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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Cranswick Plc | LSE:CWK | London | Ordinary Share | GB0002318888 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-20.00 | -0.49% | 4,096.00 | 4,088.00 | 4,092.00 | 4,138.00 | 4,072.00 | 4,124.00 | 83,774 | 16:35:22 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Food Preparations, Nec | 2.32B | 111.4M | 2.0670 | 19.79 | 2.2B |
TIDMCWK
RNS Number : 4060N
Cranswick PLC
18 May 2015
CRANSWICK plc: PRELIMINARY RESULTS
Strategic and Commercial Progress
Cranswick plc ("Cranswick" or "the Company" or "the Group"), a leading UK food producer, announces its audited preliminary results for the year ended 31 March 2015.
FINANCIAL HIGHLIGHTS
-- Revenue up 0.8 per cent to GBP1,003.3m (2014: GBP994.9m) -- Adjusted Group operating margin(1) of 5.8 per cent (2014: 5.4 per cent) -- Adjusted profit before tax (1) up 10.6 per cent to GBP57.8m (2014: GBP52.2m) -- Adjusted earnings per share(1) up 9.5 per cent to 92.1p (2014: 84.1p) -- Recommended final dividend up 6.4 per cent to 23.4p (2014: 22.0p) -- Net debt at GBP17.3m (2014: GBP17.0m) -- Statutory profit before tax of GBP52.8m (2014: GBP54.8m) -- Statutory earnings per share of 84.1p (2014: 88.7p)
STRATEGIC AND OPERATIONAL HIGHLIGHTS
-- Acquired Benson Park Limited, a leading producer of premium British cooked poultry -- GBP21 million investment in the Group's asset base
-- Extension of the Delico cooked meats facility in Milton Keynes completed on time and to budget
-- Major upgrade to the Norfolk fresh pork site -- 23 per cent growth in non-EU export sales
Cranswick Chairman Martin Davey said:
"I am pleased to report that Cranswick has made excellent strategic and commercial progress in the last year.
"Sales have exceeded GBP1 billion for the first time, an achievement in which all at the Company can be rightfully proud.
"The Board's strategy for the development of the protein base and customer profile of the business was illustrated by the acquisition, in October 2014, of Benson Park, a leading producer of premium British cooked poultry products serving the fast growing 'food to go' sector.
"Adjusted profit before tax was GBP57.8 million, an increase of 10.6 per cent on the previous year. Adjusted earnings per share rose 9.5 per cent to 92.1 pence.
"The Board is proposing to increase the final dividend by 6.4 per cent to 23.4 pence per share.
"Following a year of significant commercial and strategic progress for Cranswick, the Board looks forward to the opportunities that lie ahead. Cranswick benefits from some of the most efficient and well-invested production facilities in the UK food producer sector. This, in conjunction with our growing international export channels and strategy of diversifying our product portfolio, leaves the Board confident that Cranswick is well positioned to continue its successful long term development."
(1) adjusted Group operating margin, adjusted profit before tax and adjusted earnings per share exclude net IAS 41 valuation movement on biological assets in 2014 and 2015, amortisation of customer relationship intangible assets in 2015 and release of contingent consideration in 2014. These are the measures used by the Board to assess the Group's underlying performance.
Presentation
A presentation of the results will be made to analysts and institutional investors today at 9.30am at Investec Bank plc, 2 Gresham Street, London EC2V 7QP.
Enquiries:
Cranswick plc
Mark Bottomley, Finance Director 01482 372 000
Powerscourt
Nick Dibden/Sophie Moate 020 7250 1446
CHAIRMAN'S STATEMENT
I am pleased to report that Cranswick has made excellent strategic and commercial progress in the last year. This has come at a time of a significant shift in the dynamics of UK food retailing against a backdrop of food price deflation.
Sales have exceeded GBP1 billion for the first time, an achievement in which all at the Company can be rightfully proud. This underlines Cranswick's strong relationship with its customer base and its continued supply of quality food at affordable prices for today's consumer.
The Board's strategy for the development of the protein base and customer profile of the business was illustrated by the acquisition, in October 2014, of Benson Park, a leading producer of premium British cooked poultry products serving the fast growing 'food to go' sector.
Results
Total sales of GBP1.0 billion were slightly ahead of last year and reflect the impact of lower input prices being passed on to customers. Volumes were 3 per cent ahead with growth strongest in the second half, particularly during the final quarter of the year. Continental, Bacon and Sausage were the product areas which saw particularly good increases. Underlying sales for the year were comparable to the previous year. Export sales to non-European markets continued to grow with full year volumes increasing strongly compared to the previous year. Adjusted operating profit rose 10.1 per cent to GBP58.7 million.
Reported profit before taxation was GBP52.8 million and earnings per share were 84.1 pence. Adjusted profit before tax was GBP57.8 million, an increase of 10.6 per cent on the previous year. Adjusted earnings per share rose 9.5 per cent to 92.1 pence. Details of trading are covered more fully in the Operating Review.
Investments
Cranswick invested GBP21.1 million in its asset base during the year. This provided additional capacity, the upgrade of equipment, improved operational efficiencies and new product development resources. The principal areas of expenditure were the Delico cooked meats facility in Milton Keynes, and the Hull and Norfolk fresh pork sites.
The strategy for the development of the business to date has been to complement organic growth with appropriate acquisitions. Benson Park is an important acquisition in meeting strategic objectives and we welcome David Park, Managing Director, and his colleagues to Cranswick and look forward to working with them to develop the business further. The business has traded in line with expectations since joining the Group and the major capital expenditure programme envisaged at the time of the acquisition has commenced with commissioning anticipated towards the end of 2015.
Cash Flow
The borrowings of the business are conservatively structured and the Company's banking facility is in place through to July 2018. This GBP120 million unsecured facility provides generous headroom for the future. Net finance costs were covered 60 times by Group operating profit. Operating cash flow in the period remained strong, notwithstanding the investment in the Group's asset base and GBP17.7 million spent on acquisitions. Net debt at the end of the year stood at GBP17.3 million compared to GBP17.0 million a year earlier.
Dividend
The Board is proposing to increase the final dividend by 6.4 per cent to 23.4 pence per share. Together with the interim dividend, which was raised 6.0 per cent to 10.6 pence per share, this makes a total dividend for the year of 34 pence per share. Compared to the 32 pence per share paid last year this is an increase of 6.3 per cent. The final dividend, if approved by Shareholders, will be paid on 4 September 2015 to Shareholders on the register at the close of business on 3 July 2015. Shareholders will again have the option to receive the dividend by way of scrip issue.
Corporate Governance
The Board is mindful of the UK Corporate Governance Code and embraces this as part of its culture. A statement relating to compliance with the Code will be included within the Corporate Governance Statement in the Group's annual Report and Accounts.
Environmental initiatives
Managing and reducing the impact that the business has on the environment is an integral part of the Company's activities and has been the focus of attention for some years under a dedicated project team. Areas covered include waste, water, energy, packaging and carbon footprint and for the second successive year the Group was successful in winning the industry's "Environmental Initiative of The Year" award.
Staff
The Group operates on a decentralised basis across product categories supported by business-wide collaboration in key areas. The Board considers this to be the most appropriate format for the Company and 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
Following a year of significant commercial and strategic progress for Cranswick, the Board looks forward to the opportunities that lie ahead. Cranswick benefits from some of the most efficient and well-invested production facilities in the UK food producer sector. This, in conjunction with our growing international export channels and strategy of diversifying our product portfolio, leaves the Board confident that Cranswick is well positioned to continue its successful long term development.
Martin Davey
Chairman
18 May 2015
OPERATIONAL REVIEW
Adjusted Group operating profit increased by 10.1 per cent to GBP58.7 million in the financial year on revenues of GBP1,003 million which were 1 per cent ahead of the previous year. Strong revenue growth in several of the Group's product categories offset lower fresh pork sales and a decision to use all of Cranswick's own pigs internally. Revenue growth was also supported by the contribution from Benson Park, which was acquired on 22 October 2014. Group operating margin at 5.8 per cent of sales was 0.4 per cent ahead of the previous financial year, reflecting an unstinting focus on improving operational efficiencies across the Group and the benefit of lower pig prices in the current financial year compared to the previous year when prices had risen rapidly to record levels.
Acquisition of Benson Park
On 22 October 2014 Cranswick acquired Benson Park, 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. The integration of Benson Park is progressing as anticipated and the positive performance of the business continues to be in line with the Board's expectations. The major investment programme at the site, which will substantially increase capacity, improve efficiencies and allow the business to offer a broader product range, remains on track and is expected to complete in the autumn of 2015.
Pig herd
Following the substantial investment in the Group's pig breeding and rearing activities during the previous financial year, the business this year has focused on improving the quality of the herd and the performance of the breeding, rearing and finishing units. There is now capacity to provide more than 20 per cent of the Group's overall British pig requirements and there will be ongoing investment to improve productivity and efficiencies.
Export trade
Exports to non-European markets were 23 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. Cranswick now has a dedicated business development manager based in Shanghai and is working with the China British Business Council to expand its knowledge of the Chinese market. 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.
Infrastructure investment
A further GBP21 million was invested in the Group's infrastructure during the year to increase capacity, improve operating efficiencies and improve the quality of its asset base. This brings our total investment over the last five years to GBP137 million, resulting in the business having some of the most efficient and well-invested production facilities in the UK food manufacturing sector.
Category review
Fresh Pork (Down 10 per cent)
Fresh pork sales were 10 per cent lower than the prior year. This was due, in part, to the loss of business with one customer at the start of the year, which has now been recovered in full. The fall in sales was also partly attributable to a 9 per cent year on year fall in the average pig price, with this reduction being reflected in lower selling prices. Fresh pork sales were supported by a strong barbecue season in the first half of the year allied to a buoyant Christmas trading period. During the year work on the new rapid chill system at the Norfolk abattoir was completed. This investment which is part of an ongoing upgrade to the East Anglian facility has made the plant more energy efficient as well as improving yields and throughput speeds.
Sausage (Up 6 per cent)
Sausage sales increased by 6 per cent with growth in premium sausage and beef burgers partly countered by lower sales of frozen and mid-tier ranges. According to the latest Kantar market research data, retail sales of super-premium sausages, which Cranswick produces predominantly, 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 (Up 4 per cent)
Bacon sales were 4 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. The latest Kantar data also confirmed that the super-premium bacon category grew strongly during the year to March 2015. This is a tier in which Cranswick has a strong market position and where the barriers to entry are high. During the year, the business moved to sole supply status for premium bacon and gammons with one of the Group's leading retail customers. Sales over the key Christmas trading period were particularly strong, with volumes well ahead of the same period last year.
Cooked meat (Up 2 per cent)
Cooked meat sales grew by 2 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. The project to extend the Milton Keynes facility was completed during the year, 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. During the final quarter of the year, all production at the Kingston Foods site in Milton Keynes was transferred to the Group's Sutton Fields facility in Hull. The consolidation of production at one site will allow the business to better serve its customers and to deliver cost savings for the Group. All Kingston employees were given the opportunity to transfer to the Group's Delico facility, also in Milton Keynes, with the vast majority taking up this offer. The Board has recently agreed further investment at the Kingston site which will see it used as a satellite gammon production facility.
Pastry (Up 72 per cent)
Pastry sales were well ahead of the prior year, continuing the positive development since this category was introduced. The rapid growth of the business initially added complexity and cost resulting in the return from the investment being below initial expectations; however the performance of the Malton facility improved markedly during the second half. During the year several new products were listed with this category's lead customer and further products will shortly be launched for the coming spring/summer season. Good progress was made during the year in broadening the customer base for these products both through food service, forecourt and food to go channels, including some existing customers of the Group's sandwich business.
Continental products (Up 8 per cent)
Sales of continental products increased by 8 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 high quality, artisan products across Europe. During the final quarter of the year, a range of fresh olives was launched with a new premium grocery customer. The business increased sales of its British charcuterie range and is investing GBP0.6 million in a new salami production facility at its Guinness Circle site in Manchester to provide capability and capacity to support future development of this fast growing category.
Sandwiches (Up 15 per cent)
Sandwich sales grew by 15 per cent, driven partly by new contract wins at the start of the period and by additional sales to existing customers. The new contracts brought additional complexity to the business through an increased product range which adversely impacted operational efficiencies; however a clear improvement was seen during the second half of the year leaving the business well placed as it starts the new financial year. This improvement was achieved by both a relentless focus on labour efficiencies and yields and by streamlining the customer base and product range.
Cranswick has performed positively during a period in which the UK grocery market has remained highly competitive. The business continues to focus on delivering high quality premium products which deliver real value to the UK consumer. This focus on quality and value is underpinned by a constant drive to innovate and bring new, exciting and relevant products to market. The ongoing growth and development of the Company is underpinned by the continued efforts of the highly skilled and committed people across the business.
Cranswick 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
18 May 2015
FINANCIAL REVIEW
Revenue
Reported revenue at GBP1,003.3 million increased by 0.8 per cent with volumes 3 per cent higher. Underlying revenue* was in line with the prior year with growth across most product categories offset by lower fresh pork sales. Underlying volume growth was countered by lower input prices being passed on to the Group's customers, particularly in the final quarter of the year. Export sales to key non-European markets increased by 23 per cent.
Adjusted Group operating profit
Adjusted Group operating profit of GBP58.7 million, including the post-acquisition contribution from Benson Park, increased by 10.1 per cent. Adjusted Group operating margin at 5.8 per cent of sales was 0.4 per cent higher than last year's level, reflecting lower input costs, operating efficiency improvements and the benefit of product innovation. Operating margin in the second half of the year improved to 6.2 per cent from 5.4 per cent reported at the interim stage.
Finance costs
Net financing costs at GBP0.9 million were GBP0.1 million lower than last 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. Interest cover was 59.6 times compared to 54.4 times a year earlier.
Adjusted profit before tax
Adjusted profit before tax at GBP57.8 million increased by 10.6 per cent from GBP52.2 million.
Taxation
The tax charge of GBP11.6 million was 21.9 per cent of profit before tax (2014: 21.1 per cent). The standard rate of UK corporation tax was 21 per cent (2014: 23 per cent). The effective tax rate for the year was higher than the standard rate of corporation tax due to disallowable expenses of GBP0.5 million. The prior year charge included a GBP1.0 million deferred tax credit following the 3 per cent enacted reduction in the UK corporation tax rate. In addition, last year's GBP1.1 million contingent consideration provision release was not chargeable to tax.
Adjusted earnings per share
Adjusted earnings per share increased by 9.5 per cent from 84.1 to 92.1 pence reflecting the underlying profitability increase. The weighted average number of shares in issue was 49,071,000 (2014: 48,734,000).
Adjusted profit measures
Following investment in its pig breeding and rearing activities last year, the Group now monitors performance principally through adjusted profit measures which exclude certain non-cash items including: the net IAS 41 biological assets valuation charge of GBP4.2 million (2014: GBP1.4 million credit); amortisation of acquired intangible assets of GBP0.7 million; and, in the prior year, the release of a GBP1.1 million provision for contingent consideration payable to the previous owners of Kingston Foods. Statutory profit before tax fell by 3.5 per cent to GBP52.8 million (2014: GBP54.8 million). Operating profit on the same basis was 3.7 per cent lower at GBP53.7 million (2014: GBP55.8 million) and earnings per share were 84.1 pence (2014: 88.7 pence).
Cash flow and net debt
Cash generated from operating activities was GBP54.4 million (2014: GBP60.1 million), with higher Group operating profit partly offsetting increased working capital of GBP11.2 million (2014: decrease of GBP2.1 million), GBP4.9 million of which related to Benson Park. Net debt at GBP17.3 million was in line with the prior year end notwithstanding the GBP17.7 million net cash outflow on the acquisition of Benson Park, GBP21.1 million of capital expenditure and a GBP15.4 million dividend payment. Gearing fell from 5.6 per cent to 5.2 per cent as the Group's balance sheet continues to be conservatively managed. The Group's unsecured bank facility of GBP120 million extends to July 2018 and provides the business with generous headroom.
Acquisitions
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 broadens its product range and customer base. Benson Park has performed in line with the Board's expectations in the period since acquisition. Further details are set out in note 7.
Pensions
The Group operates defined contribution pension schemes with contributions made to schemes administered by major insurance companies. Contributions to these schemes are set 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 scheme deficit at 31 March 2015 was GBP5.6 million (2014: GBP6.5 million). Cash contributed to the scheme during the year, as part of the programme to reduce the deficit, was GBP1.3 million. The present value of funded obligations was GBP30.2 million and the fair value of plan assets was GBP24.6 million.
Mark Bottomley
Finance Director
18 May 2015
* excluding the contribution from the Benson Park acquisition in the current year and sales from the pig breeding, rearing and trading activities in both the current and comparative financial years
PRINCIPAL RISKS AND UNCERTAINTIES
As a leading UK food producer, the Group faces a variety of risks and uncertainties. Operating in a highly competitive industry, it is critical that the Group identifies, assesses and prioritises its risks. This, along with the development of appropriate mitigating actions, enables the Group to achieve its strategic objectives and protect its reputation.
The Group has a formal risk management process in place to support the identification and effective management of risks across the business. It is regularly reviewed and updated for changes within the Group, the industry and the wider economy.
Following the recently announced changes to the UK Corporate Governance Code, which introduced two new Board statements and a requirement for enhanced reporting on risk management and internal control for accounting periods beginning on or after 1 October 2014, the Group confirms that it is compliant with the required changes from 1 April 2015.
Risk management framework
Board 'Responsible for the Group's system of risk management and internal control and for setting the Group's overall risk appetite' ------------------------------------------------------------ Audit Committee 'Reviews the systems of internal control that are in place and provides assurance to the Board that the processes of risk management and internal control are operating effectively' ------------------------------------------------------------ Group Risk Committee 'Provides oversight and advice to the Audit Committee and Board in relation to current and future risk exposures and risk strategies' ------------------------------------------------------------ Operational Management 'Operate site level risk management processes to ensure that risks are adequately identified and controlled' ------------------------------------------------------------
Principal risks and uncertainties
The principal risks and uncertainties facing the Group are summarised below. However, these are not intended to be an exhaustive analysis of all risks currently facing the Group.
Risk Impact Mitigation ---------------------- ------------------------------ ------------------------------- Strategic Risks ---------------------- ------------------------------ ------------------------------- Consumer demand Deterioration in the The Group offers a UK economy may adversely range of products affect the activity across premium, standard levels of consumers and value tiers which and the Group's immediate it is able to flex customers, leading in response to customer to a fall in demand and market demands. for the Group's products Pork remains an extremely and ultimately adversely competitively priced impacting on the Group's and sought after product. financial performance. ---------------------- ------------------------------ ------------------------------- Competitor The Group trades in The Group maintains activity highly competitive and develops strong markets which tend working relationships to operate without with its customers. long term contracts. This is supported Product innovation by delivering high and changing consumer levels of service trends provide a constant and quality products challenge to the future and by the continued success of the Group focus on product development and its ability to and innovation. compete effectively. ---------------------- ------------------------------ ------------------------------- Commercial risks ---------------------- ------------------------------ ------------------------------- Reliance on A significant proportion The Group continually key customers of the Group's revenues looks for opportunities are generated from to expand its customer a small number of major base across all product customers. Loss of categories and works all or part of the closely with customers Group's business with to ensure service, one or more of these quality and new product customers would adversely developments are of impact on the Group's the highest standard. financial performance. ---------------------- ------------------------------ ------------------------------- Risk Impact Mitigation ---------------------- ------------------------------ ------------------------------- Pig meat - The Group is exposed The Group has a trusted pricing and to risks associated long-standing farming availability with the pricing and supply base which of supply availability of pig is complemented by meat. An increase in supply from the Group's pig prices, or a lack sites - Wayland Farms of availability of and Wold Farms. These pig meat would adversely arrangements help impact on the Group's to mitigate the risks financial performance. associated with pig price volatility and supply. ---------------------- ------------------------------ ------------------------------- Operational risks ---------------------- ------------------------------ ------------------------------- Business continuity The Group faces the Robust business continuity risk of significant plans are deployed incidents such as fire, across the Group's flood or loss of key sites and appropriate utilities, which could insurance arrangements result in prolonged are in place to mitigate disruption to its sites, any resulting financial adversely impacting loss. Potential business the Group's financial disruption is minimised performance. through multi-site operations across many of the Group's key product lines. ---------------------- ------------------------------ ------------------------------- Recruitment The success of the Across the Group, and retention Group is dependent strong recruitment of workforce on attracting and retaining processes, competitive quality, skilled and remuneration packages experienced labour, and ongoing training staff and Senior Management. and development plans are in place. Specifically for Senior Management, robust succession planning is also in place. ---------------------- ------------------------------ ------------------------------- Health and A breach of health The Group conforms Safety and safety legislation to all relevant standards may lead to reputational and regulations, and damage and regulatory adopts industry best penalties, including practice across its restrictions on operations, sites. All sites are damages or fines. subject to frequent audits by internal teams, customers and regulatory authorities to ensure standards are being adhered to. ---------------------- ------------------------------ ------------------------------- Disease and A significant infection The Group's pig farming infection or disease outbreak activities, and other within pig may result in the loss farms from which third herd / poultry of supply of both pig party pig and poultry flock or poultry meat, or meat is ultimately the inability to move sourced, have a broad animals freely, impacting geographical spread on the supply of key to avoid reliance raw materials into on a single production the Group's sites. area. In addition, robust vaccination and pig herd operating procedures mitigate the risk of common diseases and infections. ---------------------- ------------------------------ ------------------------------- Food scares The Group is subject The Group ensures / product to the risks of product that all raw materials contamination and/or raw material are traceable to original contamination and potential source and that the health related industry-wide manufacturing, storage food scares and issues. and distribution systems Such incidents may of both our sites lead to product recall and our suppliers costs, reputational are continually monitored damage and regulatory by experienced and penalties. well trained technical teams. ---------------------- ------------------------------ ------------------------------- Financial risks ---------------------- ------------------------------ ------------------------------- Interest rate, The Group is exposed The Group deploys currency, to interest rate risk effective currency liquidity on borrowings and to hedging arrangements and credit foreign currency risk to mitigate risks risks on purchases particularly associated with foreign of charcuterie products currency movements. from the European Union. Each site has access In addition, the Group to the Group's overdraft needs continued access facility and bank to funding for both balances are monitored current business and on a daily basis. future growth. All term debt is arranged centrally and appropriate headroom is maintained. ---------------------- ------------------------------ ------------------------------- Business acquisitions As the Group grows Rigorous due diligence businesses may be acquired reviews are carried based on inaccurate out in advance of information, unachievable any new business acquisition, forecasts or without using internal and appropriate consideration specialised external being given to the resources where required. terms of the purchase. ---------------------- ------------------------------ -------------------------------
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2015
2015 2014 Notes GBP'000 GBP'000 Revenue 1,003,336 994,905 ------------------------------------- ------ ---------- ------------ Adjusted Group operating profit 58,653 53,255 Release of contingent consideration - 1,086 Net IAS 41 valuation movement on biological assets (4,245) 1,441 Amortisation of customer (671) - relationship intangible assets ------------------------------------- ------ ---------- ------------ Group operating profit 4 53,737 55,782 Finance revenue - 32 Finance costs (901) (1,057) ------------------------------------- ------ ---------- ------------ Profit before tax 52,836 54,757 Taxation (11,584) (11,550) ------------------------------------- ------ ---------- ------------ Profit for the year 41,252 43,207 ------------------------------------- ------ ---------- ------------ Earnings per share (pence) On profit for the year: Basic 5 84.1p 88.7p Diluted 5 83.8p 88.3p ------------------------------------- ------ ---------- ------------ On adjusted profit for the year: Basic 5 92.1p 84.1p Diluted 5 91.8p 83.7p ------------------------------------- ------ ---------- ------------
.
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2015
2015 2014 GBP'000 GBP'000 ----------------------------------------------- --------- ---------- Profit for the year 41,252 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 year (210) (18) Reclassification adjustments for losses included in the income statement 18 4 Income tax effect 38 3 ------------------------------------------------- --------- ---------- Net other comprehensive income to be reclassified to profit or loss in subsequent periods (154) (11) ------------------------------------------------- --------- ---------- Items not to be reclassified to profit or loss in subsequent periods: Actuarial losses on defined benefit pension scheme (307) (4,177) Income tax effect 61 735 ------------------------------------------------- --------- ---------- Net other comprehensive income not to be reclassified to profit or loss in subsequent periods (246) (3,442) ------------------------------------------------- --------- ---------- Other comprehensive income, net of tax (400) (3,453) ------------------------------------------------- --------- ---------- Total comprehensive income, net of tax 40,852 39,754 ------------------------------------------------- --------- ----------
GROUP BALANCE SHEET
AT 31 MARCH 2015
2015 2014 Notes GBP'000 GBP'000 ---------------------------------------- -------- ---------- ---------- Non-current assets Intangible assets 145,705 130,535 Property, plant and equipment 166,087 156,578 Biological assets 592 1,174 Total non-current assets 312,384 288,287 ---------------------------------------- -------- ---------- ---------- Current assets Biological assets 11,197 13,543 Inventories 49,125 47,426 Trade and other receivables 116,905 97,775 Financial assets - - Cash and short-term deposits 8 3,941 12,223 ---------------------------------------- -------- ---------- ---------- Total current assets 181,168 170,967 ---------------------------------------- -------- ---------- ---------- Total assets 493,552 459,254 ---------------------------------------- -------- ---------- ---------- Current liabilities Trade and other payables (117,792) (108,806) Financial liabilities (210) (327) Provisions (196) - Income tax payable (7,046) (6,495) Total current liabilities (125,244) (115,628) ---------------------------------------- -------- ---------- ---------- Non-current liabilities Other payables (1,278) (409) Financial liabilities (25,427) (28,898) Deferred tax liabilities (3,457) (4,737) Provisions (150) (343) Defined benefit pension scheme deficit (5,623) (6,528) ---------------------------------------- -------- ---------- ---------- Total non-current liabilities (35,935) (40,915) ---------------------------------------- -------- ---------- ---------- Total liabilities (161,179) (156,543) Net assets 332,373 302,711 ---------------------------------------- -------- ---------- ---------- Equity Called-up share capital 4,926 4,896 Share premium account 65,689 64,173 Share-based payments 10,242 7,779 Hedging reserve (169) (15) Retained earnings 251,685 225,878 ---------------------------------------- -------- ---------- ---------- Equity attributable to owners of the parent 332,373 302,711 ---------------------------------------- -------- ---------- ----------
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2015
Notes 2015 2014 GBP'000 GBP'000 Operating activities Profit for the year 41,252 43,207 Adjustments to reconcile Group profit for the year to net cash inflows from operating activities: Income tax expense 11,584 11,550 Net finance costs 901 1,025 Loss/ (gain) on sale of property, plant and equipment 149 (100) Depreciation of property, plant and equipment 18,349 17,831 Amortisation of intangible assets 671 159 Share-based payments 2,463 1,014 Difference between pension contributions paid and amounts recognised in the income statement (1,212) (1,006) Release of government grants (74) (85) Release of contingent consideration - (1,086) Net IAS 41 valuation movement on biological assets 4,245 (1,441) Increase in biological assets (1,317) (176) Decrease in inventories 491 1,497 Increase in trade and other receivables (12,586) (3,910) Increase in trade and other payables 2,226 4,702 ------------------------------------------ ------ ---------- ---------- Cash generated from operations 67,142 73,181 Tax paid (12,750) (13,050) ------------------------------------------ ------ ---------- ---------- Net cash from operating activities 54,392 60,131 ------------------------------------------ ------ ---------- ---------- Cash flows from investing activities Interest received - 28 Principal amounts received in relation to loans advanced - 1,002 Acquisition of subsidiaries, net of cash acquired 7 (17,692) (14,402) Purchase of property, plant and equipment (21,144) (27,684) Receipt of government grants 542 100 Proceeds from sale of property, plant and equipment 244 197 Net cash used in investing activities (38,050) (40,759) ------------------------------------------ ------ ---------- ---------- Cash flows from financing activities Interest paid (880) (1,094) Proceeds from issue of share capital 901 410 Proceeds from borrowings - 30,000 Issue costs of long term borrowings (851) - Repayment of borrowings (8,000) (30,500) Dividends paid (15,350) (12,700) Repayment of capital element of finance leases and hire purchase contracts (444) (349) ------------------------------------------ ------ ---------- ---------- Net cash used in financing activities (24,624) (14,233) ------------------------------------------ ------ ---------- ---------- Net (decrease)/ increase in cash and cash equivalents 8 (8,282) 5,139 Cash and cash equivalents at beginning of year 8 12,223 7,084 ------------------------------------------ ------ ---------- ---------- Cash and cash equivalents at end of year 8 3,941 12,223 ------------------------------------------ ------ ---------- ----------
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2015
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 31 March 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 (proceeds) 24 386 - - - 410 Dividends - - - - (14,903) (14,903) Deferred tax related to changes in equity - - - - 246 246 Corporation tax related to changes in equity - - - - 323 323 ------------------------- --------- --------- ---------- --------- ---------- --------- At 31 March 2014 4,896 64,173 7,779 (15) 225,878 302,711 Profit for the year - - - - 41,252 41,252 Other comprehensive income - - - (154) (246) (400) ------------------------- --------- --------- ---------- --------- ---------- --------- Total comprehensive income - - - (154) 41,006 40,852 Share-based payments - - 2,463 - - 2,463 Scrip dividend 5 640 - - - 645 Share options exercised (proceeds) 25 876 - - - 901 Dividends - - - - (15,995) (15,995) Deferred tax related to changes in equity - - - - 437 437 Corporation tax related to changes in equity - - - - 359 359 ------------------------- --------- --------- ---------- --------- ---------- --------- At 31 March 2015 4,926 65,689 10,242 (169) 251,685 332,373 ------------------------- --------- --------- ---------- --------- ---------- ---------
NOTES TO THE ACCOUNTS
1. Basis of preparation
The results comprise those of Cranswick plc and its subsidiaries for the year ended 31 March 2015. This preliminary announcement has been prepared on the basis of accounting policies as set out in the statutory accounts for the year ended 31 March 2014 (except as detailed below) and International Financial Reporting Standards and interpretations issued by the International Accounting Standards Board as adopted by the European Union ("IFRS") and does not constitute the Company's statutory accounts within the meaning of Section 435 of the Companies Act 2006.
Statutory accounts for the years ended 31 March 2015 and 31 March 2014 have been reported on by the auditors who issued an unqualified opinion in respect of both periods and the auditors' reports for 2015 and 2014 did not contain statements under 498(2) or 498(3) of the Companies Act 2006. Statutory accounts for the year ended 31 March 2014 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 March 2015, which were approved by the Board on 18 May 2015, will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
2. Accounting policies
The accounting policies applied by the Group in this preliminary announcement are the same as those applied by the Group in the financial statements for the year ended 31 March 2014.
New standards and interpretations applied
The application of other new and revised standards and interpretations has not had a material effect on the net assets, results and disclosures of the Group.
3. Business and geographical segments
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 profit before taxation measured on a basis consistent with the disclosure in the Group accounts.
The Group reports on one reportable segment:
-- Food - manufacture and supply of food products to UK grocery retailers, the food service sector and other food producers.
All Group revenues are received for the provision of goods; no revenues are received from the provision of services.
4. Group operating profit
Group operating costs comprise:
2015 2014 GBP'000 GBP'000 ----------------------------------------------- --------- --------- Cost of sales excluding net IAS 41 valuation movement on biological assets 878,968 877,012 Net IAS 41 valuation movement on biological assets* 4,245 (1,441) ------------------------------------------------ --------- --------- Cost of sales 883,213 875,571 ------------------------------------------------ --------- --------- Gross profit 120,123 119,334 ----------------------------------------------- --------- --------- Selling and distribution costs 38,418 35,995 ----------------------------------------------- --------- --------- Administrative expenses excluding amortisation of customer relationship intangible assets and release of contingent consideration 27,297 28,643 Amortisation of customer relationship 671 - intangible assets Release of contingent consideration - (1,086) ----------------------------------------------- --------- --------- Administrative expenses 27,968 27,557 ----------------------------------------------- --------- --------- Total operating costs 949,599 939,123 ----------------------------------------------- --------- ---------
* 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 to adjusted operating profit.
5. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to members of the parent company of GBP41,252,000 (2014: GBP43,207,000) by the weighted average number of shares outstanding during the year. In calculating diluted earnings per share amounts, the weighted average number of shares is adjusted for the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.
The weighted average number of ordinary shares for both basic and diluted amounts was as per the table below:
2015 2014 Thousands Thousands ----------------------------------------- ---------- ---------- Basic weighted average number of shares 49,071 48,734 Dilutive potential ordinary shares - share options 151 191 ----------------------------------------- ---------- ---------- 49,222 48,925 ----------------------------------------- ---------- ----------
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 which became significant for the first time during the year ended 31 March 2015 following the acquisition of Benson Park Limited (note 7), gains and losses from the IAS 41 valuation movement on biological assets due to the volatility of pig prices and in the prior year the release of contingent consideration in relation to the acquisition of Kingston Foods Limited in 2012.
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 year is derived as follows:
2015 2014 GBP'000 GBP'000 --------------------------------------- -------- -------- Profit for the year 41,252 43,207 Release of contingent consideration - (1,086) Amortisation of customer relationship 671 - intangible assets Tax on amortisation of customer (134) - relationship intangible assets Net IAS 41 valuation movement on biological assets 4,245 (1,441) Tax on net IAS 41 valuation movement on biological assets (849) 288 ---------------------------------------- -------- -------- Adjusted profit for the year 45,185 40,968 ---------------------------------------- -------- -------- 6. Dividends
Subject to Shareholders' approval the final dividend will be paid on 4 September 2015 to Shareholders on the register at the close of business on 3 July 2015.
7. Acquisitions
Benson Park Limited
On 22 October 2014, the Group acquired 100 per cent of the issued share capital of Benson Park Limited for a total consideration of GBP23.8 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:
Fair value GBP'000 --------------------------------- ----- --------- Net assets acquired: Customer relationships 6,185 Property, plant and equipment 4,931 Inventories 2,190 Trade receivables 6,224 Bank and cash balances 2,308 Trade payables (5,013) Government grants (465) Corporation tax liability (373) Deferred tax liability (1,339) Finance lease obligations (135) ----------------------------------------- --------- 14,513 Goodwill arising on acquisition 9,259 ---------------------------------- --------- Total consideration 23,772 ---------------------------------- --------- Satisfied by: Cash 20,000 Contingent consideration 3,772 ----------------------------------------- --------- 23,772 ---------------------------------- --------- Analysis of cash flows on acquisition: Included within cash flows from investing activities Cash consideration paid 20,000 Cash and cash equivalents acquired (2,308) ----------------------------------------- --------- 17,692 Included within net cash from operating activities Transaction costs of the acquisition 203 ----------------------------------------- --------- Net cash outflow arising on acquisition 17,895 ---------------------------------- ---------
From the date of acquisition to 31 March 2015, the external revenues of Benson Park Limited were GBP18.1 million and the company contributed a net profit after tax of GBP1.1 million to the Group. If Benson Park Limited had been acquired at the beginning of the year, the Group's profit after tax for the year would have been GBP42.8 million and revenues would have been GBP1,026.6 million.
Included in the GBP9.3 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 were included in administrative expenses.
All of the trade receivables acquired were 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 profit before interest and tax 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 GBP4.0 million, discounted to GBP3.8 million in the table above.
Yorkshire Baker
On 2 April 2014, the Group acquired the goodwill associated with the Yorkshire Baker business in exchange for certain property, plant and equipment and 10 per cent of the issued share capital of Cranswick Gourmet Pastry Company Limited. Goodwill of GBP397,000 was recognised on acquisition representing 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 were GBPnil. There is a put and call option in place over the 10 per cent shareholding, exercisable at fixed points over the next three years. The value paid for the shares will be based on the results of Cranswick Gourmet Pastry Company Limited during that period. Contingent consideration of GBP0.4 million has been recognised in relation to the option.
8. Analysis of changes in net debt At Cash Other At 31 March flow non-cash 31 March 2014 changes 2015 Group GBP'000 GBP'000 GBP'000 GBP'000 --------------------------- ---------- -------- ---------- ---------- Cash and cash equivalents 12,223 (8,282) - 3,941 Revolving credit (28,898) 8,000 (367) (21,265) Finance leases and hire purchase contracts (309) 444 (135) - --------------------------- ---------- -------- ---------- ---------- Net debt (16,984) 162 (502) (17,324) --------------------------- ---------- -------- ---------- ----------
Net debt is defined as cash and cash equivalents and loans receivable less interest-bearing liabilities (net of unamortised issue costs).
9. Related party transactions
During the year the Group and Company entered into transactions, in the ordinary course of business, with related parties, including transactions between the Company and its subsidiary undertakings. In the Group accounts transactions between the Company and its subsidiaries are eliminated on consolidation but these transactions are reported for the Company below:
Services Interest Dividends rendered paid to received Company to related related from related party party party GBP'000 GBP'000 GBP'000 ------------------------------ ------------ --------- -------------- Related party - Subsidiaries 2015 12,103 3,125 15,350 2014 17,560 2,724 12,700
Amounts owed by or to subsidiary undertakings are unsecured and repayable on demand.
10. Report and accounts
The Report and Accounts will be available on the Company's website at www.cranswick.plc.uk on 26 June 2015. Further copies will be available upon request from the Company Secretary, Cranswick plc, 74 Helsinki Road, Sutton Fields, Hull, HU7 0YW.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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