TIDMCWK
RNS Number : 2521A
Cranswick PLC
23 May 2023
CRANSWICK plc: PRELIMINARY RESULTS
Strong commercial growth and continued strategic progress
23 May 2023
Cranswick plc ("Cranswick" or "the Company" or "the Group"), a
leading UK food producer, today announces its audited preliminary
results for the 52 weeks ended 25 March 2023.
Commercial and strategic progress:
-- Strong revenue growth reflecting inflation recovery with
operating margin improving from 6.1% to 6.5% in the second half of
the year
-- Broad-based inflationary pressure across the Group's cost
base continues to be well controlled
-- Total capital expenditure of GBP85.1m across the Group's
asset base to add capacity, capability and drive efficiency
-- New GBP32m Hull Prepared Poultry facility successfully
commissioned at the start of the year with retail and food service
customers now on board
-- Installation of third contact cooking line at Hull Cooked
Bacon facility to add capacity and capability
-- GBP9m investment in Lincoln Pet Products site underway with
significant new customer secured
-- Further investment in the Group's pig farming operations;
self-sufficiency in British pigs now approaching 50%
Sustainability highlights:
-- 7.2% reduction in Scope 1 & 2 location based carbon
emissions across both manufacturing and agricultural operations
-- Six further major solar panel installations at manufacturing
sites underway, increasing green energy generation
-- Progress on transitioning fleet to clean energy through
investment in electric vehicles, Bio LPG and renewable diesel
-- Leading Food Partner status achieved with FareShare for
commitment to reducing food waste and providing meals for people in
need
Financial highlights*:
Change Change
(Reported) (Like-for-like
2023 2022 )
--------------------------------- ------------ ------------ ------------ ----------------
Revenue GBP2,323.0m GBP2,008.5m +15.7% +14.4%
Adjusted Group operating profit GBP146.5m GBP140.6m +4.2%
Adjusted Group operating margin 6.3% 7.0% -69bps
Adjusted profit before tax GBP140.1m GBP136.9m +2.3%
Adjusted earnings per share 210.0p 205.4p +2.2%
-- Statutory profit before tax 7.4% higher at GBP139.5m (2022: GBP129.9m)
-- Statutory earnings per share up 6.4% to 208.3p (2022: 195.7p)
-- Full year dividend increased by 5.0% to 79.4p (2022: 75.6p);
33 years of unbroken dividend growth
-- Return on capital employed(++) of 15.8% (2022: 16.9%)
-- Net debt (excluding IFRS 16 lease liabilities) lower at GBP20.2m (2022: GBP36.2m)
-- Robust balance sheet with GBP250m bank facility providing significant headroom
Adam Couch, Cranswick's Chief Executive Officer, commented:
"Over the last twelve months all at Cranswick have demonstrated
resilience and determination in abundance, enabling us to deliver a
strong set of results and make further meaningful progress in
delivering our strategic objectives.
"I would like to thank our colleagues for their continued
enthusiasm and commitment. I would also like to thank our suppliers
and customers, with whom we continue to work in close partnership,
for their support and understanding.
"We have successfully navigated three years of unprecedented
disruption and uncertainty and we now have a much larger, more
diverse, and better equipped business, which is primed to deliver
the next phase of growth.
"We invested GBP85.1 million across our asset base during the
year. Our total investment in the last three years exceeds GBP250
million. Investment during the year has been broad-based as we look
to expand capacity and enhance the capability of existing
facilities.
"We are proposing to lift our full year dividend by a further
five per cent this year. This will be our 33(rd) year of
consecutive dividend growth.
"We have made a positive start to the new financial year. The
strengths of our business, which include our diverse and
long-standing customer base, breadth and quality of products and
channels, robust financial position and industry leading
infrastructure will support the further development of Cranswick
over the longer term. "
* Adjusted and like-for-like references throughout this statement
refer to non-IFRS measures or Alternative Performance Measures ('APMs').
Definitions and reconciliations of the APMs to IFRS measures are
provided in Note 10.
For comparative purposes, like-for-like revenues exclude the impact
of current year acquisitions and the contribution from prior year
acquisitions prior to the anniversary of their purchase.
++ Return on capital employed is defined as adjusted operating profit
divided by the sum of average opening and closing net assets, net
debt/(funds), pension (surplus)/deficit and deferred tax.
Presentation
A presentation of the results will be made to analysts and
institutional investors today at 9.30am at The Worshipful Company
of Butchers, 87 Bartholomew Close, London, EC1A 7BN. Analysts and
institutional investors will also be able to join the presentation
via a conference call facility. The slides will be made available
on the Company website. For the dial-in details please contact
Powerscourt on the details below.
Enquiries:
Cranswick plc
Mark Bottomley, Chief Financial Officer 01482 275 000
Powerscourt
Elizabeth Kittle / Louisa Henry /
Maxim Hibbs 020 7250 1446
cranswick@powerscourt-group.com
Note to Editors:
Cranswick is a leading and innovative supplier of premium, fresh
and added-value food products. The business employs over 13,700
people and operates from 22 well-invested, highly efficient
facilities in the UK.
Cranswick was formed in the early 1970s by farmers in East
Yorkshire to produce animal feed and has since evolved into a
business which produces a range of high quality, predominantly
fresh food, including fresh pork, poultry, convenience, gourmet
products and pet food. The business develops innovative, great
tasting food products to the highest standards of food safety and
traceability. The Group supplies the major grocery multiples as
well as the growing premium and discounter retail channels.
Cranswick also has a strong presence in the 'food-to-go' sector and
a substantial export business. For more information go to:
www.cranswick.plc.uk
Cranswick is committed to ensuring that its business activities
are sustainable from farm-to-fork. Its ambitious sustainability
strategy Second Nature has been developed to deliver the Group's
vision to become the world's most sustainable meat business.
Cranswick has committed to be a Net Zero business across its
operations by 2040. Notable achievements to date include:
a. 15 manufacturing sites certified carbon neutral
b. Meeting the Champions 12.3 target to halve edible food loss and waste
10 years ahead of the 2030 deadline
c. Removing over 2,200 tonnes of plastic from the business, including
the removal of black plastic and PVC, and increasing the recycled
content of plastic packaging to up to 80%
d. Committing to purchase 100% certified deforestation-free soya
e. All major production facilities are now powered by renewable grid
supplied electricity
f. Donating over 1,000,000 meals to local communities
g. Over 1,500 colleagues volunteering as Second Nature 'Changemakers'
to help meet the Group's sustainability goals
h. Sustainability Award Winner in 2022: Food Manufacture Excellence
Awards
i. Achieved Leading Food Partner status with FareShare for reducing
food waste and providing meals for people in need
Find out more at: www.thisissecondnature.co.uk
Chairman's Statement
Since last year, we have successfully recovered from the
COVID-19 pandemic and the impact on our business. The escalation of
war in Ukraine and the resulting inflation and cost-of-living
crisis in the UK created significant new challenges for the Group.
Our skilled and experienced management team has risen to the
challenge and delivered an excellent set of results. On behalf of
the Board, I would like to thank our talented executives and all
our Cranswick colleagues for their dedication and commitment.
We made further positive progress in pursuing our strategic
priorities. We continue to gain market share in our core pork
business through our relentless focus on improving quality, driving
innovation and delivering exceptional value. Our poultry business,
a key pillar of our medium-term growth strategy, is now a material
contributor to Group performance. We continue to invest in, and
expand, our attractive, fast-growing Continental Products range. We
made excellent progress in reshaping our rapidly developing pet
food business, where we strengthened and refocused the management
team and committed to the first phase of a substantial capital
investment programme. We also secured a major new long-term
contract with a national pet food retailer.
We delivered strong revenue growth, primarily reflecting good
control of widespread cost inflation, with a strong pipeline of new
products launched, nimbly responding to changes in market led
demand. Our customers and consumers continue to recognise and
appreciate the quality, value and versatility of our product
range.
Our broad-based investment plans remain firmly on track with
several substantial projects in progress which will enhance the
capability of, and add capacity to, several of our flagship
production facilities. The new Hull Prepared Poultry facility was
commissioned at the start of the year with two major retail and
food service customers now secured. We also made further investment
in our pig farming operations during the year and we continue to
invest at pace to push on with our 'Second Nature' sustainability
programme.
In recent years, we have substantially expanded our farming
infrastructure. Our self-sufficiency in British pigs is now
approaching 50 per cent. Our poultry farming business, including
milling, breeding and growing operations is industry leading. The
UK farming industry has faced a host of challenges over the last
three years. Labour shortages, financial pressures and political
uncertainty have led many independent producers to question their
long-term commitment to the sector. More than ever the UK needs a
vibrant farming sector at a time when the resilience of our food
system has, again, come under close scrutiny. We expect further
sector consolidation and Cranswick will continue to expand its
farming capability to ensure continuity of supply, full
farm-to-fork traceability, leadership in response to the challenges
of sustainability and the highest animal welfare standards.
Results
Total revenue in the 52 weeks to 25 March 2023 was GBP2,323.0
million, 15.7 per cent higher than the GBP2,008.5 million reported
last year. Adjusting for the impact of acquisitions made in the
previous and current financial years, revenue increased by 14.4 per
cent on a like-for-like basis.
Adjusted profit before tax for the period at GBP140.1 million
was 2.3 per cent higher than the GBP136.9 million reported last
year. Adjusted earnings per share on the same basis was up 2.2 per
cent at 210.0 pence compared to 205.4 pence last year.
Cash flow and financial position
Net debt at the end of the year stood at GBP101.4 million (2022:
GBP106.0 million). Net debt excluding IFRS 16 lease liabilities was
GBP20.2 million compared to GBP36.2 million previously. The Group
has access to an unsecured, sustainability linked GBP250 million
facility which runs through to November 2026.
Dividend
The Board is proposing a final dividend of 58.8 pence per share,
an increase of 5.8 per cent on the 55.6 pence paid last year.
Together with the interim dividend of 20.6 pence per share, this
equates to a total dividend for the year of 79.4 pence per share,
an increase of 5.0 per cent on last year and extends the
consecutive years of dividend growth to 33.
The final dividend, if approved by Shareholders, will be paid on
1 September 2023 to Shareholders on the register at the close of
business on 21 July 2023. Shares will go ex-dividend on 20 July
2023.
Board
The Board continues to evolve to ensure it provides the
appropriate skills and experience to support and challenge the
executive team.
Kate Allum stepped down as a Non-Executive Director and Chair of
the Remuneration Committee at the conclusion of the last AGM on 1
August 2022 at the end of her final three year term. Pam Powell
succeeded Kate as Remuneration Committee Chair.
This year we announced the appointment of Yetunde Hofmann as a
Non-Executive Director with effect from 1 August 2022. Yetunde has
food industry experience having previously worked for Northern
Foods plc and having also recently been a non-executive director of
Treatt plc.
We appointed Chris Aldersley to the Board with effect from 1
August 2022. Chris joined Cranswick in 1998 and since then has
undertaken a variety of senior management roles, becoming the
Group's Chief Operating Officer in 2015. Chris has responsibility
for managing the operations at the Group's four primary processing,
eighteen added value facilities and its agricultural operations,
which support the Group's vertically integrated supply chain
strategy. The appointment of Chris to the Board recognises his
contribution to the Group and the central importance of his role
going forward in delivering the Group's long-term strategy.
Mark Reckitt will step down as a Non-Executive Director and
Senior Independent Director at the Company's forthcoming AGM in
July 2023. On behalf of the Board, I thank Mark for his positive
contribution to Cranswick's successful development over the last
nine years.
Mark will be succeeded as Senior Independent Director by Liz
Barber. Upon doing so, at the forthcoming AGM, Liz will relinquish
her role as Audit Committee Chair.
As announced separately today, we will be appointing Alan
Williams as a Non-Executive Director with effect from the Company's
AGM on 24 July 2023. Alan is currently the Chief Financial Officer
of Travis Perkins plc and was previously Chief Financial Officer of
Greencore Group plc. Alan will take on the role of Audit Committee
Chair from the date of his appointment.
Outlook
We have made a positive start to the current year. We have a
strong balance sheet and comfortable financial headroom to support
our ongoing capital investment programme which underpins our
ambitious growth plans. The strengths of our business, which
include our diverse and long-standing customer base, breadth and
quality of products and channels, robust financial position and
industry leading infrastructure will support the further
development of Cranswick over the longer term.
Tim J Smith CBE
Chairman
23 May 2023
Chief Executive's Review
I am incredibly proud of how the entire Cranswick team has
responded to the many challenges we faced this year. Over the last
twelve months all at Cranswick have demonstrated resilience and
determination in abundance, enabling us to deliver a strong set of
results and make further meaningful progress in delivering our
strategic objectives. I would like to thank our colleagues for
their continued enthusiasm and commitment. I would also like to
thank our suppliers and customers, with whom we continue to work in
close partnership, for their support and understanding. We have
successfully navigated three years of unprecedented disruption and
uncertainty and we now have a much larger, more diverse, and better
equipped business, which is primed to deliver the next phase of
growth.
The UK farming sector and wider food supply chains have faced
enormous challenges, primarily resulting from the outbreak and
escalation of the war in Ukraine. In my review last year, I
highlighted the support, in partnership with our customers, we had
provided to our own farming operations and to our third-party pig
producers, in response to the rapid escalation in cereal and soya
prices and ensuing widespread input cost inflation. Despite this
support, and the UK pig price reaching an all time high in recent
months, the UK pig herd has contracted, with many independent
producers choosing to cut back or cease production entirely. We
have seen this same trend across Europe. The UK has experienced
significant shortages of staple goods throughout the year. We
recognise that food security is of paramount importance and in
response to this elevated risk we have increased our internal
supply of pigs with self-sufficiency now approaching 50 per cent.
We will continue to expand our own herd to ensure we have the right
quantity and mix of indoor and premium outdoor pigs to satisfy our
customers' requirements.
We continue to press the case for the UK farming and food
producer sector with government and our industry bodies. We have
also taken proactive action to address some of the many challenges
we and the wider industry face. In response to the challenge of
recruiting high quality skilled butchers, we have cast our net
further afield and now have 400 skilled butchers recruited from the
Philippines. This successful recruitment programme has enabled us
to continue to deliver excellent service levels to our customers
throughout the year, despite the significant cost to the business,
when some in the sector have had to cut back production due to
ongoing labour shortages.
Strong performance
We have delivered record results with reported revenue growing
by 15.7 per cent to GBP2,323.0 million and adjusted operating
profit increasing 4.2 per cent to GBP146.5 million. The broad-based
inflationary pressure we are experiencing across our cost base
continues to be well controlled and mitigated. Our relentless focus
on cash enabled us to reduce net debt on a pre IFRS 16 basis from
GBP36.2 million in March 2022 to GBP20.2 million, after investing
GBP85.1 million across our asset base and again increasing the
dividend. We continue to deliver attractive returns on the capital
we deploy. We have built four new facilities over the last five
years with a combined investment of over GBP190 million, whilst our
return on capital employed has stayed above 15 per cent. We are
proposing to lift our full year dividend by a further five per cent
this year. This will be our 33(rd) year of consecutive dividend
growth, a feat that all at Cranswick are immensely proud of.
Revenue grew strongly reflecting the successful recovery of
widespread cost inflation with all categories growing strongly.
Revenue growth accelerated in the second half of the year, building
on the momentum generated in the first half and helped by a record
December trading period for the Group. Whilst total volume growth
in the year was only modest, prior year comparatives reflected
pandemic related elevated in-home consumption. Like-for-like
volumes remain well ahead of pre-pandemic levels. Adjusted
operating margin improved in the second half of the year,
reflecting ongoing inflation recovery, but was still below the
level delivered in FY22. Inflation recovery is still work in
progress and will remain a feature through FY24.
Total export sales increased year-on-year with stronger pricing
offsetting lower volumes. Far East exports were modestly lower than
the prior year with higher prices, to a large extent, offset by
lower demand, as China remained in strict lockdown for much of the
year. We still operate without an export licence for our Norfolk
primary processing facility. It is now almost three years since we
self-suspended this licence and despite continued lobbying, we have
no visibility on when it is likely to be reinstated. We will
redouble our efforts to resolve this issue in the coming year.
Significant strategic progress
We have made further progress in strengthening our three
strategic pillars: Consolidate; Expand; and Diversify, and by doing
so delivering our long term, sustainable growth strategy. We
continue to drive further consolidation as we gain market share in
our core primary pork and value-added, convenience categories.
Ongoing capital investment and expansion of our pig herd underpin
this momentum.
Through a combination of new, greenfield, site development and
targeted complementary bolt on acquisitions we have expanded our
presence in our fast-growing poultry and Mediterranean foods
categories. Alongside our core pork business, we see poultry as the
engine room of our growth plans over the next decade.
Diversification includes both moving into new markets, as we
have done so successfully in China, and developing new product
categories closer to home. Our new pet food business is a great
example of this approach. Since acquiring the Grove pet food
business in January 2022, we have subsequently renamed it Cranswick
Pet Products. More importantly we have strengthened the management
team, embarked on a GBP9 million capital investment programme and
gained British Retail Consortium 'A' grade status at the Lincoln
facility. We are also focused on realigning the customer base and,
in this context, I am delighted that we recently agreed a long-term
supply agreement with Pets at Home. Although our pet food business
currently makes a very modest contribution to Group revenue and
earnings, we are very excited about the opportunity to grow our
presence in this attractive, large and fast-growing market.
Investing at pace
We invested GBP85.1 million across our asset base during the
year. Our total investment in the last three years alone exceeds
GBP250 million. We successfully commissioned our new GBP32 million
Hull Prepared Poultry facility at the start of the year, with
retail and food service customers onboarded and volumes ahead of
the original business plan. Investment during the year has been
broad-based as we look to expand capacity and enhance the
capability of existing facilities. We now operate from 22 well
invested and highly efficient production facilities in the UK and
we will continue to invest at pace to ensure we serve our customers
from the best quality asset base the UK industry can offer in terms
of food safety, technical compliance, and colleague well-being.
Looking ahead we expect to invest at these elevated levels over the
next three years, with spend particularly focused on our pork
primary processing operations to add substantial capacity and drive
further efficiencies as we look to service our rapidly growing
value-added pork business. Whilst modest in the overall context of
our capital investment programme, we are now automating the
production of pigs in blankets. We now produce approximately [60]
million pigs in blankets, primarily for Christmas trade, and the
search for an automated solution has been a long and frustrating
one. We are excited about the opportunity this creates, and it is
just one example of our unstinting focus on, and relentless search
for, efficiency improvements in our business.
Shortly before year-end we purchased a pre-existing production
facility in Worsley, near Manchester. This facility will be
redeveloped to provide additional manufacturing capacity for our
fast-growing Mediterranean foods business. We also acquired the
trade and assets of Mediterranean Foods (London) Ltd in February
2023. Mediterranean Foods supplies houmous and other Mediterranean
snacks and the business complements our growing portfolio of
Continental Products businesses.
A sustainable business model
We have again invested at pace to drive forward our 'Second
Nature' sustainability programme. Six new major solar panel
installations have now been approved and we are upgrading
refrigeration systems across our estate to further reduce CO(2)
emissions. We have made progress in transitioning our fleet to
clean energy through investment in electric vehicles, Bio LPG and
renewable diesel. Our focus on regenerative farming is building
resilience into our farming operations and agricultural supply
chains as we move towards our target of gaining carbon neutral
status for all Cranswick farms by 2030. This year we again improved
our Carbon Disclosure Project scores: grade A- for Climate and
grade B- for Soya within Forests were both a grade improvement on
the previous year and reflect our continued focus on, and
commitment to, delivering our industry leading sustainability
strategy.
A people business
I continually say that we are a people business, and that our
colleagues are our biggest and most valuable asset. We understand
that being an employer of choice in a tight labour market enables
us to compete and win by attracting and retaining the best talent.
We are sector leading in terms of pay, working conditions, health
and safety, inclusivity and wellbeing for all Group colleagues. We
recruited 12 more graduates this year, bringing the total enrolled
onto the programme since 2013 to 85, with 25 now occupying
management roles. We also have a vibrant apprenticeship programme
with over 141 apprentices spread across the business. We actively
support and encourage diversity and our Diversity, Equality and
Inclusion programme is now firmly embedded and recognised in all
functions. Succession planning through developing and retaining
talent has been the cornerstone of our success over many years and
we would not be the business we are today without a deep and
continually replenished talent pool.
Adam Couch
Chief Executive Officer
23 May 2023
Operating and Financial Review
Operating review
Revenue and adjusted operating profit
Change Change
2023 2022 (Reported) (Like-for-like*)
--------------------------------- ----------- ----------- ----------- -----------------
Revenue GBP2,323.0m GBP2,008.5m +15.7% +14.4%
Adjusted Group Operating Profit* GBP146.5m GBP140.6m +4.2%
Adjusted Group Operating Margin* 6.3% 7.0% -69bps
--------------------------------- ----------- ----------- ----------- -----------------
*See Note 10
Revenue
Reported revenue increased by 15.7 per cent to GBP2,323.0
million reflecting inflation recovery. Like-for-like revenue
increased by 14.4 per cent with corresponding volumes down 1.4 per
cent, primarily reflecting lower export volumes. Volumes in our
core UK Pork, Convenience and Poultry businesses remained
resilient.
Gourmet Products revenue was particularly strong with volumes
from the Hull Cooked Sausage and Bacon facility accelerating
strongly in its second year of operation. Convenience revenue was
also strongly ahead reflecting continued expansion of the
Continental Products businesses as we broaden our range in adjacent
categories.
The new GBP32 million Prepared Poultry facility in Hull was
successfully commissioned at the beginning of the year and has
delivered first year revenue ahead of initial expectations. This
additional revenue offset lower sales from our Hull Cooked Poultry
business resulting from the impact of the product recall at the
beginning of the year.
Customer services levels remained consistently high including
during a record Christmas trading period.
Adjusted Group operating profit
Adjusted Group operating profit increased by 4.2 per cent to
GBP146.5 million. Adjusted Group operating margin was 69 bps lower
at 6.3 per cent. Adjusted Group operating margin improved to 6.5
per cent in the second half of the year compared to the 6.1 per
cent reported in the first half of the year with margin
accelerating through the second half of the year reflecting ongoing
recovery of significant, broad-based cost inflation.
Category review
FOOD SEGMENT
Fresh Pork
Fresh Pork revenue was 15.6 per cent above the prior year and
represented 26 per cent of Group revenue. Revenue increased as a
result of higher average UK pig prices. UK Fresh Pork volumes were
modestly ahead of the prior year.
The average UK standard pig price ("SPP") closed the year at a
record high of 214p/kg, 45.6 per cent higher than the opening price
of 147p/kg. The average price for the year was 30.2 per cent higher
than the prior year. This significant movement in the pig price
reflected a sharp increase in the cost of feed following the
outbreak of war in Ukraine with wheat and soya prices reaching
all-time highs. These higher input costs alongside more widespread
inflationary cost pressure pushed the pig price rapidly up to
200p/kg by the end of the first half. The pig price remained at
this level throughout the third quarter before increasing further
in the fourth quarter.
Security of supply is of paramount importance in ensuring we are
able to meet the needs of our customers and so we continued to
invest in increasing our self-sufficiency. During the year we
increased the herd both in terms of premium outdoor and indoor
pigs. We now have a herd of c62,000 sows producing c29,000 pigs per
week resulting in self-sufficiency in UK pigs of approaching 50 per
cent. Direct ownership gives us greater control over our vertical
supply chain and facilitates implementation of sustainability
initiatives and targets.
Weekly average pig numbers remained strong with a record peak in
November when we processed over 67,700 pigs per week to meet
Christmas demand. The average for the year was 61,600, 2.7 per cent
ahead of pre pandemic levels.
Far East export revenue was 2.7 per cent behind the prior year
as demand from China remained subdued as the country slowly emerged
from its strict pandemic enforced lockdown. Exports to other
markets grew strongly, partly compensating for the lower Far East
revenue.
Our successful campaign to recruit skilled butchers from the
Philippines into our primary processing facilities helped to
alleviate the well-publicised labour shortage in our sector,
although there was a significant cost to the business from doing
this. During the year we invested GBP20 million across the three
primary processing facilities and our farming infrastructure. GBP10
million of this investment related to the first stage of the
redevelopment of our largest primary processing facility in Hull.
Alongside the existing semi-automated shoulder deboning line, we
have more recently added a similar leg deboning line and now an
automated cutting line. The Hull facility incorporates some of the
most technologically advanced butchery equipment the industry has
to offer.
African Swine Fever ("ASF") continues to affect large parts of
China and, to a lesser extent, parts of Europe. In Europe, most ASF
cases continue to be detected in Romania and Poland however recent
cases have been found in eastern Germany, Italy and Greece. In the
UK, we remain acutely aware of the impact an outbreak of ASF would
have on the UK pig industry. New legislation was introduced in
November banning the import of non-commercial pork. These measures
will further enhance the intensive bio-security protocols which are
in place across the industry.
Convenience
Convenience revenue was 15.5 per cent ahead on a reported basis
and represented 38 per cent of Group revenue. Revenue growth
reflected ongoing inflation recovery and continued progress in
expanding the range offered by the Continental Products portfolio
of businesses, with volumes ahead of the prior year.
Cooked Meats revenue growth reflected proactive inflation
recovery and a strong performance from the 'slow cook' and 'sous
vide' ranges as these products continue to meet the changing needs
of consumers who are increasingly demanding more convenient
high-quality meals at home. This year, range expansion included
centre-of plate 'slow cook' Christmas products including Turkey
Crown, Three Bird Roast, Beef Rump and Slow Cook Gammon, with over
400,000 units supplied over the Christmas period. The ongoing GBP8
million investment at the Hull Cooked Meats facility will double
'slow cook' capacity, enabling us to drive further growth in this
attractive, fast growing category. At the Milton Keynes facility a
GBP10 million extension is nearing completion. This will provide
opportunities for further expansion with added production capacity
and additional packing capability enabling the site to increase
food service and wholesale volumes. Investment at the Valley Park
facility is driving process efficiency through a programme of
upgrades utilising the most efficient slicing technology.
Continental Products revenue grew strongly underpinned by robust
underlying volume growth as the category continued to build on the
popularity of olives, antipasti and charcuterie products as a
centre of plate eating occasion. Growth continues to be delivered
through category leadership and a strong supply chain model.
Investment in the Bury site has continued at pace with GBP3 million
spent on increasing olive, antipasti and charcuterie production
capacity. A further GBP3 million was deployed on new manufacturing
capability including state-of-the-art robotics to increase quality
and efficiency of production. Innovation and sector expertise will
continue to drive growth in this category.
Katsouris Brothers revenue was strongly ahead driven by
double-digit volume growth. Ramona's performed particularly well
with a number of new retail listings. Ramona's is the only houmous
brand to be listed in three major retailers. Category expansion has
continued throughout the year with Katsouris winning three Great
Taste awards for its branded Cypressa Virgin Olive Oil, Tahini and
Authentic Cyprus Halloumi.
Product development at Continental, Katsouris and Ramona's drove
success over the Christmas period. Collectively 48 festive lines
were launched with 2.3 million units sold. Sharing platters were
particularly successful with over 1.5 million units sold.
Expansion of the portfolio of Continental businesses remains a
priority for the Group. Following the acquisition of Atlantica UK
and Ramona's Kitchen in 2022, two further manufacturing facilities
were acquired in 2023 to significantly increase production capacity
and add cooking capability and flexibility.
In February 2023 the Group acquired the trade and assets of
Mediterranean Foods (London) Ltd, now renamed Cranswick
Mediterranean Foods, a supplier of houmous and fried Mediterranean
snacks. This acquisition adds additional capacity in houmous and
new falafel frying capability.
In March 2023 the Group purchased a food-grade manufacturing
facility in Worsley, Manchester. This 50,000 square foot facility
will allow future expansion across our fast-growing Continental
Foods business.
Gourmet Products
Gourmet Products revenue increased 20.2 per cent year-on-year,
and represented 17 per cent of Group revenue, underpinned by strong
volume growth.
Sausage revenue grew strongly with robust retail volumes driven
by tier expansion and product innovation with both premium and
discount retailers. The continued recovery of food service volumes
also contributed to revenue growth with more breakfasts being
consumed out of the home. An GBP8 million investment programme at
the Hull facility to add new alginate casing capability and deliver
process improvements is largely complete.
Bacon revenue was ahead, with higher prices offsetting lower
volumes resulting from reduced retailer promotional activity in the
category, particularly during the first half of the year. New
premium bacon business was secured, complementing the established
supply of fresh pork and sausage into the same customer.
Pastry revenue improved year-on-year. Food service sales
recovered to pre-pandemic levels offsetting a modest softening in
retail demand for premium pastry products. Innovative product
development resulted in a strong Christmas trading period. New
festive launches included two vegetarian pies which received a trio
of BBC Good Food and Good Housekeeping awards.
Revenue from the Cooked Bacon and Sausage facility was
substantially ahead. Robust Quick Service Restaurant volumes and
premium retail sales, which were ahead of expectations, were
complemented by a new food service customer. Investment in the site
to increase capacity has continued with GBP5 million spent on a
third contact cooking line.
Poultry
Poultry revenue increased by 6.7 per cent and represented 18 per
cent of Group revenue. Volumes were modestly down year-on-year.
Fresh Poultry performed well with an average 1.3 million birds
processed per week. Supply to a popular casual dining chain started
during the year, adding to the site's growing customer base and
mitigating a modest decline in demand from the site's anchor
customer. Investment into a 5(th) portioning line has progressed
during the year. This investment will add additional automated
portioning and thigh deboning capability, with the additional
capacity added to meet retail demand.
Avian Influenza ("AI") continues to represent a heightened risk
to the Fresh Poultry business. Although the business impact has
been limited and the overall risk to production is still low,
controlling the spread of AI remains a priority. Heightened
bio-security protocols remain in place at the site and on all
farms.
Cooked Poultry revenue was well below the prior year following
the product recall in May 2022. Volumes continue to recover, albeit
they are still below those prior to the product recall. Net of
mitigation the product recall did not have a material impact on the
Group's results.
The new GBP32 million Prepared Poultry facility in Hull was
successfully commissioned at the beginning of the year. The
state-of-the-art facility produces a range of premium prepared
poultry products for an anchor retail customer and a strategic
Quick Service Restaurant customer. First year volumes were ahead of
initial expectations.
OTHER SEGMENT
Pet Products
Cranswick Pet Products (formally known as Grove Pet Foods)
represented 1 per cent of Group revenue. Revenue growth in Pet
Products reflected the first full year of ownership compared to two
months in the prior year.
Significant progress has been made on reshaping the business for
the future. Following a strengthening of the management team, the
principal manufacturing site in Lincolnshire has gained British
Retail Consortium approval and a multi-year capital investment
programme has commenced. The first phase of this investment costing
GBP9 million is underway and will provide increased capacity for
dry dog food and increase the site's automated packing
capability.
The business recently agreed terms to manufacture a range of
established private label products for Pets at Home. Pets at Home
is the largest specialist pet retailer in the UK with over 450
stores. This partnership, alongside reinvigorating the business's
existing Vitalin and Alpha dog food brands, will support the
ongoing strategic development of the business and accelerate our
ambition to develop Pet Products into a leading British pet food
manufacturer complemented by our farm-to-fork strategy in poultry
and pigs. During the first half of the year, a legacy private label
contract was terminated. This resulted in a GBP3.0 million
impairment of the acquired customer relationship intangible
asset.
Finance review
Revenue
Reported revenue increased by 15.7 per cent to GBP2,323.0
million (2022: GBP2,008.5 million). Like-for-like revenue,
excluding the impact from acquisitions, increased by 14.4 per
cent.
Adjusted gross profit and adjusted EBITDA
Adjusted gross profit increased by 7.1 per cent to GBP300.9
million (2022: GBP281.0 million) with adjusted gross profit margin
at 13.0 per cent (2022: 14.0 per cent). Adjusted EBITDA increased
by 6.7 per cent to GBP215.3 million (2022: GBP201.7 million) and
adjusted EBITDA margin was 9.3 per cent (2022: 10.0 per cent).
Adjusted Group operating profit
Adjusted Group operating profit increased by 4.2 per cent to
GBP146.5 million (2022: GBP140.6 million) and adjusted Group
operating margin stood at 6.3 per cent (2022: 7.0 per cent).
Full reconciliations of adjusted measures to statutory results
can be found in Note 10. The net IAS 41 movement on biological
assets results in a GBP7.6 million credit (2022: GBP2.8 million
charge) on a statutory basis primarily reflecting the substantial
increase in the UK pig price during the year.
Finance costs and funding
Net financing costs of GBP6.4 million (2022: GBP3.7 million)
included GBP2.5 million (2022: GBP2.2 million) of IFRS 16 lease
interest. Bank finance costs were GBP2.4 million higher than the
prior year at GBP4.0 million (2022: GBP1.6 million) due to the
increase in the bank base rate during the year.
During the year the Group successfully extended the term of it's
banking facility for a further year with the facility now running
to November 2026. This provides the Group with access to a GBP250
million revolving credit facility, including a committed overdraft
of GBP20 million. It also includes the option to access a further
GBP50 million on the same terms at any point during the term of the
agreement. The facility provides the business with over GBP200
million of headroom at 25 March 2023. The adequacy of this facility
has been confirmed as part of robust scenario testing performed
over the three-year viability period for the Group.
Adjusted profit before tax
Adjusted profit before tax was 2.3 per cent higher at GBP140.1
million (2022: GBP136.9 million).
Taxation
The tax charge of GBP28.1 million (2022: GBP26.4 million) was
20.1 per cent of profit before tax (2022: 20.3 per cent). The
standard rate of UK corporation tax was 19.0 per cent (2022: 19.0
per cent). The effective rate was higher than the standard rate due
to disallowable expenses and the deferred tax charge resulting from
the future enacted increase in the UK corporation tax rate to 25.0
per cent, partly offset by the super-deduction on eligible capital
investment.
Adjusted earnings per share
Adjusted earnings per share increased by 2.2 per cent to 210.0
pence (2022: 205.4 pence). The average number of shares in issue
was 53,461,000 (2022: 52,923,000).
Statutory profit measures
Statutory profit before tax was GBP139.5 million (2022: GBP129.9
million), with statutory Group operating profit at GBP145.9 million
(2022: GBP133.6 million) and statutory earnings per share of 208.3
pence (2022: 195.7 pence). Statutory gross profit was GBP308.5
million (2022: GBP278.2 million).
Cash flow and net debt
The net cash inflow from operating activities in the year was
GBP153.0 million (2022: GBP160.0 million). This reduction was
primarily due to an increase in tax payments resulting from
unwinding of the super deduction claimed in the prior year and a
one-off contribution of GBP3.7 million into the Group's defined
benefit pension scheme. Net debt, including the impact of IFRS 16
lease liabilities, fell to GBP101.4 million (2022: GBP106.0
million) with the inflow from operating activities offset by
GBP83.9 million invested in the Group's asset base, net of disposal
proceeds, GBP36.3 million of dividends paid to the Group's
Shareholders and GBP16.3 million of IFRS 16 lease charges.
Pensions
The Group operates defined contribution pension schemes whereby
contributions are made to schemes administered by major insurance
companies. Contributions to these schemes are determined as a
percentage of employees' earnings.
The Group also operates a defined benefit pension scheme which
has been closed to further benefit accrual since 2004. On 2
December 2022, the Trustees of the defined benefit pension scheme
purchased a buy-in insurance policy to secure the majority of the
benefits provided by the scheme. The surplus on this scheme at 25
March 2023 was GBP0.2 million, compared to GBP8.3 million at 26
March 2022. Cash contributions to the scheme during the year, and
additional contributions to support the purchase of the buy-in
insurance policy, were GBP4.3 million. The present value of funded
obligations was GBP22.1 million, and the fair value of plan assets
was GBP22.3 million. The Group does not expect to make any further
contributions to the scheme during the year ending March 2024.
Group income statement
For the 52 weeks ended 25 March 2023
2023 2022
Notes GBP'm GBP'm
Revenue 2,323.0 2,008.5
---------------------------------------------------- ------ --------- ----------
Adjusted Group operating profit 146.5 140.6
Net IAS 41 valuation movement on biological assets 7.6 (2.8)
Amortisation of intangible assets (5.2) (4.2)
Impairment of intangible assets (3.0) -
Group operating profit 4 145.9 133.6
Finance costs (6.4) (3.7)
---------------------------------------------------- ------ --------- ----------
Profit before tax 139.5 129.9
Taxation (28.1) (26.4)
---------------------------------------------------- ------ --------- ----------
Profit for the year 111.4 103.5
---------------------------------------------------- ------ --------- ----------
Earnings per share (pence)
On profit for the year:
Basic 5 208.3p 195.7p
Diluted 5 207.8p 194.8p
------------------------- ------- -------
Group statement of comprehensive income
For the 52 weeks ended 25 March 2023
2023 2022
GBP'm GBP'm
------------------------------------------------------------------------------------------ -------- --------
Profit for the year 111.4 103.5
-------------------------------------------------------------------------------------------- -------- --------
Other comprehensive income/(expense)
Other comprehensive income/(expense) to be reclassified to profit or loss in subsequent
periods:
Cash flow hedges
Gains/(losses) arising in the year 0.1 (0.3)
Reclassification adjustments for gains included in the income statement 0.3 -
Income tax effect (0.1) 0.1
-------------------------------------------------------------------------------------------- -------- --------
Net other comprehensive income/(expense) to be reclassified to profit or loss in subsequent
periods 0.3 (0.2)
-------------------------------------------------------------------------------------------- -------- --------
Items not to be reclassified to profit or loss in subsequent periods:
Actuarial (losses)/gains on defined benefit pension scheme (12.5) 0.7
Income tax effect 2.8 (0.5)
-------------------------------------------------------------------------------------------- -------- --------
Net other comprehensive (expense)/income not to be reclassified to profit or loss in
subsequent
periods (9.7) 0.2
-------------------------------------------------------------------------------------------- -------- --------
Other comprehensive expense
(9.4) -
------------------------------------------------------------------------------------------ -------- --------
Total comprehensive income 102.0 103.5
-------------------------------------------------------------------------------------------- -------- --------
Group balance sheet
At 25 March 2023
2023 2022
Notes GBP'm GBP'm
-------------------------------------------- -------- -------- --------
Non-current assets
Intangible assets 223.2 231.3
Defined benefit pension scheme surplus 0.2 8.3
Property, plant and equipment 464.1 434.8
Right-of-use assets 76.3 65.5
Biological assets 6.3 2.7
Total non-current assets 770.1 742.6
-------------------------------------------- -------- -------- --------
Current assets
Biological assets 72.8 50.7
Inventories 113.0 105.2
Trade and other receivables 288.5 244.4
Financial assets 0.1 -
Cash and short-term deposits 7 20.3 0.2
-------------------------------------------- -------- -------- --------
Total current assets 494.7 400.5
-------------------------------------------- -------- -------- --------
Total assets 1,264.8 1,143.1
-------------------------------------------- -------- -------- --------
Current liabilities
Trade and other payables (268.5) (238.7)
Financial liabilities (0.1) (3.1)
Lease liabilities (14.4) (13.8)
Provisions (0.8) (1.8)
Income tax payable (4.3) (2.4)
Total current liabilities (288.1) (259.8)
-------------------------------------------- -------- -------- --------
Non-current liabilities
Other payables (0.4) (0.6)
Financial liabilities (43.2) (36.4)
Lease liabilities (66.8) (56.0)
Deferred tax liabilities (20.7) (19.7)
Provisions (2.7) (1.7)
Total non-current liabilities (133.8) (114.4)
-------------------------------------------- -------- -------- --------
Total liabilities (421.9) (374.2)
-------------------------------------------- -------- -------- --------
Net assets 842.9 768.9
-------------------------------------------- -------- -------- --------
Equity
Called-up share capital 5.4 5.3
Share premium account 123.9 115.9
Share-based payments 49.0 44.3
Hedging reserve - (0.3)
Retained earnings 664.6 603.7
-------------------------------------------- -------- -------- --------
Total equity attributable to owners of the
parent 842.9 768.9
-------------------------------------------- -------- -------- --------
Group statement of cash flows
For the 52 weeks ended 25 March 2023
Notes 2023 2022
GBP'm GBP'm
Operating activities
Profit for the year 111.4 103.5
Adjustments to reconcile Group profit for the year to net cash inflows from operating
activities:
Income tax expense 28.1 26.4
Net finance costs 6.4 3.7
Gain on sale of property, plant and equipment (0.5) (0.1)
Depreciation of property, plant and equipment 54.1 47.9
Depreciation of right-of-use assets 14.7 13.2
Amortisation of intangible assets 5.2 4.2
Impairment of acquired intangible assets 3.0 -
Share-based payments 4.7 6.9
Difference between pension contributions paid and amounts recognised in the income
statement (4.4) (1.9)
Release of government grants (0.2) (0.2)
Net IAS 41 valuation movement on biological assets (7.6) 2.8
Increase in biological assets (18.1) (12.7)
Increase in inventories (7.7) (21.3)
Increase in trade and other receivables (44.8) (20.1)
Increase in trade and other payables 29.1 17.5
---------------------------------------------------------------------------------------- ------ -------- --------
Cash generated from operations 173.4 169.8
Tax paid (20.4) (9.8)
---------------------------------------------------------------------------------------- ------ -------- --------
Net cash from operating activities 153.0 160.0
---------------------------------------------------------------------------------------- ------ -------- --------
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired 9 0.1 (38.5)
Purchase of property, plant and equipment (85.1) (93.7)
Proceeds from sale of property, plant and equipment 1.2 1.3
Net cash used in investing activities (83.8) (130.9)
---------------------------------------------------------------------------------------- ------ -------- --------
Cash flows from financing activities
Interest paid (3.8) (1.6)
Proceeds from issue of share capital 3.7 4.6
Issue costs of long-term borrowings (0.4) (1.8)
Proceeds from/(repayment of) borrowings 4.0 (22.0)
Dividends paid (36.3) (32.8)
Payment of lease capital (13.8) (12.1)
Payment of lease interest (2.5) (2.2)
---------------------------------------------------------------------------------------- ------ -------- --------
Net cash used in financing activities (49.1) (67.9)
---------------------------------------------------------------------------------------- ------ -------- --------
Net increase/(decrease) in cash and cash equivalents 7 20.1 (38.8)
Cash and cash equivalents at beginning of year 7 0.2 39.0
---------------------------------------------------------------------------------------- ------ -------- --------
Cash and cash equivalents at end of year 7 20.3 0.2
---------------------------------------------------------------------------------------- ------ -------- --------
Group statement of changes in equity
For the 52 weeks ended 25 March 2023
Share-
Share Share based Hedging Retained Total
capital premium payments reserve earnings equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
------------------------------- ---------- ---------- ---------- ---------- ----------- ---------
At 27 March 2021 5.3 106.4 37.4 (0.1) 537.1 686.1
------------------------------- ---------- ---------- ---------- ---------- ----------- ---------
Profit for the year - - - - 103.5 103.5
Other comprehensive income - - - (0.2) 0.2 -
------------------------------- ---------- ---------- ---------- ---------- ----------- ---------
Total comprehensive income - - - (0.2) 103.7 103.5
Share-based payments - - 6.9 - - 6.9
Scrip dividend - 4.9 - - - 4.9
Share options exercised - 4.6 - - - 4.6
Dividends - - - - (37.7) (37.7)
Deferred tax related to
changes in equity - - - - (0.1) (0.1)
Current tax related to
changes in equity - - - - 0.7 0.7
------------------------------- ---------- ---------- ---------- ---------- ----------- ---------
At 26 March 2022 5.3 115.9 44.3 (0.3) 603.7 768.9
Profit for the year - - - - 111.4 111.4
Other comprehensive income - - - 0.3 (9.7) (9.4)
------------------------------- ---------- ---------- ---------- ---------- ----------- ---------
Total comprehensive income - - - 0.3 101.7 102.0
Share-based payments - - 4.7 - - 4.7
Scrip dividend - 4.4 - - - 4.4
Share options exercised 0.1 3.6 - - - 3.7
Dividends - - - - (40.7) (40.7)
Deferred tax related to
changes in equity - - - - (0.9) (0.9)
Current tax related to
changes in equity - - - - 0.8 0.8
------------------------------- ---------- ---------- ---------- ---------- ----------- ---------
At 25 March 2023 5.4 123.9 49.0 - 664.6 842.9
------------------------------- ---------- ---------- ---------- ---------- ----------- ---------
Notes to the accounts
1. Basis of preparation
The results comprise those of Cranswick plc and its subsidiaries
for the 52 weeks ended 25 March 2023. This preliminary announcement
has been prepared on the basis of accounting policies as set out in
the statutory accounts for the 52 weeks ended 26 March 2022 (except
as detailed below and in note 2). This announcement does not
constitute the Company's statutory accounts within the meaning of
Section 435 of the Companies Act 2006.
The consolidated financial statements of Cranswick plc have been
prepared under the historical cost convention except where
measurement of balances at fair value is required as explained in
the accounting policies below. The Group's financial statements
have been prepared in accordance with UK-Adopted International
Accounting Standards ('UK-Adopted IAS'). The Group's financial
statements have been prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006.
The Financial Statements of the Group are prepared to the last
Saturday in March. Accordingly, these Financial Statements are
prepared for the 52 week period ended 25 March 2023. Comparatives
are for the 52 week period ended 26 March 2022. The Balance Sheet
for 2023 and 2022 have been prepared as at 25 March 2023 and 26
March 2022 respectively.
Statutory accounts for the 52 weeks ended 25 March 2023 and 26
March 2022 have been reported on by the auditors who issued an
unqualified opinion in respect of both years and the auditors'
reports for 2023 and 2022 did not contain statements under 498(2)
or 498(3) of the Companies Act 2006. Statutory accounts for the 52
weeks ended 26 March 2022 have been filed with the Registrar of
Companies. The statutory accounts for the 52 weeks ended 25 March
2023, which were approved by the Board on 23 May 2023, will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting.
Viability and Going Concern
In accordance with the provisions of the UK Corporate Governance
Code, the Board has assessed the viability of the Group over an
appropriate time period, taking into account the current position,
future prospects and the potential impact of the principal risks to
the Group's business model and ability to deliver its strategy.
The Board has determined that a three-year period to March 2026
is an appropriate period over which to provide its Viability
Statement. This timeframe has been specifically chosen due to the
fast-moving nature of the food industry and the current financial
and operational forecasting cycles of the Group.
In making this assessment of viability, the Board carried out a
robust assessment of the principal risks and uncertainties facing
the Group as well as considering material macroeconomic conditions
and geopolitical challenges including the loss of consumer demand,
especially during the cost-of-living crisis, and the impact of
disease and infection in livestock, in particular focusing on the
risk of both an outbreak of Avian Influenza impacting our chicken
flock and a widespread outbreak of African Swine Fever in the UK
and Europe.
The sensitivity analysis utilised the Group's robust three-year
budget and forecasting process to quantify the financial impact on
the strategic plan and on the Group's viability against specific
measures including liquidity, credit rating and bank covenants.
Given the strong liquidity of the Group; the committed banking
facilities which are in place beyond the viability period; and the
diversity of operations, the results of the sensitivity analysis
highlighted that the Group would, over the three-year period, be
able to withstand the impact of the most severe combination of the
risks modelled by making adjustments to its
strategic plan and discretionary expenditure, with strong
headroom against current available facilities and full covenant
compliance in all modelled scenarios.
Based on the results of this analysis, the Board has a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
to 28 March 2026.
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 52 weeks ended 26 March 2022, except
for the new standards and interpretations explained below.
New and revised standards and interpretations not applied
In the Financial Statements, the Group has not applied the
following new and revised IFRSs that have been issued but are not
yet effective:
International Accounting Standards (IAS/IFRSs) Effective date
Narrow scope amendments to IAS 1 and IAS 8 1 January 2023
IFRS 17 Insurance contracts 1 January 2023
IAS 12 Deferred tax (amendment) 1 January 2023
IAS 1 Presentation of Financial Statements (amendment) 1 January 2024
IFRS 16 Leases (amendment) 1 January 2024
None of these are expected to have a significant effect on the
Financial Statements 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 principally through
adjusted profit measures consistent with those disclosed in the
Annual Report and Accounts.
The reportable segment 'Food' represents the aggregation of four
operating segments which are aligned to the product categories of
the Group; Fresh Pork, Convenience, Gourmet Products and Poultry,
all of which manufacture and supply food products through the
channels described below. These operating segments have been
aggregated into one reportable segment as they share similar
economic characteristics. The economic indicators which have been
assessed in concluding that these operating segments should be
aggregated include the similarity of long-term average margins;
expected future financial performance; and operating and
competitive risks. In addition, the operating segments are similar
with regard to the nature the products and production process, the
type and class of customer, the method of distribution and the
regulatory environment.
The reporting segments are organised based on the nature of the
end markets served. The 'Food' segment entails manufacture and
supply of food products to UK grocery retailers, the food service
sector and other UK and global food producers. The 'Other' segment
represents all other activities which do not meet the above
criteria, principally Cranswick Pet Products Limited.
2023 GBP'm 2023 GBP'm 2023 GBP'm 2022 GBP'm 2022 GBP'm 2022 GBP'm
Food Other Total Food Other Total
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Revenue 2,296.4 26.6 2,323.0 2,004.6 3.9 2,008.5
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Adjusted operating profit 146.3 0.2 146.5 140.7 (0.1) 140.6
Finance costs (6.3) (0.1) (6.4) (3.7) - (3.7)
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Adjusted profit before tax 140.0 0.1 140.1 137.0 (0.1) 136.9
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Assets 1,248.4 16.4 1,264.8 1,132.2 10.9 1,143.1
Liabilities (410.6) (11.3) (421.9) (368.3) (5.9) (374.2)
----------------------------- -------- ------- -------- -------- ------ --------
Net assets 837.8 5.1 842.9 763.9 5.0 768.9
----------------------------- -------- ------- -------- -------- ------ --------
Depreciation 67.5 1.3 68.8 60.9 0.2 61.1
Non-current asset additions 105.4 3.5 108.9 139.5 0.2 139.7
----------------------------- -------- ------- -------- -------- ------ --------
4. Group operating profit
Group operating costs comprise:
2023 2022
GBP'm GBP'm
------------------------------------------------------------------------------------- -------- --------
Cost of sales excluding net IAS 41 valuation movement on biological assets 2,022.1 1,727.5
Net IAS 41 valuation movement on biological assets* (7.6) 2.8
-------------------------------------------------------------------------------------- -------- --------
Cost of sales 2,014.5 1,730.3
-------------------------------------------------------------------------------------- -------- --------
Gross profit 308.5 278.2
------------------------------------------------------------------------------------- -------- --------
Selling and distribution costs 94.8 80.3
------------------------------------------------------------------------------------- -------- --------
Administrative expenses excluding amortisation and impairment of intangible assets 69.5 60.1
Impairment of acquired intangible assets 3.0 -
Amortisation of intangible assets 5.2 4.2
Administrative expenses 77.7 64.3
------------------------------------------------------------------------------------- -------- --------
Other operating income (9.9) -
------------------------------------------------------------------------------------- -------- --------
Total operating costs 2,177.1 1,874.9
------------------------------------------------------------------------------------- -------- --------
*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.
Included within other operating income is a credit of GBP9.9
million for an insurance claim received in the period (2022:
GBPnil). The net impact of the claim is not material.
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 GBP111.4 million (2022: GBP103.5 million) 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:
2023 2022
Thousands Thousands
---------------------------------------------------- ---------- ----------
Basic weighted average number of shares 53,461 52,923
Dilutive potential ordinary shares - share options 129 246
---------------------------------------------------- ---------- ----------
53,590 53,169
---------------------------------------------------- ---------- ----------
Adjusted earnings per share are calculated using the weighted
average number of shares for both basic and diluted amounts as
detailed above (see Note 10).
6. Dividends
Subject to Shareholders' approval the final dividend will be
paid on 1 September 2023 to Shareholders on the register at the
close of business on 21 July 2023.
7. Analysis of changes in net debt
At Other At
26 March Cash non-cash 25 March
2022 flow changes 2023
Group GBP'm GBP'm GBP'm GBP'm
--------------------------- ---------- ------- ---------- ----------
Cash and cash equivalents 0.2 20.1 - 20.3
Revolving credit (36.4) (3.6) (0.5) (40.5)
Lease liabilities (69.8) 16.3 (27.7) (81.2)
Net debt (106.0) 32.8 (28.2) (101.4)
--------------------------- ---------- ------- ---------- ----------
Net (debt)/funds are defined as cash and cash equivalents less
interest-bearing liabilities net of unamortised issue costs.
8. 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.
9. Acquisitions
i) Cranswick Mediterranean Foods Limited
On 13 February 2023, the Group acquired the trade and assets of
Mediterranean Foods (London) Ltd. The business, now named Cranswick
Mediterranean Foods Limited, produces Mediterranean snacking foods
and was acquired for a cash consideration of GBP0.5 million.
The following table sets out the final fair values of the
identifiable assets and liabilities acquired by the Group from
Mediterranean Foods (London) Ltd:
Fair value
GBP'm
Net assets acquired:
Property, plant and equipment 0.6
Inventories 0.1
Trade and other payables (0.1)
Provisions (0.1)
------------------------------------------- ------
0.5
Goodwill arising on acquisition -
------------------------------------------- ------
Total consideration 0.5
------------------------------------------- ------
Satisfied by:
Initial cash consideration 0.5
Deferred contingent consideration -
------------------------------------------- ------
0.5
------------------------------------------- ------
Net cash outflow arising on acquisition:
Cash consideration paid 0.5
Cash and cash equivalents acquired -
------------------------------------------- ------
0.5
------------------------------------------- ------
Transaction costs in relation to the acquisition of GBP0.1
million have been expensed within administrative expenses.
Post-acquisition Cranswick Mediterranean Foods Limited has
contributed GBP0.1 million revenue and GBPnil operating result
which is included in the Group income statement. Had the acquisiton
taken place at the beginning of the year, the revenue in the year
would have been GBP2.2 million higher and profit in the year would
have been the same.
ii) Holdco Alpha Ltd (Grove Pet Foods)
On 28 January 2022, the Group acquired 100% of the share capital
of a holding entity Holdco Alpha Limited and its subsidiary Grove
Pet Foods Limited (later renamed to 'Cranswick Pet Products'), a
producer of dried pet foods for several leading brands under
private label relationships alongside its own brands, together with
associated freehold land and buildings, for an initial net cash
consideration of GBP32.9 million.
The following table sets out the fair values of the identifiable
assets and liabilities acquired by the Group in relation to
Grove.
Fair value
GBP'm
----------------------------------------------------------------------------- ------
Net assets acquired:
Customer relationships 6.2
Trademark 2.2
Property, plant and equipment 10.1
Inventories 2.0
Trade and other receivables 2.5
Right of use assets 0.3
Bank and cash balances (0.5)
Trade and other payables (3.0)
Hire purchase leases (0.3)
Lease liabilities (0.3)
Corporation tax liability (0.7)
Deferred tax liability (1.8)
----------------------------------------------------------------------------- ------
16.7
Goodwill arising on acquisition 15.1
----------------------------------------------------------------------------- ------
Total consideration 31.8
----------------------------------------------------------------------------- ------
Satisfied by:
Initial cash consideration 32.4
Completion accounts adjustment (0.6)
----------------------------------------------------------------------------- ------
31.8
----------------------------------------------------------------------------- ------
Net cash outflow arising on acquisition:
Cash consideration paid (included in cash flows from investing activities) 32.4
Cash and cash equivalents acquired 0.5
----------------------------------------------------------------------------- ------
32.9
----------------------------------------------------------------------------- ------
Included in the GBP15.1 million of goodwill recognised above are
certain intangible assets that cannot be individually separated
from the acquirees and reliably measured due to their nature. These
items include the expected value of synergies and an assembled
workforce.
A review of the completion accounts was undertaken during the
year in line with the Sale and Purchase Agreement. This has
resulted in an adjustment of GBP0.6 million received from the
seller, referred to as the 'completion accounts adjustment'
above.
In May 2022, one of Grove's customers informed the Group of
their intention to terminate the trading relationship and therefore
the recognised intangible asset is now expected to generate lower
future cashflows. A review of the recoverable amount has identified
an updated customer relationships value of GBP3.2 million,
resulting in an impairment loss of GBP3.0 million.
Despite the loss of the customer, a review of the carrying value
of goodwill has not identified any goodwill impairment. The
goodwill assessment has been performed on the same basis as at the
prior year end, but with an update to the discount rate and the
future operating cash flows of the business.
The discount rate has been updated to the latest position at the
year end and the operating profits were based on the latest Board
approved cash flows which were revised to exclude the loss of the
customer.
10. Alternative performance measures
The Board monitors performance principally through adjusted and
like-for-like performance measures. Adjusted profit and earnings
per share measures exclude certain non-cash items including the net
IAS 41 valuation movement on biological assets, amortisation of
acquired intangible assets, profit on sale of a business and
goodwill impairment charges. Free cash flow is defined as net cash
from operating activities less net interest paid and like-for-like
revenue excludes the impact of current year acquisitions and the
contribution from prior year acquisitions prior to the anniversary
of their purchase.
The Board believes that such alternative measures are useful as
they exclude volatile (net IAS 41 valuation movement on biological
assets), one-off (impairment of goodwill and profit on sale of a
business) and non-cash (amortisation of intangible assets) items
which are normally disregarded by investors, analysts and brokers
in gaining a clearer understanding of the underlying performance of
the Group when making investment and other decisions. Equally,
like-for-like revenue provides these same stakeholders with a
clearer understanding of the organic sales growth of the
business.
Like-for-like revenue
2023 2022 Change
GBP'm GBP'm
-------------------------------------------- -------- -------- -------
Revenue 2,323.0 2,008.5 +15.7%
Ramona's Kitchen, Atlantica UK Limited and (2.8) -
Mediterranean Foods
Cranswick Pet Products (22.3) -
-------------------------------------------- -------- -------- -------
Like-for-like revenue 2,297.9 2,008.5 +14.4%
-------------------------------------------- -------- -------- -------
Adjusted gross profit
2023 2022 Change
GBP'm GBP'm
------------------------------- ------- ------- -------
Gross profit 308.5 278.2 +10.9%
Net IAS 41 valuation movement (7.6) 2.8
Adjusted gross profit 300.9 281.0 +7.1%
------------------------------- ------- ------- -------
Adjusted Group operating profit and adjusted EBITDA
2023 2022 Change
GBP'm GBP'm
----------------------------------------------- ------- ------- -------
Group operating profit 145.9 133.6 +9.2%
Net IAS 41 valuation movement (7.6) 2.8
Impairment of acquired intangible assets 3.0 -
Amortisation of intangible assets 5.2 4.2
Adjusted Group operating profit 146.5 140.6 +4.2%
Depreciation of property, plant and equipment 54.1 47.9
Depreciation of right-of-use assets 14.7 13.2
Adjusted EBITDA 215.3 201.7 +6.7%
----------------------------------------------- ------- ------- -------
Adjusted profit before tax
2023 2022 Change
GBP'm GBP'm
------------------------------------------ ------- ------- -------
Profit before tax 139.5 129.9 +7.4%
Net IAS 41 valuation movement (7.6) 2.8
Amortisation of intangible assets 5.2 4.2
Impairment of acquired intangible assets 3.0 -
Adjusted profit before tax 140.1 136.9 +2.3%
------------------------------------------ ------- ------- -------
Adjusted earnings per share
2023 2023 2023 2022 2022 2022
Basic Diluted Basic Diluted
GBP'm pence pence GBP'm pence pence
------------------------------------------ ------- ------- --------- ------- ------- ---------
On profit for the year 111.4 208.3 207.8 103.5 195.7 194.8
Amortisation of intangible assets 5.2 9.6 9.6 4.2 7.9 7.9
Tax on amortisation of intangible
assets (1.0) (1.8) (1.8) (0.5) (1.0) (1.0)
Net IAS 41 valuation movement (7.6) (14.2) (14.2) 2.8 5.2 5.2
Tax on net IAS 41 valuation movement 1.9 3.6 3.6 (1.3) (2.4) (2.4)
Impairment of acquired intangible
assets 3.0 5.6 5.6 - - -
Tax on impairment of acquired intangible
assets (0.6) (1.1) (1.1) - - -
On adjusted profit for the year 112.3 210.0 209.5 108.7 205.4 204.5
------------------------------------------ ------- ------- --------- ------- ------- ---------
Free cash flow
2023 2022 Change
GBP'm GBP'm
------------------------------------ ------- ------- -------
Net cash from operating activities 153.0 160.0 -4.4%
Net interest paid (3.8) (1.6)
==================================== ======= ======= =======
Free cash flow 149.2 158.4 -5.8%
------------------------------------ ------- ------- -------
Return on capital employed
2023 2022 Change
GBP'm GBP'm
--------------------------------------------- ------- ------- --------
Average opening and closing net assets 805.6 727.5
Average opening and closing net debt 103.7 99.5
Average opening and closing pension surplus (4.2) (7.0)
Average opening and closing deferred tax 20.1 11.2
============================================= ======= ======= ========
925.2 830.9
Adjusted Group operating profit 146.5 140.6
============================================= ======= ======= ========
Return on capital employed 15.8% 16.9% -109bps
--------------------------------------------- ------- ------- --------
11. Principal risks and uncertainties
The Group has an established risk management framework which
identifies, assesses, and mitigates key risks facing the business.
The principal risks and uncertainties facing the Group are set out
in detail on pages 75 to 79 of the Report & Accounts for the 52
weeks ended 26 March 2022, dated 24 May 2022 a copy of which is
available on the Group's website.
These risks include: competitor activity, climate change, growth
& change, consumer demand, reliance on key customers &
exports, pig meat availability & price, health & safety,
Brexit disruption, IT systems & cyber security, food scares
& product contamination, adverse media attention, disease &
infection within livestock, disruption to Group operations,
recruitment & retention of key personnel, labour availability
& cost, COVID-19 pandemic and interest rate, currency,
liquidity & credit risk.
Whilst the Board considers the principal risks and uncertainties
as at 25 March 2023 to be the same as those described in the Report
& Accounts for the 52 weeks ended 26 March 2022, the war in
Ukraine continues to create economic uncertainty across markets in
which the Group operates, impacting, in particular, the cost and
availability of materials in the Group's supply chain. To manage
these uncertainties, the Group identified potential future
scenarios which allowed timely and appropriate mitigating actions
to be put in place.
The cost of living crisis, driven predominately by rising energy
prices, increasing interest rates and high inflation, has put
significant pressure on household budgets. Consequently the Group
has started to see changes in consumer spending habits. Retail
data, in the categories in which the Group operates, is being
proactively monitored to ensure that appropriate strategies are
developed to minimise the impact of any potential economic
downturn.
12. Report and accounts
The Report and Accounts will be available on the Company's
website at www.cranswick.plc.uk on 30 June 2023. Further copies
will be available upon request from the Company Secretary,
Cranswick plc, Crane Court, Hesslewood Country Office Park, Ferriby
Road, Hessle, HU13 0PA.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR NKBBBABKDAPB
(END) Dow Jones Newswires
May 23, 2023 02:00 ET (06:00 GMT)
Cranswick (LSE:CWK)
Gráfico Histórico do Ativo
De Dez 2024 até Jan 2025
Cranswick (LSE:CWK)
Gráfico Histórico do Ativo
De Jan 2024 até Jan 2025
