REG - Cranswick PLC - Final Results <Origin Href="QuoteRef">CWK.L</Origin> - Part 2
15/07/2015 17:59
- Part 2: For the preceding part double click ID:nRSR4060Na
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£'000 2014£'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 intangible assets 671 -
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 £41,252,000 (2014:
£43,207,000) 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
£'000 £'000
Profit for the year 41,252 43,207
Release of contingent consideration - (1,086)
Amortisation of customer relationship intangible assets 671 -
Tax on amortisation of customer relationship intangible assets (134) -
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 £23.8 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£'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 £18.1 million and the company contributed a net profit after
tax of £1.1 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 £42.8 million and revenues would have been £1,026.6 million.
Included in the £9.3 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 £0.2 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 £nil and
£4.0 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
£4.0 million, discounted to £3.8 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 £397,000 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 £nil. 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 £0.4
million has been recognised in relation to the option.
8. Analysis of changes in net debt
At 31 March2014 Cash flow Othernon-cashchanges At 31 March2015
Group £'000 £'000 £'000 £'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:
Company Services rendered to related party£'000 Interest paid to related party £'000 Dividends received from related party£'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
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