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Cranswick record capital expenditure of £101m to provide platform for continued growth

Cranswick plc (LON:CWK), a leading UK food producer, today announces its audited preliminary results for the 52 weeks ended 28 March 2020.

COVID-19 update:

  • Proactive and comprehensive COVID-19 action plan centred on keeping our colleagues safe, feeding the nation and supporting our local communities:

– Introduction of enhanced protective measures for our colleagues including provision of visors, screens in production   areas, social distancing protocols and new working patterns

– A £500 bonus payable to each of our site based colleagues to recognise their essential key worker status and valued   contribution throughout the pandemic

– Working closely with our customers to ensure the continued supply of essential food products

– Community support including making and providing sandwiches to front line NHS staff, giving food hampers to the   elderly and vulnerable and making donations to local charities

  • Strong financial position and trading has enabled us to continue operating well within banking covenants and without recourse to any Government assistance

Commercial and strategic progress:

  • Strong revenue growth and earnings momentum
  • Commissioning of new world-class primary poultry facility in Eye, Suffolk completed as planned in Q3, with successful ramp-up phase in Q4
  • Total export revenue up 92% including Far East export revenue 122% ahead
  • Record capital expenditure of £101m to provide platform for continued growth
  • Continuation of substantial investment in farming operations, including acquisitions of Packington Pork and White Rose Farms in H2, delivering further vertical integration
  • Acquisition of Katsouris Brothers in H1
  • Strong progress towards meeting our ‘Second Nature’ sustainability targets

Financial highlights*:

 2020 2019 Change (Reported)Change (Like-for-like†)
     
Revenue£1,667.2m£1,437.1m+16.0%+13.0%
Adjusted Group operating profit£105.1m£92.3m+13.9% 
Adjusted Group operating margin6.3%6.4%-12bps 
Adjusted profit before tax£102.3m£92.0m+11.2% 
Adjusted earnings per share156.4p144.3p+8.4% 
  • Statutory profit before tax 20.2% higher at £104.0m (2019: £86.5m)
  • Statutory earnings per share up 17.4%  to 159.1p (2019: 135.5p)
  • Full year dividend increased by 8.1% to 60.4p (2019: 55.9p), reflecting 30 years of unbroken dividend growth
  • Return on capital employed of 16.2% (2019: 18.4%), mainly reflecting Eye poultry facility growth capex
  • Net debt of £146.9m, including £65.9m from first time adoption of IFRS 16: ‘Leases’ (2019: Net funds £6.3m)
  • Robust balance sheet with £200m of bank facilities providing over £100m of headroom

Adam Couch, Cranswick’s Chief Executive Officer, commented:

“We continue to experience and operate in the most challenging of periods. Our business is founded on our people and I would like to thank all our colleagues for their professionalism, commitment, dedication and passion.  We will continue to support all Cranswick colleagues and their families who have been affected by COVID-19.

“To recognise the outstanding contribution of our people we announced in April that we will pay a £500 bonus to each of our site-based colleagues at the end of June.  We have also supported local communities through a number of initiatives including making and delivering sandwiches and sausage rolls to front line NHS staff, giving food hampers to the elderly and the vulnerable in our communities and care homes, as well as supporting local charities.

“The last 12 months has seen us deliver key steps in our diversification strategy with the successful commissioning of our Eye poultry facility and the acquisition of Katsouris Brothers which expands our non-meat activities.  We also completed two further acquisitions to increase our vertical integration in pork.

“We spent a record £101 million across our asset base and this brings the total investment in our infrastructure over the last eight years to more than £400 million.

“The strong growth and strategic progress we have made over the last 12 months has been made possible by the platform we have built and the pipeline we have laid down in recent years.  Our positive momentum is a reflection of the continued investment we make in our infrastructure and the quality and capability of all our colleagues.

“There has been a positive start to trading in the new financial year, though we remain mindful of the uncertainty around the longer-term effects of the COVID-19 crisis and Brexit negotiations.  Nonetheless, our outlook for the current year is unchanged and we have a solid platform from which to continue Cranswick’s successful long-term development.”

*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 references exclude acquisitions in the current year.

‡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 liabilities and deferred tax.  Like-for-like return on capital employed, excluding the impact of adoption of IFRS 16: ‘Leases’, in the current year was 16.9%.

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 Cranswick website.  For the dial-in details please contact Powerscourt on the details below.

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