range and the customer
base of the business.
"The interim dividend is being increased by 6.0 per cent to 10.6
pence per share from 10.0 pence previously.
"With experienced management at all levels of the Group, a
strong and continually evolving range of products along with a
robust financial position the Board remains confident in the
continued long term success and development of the business".
-ends-
(1) adjusted group operating margin, adjusted profit before tax
and adjusted earnings per share exclude net IAS 41 valuation
movement on biological assets in both the current and prior
financial years and the release of contingent consideration in the
prior financial year. 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/Sophie Moate 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,
cooked meats, premium cooked poultry, air-dried bacon, charcuterie,
sandwiches 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', 'Weightwatchers' and 'Red
Lion Foods'. Sales in the year to March 2014 were GBP995 million
and have grown more than 270 per cent over ten years.
Chairman's statement
The overall performance of the business during the first half of
the year has been in line with the Board's expectations.
Sales of GBP481.5 million were comparable to that recorded in
the same period a year ago. The underlying feature was of strong
sales growth across most product categories coupled with a
reduction in fresh pork sales. The latter was a result of business
lost earlier in the year which is now being recovered. Details of
trading in the period are covered more fully in the Operating
review.
The versatility and value credentials of pig meat in its various
forms continue to prove popular with the consumer. In addition, the
consumer focus on British meat has seen a greater proportion of the
Group's own pigs utilised internally thus delivering the benefits
envisaged when the strategic decision was made to return to pig
production with investment in the Company's own herds.
There have been well-publicised changes in consumers' food
shopping habits, including smaller but more frequent shopping trips
and reductions in food wastage. Along with increases in market
share for the convenience sector and the growth of limited
assortment discounters, this has impacted food sales at the major
grocery retailers and added to the pressures in the competitive
environment in which we operate.
Against this backdrop it is pleasing to report to Shareholders
that adjusted profit before tax for the six months increased 11.4
per cent to GBP25.8 million from GBP23.2 million in the
corresponding period last year. Earnings per share on the same
basis rose 7.3 per cent to 41.1 pence compared to 38.3 pence
previously, with the prior year benefitting from a lower effective
tax rate.
Adjusted operating margin was similar to that achieved for the
whole of the last financial year. The investments made in recent
years to increase capacity and improve efficiencies have been
important in offsetting commercial pressures.
During the period, work to extend the Delico cooked meats
facility in Milton Keynes was completed on time and to budget. This
investment provides additional capacity and improved production
yields. A major upgrade to the Norfolk fresh pork site, which is
nearing completion, will deliver similar benefits. The ongoing
development within pastry is delivering very encouraging sales
levels though much still remains to be done operationally to
deliver the targeted returns.
The strategy for the development of the business to date has
been to complement organic growth with appropriate acquisitions.
Subsequent to the period end, the Company acquired Benson Park
Limited, a Hull based, leading producer of premium British cooked
poultry which serves the fast growing food to go sector. This is an
important acquisition for Cranswick in meeting the Company's stated
strategic aim of broadening both the protein range and the customer
base of the business. We welcome David Park, Managing Director, and
his colleagues to Cranswick and look forward to working with them
to further develop the business.
Operating cash inflow in the period reduced to GBP17.1 million
from GBP23.8 million in the same period last year, reflecting
higher working capital as the Group has grown its pig herd and
prepares for a strong Christmas trading period. Interest was
covered 66 times and at the end of the period net debt stood at
GBP22.4 million. The Company is in a sound financial position and
further details are provided in the Financial review.
The interim dividend is being increased by 6.0 per cent to 10.6
pence per share from 10.0 pence previously. The dividend will be
paid on 23 January 2015 to Shareholders on the register at the
close of business on 5 December 2014. Shareholders will again have
the opportunity to receive the dividend by way of scrip issue.
The continued successful development of Cranswick would not be
possible without truly committed individuals throughout the
business. On behalf of the Board I express sincere thanks and
appreciation to all of our colleagues for their unstinting efforts,
enthusiasm and talents in driving the business forward.
The Company is totally focused on working closely with its
customers to deliver quality food for the consumer from well
invested production facilities of the highest standards. With
experienced management at all levels of the Group, a strong and
continually evolving range of products along with a robust
financial position the Board remains confident in the continued
long term success and development of the business.
Martin Davey
Chairman
24 November 2014
Operating review
Strong revenue growth in several of the Group's product
categories offset lower fresh pork sales and a conscious decision
to utilise more of Cranswick's own pigs internally. Retail market
data for the 52 weeks to 12 October 2014 shows most product
categories in which the Group participates continuing to grow, with
the premium tier, where Cranswick's sales tend to be more
concentrated, growing ahead of the overall category.
Adjusted Group operating profit increased by 11 per cent to
GBP26.2 million in the first half of the financial year on revenues
which were in line with last year at GBP481.5 million.
Adjusted group operating margin at 5.4 per cent of sales was in
line with the last financial year as a whole. The improvement in
Group operating margin compared to the first half last year
reflected the ongoing focus on improving operational efficiencies
across the Group and the benefit of a more stable pig price in the
current financial year compared to the first half last year when
prices were rising rapidly.
Cranswick's long term growth strategy is focussed on
consolidating existing market positions, developing new products
and channels in its core UK food market and growing its
international operations and customer base, with growth being
supported by organic initiatives and targeted acquisitions. It is
pleasing to report that progress has been made in each of these
areas during the period under review.
On 22 October 2014 Cranswick acquired Benson Park Limited, a
leading producer of premium British cooked poultry. It supplies
ingredients to customers which operate in the fast growing food to
go sector of the retail multi-channel, convenience and foodservice
markets. This strategic acquisition moves Cranswick into a new
protein sector, broadening both the Group's product range and its
customer base.
Following the substantial investment in the Group's pig breeding
and rearing activities during the previous financial year, the
focus has been on improving the quality of the herd and the
performance of the breeding, rearing and finishing units. There is
now capacity to service in excess of 20 per cent of the Group's
overall British pig requirements and there will be ongoing
investment to further improve productivity and efficiencies. The
business is also exploring several options to enhance the
competitiveness of the Group's pig operations, relative to the most
efficient European producers.
Exports to Europe were lower than in the same period last year
as more product was sold into the UK market where prices were more
attractive, but exports to the rest of the world including Far
Eastern markets were 24 per cent ahead of the same period last
year, as the business continues to make positive progress in
developing its export trade. The business is now exporting to a
number of countries in the Far East and has recently sent shipments
to West Africa and Australia. One third of the tonnage being
processed through the Group's two primary processing facilities is
being shipped overseas each week.
Fresh pork sales were 13 per cent lower than in the same period
last year due to business lost at the start of the year which is
now being recovered. The loss of this business was partly offset by
additional barbecue business, particularly during the first
quarter. Pig prices eased during the period and were well below the
record highs recorded around the previous half year end. During the
period, work on the new rapid chill system at the Norfolk abattoir
was substantially completed. This investment, which is part of an
ongoing upgrade to the East Anglian facility, will make the plant
more energy efficient as well as improving yields and throughput
speeds.
Sausage sales were slightly ahead of the same period last year.
Strong growth in premium sausage sales was countered by lower sales
of frozen and mid-tier ranges. Sales of premium beef burgers were
slightly lower year on year reflecting the shorter barbecue season
in 2014 compared to the previous summer. According to the latest
Kantar market research data, retail sales of super-premium
sausages, which Cranswick predominantly produces, continue to grow
ahead of the overall category both in volume and value terms. The
price differential between the premium and standard tiers is
relatively modest which makes trading up an attractive option for
consumers.
Bacon sales were 3 per cent ahead as continued growth of the
business' hand-cured, air-dried bacon was supported by a
substantial uplift in sales of premium gammons. Shortly before the
end of the period under review the business moved to sole supply
status for premium bacon and gammons with one of the Group's lead
retail customers. With further new product launches planned for
both existing and new customers in the run up to the peak Christmas
trading period, the business is well placed moving into the second
half of the year.
Cooked meat sales grew by 8 per cent supported by new product
launches and a strong promotional calendar as well as increased
business with a key retail customer after securing a long term
supply agreement in the previous financial year. During the period
the project to extend the Delico facility in Milton Keynes was
completed on time and to budget. This investment has substantially
increased capacity at the site and will deliver further efficiency
gains as well as improving product quality.
Pastry sales were significantly ahead of the prior year
continuing the positive development since this category was
introduced. Whilst top line performance has been very pleasing the
rapid growth of the business is adding complexity cost and so
further operational improvements are being targeted to deliver the
forecast returns from the investment. During the period several new
summer eating products were listed with the category's lead
customer and several further products are being launched in autumn
of 2014 and spring 2015. These will be complemented by a range of
festive products in the lead up to Christmas. Good progress was
made during the period in broadening the customer base for these
products both through food service, forecourt and food to go
channels including some customers already being serviced by the
Group's sandwich business.
Sales of continental products increased by 9 per cent reflecting
the UK consumer's growing taste for speciality continental products
including charcuterie, cheeses, pasta and olives. Category growth
was supported by new product launches and new retail contracts in
the second half of the previous financial year together with a
renewed focus on sourcing new artisan products across Europe. An
important part of the continental range is corned beef which is
sliced and packed at the Group's Manchester facility. This product
performed extremely well during the period and made a positive
contribution to the overall category performance.
Sandwich sales grew by 12 per cent, driven partly by new
contract wins at the start of the period and by additional sales to
existing customers. The new contracts have brought additional
complexity to the business through an increased product range which
has impacted operational efficiencies, however a clear improvement
was seen towards the end of the period which leaves the business
well placed moving into the second half of the year. The new
contract wins are more seasonally balanced than the historic mix of
business in this category where sales and profitability have been
skewed towards the summer months.
Cranswick has performed positively during a period in which the
UK grocery market has remained competitive. The business continues
to focus on delivering high quality premium products which offer
real value to the UK consumer. This focus on quality and value is
underpinned by a constant drive to innovate and bring new, tasty
and exciting products to market. The ongoing growth and development
of the Company is a testament to the continued efforts of the
highly skilled and committed people across the business.
The Company remains highly cash generative allowing for
attractive returns to Shareholders, continued investment in the
Group's infrastructure and complementary acquisitions. Cranswick's
facilities are amongst the very best in the industry and ongoing
investment both in these assets and the teams which make them run
so effectively will support the Group's future successful
development.
Adam Couch
Chief Executive
24 November 2014
Financial review
The Group is presenting its interim financial information for
the six months to 30 September 2014 with comparative information
for the six months to 30 September 2013 and the year to 31 March
2014.
Revenue
Revenue decreased by 0.4 per cent from GBP483.5 million to
GBP481.5 million, reflecting growth across most product categories
offset by lower sales of fresh pork and, as planned, a greater
proportion of the Group's own pigs being utilised internally. It is
pleasing to note that the fresh pork business lost earlier in the
year is now being recovered.
Adjusted Group operating profit
Adjusted Group operating profit increased by 10.8 per cent to
GBP26.2 million (2013: GBP23.6 million). Adjusted Group operating
margin at 5.4 per cent of sales was higher than the 4.9 per cent
delivered in the same period last year and in line with that
reported for the last financial year as a whole, reflecting the
Group's continued focus on operating efficiencies, product quality
and innovation. Pig prices eased during the second quarter of the
financial year and are now below the record highs seen at this time
last year.
Finance costs
Net financing costs at GBP0.4 million were GBP0.1 million lower
than reported in the first half of the prior year, reflecting lower
average bank borrowings and improved terms following the extension
of the Group's banking facilities at the end of the previous
financial year.
Adjusted profit before tax
Adjusted profit before tax was 11.4 per cent higher at GBP25.8
million (2013: GBP23.2 million).
Taxation
The tax charge as a percentage of profit before tax was 22.0 per
cent (2013: 18.9 per cent). The standard rate of corporation tax
was 21 per cent (2013: 23 per cent). The charge for the period was
higher than the standard rate of corporation tax due to the impact
of disallowable expenses. The charge for the prior period benefited
from a GBP0.8 million deferred tax credit following a 3 per cent
enacted reduction in the UK corporation tax rate. In addition the
GBP1.1 million contingent consideration provision release was not
chargeable to tax. Adjusting for these items the underlying
effective rate for the prior period was 22.8 per cent.
Adjusted earnings per share
Adjusted earnings per share rose by 7.3 per cent to 41.1 pence
(2013: 38.3 pence) in the six months to 30 September 2014. The
average number of shares in issue was 49,023,000 (2013:
48,631,000).
Adjusted profit measures
Following the investment in pig breeding and rearing activities
during the prior year, the Group now monitors performance
principally through the adjusted profit measures which exclude
certain non-cash items including the net IAS 41 valuation charge of
GBP1.2 million on biological assets (2013: GBP1.8 million credit)
and in the prior year, the release of the GBP1.1 million provision
for contingent consideration payable to the previous owners of
Kingston Foods. The statutory results, including these items, show
a 5.4 per cent decrease in profit before tax to GBP24.6 million
(2013: GBP26.1 million), a 5.7 per cent decrease in Group operating
profit to GBP25.0 million (2013: GBP26.5 million) and a 9.9 per
cent decrease in earnings per share to 39.2 pence (2013: 43.5
pence).
Cash flow and net debt
The net cash inflow from operating activities in the period was
GBP17.1 million (2013: GBP23.8 million) reflecting an increase in
working capital of GBP9.3 million (2013: GBP2.0 million) with the
Group preparing for a strong Christmas trading period. Net debt
increased in the six month period by GBP5.4 million to GBP22.4
million, but was GBP14.8 million lower than the previous half year
end level. Net debt was just 7 per cent of shareholders' funds
(2013: 13 per cent) as the Group's balance sheet continues to be
conservatively managed. The Group's current bank facility of GBP120
million extends to July 2018 and provides the business with
generous headroom to meet its objectives.
Pensions
The Group operates a defined contribution pension scheme whereby
contributions are made to a scheme administered by a major
insurance company. Contributions to this scheme 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 2014 was GBP6.1 million which compared to GBP6.5 million
at 31 March 2014. 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 GBP27.0
million and the fair value of plan assets was GBP20.9 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 will regularly review 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.
Events after the balance sheet date
On 22 October 2014, the Group acquired 100 per cent of the
issued share capital of Benson Park Limited, a leading producer of
premium British cooked poultry, for an initial consideration of
GBP17.7 million net of cash acquired of GBP2.3 million. A further
GBP4.0 million of consideration may become payable contingent on
the performance of the business during a two and a half year period
from the date of acquisition. The acquisition moves the Group into
a new protein sector and further broadens its product range and
customer base. Further details of the acquisition are set out in
note 11.
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
2014, dated 19 May 2014, 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 12 to 14 of the
Report & Accounts for the year ended 31 March 2014 are:
Strategic risks Commercial risks Financial risks Operational risks
* Consumer demand * Reliance on key customers * Interest rate, curren * Food scares
cy, liquidity and credit ri
sks
* Competitor activity * Pricing and availability of raw materials * Business continuity
* Business acquisitions
* Recruitment and retention of key staff
* Food safety and health and safety
* Pig herd infection and disease
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
24 November 2014
Cranswick plc: Group income statement (unaudited)
for the six months ended 30 September 2014
Half year Year to
------------------------
2014 2013 31 March 2014
Notes GBP'000 GBP'000 GBP'000
Revenue 481,540 483,521 994,905
------------------------------------- --- --------- ------------ ------------
Adjusted Group operating profit 26,192 23,640 53,255
Release of contingent consideration - 1,086 1,086
Net IAS 41 valuation movement
on biological assets (1,182) 1,795 1,441
------------------------------------- --- --------- ------------ ------------
Group operating profit 4 25,010 26,521 55,782
Finance revenue 1 22 32
Finance costs (378) (492) (1,057)
Profit before tax 24,633 26,051 54,757
Taxation 5 (5,429) (4,920) (11,550)
Profit for the period 19,204 21,131 43,207
------------------------------------- --- --------- ------------ ------------
Earnings per share (pence)
On profit for the period:
Basic 6 39.2p 43.5p 88.7p
Diluted 6 39.0p 43.3p 88.3p
------------------------------------- --- --------- ------------ ------------
On adjusted profit for the period:
Basic 6 41.1p 38.3p 84.1p
Diluted 6 40.9p 38.1p 83.7p
------------------------------------- --- --------- ------------ ------------
Cranswick plc: Group statement of comprehensive income
(unaudited)
for the six months ended 30 September 2014
Year to
Half year 31 March
---------------------
2014 2013 2014
GBP'000 GBP'000 GBP'000
Profit for the period 19,204 21,131 43,207
------------------------------------------------------------ --------- --------- ---------
Other comprehensive income
Other comprehensive income to be reclassified
to profit or loss in subsequent periods:
Cash flow hedges
Losses arising in the period (163) (78) (18)
Reclassification adjustments for losses
included in the income statement 18 4 4
Income tax effect 29 15 3
------------------------------------------------------- --- --------- --------- ---------
Net other comprehensive income to be reclassified
to profit or loss in subsequent periods (116) (59) (11)
------------------------------------------------------- --- --------- --------- ---------
Items not to be reclassified to profit
or loss in subsequent periods:
Actuarial losses on defined benefit pension
scheme (148) (475) (4,177)
Income tax effect 29 9 735
------------------------------------------------------- --- --------- --------- ---------
Net other comprehensive income not being
reclassified to profit or loss in subsequent
periods (119) (466) (3,442)
------------------------------------------------------- --- --------- --------- ---------
Other comprehensive income, net of tax (235) (525) (3,453)
------------------------------------------------------- --- --------- --------- ---------
Total comprehensive income, net of tax 18,969 20,606 39,754
------------------------------------------------------- --- --------- --------- ---------
Cranswick plc: Group balance sheet (unaudited)
at 30 September 2014
As at
Half year 31 March
-----------------------
2014 2013 2014
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 130,754 130,517 130,535
Property, plant and equipment 159,931 155,782 156,578
Biological assets 924 1,337 1,174
Financial assets - 104 -
---------------------------------------- --------- ---------- ---------- ----------
Total non-current assets 291,609 287,740 288,287
--------------------------------------------------- ---------- ---------- ----------
Current assets
Biological assets 15,300 12,416 13,543
Inventories 54,041 54,961 47,426
Trade and other receivables 95,474 92,249 97,775
Financial assets - 696 -
Cash and short-term deposits 11,720 19,453 12,223
--------------------------------------------------- ---------- ---------- ----------
Total current assets 176,535 179,775 170,967
--------------------------------------------------- ---------- ---------- ----------
Total assets 468,144 467,515 459,254
--------------------------------------------------- ---------- ---------- ----------
Current liabilities
Trade and other payables (104,238) (107,126) (108,806)
Financial liabilities (207) (380) (327)
Income tax payable (6,056) (5,868) (6,495)
Total current liabilities (110,501) (113,374) (115,628)
--------------------------------------------------- ---------- ---------- ----------
Non-current liabilities
Other payables (426) (445) (409)
Financial liabilities (34,082) (57,167) (28,898)
Deferred tax liabilities (3,892) (5,798) (4,737)
Provisions (346) (342) (343)
Defined benefit pension scheme deficit (6,078) (3,334) (6,528)
--------------------------------------------------- ---------- ---------- ----------
Total non-current liabilities (44,824) (67,086) (40,915)
--------------------------------------------------- ---------- ---------- ----------
Total liabilities (155,325) (180,460) (156,543)
Net assets 312,819 287,055 302,711
--------------------------------------------------- ---------- ---------- ----------
Equity
Called-up share capital 4,909 4,878 4,896
Share premium account 64,650 62,886 64,173
Share-based payments 8,939 7,853 7,779
Hedging reserve (131) (63) (15)
Retained earnings 234,452 211,501 225,878
--------------------------------------------------- ---------- ---------- ----------
Equity attributable to owners of the
parent 312,819 287,055 302,711
--------------------------------------------- ---- ---------- ---------- ----------
Cranswick plc: Group statement of cash flows (unaudited)
for the six months ended 30 September 2014
Year
Half year to 31
March
--------------------
2014 2013 2014
GBP'000 GBP'000 GBP'000
Operating activities
Profit for the period 19,204 21,131 43,207
Adjustments to reconcile Group profit for
the period to net cash inflows from operating
activities:
Income tax expense 5,429 4,920 11,550
Net finance costs 377 470 1,025
Gain on sale of property, plant and equipment (49) (51) (100)
Depreciation of property, plant and equipment 8,753 8,485 17,831
Amortisation of intangibles 78 79 159
Share-based payments 1,160 1,088 1,014
Difference between pension contributions
paid and amounts recognised in the income
statement (598) (497) (1,006)
Release of government grants (18) (49) (85)
Release of contingent consideration - (1,086) (1,086)
Net IAS 41 valuation movement on biological
assets 1,182 (1,795) (1,441)
Increase in biological assets (2,689) - (176)
(Increase)/decrease in inventories (6,615) (6,068) 1,497
Decrease/ (increase) in trade and other
receivables 2,485 2,341 (3,910)
(Decrease)/ increase in trade and other
payables (5,218) 1,718 4,702
------------------------------------------------- --------- --------- ---------
Cash generated from operations 23,481 30,686 73,181
Tax paid (6,374) (6,880) (13,050)
------------------------------------------------- --------- --------- ---------
Net cash from operating activities 17,107 23,806 60,131
------------------------------------------------- --------- --------- ---------
Cash flows from investing activities
Interest received 1 12 28
Principal amounts received in relation
to loans advanced - 598 1,002
Acquisition of subsidiary, net of cash
acquired - (12,944) (14,402)
Purchase of property, plant and equipment (11,022) (16,857) (27,684)
Receipt of government grants - 100 100
Proceeds from sale of property, plant and
equipment 198 90 197
Net cash used in investing activities (10,823) (29,001) (40,759)
------------------------------------------------- --------- --------- ---------
Cash flows from financing activities
Interest paid (369) (431) (1,094)
Proceeds from issue of share capital 60 27 410
Proceeds from borrowings 5,000 27,000 30,000
Issue costs of long term borrowings (851) - -
Repayment of borrowings - - (30,500)
Dividends paid (10,362) (8,744) (12,700)
Repayment of capital element of finance
leases (265) (288) (349)
------------------------------------------------- --------- --------- ---------
Net cash (used in)/ from financing activities (6,787) 17,564 (14,233)
------------------------------------------------- --------- --------- ---------
Net (decrease)/ increase in cash and cash
equivalents (503) 12,369 5,139
Cash and cash equivalents at beginning
of period 12,223 7,084 7,084
------------------------------------------------- --------- --------- ---------
Cash and cash equivalents at end of period 11,720 19,453 12,223
------------------------------------------------- --------- --------- ---------
Cranswick plc: Group statement of changes in equity
(unaudited)
for the six months ended 30 September 2014
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 2014 4,896 64,173 7,779 (15) 225,878 302,711
---------------------------------- --------- --------- ---------- --------- ---------- ---------
Profit for the period - - - - 19,204 19,204
Other comprehensive income - - - (116) (119) (235)
---------------------------------- --------- --------- ---------- --------- ---------- ---------
Total comprehensive income - - - (116) 19,085 18,969
Share-based payments - - 1,160 - - 1,160
Scrip dividend 3 427 - - - 430
Share options exercised 10 50 - - - 60
Dividends - - - - (10,792) (10,792)
Deferred tax relating to changes
in equity - - - - 113 113
Corporation tax relating to
changes in equity - - - - 168 168
---------------------------------- --------- --------- ---------- --------- ---------- ---------
At 30 September 2014 4,909 64,650 8,939 (131) 234,452 312,819
---------------------------------- --------- --------- ---------- --------- ---------- ---------
At 1 April 2013 4,853 61,603 6,765 (4) 200,447 273,664
---------------------------------- --------- --------- ---------- --------- ---------- ---------
Profit for the period - - - - 21,131 21,131
Other comprehensive income - - - (59) (466) (525)
---------------------------------- --------- --------- ---------- --------- ---------- ---------
Total comprehensive income - - - (59) 20,665 20,606
Share-based payments - - 1,088 - - 1,088
Scrip dividend 11 1,270 - - - 1,281
Share options exercised 14 13 - - - 27
Dividends - - - - (10,025) (10,025)
Deferred tax relating to changes
in equity - - - - 212 212
Corporation tax relating to
changes in equity - - - - 202 202
---------------------------------- --------- --------- ---------- --------- ---------- ---------
At 30 September 2013 4,878 62,886 7,853 (63) 211,501 287,055
---------------------------------- --------- --------- ---------- --------- ---------- ---------
At 1 April 2013 4,853 61,603 6,765 (4) 200,447 273,664
---------------------------------- --------- --------- ---------- --------- ---------- ---------
Profit for the year - - - - 43,207 43,207
Other comprehensive income - - - (11) (3,442) (3,453)
---------------------------------- --------- --------- ---------- --------- ---------- ---------
Total comprehensive income - - - (11) 39,765 39,754
Share-based payments - - 1,014 - - 1,014
Scrip dividend 19 2,184 - - - 2,203
Share options exercised 24 386 - - - 410
Dividends - - - - (14,903) (14,903)
Deferred tax relating to changes
in equity - - - - 246 246
Corporation tax relating to
changes in equity - - - - 323 323
---------------------------------- --------- --------- ---------- --------- ---------- ---------
At 31 March 2014 4,896 64,173 7,779 (15) 225,878 302,711
---------------------------------- --------- --------- ---------- --------- ---------- ---------
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 principle 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.
On behalf of the Board
Martin Davey Mark Bottomley
Chairman Finance Director
24 November 2014
Notes to the interim accounts
1. Basis of preparation
This interim report was approved by the Directors on 24 November
2014 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 434 of the Companies Act
2006. The statutory accounts for the year ended 31 March 2014
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 has not been reviewed pursuant to the Auditing
Practices Board guidance on 'Review of Interim Financial
Information' and does not include all of the information required
for full annual financial statements.
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 2014.
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 before net IAS 41 valuation
movement on biological assets, impairment charges and other
significant non-trading items (being release of contingent
consideration in the prior period). 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.
The following accounting standards and interpretations became
effective, and were adopted by the Group, for the current reporting
period:
International Accounting Standards (IAS / IFRSs) Effective
date
IAS 32 (revised) Financial Instruments: Presentation on Offsetting 1 January
Financial Assets and Financial Liabilities 2014
IFRS 10 Consolidated Financial Statements 1 January
2014
IFRS 11 Joint Arrangements 1 January
2014
IFRS 12 Disclosure of Interests in Other Entities 1 January
2014
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 GBP12.3 million (2013: GBP12.9 million). Future capital
expenditure under contract at 30 September 2014 was GBP3.1 million
(2013: GBP5.6 million).
4. Group operating profit
Group operating costs comprise:
Year to
Half year 31 March
-----------------------
2014 2013 2014
GBP'000 GBP'000 GBP'000
--------------------------------- ----------------- ---------- ---------- ---------
Cost of sales excluding net IAS 41 valuation
movement on biological assets 425,580 429,806 877,012
Net IAS 41 valuation movement on biological
assets* 1,182 (1,795) (1,441)
---------------------------------------------------- ---------- ---------- ---------
Cost of sales 426,762 428,011 875,571
---------------------------------------------------- ---------- ---------- ---------
Gross profit 54,778 55,510 119,334
------------------------------------------------ ---------- ---------- ---------
Selling and distribution costs 18,035 18,184 35,995
------------------------------------------------ ---------- ---------- ---------
Administrative expenses excluding release
of contingent consideration 11,733 11,891 28,643
Release of contingent consideration - (1,086) (1,086)
------------------------------------------------ ---------- ---------- ---------
Administrative expenses 11,733 10,805 27,557
------------------------------------------------ ---------- ---------- ---------
Total operating costs 456,530 457,000 939,123
------------------------------------------------ ---------- ---------- ---------
* 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 was GBP5.4 million (2013: GBP4.9
million) and represents an effective rate of 22.0 per cent (2013:
18.9 per cent). The charge for the period was higher than the
standard rate of corporation tax due to the impact of disallowable
expenses. In the previous period, the tax charge benefited from a
GBP0.8 million deferred tax credit reflecting the enacted reduction
in the UK corporation tax rate to 20 per cent by 1 April 2015. In
addition the GBP1.1 million contingent consideration provision
release was not chargeable to tax. Adjusting for these items, the
underlying rate for the prior period was 22.8 per cent.
6. 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 49,022,524 (2013: 48,631,199).
The calculation of diluted earnings per share is based on
49,223,926 shares (2013: 48,837,327).
Adjusted earnings per share
During the period, the Group has recognised a loss (2013: gain)
on the IAS 41 valuation movement on biological assets. In addition,
in the prior year, the Group released contingent consideration
relating to the acquisition of Kingston Foods Limited.
As the release of contingent consideration does not form part of
the on-going business of the Group and due to the volatility of the
valuation of biological assets the Directors consider it
appropriate to present an adjusted measure of earnings per share on
the face of the income statement which excludes the effects of
these items to facilitate a more meaningful comparison with prior
and future periods. 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 is derived as follows:
Year to
Half year 31 March
---------------------
2014 2013 2014
GBP'000 GBP'000 GBP'000
Profit for the period 19,204 21,131 43,207
Release of contingent consideration - (1,086) (1,086)
Net IAS 41 valuation movement on biological
assets 1,182 (1,795) (1,441)
Tax on net IAS 41 valuation movement on
biological assets (236) 359 288
------------------------------------------------ --- --------- --------- ---------
Adjusted profit for the period 20,150 18,609 40,968
------------------------------------------------ --- --------- --------- ---------
7. Dividends - half year ended 30 September
Year to
Half year 31 March
------------------------
2014 2013 2014
GBP'000 GBP'000 GBP'000
-------------------------------- ----------------- --------- --------- ---------
Interim dividend for year ended 31 March
2014 of 10.0p per share - - 4,878
Final dividend for year ended 31 March 2014
of 22.0p (2013: 20.6p)
per share 10,792 10,025 10,025
10,792 10,025 14,903
----------------------------------------------- --------- --------- ---------
The interim dividend for the year ending 31 March 2015 of 10.6
pence per share was approved by the Board on 24 November 2014 for
payment to shareholders on 23 January 2015 and therefore has not
been included as a liability as at 30 September 2014.
8. Analysis of Group net debt
At Cash Non-cash At
31 March flow movements 30 September
2014 2014
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ---------- -------- ----------- --------------
Cash and short-term deposits 12,223 (503) - 11,720
Overdrafts - - - -
------------------------------- ---------- -------- ----------- --------------
Net cash and cash equivalents 12,223 (503) - 11,720
Revolving credit (28,898) (5,000) (184) (34,082)
Finance leases (309) 265 - (44)
------------------------------- ---------- -------- ----------- --------------
Net debt (16,984) (5,238) (184) (22,406)
------------------------------- ---------- -------- ----------- --------------
Net debt is defined as cash and cash equivalents, loans
receivable and interest rate swaps at fair value less interest
bearing liabilities (net of unamortised issue costs).
9. 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.
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 60 of the Report &
Accounts for the year ended 31 March 2014.
Fair value of financial instruments
All derivative financial instruments are shown in the balance
sheet at fair value as follows:
Half year Year to
------------------------------------------
2014 2013 31 March 2014
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 (163) (163) (78) (78) (18) (18)
------------------ --------- --------- --------- --------- --------- ---------
The book value of trade and other receivables, trade and other
payables, cash balances, overdrafts, amounts outstanding under
revolving credit facilities 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. Events after the balance sheet date
On 22 October 2014, the Group acquired 100 per cent of the
issued share capital of Benson Park Limited for a total
consideration of GBP23.6 million. The principal activity of Benson
Park Limited is the production of premium British cooked poultry.
The acquisition moves the Group into a new protein sector and
further broadens its product range and customer base.
Fair values of the net assets at the date of acquisition were as
follows:
Provisional
fair value
GBP'000
----------------------------------------------- ----- ------------
Net assets acquired:
Customer relationships 6,185
Property, plant and equipment 5,057
Inventories 2,190
Trade receivables 6,223
Bank and cash balances 2,304
Trade payables (5,195)
Government grants (465)
Corporation tax liability (367)
Deferred tax liability (102)
Finance lease obligations (135)
------------------------------------------------------- ------------
15,695
Goodwill arising on acquisition 7,933
------------------------------------------------ ------------
Total consideration 23,628
------------------------------------------------ ------------
Satisfied by:
Cash 20,000
Contingent consideration 3,628
------------------------------------------------------- ------------
23,628
------------------------------------------------ ------------
Net cash outflow arising on
acquisition:
To be included within cash flows from
investing activities
Cash consideration paid 20,000
Cash and cash equivalents
acquired (2,304)
------------------------------------------------------- ------------
17,696
To be included within net cash from operating
activities
Transaction costs of the
acquisition 203
------------------------------------------------------- ------------
17,899
-------------------------------------------------- ------------
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.
If Benson Park Limited had been acquired at the beginning of the
period, the Group's profit after tax for the period would have been
GBP20.5 million and revenues would have been GBP502.5 million.
Included in the GBP7.9 million of goodwill recognised 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 the assembled
workforce.
Transaction costs of GBP0.2 million have been expensed in
relation to the acquisition, and will be included in administrative
expenses.
All of the trade receivables acquired were, or are expected to
be, collected in full.
Contingent Consideration
The agreement includes contingent consideration payable in cash
to the previous owners of Benson Park Limited based on the
performance of the business over a 2.5 year period. The amount
payable will be between GBPnil and GBP4.0 million dependant on the
average EBIT of the business during the 2.5 year period versus an
agreed target level.
The fair value of the contingent consideration on acquisition
was estimated at GBP3.8 million, discounted to GBP3.6 million in
the table above.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UAABRSRAAUAA
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