REG - Cranswick PLC - INTERIM RESULTS
26/11/2024 07:00
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RNS Number : 5877N Cranswick PLC 26 November 2024
CRANSWICK plc: INTERIM RESULTS
Strong volume-led earnings growth
26 November 2024
Cranswick plc ("Cranswick" or "the Company" or "the Group"), a leading UK food
producer, today announces its unaudited results for the 26 weeks ended 28
September 2024.
Financial highlights(1): H1 2024 H1 2023 Change Change
(Reported) (Like-for-like(2))
Revenue £1,329.9m £1,253.7m +6.1% +5.8%
Adjusted Group operating profit £99.6m £85.5m +16.5%
Adjusted Group operating margin 7.5% 6.8% +67bps
Adjusted profit before tax £95.8m £81.6m +17.4%
Adjusted earnings per share 132.1p 112.2p +17.7%
Return on capital employed(3) 18.7% 16.4% +234bps
Net debt (excluding IFRS 16) £0.9m £51.0m -£50.1m
Interim dividend per share 25.0p 22.7p +10.1%
Statutory measures: H1 2024 H1 2023 Change
Group operating profit £94.0m £90.8m +3.5%
Profit before tax £90.2m £86.9m +3.8%
Earnings per share 124.0p 119.5p +3.8%
Financial highlights:
· Strong reported volume-led revenue growth of 6.1% with
like-for-like(2) revenue growth of 5.8%
o Revenue from core UK food business ahead by 6.4% underpinned by 7.0%
volume growth
o Poultry revenue up by 16.4% with Poultry now accounting for 19.5% of
total Group sales
o Pet food revenue 71.1% higher reflecting successful ongoing roll out of
Pets at Home contract
· 67bps increase in adjusted operating margin to 7.5%, reflecting a
strong contribution from growing pig farming operations, excellent capacity
utilisation and tight cost control
· Free cash conversion(1) of 110.9% with ROCE(3) up 234bps to 18.7%
and net debt pre-IFRS 16 down £50.1m to £0.9m
· Outlook for the financial year ending 29 March 2025 remains in
line with current market expectations(4)
Strategic highlights:
· Further investment in pig farming operations driving 18% increase
in pig production year-on-year
o Acquisition of a long-standing supplier of RSPCA Assured outdoor bred
pigs, based in East Anglia
o Investment across existing farming operations to drive productivity
improvements
· Excellent industry-leading customer service levels maintained
· Total capital expenditure of £47.7m
· Good progress on three earnings enhancing capital projects, with
£20m spent in the period
o £25m fit out of Worsley houmous facility ongoing with initial phase
successfully commissioned
o £62m multi-phased expansion project at the Hull pork primary processing
site progressing as planned
o £27m expansion of the two added-value Hull poultry sites on track to
start onboarding large new retail contract in Q4
· £20m now committed to drive further fresh poultry growth
o Adds substantial capacity at flagship Eye facility and drives further
automation
o Delivers a material increase in incubatory capacity at the Kenninghall
site
Adam Couch, Cranswick's Chief Executive Officer commented:
"We have delivered another strong first half performance with good volume-led
growth through capacity expansion and market share gains from close alignment
to our key long-standing customers and a relentless focus on quality and
industry-leading service levels. I would like to thank, once again, our
brilliant Cranswick colleagues for their continued support and commitment in
delivering this strong performance.
"We continue to grow our poultry business and we have now committed to
spending almost £50m across our vertically integrated poultry operations.
We will invest £20m to increase volumes processed through our fresh poultry
operations in East Anglia, alongside the substantial ongoing investment at our
two added-value facilities in Hull.
"Investment in our agricultural operations continues at pace with a further
acquisition completed during the period alongside ongoing organic expansion.
We now have the largest pig farming business in the UK which is producing
over 34,000 finished pigs per week with self-sufficiency maintained at well
over 50%. We will continue to invest in our pig farming operations to ensure
that we can supply the right quality and quantity of pigs to meet the need of
our strategic retail customers.
"We remain on track to deliver further progress in the second half of the
year. Our Christmas order book is strong and demand for our innovative
products remains high as the UK consumer continues to appreciate the quality,
value and versatility of our core pork and poultry ranges.
"Our continued positive progress is made possible by our industry-leading
asset infrastructure, the unrivalled capability of our colleagues across the
business, the breadth and quality of our product range and robust financial
position. Focusing on these strengths will allow Cranswick to continue to
prosper, both in the current financial year and over the longer term."
1 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 15.
2 For comparative purposes, like-for-like revenue excludes the current year
contribution from current and prior year acquisitions prior to the anniversary
3 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
4 (surplus)/deficit and deferred tax.
Market expectations for adjusted profit before tax as at 25 November 2024
range between £189.0m and £193.0m. The range reflects all published
updated Broker analysis following the 27 September 2024 half-year trading
update.
Presentation
A conference call for analysts and institutional investors will take place at
9.30am today. Slides to accompany the call will be sent to registered
participants ahead of the call. Slides will also be available on the company
website. For the dial-in details please contact Sodali & Co on the
details below.
Enquiries:
Cranswick plc
Mark Bottomley, Chief Financial Officer 01482
275 000
Sodali & Co
Ben Foster / Louisa Henry
+44 207 100 6451
cranswick@sodali.com
Note to editors:
1. Cranswick is a leading, vertically integrated supplier of premium,
fresh and added-value food products. The business employs over 15,000 people
across the Group; from our pig and poultry farming operations to our 22
well-invested, highly efficient food production facilities. Cranswick was
formed in 1975 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. Results for the 53
weeks to 30 March 2024 showed revenue of £2,599.3m and profit before tax of
£158.4m. For more information go to: https://cranswick.plc.uk
(http://www.cranswick.plc.uk/)
2. At Cranswick, it is second nature for us to protect and nurture our
environment while supporting people and communities to thrive. Guided by our
sustainability strategy, Second Nature, we have seamlessly integrated our
sustainability commitments into the core of our business model, which in turn
shapes our decision-making, culture, and actions. For more information on
our Second Nature strategy, please visit:
https://cranswick.plc.uk/sustainability
(https://cranswick.plc.uk/sustainability)
Summary
Trading during the period has been strong with healthy demand continuing
across our core UK food product business. Premium added-value categories
performed particularly well with promotional activity across our customer base
driving growth, supported by the affordability, versatility and quality of our
pork and poultry products. Poultry revenue grew strongly during the period
and further committed substantial capital investment across both fresh and
added-value operations will support further growth going forward. Pet
revenue grew strongly as the roll out of business with Pets at Home gathers
momentum.
We continue to invest at pace in our pig farming and agricultural operations
to add scale and drive ongoing productivity improvements. In doing so we are
also securing supply for our key retail partners' requirements while
continuing to ensure the highest animal welfare standards. We have further
strengthened our presence in the UK pig farming sector as an efficient,
large-scale producer through the acquisition of a 4,000 sow RSPCA Assured
outdoor pig herd in East Anglia. Alongside this we continue to invest in our
existing pig farming business with six new herds established during the
period. This investment ensures we have the required quality, quantity and
mix of indoor and premium outdoor pigs to service our customers'
requirements. We have also made significant progress in feed milling to add
capacity and drive productivity improvements.
We invested £47.7m across our asset base during the period to support future
growth and drive further operating efficiencies. Commissioning of the
initial phase of the new Worsley houmous facility is now complete with our
fast-growing Ramona's houmous range produced and despatched to customers from
the site. The £62m multi-phased investment programme at our Hull pork
primary processing facility is progressing as planned, as is the £27m
expansion of our two Hull-based breaded and ready-to-eat added-value poultry
sites. We have also now committed to £20m of investment to increase
capacity in our fresh poultry operations.
Results
Total revenue in the 26 weeks to 28 September 2024 was £1,329.9m, 6.1% higher
than the £1,253.7m reported in the corresponding period last year.
Adjusting for the contribution from acquisitions made in the current and
previous period, revenue increased by 5.8% on a like-for-like basis.
Adjusted profit before tax for the period at £95.8m was 17.4% higher than the
£81.6m reported in the corresponding period last year. Adjusted earnings
per share on the same basis was up 17.7% at 132.1p compared to 112.2p in the
equivalent period last year, reflecting the growth in adjusted profit before
tax.
Cash flow and financial position
Net debt, excluding IFRS 16 lease liabilities, at the end of the period fell
to just £0.9m (September 2023: £51.0m) reflecting the strong operational
performance of the Group. Free cash conversion at 110.9% was well ahead of
our medium-term target of 90.0%. The Group remains in a robust financial
position and has access to a £250m unsecured, sustainability linked facility
providing generous headroom which runs through to November 2026.
Dividend
The interim dividend is being increased by 10.1% to 25.0p per share from 22.7p
per share previously. The interim dividend will be paid on 24 January 2025
to Shareholders on the register at the close of business on 13 December 2024.
Outlook
We have made a strong start to the year with positive trading momentum
continuing into the third quarter. Demand for our product range remains
high, driven by growth in premium and added-value products and underpinned by
the quality, affordability and versatility of our pork and poultry products
and our industry-leading service levels. Whilst we remain cautious about
current market and wider economic and geopolitical conditions, the outlook for
the current financial year ending 29 March 2025 remains in line with current
market expectations(*).
The Board is encouraged by the continued strategic progress of the business
and is confident that focus on the strengths of the Company, which include its
long-standing customer relationships, breadth and quality of products and
industry leading asset infrastructure, will support the further successful
development of the Group over the longer term.
( )
(*) Market expectations for adjusted profit before tax as at 25 November 2024
ranged between £189.0m and £193.0m. The range reflects all published Broker
analysis that has been updated since the half year trading update dated 27
September 2024.
Operating review
Revenue and adjusted operating profit
H1 2024 H1 2023 Change Change
(Reported) (Like-for-like)*
Revenue £1,329.9m £1,253.7m +6.1% +5.8%
Adjusted Group operating profit* £99.6m £85.5m +16.5%
Adjusted Group operating margin* 7.5% 6.8% +67bps
Group operating profit £94.0m £90.8m +3.5%
(*) See Note 15
Revenue
Reported revenue increased by 6.1% to £1,329.9m, with volumes 7.3% ahead.
On a like-for-like basis, revenue increased by 5.8%. Revenue from UK food
was ahead by 6.4% underpinned by volume growth of 7.0%. Poultry revenue
increased by 16.4% driven by strong growth in cooked and prepared poultry and
now represents 19.5% of total Group sales. Pet food revenue grew by 71.1% as
the onboarding of Pets at Home business continues to build.
Adjusted Group operating profit
Adjusted Group operating profit was 16.5% higher at £99.6m with adjusted
Group operating margin up 67bps to 7.5%. Higher Group operating margin
reflected the positive contribution from the Group's expanded agricultural
operations, strong volume growth, excellent capacity utilisation and tight
cost control.
Category review
FOOD SEGMENT
Fresh Pork
Fresh Pork revenue was 2.8% ahead of the prior period and represented 24.5% of
Group revenue. Growth reflected strong volume driven retail and wholesale
demand offset by lower export sales revenues. UK food channel revenue
increased by 5.6% with corresponding volume up by 12.7%. Export revenue was
7.1% down on the prior year with positive volume growth more than offset by
lower pricing from China and other Far Eastern markets.
We continue to invest in and grow our pig farming and feed milling
operations. We increased the size, scale and quality of our pig herd during
the period through ongoing organic investment and the acquisition of a 4,000
sow herd from a long-standing existing supplier of RSPCA Assured outdoor bred
pigs, based in East Anglia. We also increased our self-sufficiency in pig
feed milling to 19% following the acquisition of the Elsham mill in the prior
year.
We now have the largest pig farming business in the UK which is producing over
34,000 finished pigs each week. Finished pig numbers increased by 18%
compared to the same period last year with self-sufficiency maintained at well
over 50% as our farming business expands to meet the growing demand from our
three primary processing facilities and the wider business. We now have
almost 900,000 pigs on the ground at any time which are reared across a
mixture of premium outdoor and high-quality indoor units. We will continue
to invest in our pig farming operations, both organically and through
acquisition, to ensure that we can supply the right quality and quantity of
pigs to meet the need of our strategic retail customers.
Investment into our integrated supply chain gives us increased control over
the key drivers that influence our carbon footprint. We have a clear strategy
to net zero carbon emissions by 2040 for our agricultural operations. We
recently announced a carbon inset pilot scheme with farmers incentivised to
sequester carbon and increase biodiversity levels on their farmland.
All three primary processing sites lifted production volumes year-on-year with
the total number of UK pigs processed across the sites increasing by 9.5%
compared to the same period last year. A proportion of this additional
throughput drove higher revenue through retail and wholesale channels, with
the balance traded internally to fuel growth in our added-value gourmet and
convenience ranges. During the period, we launched a new range of premium
barbecue grill products including new pork loin flavours and the 'TomaPork'
which won 'BBQ Hero' at the BBC Good Food Awards in May.
We remain committed to continued investment across our primary processing
operations to increase capacity and drive further operational efficiencies to
service our growing added-value pork business. This investment programme
includes the ongoing £62m multi-phased redevelopment of the Hull primary
processing site which will provide the platform to substantially increase
capacity in the future, drive further automation and operational efficiency
improvements and add onsite cold storage capability. Ongoing investment at
our Ballymena and Norfolk sites include projects which will deliver efficiency
improvements and production flexibility.
Convenience
Convenience revenue was 1.1% ahead of the prior period and represented 37.6%
of Group revenue.
Cooked Meats revenue was in line with the prior period as new retail business
secured during the period and underlying growth from new listings were offset
by the decision to forego some lower margin business at the start of the
period. Continued positive momentum in our 'slow cook' and 'sous vide'
product range following significant recent investment in capacity and strong
retailer promotional activity resulted in volume growth at our Hull Cooked
Meats site.
Continental and Mediterranean Products revenue growth reflected higher pricing
and improved product mix which more than offset a slight fall in volumes.
Pricing reflected support for olive producers following the challenging
harvest. The business now focuses on premium, added-value Mediterranean
foods and produces less high volume, low value, factored products. The
ongoing popularity of charcuterie, olives and antipasti products, either sold
in single or mixed platter pack formats, continues to drive expansion of wider
Mediterranean food categories.
We continue to see opportunities to drive further innovation in the category.
In partnership with a leading Spanish restaurant chain, we recently launched
a new premium charcuterie range with one of our key retail customers. We see
significant potential for growth through expansion and premiumisation of the
houmous and dips category where we are growing our presence further through
new retailer listings, having recently won a 'Q Award' for an own brand
'Truffle and Pecorino' premium dip, demonstrating our ability to innovate with
new products in this exciting category.
Our Ramona's houmous brand is the leading retail houmous brand measured by
both volume and value. The capacity constraints of Ramona's small Watford
plant have been removed with production transferred to the newly commissioned
Worsley facility late in the period. The new facility creates a platform to
rapidly expand the Ramona's houmous and dips range and provides substantial
headroom for further wider category growth.
During the period we secured a new, major halloumi contract with a key retail
customer under the Cypressa brand, launching in 800 stores. We have also
supplied Cypriot halloumi to a national quick service restaurant chain where
it is sold as halloumi fries. We have recently secured new business for a
significant existing food service customer co-packing their branded range. All
these products are produced at, or sourced through, our Katsouris business in
North London which now has limited capacity headroom. Consequently, we have
committed to invest in additional capacity at this site.
Gourmet Products
Gourmet Products revenue increased by 8.7% and represented 17.1% of Group
revenue. Revenue growth was underpinned by strong volume growth and the
contribution from Froch Foods, acquired during the second half of the prior
year.
Sausage and Bacon revenues were both well ahead, with strong retail volume
growth driven by the performance of premium ranges and increased promotional
activity in these categories. Sausage volume growth was well ahead of the
market despite a lacklustre barbecue season. We launched a new summer range
of hot dogs with one product granted 'hero status' by a major retail
customer. We continue to build for what we anticipate will be another
extremely busy Christmas for pigs in blankets. During the period, we added
more automated production capacity to alleviate capacity constraints.
Froch Foods made a modest contribution to external revenue but the key
contribution from this site has been to free up much needed premium bacon
curing capacity at the Sherburn facility which was previously being used to
cure bacon for the Cooked Bacon and Sausage facility. This activity has now
transferred to Froch Foods.
Revenue from the Hull Cooked Bacon and Sausage facility grew strongly
reflecting new retail business and further quick service restaurant trade
growth.
Pastry revenue improved year-on-year with strong underlying performance and
increased promotional activity from the site's anchor retail customer. New
product launches included innovative meal solutions in collaboration with a
celebrity chef, and a summer range of sausage rolls, all of which continue to
drive category growth in our premium pastry product range. The Malton
facility was recently awarded 'Fortress' status, by the site's anchor retail
customer, one of only nine sites in the country to be awarded this status.
Poultry
Poultry revenue increased by 16.4% during the period and represented 19.5% of
Group revenue, up from 17% in the previous financial year.
Fresh Poultry revenue grew strongly reflecting retail demand from the site's
anchor customer with the Eye facility running at full capacity throughout the
period. We have now committed to £20m of further investment split across
the Eye facility and the Kenninghall site in East Anglia. The investment at
Eye will add c.15% additional capacity and further automation. At
Kenninghall we will add additional incubatory capacity. The move to lower
stocking densities across our fresh poultry farming supply chain is
progressing to plan.
Cooked Poultry revenue was strongly ahead driven by increased volumes and
improved mix following the onboarding of new premium retail business.
Volumes have been supported by new retail listings including with one of our
premium strategic retail customers. The £17m ongoing investment programme
will add additional cooking and cooling capacity and will enable further range
expansion, including roasted and bone-in portions. The project will be
largely completed by the end of the current financial year to accommodate a
new retail contract shared across the Cooked and Prepared Poultry sites from
Q4.
Prepared Poultry revenue more than doubled year-on-year reflecting new retail
business which launched at the start of the period alongside growth with
existing retail and food service customers as site capacity utilisation
continues to improve following commissioning of the Hull facility in April
2022. The £10m expansion project continues to progress in line with
expectations, ahead of new retail business coming on stream from the beginning
of the next financial year, as referred to above.
OTHER SEGMENT
Pet Food
Cranswick Pet Products revenue was 1.3% of Group revenue. Strong revenue
growth of 71.1% reflected the successful ongoing roll out of the Pets at Home
business. The refreshed Vitalin dog food brand launched with a major grocery
multiple towards the period end. Whilst top line growth is pleasing, the
financial performance of the pet food business reflects the continued
transformation taking place including the ongoing strategic review of the
customer base, brand investment and disruption resulting from the major £10m
capital investment programme, which is nearing completion.
Finance review
Revenue
Reported revenue increased by 6.1% to £1,329.9m (2023: £1,253.7m).
Like-for-like revenue, excluding the contribution from acquisitions made in
the current and previous financial period, increased by 5.8%.
Adjusted Group operating profit
Adjusted Group operating profit increased by 16.5% to £99.6m (2023:
£85.5m). Adjusted Group operating margin at 7.5% of sales was 67bps higher
than the prior period.
Finance costs and funding
Net finance costs were £3.9m (2023: £3.9m) with lower bank interest offset
by higher IFRS 16 lease interest.
Adjusted profit before tax
Adjusted profit before tax was 17.4% higher at £95.8m (2023: £81.6m).
Taxation
The tax charge of £23.6m (2023: £22.7m) was 26.2% of profit before tax
(2023: 26.1%). The UK statutory rate of corporation tax was 25.0% (2023:
25.0%). The effective rate was higher than the standard rate mainly due to
non-qualifying depreciation and tax adjustments related to disallowable
expenditure.
Adjusted earnings per share
Adjusted earnings per share for the 26 weeks to 28 September 2024 increased by
17.7% to 132.1p compared to the 112.2p reported in the corresponding period in
the prior year, reflecting the growth in adjusted profit before tax and the
impact of the shares held in trust. The average number of shares in issue was
53,648,000 (2023: 53,712,000).
Statutory profit measures
Statutory profit before tax increased by 3.8% to £90.2m (2023: £86.9m),
statutory Group operating profit was 3.5% higher at £94.0m (2023: £90.8m)
and statutory earnings per share was 3.8% higher at 124.0p (2023: 119.5p).
Full reconciliations of these results to the adjusted measures can be found in
Note 15.
Cash flow and net debt
Cash generated from operations in the period was £127.2m (2023: £103.2m),
including a working capital outflow in the period of £18.7m (2023: £24.9m).
Net debt, including the impact of IFRS 16 lease liabilities, increased by
£8.1m in the period to £107.5m from £99.4m at 30 March 2024. Net debt,
excluding IFRS 16 lease liabilities, at the end of the period fell to just
£0.9m (September 2023: £51.0m) reflecting the strong operational performance
of the Group. Capital expenditure was £47.7m in the period.
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 28 September 2024 was £0.2m which is in line with 30 March 2024.
Cash contributions to the scheme during the period were £nil. The Group
does not expect to make any contributions to the scheme during the year ending
March 2025. The present value of funded obligations was £19.6m, and the
fair value of plan assets was £19.8m.
Principal risks and uncertainties
The Board continues to assess the principal risks and uncertainties of the
Group on a frequent basis. The principal risks and uncertainties faced by
the business at 30 March 2024 are set out on pages 68 to 72 of the Annual
Report and Accounts for the 53 weeks ended 30 March 2024, dated 21 May 2024, a
copy of which is available on the Group's website. An update to these
principal risks and uncertainties at 28 September 2024 is set out in Note 16.
Forward looking information
This interim report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the information
available to them at the time of their approval of this report and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such forward
looking information.
Group income statement (unaudited)
for the 26 weeks ended 28 September 2024
Half year 53 weeks ended
30 March
2024
(Audited)
£'m
Notes 2024 2023
£'m
£'m
Revenue 1,329.9 1,253.7 2,599.3
Adjusted Group operating profit 99.6 85.5 185.1
Net IAS 41 valuation movement on biological assets (3.4) 7.7 2.2
Amortisation of intangible assets (2.2) (2.4) (5.0)
Impairment of intangible assets - - (15.4)
Group operating profit 5 94.0 90.8 166.9
Finance costs (3.9) (3.9) (8.9)
Share of net profit of joint venture 0.1 - 0.4
Profit before tax 90.2 86.9 158.4
Taxation 6 (23.6) (22.7) (45.3)
Profit for the period 66.6 64.2 113.1
Earnings per share (pence)
On profit for the period:
Basic 7 124.0 119.5 210.4
Diluted 7 123.4 119.1 209.7
Group statement of comprehensive income (unaudited)
for the 26 weeks ended 28 September 2024
53 weeks ended
30 March 2024
Half year
2024 2023 (Audited)
£'m £'m £'m
Profit for the period 66.6 64.2 113.1
Other comprehensive (expense)/income
Other comprehensive (expense)/income to be reclassified to profit or loss in
subsequent periods:
Cash flow hedges
Losses arising in the period (0.7) - (0.1)
Reclassification adjustments for gains/(losses) included in the income - (0.1)
statement
0.1
Income tax effect 0.1 - 0.1
Net other comprehensive expense to be reclassified to (0.1)
profit or loss in subsequent periods
(0.5) -
Items not to be reclassified to profit or loss in subsequent periods:
Actuarial losses on defined benefit pension scheme - (0.1) -
Income tax effect - - -
Net other comprehensive expense not being reclassified to profit or loss -
in subsequent periods
- (0.1)
(0.5) (0.1)
Other comprehensive expense
(0.1)
66.1 113.0
Total comprehensive income
64.1
Group balance sheet (unaudited)
at 28 September 2024 As at
Half year 30 March
Notes 2024 2023 2024
Restated* (Audited)
£'m £'m £'m
Non-current assets
Financial asset investment 0.1 0.1 0.1
Investment in joint venture 0.8 0.4 0.8
Intangible assets 211.9 224.1 213.5
Defined benefit pension scheme surplus 0.2 0.1 0.2
Property, plant and equipment 533.8 496.7 518.9
Right-of-use assets 99.0 85.0 92.4
Biological assets 4.9 6.3 6.4
Total non-current assets 850.7 812.7 832.3
Current assets
Biological assets 84.1 90.8 83.7
Inventories 144.7 128.7 113.7
Trade and other receivables 321.9 310.2 325.3
Other financial assets 0.1 0.1 -
Income tax receivable 6.6 3.6 2.0
Cash and short-term deposits 11 8.4 27.8 27.0
Total current assets 565.8 561.2 551.7
Total assets 1,416.5 1,373.9 1,384.0
Current liabilities
Trade and other payables (321.3) (292.0) (310.0)
Other financial liabilities (2.2) (2.8) (2.3)
Lease liabilities (17.2) (14.4) (17.3)
Provisions (1.8) (0.8) (1.8)
Total current liabilities (342.5) (310.0) (331.4)
Non-current liabilities
Other payables (1.0) (0.3) (0.9)
Financial liabilities (9.3) (78.8) (27.1)
Lease liabilities (89.4) (76.5) (82.1)
Deferred tax liabilities (31.7) (27.1) (28.4)
Provisions (2.6) (2.8) (2.6)
Total non-current liabilities (134.0) (185.5) (141.1)
Total liabilities (476.5) (495.5) (472.5)
Net assets 940.0 878.4 911.5
Equity
Called-up share capital 5.4 5.4 5.4
Share premium account 130.1 125.4 128.3
Share-based payments 11.0 8.3 11.8
Shares held in trust (20.6) (3.3) (15.6)
Hedging reserve (0.6) - (0.1)
Retained earnings 814.7 742.6 781.7
Total equity attributable to owners of the parent 940.0 878.4 911.5
* See note 2 for details regarding the restatement as a result of a change in
accounting policy.
Group statement of cash flows (unaudited)
for the 26 weeks ended 28 September 2024
53 weeks ended 30 March 2024
Half year
Notes 2024 2023 (Audited)
£'m £'m £'m
Operating activities
Profit for the period 66.6 64.2 113.1
Adjustments to reconcile Group profit for the period to net cash from
operating activities:
Income tax expense 23.6 22.7 45.3
Net finance costs 3.9 3.9 8.9
(Gain)/loss on sale of property, plant and equipment (0.1) 0.2 1.0
(Gain)/loss on disposal of right-of-use assets (0.3) 0.4 0.2
Depreciation of property, plant and equipment 34.0 30.1 65.5
Depreciation of right-of-use assets 8.8 7.7 16.2
Amortisation of intangibles 2.2 2.4 5.0
Impairment of intangible assets - - 15.4
Share-based payments 4.1 4.3 8.8
Share of net profit of joint venture (0.1) - (0.4)
Release of Government grants (0.2) (0.1) (0.4)
Net IAS 41 valuation movement on biological assets 3.4 (7.7) (2.2)
Increase in biological assets (1.0) (2.8) (1.3)
(Increase)/decrease in inventories (30.9) (14.7) 0.3
Decrease/(increase) in trade and other receivables 4.3 (19.4) (33.8)
Increase in trade and other payables 8.9 12.0 28.2
Cash generated from operations 127.2 103.2 269.8
Tax paid (20.6) (22.9) (41.4)
Net cash from operating activities 106.6 80.3 228.4
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired 9 (4.4) (13.6) (23.5)
Distributions received from joint venture 0.1 - -
Payment of property, plant and equipment acquired on acquisition - (9.1) (9.1)
Purchase of financial asset investment - (0.1) (0.1)
Purchase of property, plant and equipment (47.7) (39.4) (91.4)
Proceeds from sale of property, plant and equipment 1.0 0.3 0.8
Net cash used in investing activities (51.0) (61.9) (123.3)
Cash flows from financing activities
Interest paid (1.2) (2.0) (5.0)
Proceeds from issue of share capital 1.8 1.5 4.4
Own shares purchased (10.4) (3.3) (15.6)
(Repayment of)/proceeds from borrowings 11 (18.0) 38.0 (14.0)
Repayment of borrowings acquired - (4.8) (6.5)
Dividends paid (36.1) (31.7) (43.9)
Payment of lease capital (7.9) (7.1) (14.2)
Payment of lease interest (2.4) (1.5) (3.6)
Net cash used in financing activities (74.2) (10.9) (98.4)
Net (decrease)/increase in cash and cash equivalents 11 (18.6) 7.5 6.7
Cash and cash equivalents at beginning of period 11 27.0 20.3 20.3
Cash and cash equivalents at end of period 11 8.4 27.8 27.0
Group statement of changes in equity (unaudited)
for the 26 weeks ended 28 September 2024
Share Share Share- Shares held in trust Hedging Retained Total
capital premium based £'m reserve earnings equity
payments
£'m £'m £'m £'m £'m £'m
At 30 March 2024 5.4 128.3 11.8 (15.6) (0.1) 781.7 911.5
Profit for the period - - - - - 66.6 66.6
Other comprehensive expense - - - - (0.5) - (0.5)
Total comprehensive income - - - - (0.5) 66.6 66.1
Share-based payments (SBPs) - - 4.1 - - - 4.1
Exercise, lapse or forfeit of SBPs - - (4.9) - - 4.9 -
Shares acquired by Employee Benefit Trust - - - (10.4) - - (10.4)
Transfer on grant of shares to beneficiaries of the Employee Benefit Trust
- - - 5.4 - (5.4) -
Share options exercised - 1.8 - - - - 1.8
Dividends - - - - - (36.1) (36.1)
Deferred tax relating to changes in equity - - - - - 2.1 2.1
Current tax relating to changes in equity - - - - - 0.9 0.9
At 28 September 2024 5.4 130.1 11.0 (20.6) (0.6) 814.7 940.0
At 25 March 2023 as originally presented 5.4 123.9 49.0 - - 664.6 842.9
Change in accounting policy - - (39.5) - - 39.5 -
Total equity at the beginning of the financial year (restated*)
5.4 123.9 9.5 - - 704.1 842.9
Profit for the period - - - - - 64.2 64.2
Other comprehensive expense - - - - - (0.1) (0.1)
Total comprehensive income - - - - - 64.1 64.1
Share-based payments - - 4.3 - - - 4.3
Exercise, lapse or forfeit of SBPs (restated*) - - (5.5) - - 5.5 -
Shares acquired by Employee Benefit Trust - - - (3.3) - - (3.3)
Share options exercised - 1.5 - - - - 1.5
Dividends - - - - - (31.7) (31.7)
Deferred tax relating to changes in equity - - - - - 0.2 0.2
Current tax relating to changes in equity - - - - - 0.4 0.4
At 23 September 2023 (restated*) 5.4 125.4 8.3 (3.3) - 742.6 878.4
(Audited)
At 25 March 2023 as originally presented 5.4 123.9 49.0 - - 664.6 842.9
Change in accounting policy - - (39.5) - - 39.5 -
Total equity at the beginning of the financial year (restated*)
5.4 123.9 9.5 - - 704.1 842.9
Profit for the year - - - - - 113.1 113.1
Other comprehensive expense - - - - (0.1) - (0.1)
Total comprehensive income - - - - (0.1) 113.1 113.0
Share-based payments - - 8.8 - - - 8.8
Exercise, lapse or forfeit of SBPs - - (6.5) - - 6.5 -
Shares acquired by Employee Benefit Trust - - - (15.6) - - (15.6)
Share options exercised - 4.4 - - - - 4.4
Dividends - - - - - (43.9) (43.9)
Deferred tax relating to changes in equity - - - - - 1.4 1.4
Current tax relating to changes in equity - - - - - 0.5 0.5
At 30 March 2024 5.4 128.3 11.8 (15.6) (0.1) 781.7 911.5
* See note 2 for details regarding the restatement as a result of a change in
accounting policy.
Responsibility statement
The Directors confirm that these condensed set of consolidated interim
financial statements have been prepared in accordance with UK-adopted
International Accounting Standard (IAS) 34, 'Interim Financial Reporting' and
the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8,
namely:
· an indication of important events that have occurred during the
first 26 weeks of the year and their impact on the condensed set of
consolidated financial statements, and a description of the principal risks
and uncertainties for the remaining 26 weeks of the financial year; and
· material related-party transactions in the first 26 weeks of the
year and any material changes in the related-party transactions described in
the last annual report.
The Board of Directors that served during the 26 weeks ended 28 September
2024, and their respective responsibilities, can be found on pages 78 to 79,
and 92 of the Annual Report and Accounts for the 53 weeks ended 30 March 2024,
dated 21 May 2024. A list of current Directors is maintained on the Cranswick
plc website: www.cranswick.plc.uk
On behalf of the Board
Tim J Smith CBE Mark Bottomley
Chairman Chief Financial Officer
26 November 2024
Notes to the interim accounts
1. Basis of preparation
Cranswick plc is a public limited company incorporated and domiciled in
England, United Kingdom. The condensed set of consolidated interim financial
statements have been prepared in accordance with the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority and UK-adopted IAS 34,
'Interim Financial Reporting'. The Group is presenting its condensed
consolidated interim financial statements for the 26 weeks to 28 September
2024 with comparative information for the 26 weeks to 23 September 2023 and
the 53 weeks to 30 March 2024. The 2023 Balance Sheet has been restated
following a change in accounting policy. For more details see the accounting
policies section below. This interim report was approved by the Directors on
26 November 2024.
The annual financial statements will be prepared in accordance with UK-adopted
International Accounting Standards (IAS) and the requirements of the Companies
Act 2006.
As required by the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority, the condensed set of consolidated financial statements have
been prepared applying the accounting policies and presentation that were
applied in the preparation of the Group's published consolidated financial
statements for the 53 weeks ended 30 March 2024. These statements do not
include all the information required for full annual consolidated financial
statements and should be read in conjunction with the full Annual Report and
Accounts for the 53 weeks ended 30 March 2024.
The information does not constitute statutory accounts within the meaning of
Section 435 of the Companies Act 2006. The statutory accounts for the 53
weeks ended 30 March 2024 were prepared in accordance with UK-Adopted
International Accounting Standards ('UK-Adopted IAS') and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards, and have been filed with the Registrar of Companies.
The report of the auditors on the statutory accounts was not qualified and did
not contain a statement under Section 498(2) or (3) of the Companies Act 2006.
The interim report is unaudited but has been subject to an independent review
by PricewaterhouseCoopers LLP pursuant to the Auditing Practices Board
guidance contained in ISRE 2410 (UK and Ireland) 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Operating
review. The financial position of the Group, its cash flows, liquidity
position and borrowing facilities are described in the Finance review. The
Group has considerable financial resources, together with strong trading
relationships with its key customers and suppliers. As a consequence, the
Directors believe that the Group is well placed to manage its business risks
successfully.
The Board's going concern assessment has utilised the Group's latest forecasts
and has taken into account the Group's current position, future prospects and
the potential impact of the principal risks of the Group. Management has
produced forecasts to reflect severe yet plausible downside scenarios which
consider the principal risks faced by the Group, including, but not limited
to, a loss of consumer demand, an outbreak of Avian Influenza and a widespread
outbreak of African Swine Fever in the UK and Europe, as well the Group's
considerable financial resources and strong trading relationships with its key
customers and suppliers. Sensitivity analysis was carried out on the Group's
forecasts to quantify the financial impact of these risks on the strategic
plan and on the Group's viability against specific measures including
liquidity and bank covenants.
Given the strong liquidity of the Group, the £250m committed banking
facilities in place beyond the going concern period, and the diversity of
operations, the results of the sensitivity analysis highlighted that the Group
would be able to withstand the impact of the most severe, but plausible,
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.
After reviewing the available information, including business plans and
downside scenario modelling and making enquiries, the Directors have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the twelve months from the date of signing the
condensed consolidated interim financial statements. For this reason, the
Directors continue to adopt the going concern basis for preparing these
consolidated interim financial statements.
2. Accounting policies
The accounting policies applied by the Group in this interim report are the
same as those applied by the Group in the financial statements for the 53
weeks ended 30 March 2024, except as described below:
Taxation
Taxes for the interim periods are accrued using the tax rate that is expected
to be applicable to total earnings for the full year based on enacted tax
rates at the interim date.
There were no accounting standards or interpretations that have become
effective in the current reporting period which had an impact on disclosures,
financial position or performance.
Change in accounting policy
During the prior financial year, the Group changed its accounting policy for
share-based payments such that the value of shares that have exercised, lapsed
or forfeit is now credited to Retained earnings as opposed to remaining within
the Share-based payment reserve.
The change in accounting policy had no impact upon the Group Income Statement,
Group Statement of Comprehensive Income, Group Statement of Cash Flows, net
assets of the Group, or the Group distributable reserves. The change in
accounting policy enables the readers of the financial statements to identify
the cumulative value of share-based payments that are still to be exercised,
lapse or forfeit.
The impact of the change in accounting policy is detailed in the Group
Statement of Changes in Equity. There is no change to basic and diluted
earnings per share arising from the change in accounting policy.
3. Significant estimates and judgements
In preparing this set of consolidated condensed interim financial statements,
the significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements for the 53
weeks ended 30 March 2024.
4. Segmental analysis
IFRS 8 requires operating segments to be identified on the basis of the
internal financial information reported to the Chief Operating Decision Maker
(CODM). The Group's CODM is deemed to be the Executive Directors on the Board,
who are primarily responsible for the allocation of resources to segments and
the assessment of performance of the segments.
The CODM assesses profit performance principally through adjusted profit
measures consistent with those disclosed in the Annual Report and Accounts.
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.
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 above. The Piggy Green Limited
and Fornham Pigs Limited acquisitions are included within the Fresh Pork
product category. The 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 of the products and production process, the type and class of
customer, the method of distribution and the regulatory environment.
Half year 53 weeks ended
30 March 2024
2024 2024 2024 2023 2023 2023
£'m £'m £'m £'m £'m £'m £'m £'m £'m
Food Other Total Food Other Total Food Other Total
Revenue 1,313.0 16.9 1,329.9 1,243.8 9.9 1,253.7 2,573.9 25.4 2,599.3
Adjusted operating profit 101.8 (2.2) 99.6 87.2 (1.7) 85.5 192.5 (7.4) 185.1
Finance costs (3.9) - (3.9) (3.9) - (3.9) (8.9) - (8.9)
Share of net profit of joint venture
0.1 - 0.1 - - - 0.4 - 0.4
Adjusted profit before tax 98.0 (2.2) 95.8 83.3 (1.7) 81.6 184.0 (7.4) 176.6
Geographical segments
The following table sets out revenues by destination, regardless of where the
goods were produced:
53 weeks ended
30 March
Half year
2024 2023 2024
£'m £'m £'m
UK 1,302.3 1,224.7 2,543.7
Continental Europe 10.5 15.8 24.9
Rest of world 17.1 13.2 30.7
1,329.9 1,253.7 2,599.3
In addition to the non-UK sales disclosed above, the Group also made sales to
export markets through UK-based meat trading agents totalling £26.1m (2023:
£28.9m). Including these sales, total sales to export markets were £53.7m
for the period (2023: £57.9m).
Customer concentration
The Group has three customers (2023: three) which individually account for
more than 10% of the Group's total revenue. These customers account for 23%,
16% and 11% respectively. In the prior period, these same three customers
accounted for 22%, 16% and 10% respectively.
Seasonality
The Group is subject to marginal seasonal fluctuations in its Food segment
with increased sales over the Christmas period. This increase results in a
working capital build towards Christmas which then unwinds over the remainder
of the financial year.
5. Group operating profit
Group operating costs comprise:
53 weeks ended
Half year 30 March
2024 2023 2024
£'m £'m £'m
Cost of sales excluding net IAS 41 valuation movement on biological assets 1,126.5 1,077.1 2,224.6
Net IAS 41 valuation movement on biological assets(*) 3.4 (7.7) (2.2)
Cost of sales 1,129.9 1,069.4 2,222.4
Gross profit 200.0 184.3 376.9
Selling and distribution costs 54.9 48.1 100.0
Administrative expenses excluding impairment and amortisation of intangible 48.9 95.3
assets
43.0
Impairment of intangible assets (Note 14) - - 15.4
Amortisation of intangible assets 2.2 2.4 5.0
Administrative expenses 51.1 45.4 115.7
Other operating income - - (5.7)
Total operating costs 1,235.9 1,162.9 2,432.4
(*) This represents the difference between operating profit prepared under IAS
41 and operating profit prepared under historical cost accounting, which forms
part of the reconciliation of adjusted operating profit.
Included within other operating income at 30 March 2024 are credits of £5.7m
for insurance claims received in the period.
6. Taxation
The tax charge of £23.6m (2023: £22.7m) gives an effective tax rate of 26.2%
(2023: 26.1%). The effective tax rate is higher than the UK statutory rate of
corporation tax of 25.0% (2023: 25.0%) mainly due to non-qualifying
depreciation and tax adjustments related to disallowable expenditure.
7. Earnings per share
Basic earnings per share are based on profit for the period attributable to
members of the Parent Company and on the weighted average number of shares in
issue during the period (excluding the shares held by the Employee Benefit
Trust) of 53,648,000 (30 March 2024: 53,776,000, 23 September 2023:
53,712,000). The calculation of diluted earnings per share is based on
53,940,000 shares (30 March 2024: 53,963,000, 23 September 2023: 53,903,000).
8. Dividends
53 weeks ended
Half year 30 March
2024 2023 2024
£'m £'m £'m
Interim dividend for year ended 30 March 2024 of 22.7p per share - - 12.2
Final dividend for year ended 30 March 2024 of 67.3p (2023: 58.8p) 31.7
per share 36.1 31.7
36.1 31.7 43.9
The interim dividend for the year ending 29 March 2025 of 25.0p per share was
approved by the Board on 26 November 2024 for payment to Shareholders on 24
January 2025 and therefore has not been included as a liability at 28
September 2024.
9. Acquisitions
i) Piggy Green Limited and Fornham Pigs Limited
On 28 June 2024, the Group acquired 100% of the issued share capital of Piggy
Green Limited and Fornham Pigs Limited, both of which are outdoor pig breeders
based in East Anglia, for net cash consideration of £4.1m.
The acquisition is in line with the Group's focus on increasing our
self-sufficiency in British pigs.
The acquisition has been accounted for as a business combination using the
acquisition method of accounting in accordance with IFRS 3 Business
Combinations. Consequently, the assets acquired and liabilities assumed, have
been recorded by the Group at fair value with an excess purchase price over
the fair value of the identifiable asset and liabilities recognised as
goodwill.
The following table sets out the provisional fair values of the identifiable
assets and liabilities acquired by the Group in relation to Piggy Green
Limited and Fornham Pigs Limited:
Provisional
fair value
£'m
Net assets acquired:
Property, plant and equipment 1.5
Biological assets 1.3
Inventories 0.1
Trade and other receivables 0.9
Cash 0.2
Trade and other payables (0.4)
Deferred tax liability (0.1)
3.5
Goodwill arising on acquisition 0.6
Total consideration 4.1
Satisfied by:
Initial cash consideration 3.7
Deferred consideration 0.4
4.1
Net cash outflow arising on acquisition:
Cash consideration paid 3.7
Cash and cash equivalents acquired (0.2)
3.5
The fair values on acquisition are provisional pending finalisation of the
completion accounts and will be finalised within twelve months of the
acquisition date.
The fair value of trade and other receivables acquired is the same as the
gross contractual amounts. All of the trade and other receivables acquired are
expected to be collected in full.
No customer relationship intangible asset has been recognised as the
acquisition was undertaken in line with the Group's focus on increasing
self-sufficiency in British pigs. There are no trademarks linked to Piggy
Green Limited or Fornham Pigs Limited.
Included in the £0.6m of goodwill recognised above are certain intangible
assets that cannot be individually separated from the acquiree and reliably
measured due to their nature. These items include the expected value of
synergies and an assembled workforce.
Transaction costs in relation to the acquisition of £0.2m have been expensed
within administrative expenses.
From the date of acquisition to 28 September 2024, the external revenue of
Piggy Green Limited and Fornham Pigs Limited combined was £0.1m and the
combined net profit after tax was less than £0.1m. Had the acquisition taken
place at the beginning of the financial year, Group revenue would have been
£1,330.1m with no change to Group profit after tax.
(ii) Deferred and contingent consideration
The Sale and Purchase agreements for Atlantica UK Limited and Ramona's Kitchen
Limited included contingent consideration payable in cash to the previous
owners based on the performance of the businesses in the period to 30 June
2024.
The fair value of the deferred contingent consideration on acquisition was
estimated at £2.7m and was estimated calculating the present value of the
future expected cashflows. During the period, the Atlantica UK Limited
deferred contingent consideration was finalised, resulting in a cash payment
of £0.6m with £0.1m being released to the Group Income Statement. In the
prior year, £1.0m of the Ramona's Kitchen Limited deferred contingent
consideration was paid. The remaining value has been reassessed at the end of
the reporting period based on latest Board approved cash flows, resulting in
£1.0m recognised as at the period end and will be paid within the year.
The Sale and Purchase agreement for Froch Foods Holdings Limited included
deferred consideration payable in cash to the previous owners based on the
finalisation of the completion accounts. The estimated amount payable was
£0.4m. Following the finalisation of the completion accounts, the deferred
consideration was reduced by £0.1m and a cash payment of £0.3m was made in
the period.
The Sale and Purchase agreements for Piggy Green Limited and Fornham Pigs
Holdings Limited included deferred consideration payable in cash to the
previous owners based on the finalisation of the completion accounts. The
amount payable is estimated at £0.4m and will be paid within the year.
10. Financial instruments
The Group's activities expose it to a number of financial risks which include
foreign currency risk, interest rate risk, credit risk and liquidity risk. The
Board considers the Group's financial instruments risk management strategy to
be the same as described within the Directors' Report on page 135 of the
Annual Report and Accounts for the 53 weeks ended 30 March 2024.
Fair value of financial instruments
All financial instruments are shown in the balance sheet at fair value as
follows:
Half year 53 weeks ended
30 March 2024
2024 2023
Book Fair Book Fair Book Fair
value value value value value value
£'m £'m £'m £'m £'m £'m
Forward currency contracts 0.7 0.7 - - 0.2 0.2
Contingent consideration 1.0 1.0 2.7 2.7 1.7 1.7
The book value of trade and other receivables, trade and other payables, cash
balances, overdrafts and amounts outstanding under the revolving credit
facility equates to fair value to the Group.
Reconciliation of contingent consideration:
£'m
At 30 March 2024 1.7
Paid in the period (0.6)
Released to the Group Income Statement in the period (0.1)
At 28 September 2024 1.0
Biological assets
To provide an indication about the reliability of the inputs used in
determining fair value, the Group has classified its non-financial assets and
liabilities into the three levels prescribed under the accounting standards:
Level 1 Level 2 Level 3 Total
£'m £'m £'m £'m
At 28 September 2024
Breeding sows (Bearer biological assets) - 10.5 - 10.5
Boars - 0.2 - 0.2
Finished pigs (Consumable biological assets) - - 48.0 48.0
Sucklers and weaners (Consumable biological assets) - - 19.4 19.4
Breeder chickens (Bearer biological assets) - 2.4 - 2.4
Broiler chickens (Consumable biological assets) - 7.7 - 7.7
Total biological assets - 20.8 67.4 88.2
Level 1 Level 2 Level 3 Total
£'m £'m £'m £'m
At 30 September 2023
Breeding sows (Bearer biological assets) - 13.2 - 13.2
Boars - 0.2 - 0.2
Finished pigs (Consumable biological assets) - - 53.6 53.6
Sucklers and weaners (Consumable biological assets) - - 19.4 19.4
Breeder chickens (Bearer biological assets) - 2.2 - 2.2
Broiler chickens (Consumable biological assets) - 8.0 - 8.0
Total biological assets - 23.6 73.0 96.6
Level 1 Level 2 Level 3 Total
£'m £'m £'m £'m
At 30 March 2024
Breeding sows (Bearer biological assets) - 12.2 - 12.2
Boars - 0.2 - 0.2
Finished pigs (Consumable biological assets) - - 49.9 49.9
Sucklers and weaners (Consumable biological assets) - - 16.9 16.9
Breeder chickens (Bearer biological assets) - 2.2 - 2.2
Broiler chickens (Consumable biological assets) - 8.2 - 8.2
Total biological assets - 22.8 66.8 89.6
Included within biological assets are eggs with a value of £0.8m (30 March
2024: £0.5m, 23 September 2023: £0.5m).
In the prior year, there was a change in available external data from AHDB in
respect of suckler and weaner pig prices. As a result, management has used
historic data and applied a correlation with the current UK Standard Pig
Price. There was no change in underlying methodology applied, however as these
suckler and weaner prices were no longer observable in the market, management
considered that this caused the valuation to move into Level 3 of the fair
value hierarchy. Having considered the sensitivities in key inputs to suckler
and weaner valuations, management considered that reasonable sensitivities
would not result in a material impact on the fair value.
The Group's valuation model for finished pigs utilises quoted (unadjusted)
prices in an active market: the UK Standard Pig Price (SPP). The prices are
then adjusted to reflect the growth of the animals through straight-line
interpolation between weaner to finished pig to provide a value for the pigs
at a particular stage of growth. As the weaner price used in the straight-line
interpolation for finished pigs was not observable in the market in the prior
year, management concluded that these prices moved into Level 3 of the fair
value hierarchy.
Reconciliation of carrying amounts of fair value level 3 livestock:
£'m
At 30 March 2024 66.8
Increase due to purchases 8.8
Increase due to acquisition 0.7
Decrease attributable to harvest (154.0)
Decrease attributable to sales (2.2)
Changes in fair value less estimated costs to sell 147.3
At 28 September 2024 67.4
The gains or (losses) recognised in relation to the sucklers, weaners and
finished pigs are as follows:
53 weeks ended
Half year 30 March
2024 2023 2024
£'m £'m £'m
Net total (losses)/gains for the period recognised in profit or loss within
'Net IAS 41 valuation movement on biological assets'
(0.7) 10.3 6.4
Net change in unrealised gains for the period recognised in profit or loss
attributable to sucklers, weaners and finished pigs held at the end of the
reporting period 6.3 10.6 6.7
The following table summarises the quantitative information about the
significant unobservable inputs used in the fair value measurements of the
weaners, sucklers and finishers.
Range of inputs
Half year 53 weeks ended Relationship of unobservable inputs to fair value
30 March
Unobservable inputs 2024 2023 2024
Description £ £ £
Sucklers and weaners Suckler price 51.30 - 51.98 51.98 - 55.40 51.98 - 55.40 The higher the market price, the higher the fair value.
Weaner price 60.40 - 61.20 56.70 - 64.69 56.70 - 64.69
Finished pigs Finisher price 175.66 - 203.37 184.61 - 215.19 182.83 - 215.19
If the sensitivities in the table above moved by 10%, the fair value of the
sucklers and weaners as well as finished pigs would move by £3.0m (30 March
2024: £2.8m, 23 September 2023: £3.1m). There is no material impact on the
Group.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities.
Level 2: other techniques for which all inputs which have a significant effect
on the recorded fair value are observable, either directly or indirectly.
Level 3: techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data.
Transfers between levels of the fair value hierarchy are deemed to have
occurred at the end of the reporting period. There were no such transfers of
financial instruments in the period.
The Group's forward currency contracts are measured using Level 2 of the fair
value hierarchy. The valuations are provided by the Group's bankers from their
proprietary valuation models and are based on mid-market levels as at close of
business on the Group's reporting date.
Contingent consideration is measured using Level 3 of the fair value hierarchy
and relates to future amounts payable on acquisitions. Amounts payable are
based on agreements within purchase contracts, management's expectations of
the future profitability of the acquired entity and the timings of payments.
The Group's biological assets are measured using Level 2 and Level 3 of the
fair value hierarchy.
Quoted (unadjusted) prices in an active market are not available for sucklers
and weaners. The Group's valuation model for sucklers and weaners
is therefore a function of the UK Standard Pig Price (SPP) for finished pigs
since historic data suggests that prices for sucklers, weaners and finished
pigs were strongly correlated. The derived prices for sucklers and weaners are
then adjusted to reflect the growth of the pigs through a straight line
interpolation based on age, to provide a value for the pigs at a particular
stage of growth. As suckler and weaner prices are not observable in the
market, management concludes that these prices fall within Level 3 of the fair
value hierarchy.
The Group's valuation model for finished pigs utilises quoted (unadjusted)
prices in an active market: the UK Standard Pig Price (SPP). The prices are
then adjusted to reflect the growth of the animals through straight-line
interpolation between weaner to finished pig to provide a value for the pigs
at a particular stage of growth. As the weaner price used in the
straight-line interpolation for finished pigs is not observable in the market,
management concludes that these prices fall within Level 3 of the fair value
hierarchy.
The valuation for broiler birds uses recent transaction prices at various
stages of development. The prices are then adjusted to reflect the growth
of the birds through interpolation between the transaction prices. The
valuation of breeder chickens is based on recent transactions for similar
assets and therefore it is classified as Level 2 in the fair value hierarchy.
The valuation of sows, boars and breeder chickens is based on recent
transactions for similar assets and therefore is also classified as Level 2 in
the fair value hierarchy.
The main assumptions used in relation to the valuation are growth and
mortality rates of chickens and a price for sucklers and weaners.
11. Analysis of Group net debt
At Acquired on acquisition Cash Other non-cash changes At
30 March flow 28 September
2024 2024
£'m £'m £'m £'m £'m
Cash and cash equivalents 27.0 0.2 (18.8) - 8.4
Revolving credit facility (27.1) - 18.0 (0.2) (9.3)
Net debt excluding IFRS 16 lease liabilities (0.1) 0.2 (0.8) (0.2) (0.9)
Lease liabilities (99.3) - 10.3 (17.6) (106.6)
Total net debt (99.4) 0.2 9.5 (17.8) (107.5)
Net debt is defined as cash and cash equivalents and loans receivable less
interest-bearing liabilities (including IFRS 16 lease liabilities) net of
unamortised issue costs of £0.7m.
The Group acquired £0.2m cash and cash equivalents as part of the Piggy Green
Limited and Fornham Pigs Limited acquisition.
Cash and cash equivalents and bank overdrafts are presented on a net (offset)
basis. The Group's bank arrangements and facilities provide the legally
enforceable right to offset and the Group demonstrated its intention to offset
by sweeping balances regularly throughout the year. Consequently, the balances
have been offset in the financial statements.
12. Related party transactions
During the period the Group entered into transactions, in the ordinary course
of business, with its subsidiaries and joint venture which are related
parties. Balances and transactions with subsidiaries are eliminated on
consolidation.
13. Property, plant and equipment, right-of-use assets and capital
expenditure commitments
Additions to owned property, plant and equipment during the period totalled
£48.4m (2023: £40.5m). Future capital expenditure under contract at 28
September 2024 was £47.5m (2023: £18.5m).
Additions to right-of-use assets in the period totalled £18.7m (2023:
£13.8m). At 28 September 2024, the Group had no signed leases for
right-of-use assets which commence after the balance sheet date (2023: £nil).
14. Impairment of non-current assets
No impairment of goodwill or intangible assets were recognised in the 26 weeks
ended 28 September 2024 (2023: £nil). The Group reviewed both internal and
external sources of information and concluded that there are no indicators of
impairment during the 26 weeks to 28 September 2024, hence no impairment loss
was recognised in the period.
There were no impairment losses in the period (2023: £nil) with respect to
investments in joint ventures.
15. 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 and amortisation of intangible assets and, where relevant,
profit on sale of a business and impairment charges. Free cash flow is
defined as net cash from operating activities less net interest paid and
like-for-like revenue excludes the current year contribution from current and
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 other intangible assets) 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
53 weeks ended
Half year 30 March
2024 2023 2024
£'m £'m £'m
Revenue 1,329.9 1,253.7 2,599.3
Elsham Linc Limited (0.6) - -
Froch Foods Limited (3.5) - -
Like-for-like revenue 1,325.8 1,253.7 2,599.3
Adjusted gross profit
53 weeks ended
Half year 30 March
2024 2023 2024
£'m £'m £'m
Gross profit 200.0 184.3 376.9
Net IAS 41 valuation movement on biological assets 3.4 (7.7) (2.2)
Adjusted gross profit 203.4 176.6 374.7
Adjusted Group operating profit and adjusted EBITDA
53 weeks ended
Half year 30 March
2024 2023 2024
£'m £'m £'m
Group operating profit 94.0 90.8 166.9
Net IAS 41 valuation movement on biological assets 3.4 (7.7) (2.2)
Amortisation of intangible assets 2.2 2.4 5.0
Impairment of intangible assets - - 15.4
Adjusted Group operating profit 99.6 85.5 185.1
Depreciation of plant, property and equipment 34.0 30.1 65.5
Depreciation of right-of-use assets 8.8 7.7 16.2
Adjusted EBITDA 142.4 123.3 266.8
Adjusted profit before tax
53 weeks ended
Half year 30 March
2024 2023 2024
£'m £'m £'m
Profit before tax 90.2 86.9 158.4
Net IAS 41 valuation movement on biological assets 3.4 (7.7) (2.2)
Amortisation of intangible assets 2.2 2.4 5.0
Impairment of intangible assets - - 15.4
Adjusted profit before tax 95.8 81.6 176.6
Adjusted earnings per share
On adjusted profit for the period: Half year 53 weeks ended
30 March
2024 2024 2023 2023 2024 2024
Basic pence Diluted pence Basic pence Diluted pence Basic pence Diluted pence
On profit for the period 124.0 123.4 119.5 119.1 210.4 209.7
Net IAS 41 valuation movement on biological assets 6.4 6.4 (14.3) (14.2) (4.2) (4.1)
Tax on net IAS 41 valuation movement on biological assets (1.6) (1.6) 3.6 3.6 1.0 1.0
Amortisation of intangible assets 4.4 4.4 4.5 4.5 9.4 9.3
Tax on amortisation of intangible assets (1.1) (1.1) (1.1) (1.1) (2.3) (2.3)
Impairment of goodwill - - - - 28.0 27.9
Impairment of intangible assets - - - - 0.6 0.6
Tax on impairment of intangible assets - - - - (0.1) (0.1)
On adjusted profit for the period 132.1 131.5 112.2 111.9 242.8 242.0
Free cash flow
53 weeks ended
Half year 30 March
2024 2023 2024
£'m £'m £'m
Net cash from operating activities 106.6 80.3 228.4
Net interest paid (1.2) (2.0) (5.0)
Free cash flow 105.4 78.3 223.4
Free cash conversion
53 weeks ended
Half year 30 March
2024 2023 2024
£'m £'m £'m
Free cash flow 105.4 78.3 223.4
Non-growth capital expenditure (13.2) (10.9) (22.1)
Net IAS 41 valuation movement on biological assets (3.4) 7.7 2.2
Payment of lease capital (7.9) (7.1) (14.2)
Payment of lease interest (2.4) (1.5) (3.6)
78.5 66.5 185.7
Adjusted profit after tax 70.8 60.3 130.5
Free cash conversion 110.9% 110.4% 142.3%
Return on capital employed
53 weeks ended
Half year 30 March
2024 2023 2024
£'m £'m £'m
Average opening and closing net assets 909.2 835.5 877.2
Average opening and closing net debt 124.7 139.2 100.4
Average opening and closing pension surplus (0.2) (2.2) (0.2)
Average opening and closing deferred tax 29.4 25.1 24.6
1,063.1 997.6 1,002.0
Adjusted Group operating profit 199.2 163.6 185.1
Return on capital employed 18.7% 16.4% 18.5%
Return on capital employed over a 12 month period is a key performance
indicator for the Group and is defined as adjusted operating profit divided by
the sum of average opening and closing net assets, net debt/(funds), pension
liability/(surplus) and deferred tax.
16. Principal risks and uncertainties
The Group continues to have a structured and mature approach to risk
management to ensure a systematic and planned method for identifying,
assessing, prioritising, mitigating, and monitoring risks is in place across
the business. In recent years, the successful implementation of a Risk
Management IT System has led to improvements in the quality and integrity of
reported risk information and importantly the ability to respond promptly to
existing and emerging risks. Going forward, the Group will continue to focus
on enhancing risk management arrangements specifically to give greater
simplicity and effectiveness to our reporting processes and options to create
greater interconnectivity of risks across different areas of the business.
The principal risks and uncertainties facing the Group are set out in detail
on pages 68 to 72 of the Annual Report and Accounts for the 53 weeks ended 30
March 2024, dated 21 May 2024, a copy of which is available on the Group's
website.
Following a detailed review of the Group's principal risks, the competitor
activity principal risk has now been amalgamated into the reliance on key
customers and exports principal risk due to being comparable in nature with
similar existing controls and mitigations.
The Board therefore considers the principal risks and uncertainties at 28
September 2024 to be as follows:
- Reliance on key customers and exports - Labour availability and cost
- Disease and infection within livestock - Growth and change
- Consumer demand - Pig meat availability and price
- Recruitment and retention of key personnel - Health and Safety
- Climate change - Interest rate, currency, liquidity and credit risk
- Food scares and product contamination - IT systems and cyber security
- Disruption to Group operations - Adverse media attention
In common with other UK businesses, the Group has seen volatility within
existing risks caused by external issues including the ongoing conflicts in
Ukraine and the Middle East, the cost of living crisis and broader economic,
geopolitical and supply chain uncertainties.
As previously reported, disease in livestock continues to present a
significant risk to the Group and we remain acutely aware of the impact an
African Swine Fever (ASF) outbreak would have on the UK pig industry and
specifically our ability to continue exporting. The spread of ASF continues to
be closely monitored by the Group, and over recent months we have worked with
the Department for Environment, Food and Rural Affairs (DEFRA) regarding ASF
outbreak simulation planning. Across all Cranswick farms, robust bio-security
protocols continue to be strictly in place and enforced.
Independent review report to Cranswick plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Cranswick plc's condensed consolidated interim financial
statements (the "interim financial statements") in the interim results of
Cranswick plc for the 26 week period ended 28 September 2024 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Group balance sheet as at 28 September 2024;
· the Group income statement and Group statement of comprehensive
income for the period then ended;
· the Group statement of cash flows for the period then ended;
· the Group statement of changes in equity for the period then ended;
and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results of Cranswick
plc have been prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the interim results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The interim results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the interim results, including the
interim financial statements, the directors are responsible for assessing the
group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the interim results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Leeds
26 November 2024
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