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9
Report & Accounts
Year ended 31 March
2009
Registered office: Helsinki Road, Sutton Fields, Hull HU7 0YW
Tel. 01482 372000
www.cranswick.co.uk
Cranswick was formed in the 1970s by farmers in East Yorkshire to produce
animal feed. The Company went on to the Stock Market in 1985 and
since that time has evolved into a business that is highly focused on the
food sector. Activities include the supply of fresh pork, gourmet sausages,
charcuterie, cooked meats, sandwiches and traditional dry cured bacon.
This now represents 100 percent of sales as the pet and aquatics business
was sold subsequent to the year end and has been treated as discontinued.
Financial highlights
Turnover
(£m)
606.8
559.2
Profit before tax*
(£m)
Earnings per share*
(pence)
Dividends per share
(pence)
34.7
32.2
53.7
21.7
49.1
19.9
2008 2009
2008 2009
2008 2009
2008 2009
• Turnover from continuing operations up 9 per cent to £607m
• Profit before tax from continuing operations up 8 per cent at £34.7m*
•
Increase of 9 per cent in earnings per share from continuing operations to 53.7p*
• Dividend up 9 per cent to 21.7p per share
*Before exceptional items
Contents
Chairman’s statement
Review of activities
Group operating and financial review
Group Directors and business locations
Directors
Directors’ report
Corporate governance statement
Directors’ remuneration report
Corporate social responsibility statement
Statement of Directors’ responsibilities in relation to the financial statements
Report of the auditors to the members of Cranswick plc
Group income statement
Group statement of recognised income and expense
Company statement of recognised income and expense
Group balance sheet
Company balance sheet
Group cash flow statement
Company cash flow statement
Notes to the accounts
Advisers
Shareholder information
Shareholder analysis
Professional awards
Production facilities
3
7
9
16
17
19
25
31
35
37
38
40
41
41
42
43
44
45
46
84
85
86
87
88
Cranswick plc Report & Accounts 2009
1
Cranswick’s record of growth has
continued during the past year
2
Cranswick plc Report & Accounts 2009
Chairman’s statement
Continued development
I am pleased to be reporting to Shareholders
that Cranswick’s record of growth has
continued during the past year.
by Cranswick’s admission to the FTSE 250 during the year
which increases the potential investor base.
Cash generation strong
Total sales increased by 9 per cent to £653 million. In
the prior year sales included almost two months trading
in the animal feed business which was sold in May 2007.
Adjusting for this the underlying increase in sales was 10
per cent. Total profit before tax and exceptional items rose
9 per cent to £36.7 million. The published figures do not
take this form because the pet business, which was sold
subsequent to the March 2009 year end, has been treated
as a discontinued activity in accordance with International
Financial Reporting Standard (IFRS) 5. The pet business
had an encouraging year and sales for the year were 17
per cent ahead at £46.5 million.
Reported sales for the continuing food business increased 9
per cent to £607 million. There were a number of challenges
in the year including inflation, the impact of sterling’s
devaluation and the pressures faced by the consumer as
a result of the difficult economic environment. Sales of
pork products have proved resilient in the face of this not
least because of pork’s competitive pricing by comparison
to other meats. Sales increases were seen across each of
the main food categories.
Profit before tax in the continuing business rose 8 per cent
to £34.7 million from £32.2 million last year. Last year’s
figure is stated prior to the exceptional gain recorded on
asset disposals and the sale of the animal feed business.
Earnings per share rose 9 per cent to 53.7p per share on the
same basis. In my Report to Shareholders last year I drew
attention to rising raw material prices. These were dealt
with either by absorption through efficiency gains, passed
on by way of higher selling prices or by a combination of
both. There has been further inflation during 2009 which
is being handled similarly.
The cash generated from operations was extremely strong
at £53.4 million, up from £40.2 million the previous year.
Working capital reduced by £0.4 million which was pleasing
given the strong growth in sales. Tax, interest and dividend
payments amounted to £21.0 million, and the cash spent
on the purchase of fixed assets, as part of the strategy for
continued growth, was £20.9 million following the £25.3
million spent the previous year. This generated a cash
inflow of £10.9 million, leaving year-end borrowings of
£66.6 million, 40 per cent of shareholders’ funds. Interest
cover improved from 8.4 times to 10.4 times.
In December the Company agreed new bank facilities
for three years. As a result, the Company is well placed
to continue its long-term growth strategy through a
combination of further investment in fixed assets and
acquisitions, as typified by the recently announced
purchase of Bowes of Norfolk Limited, subject to clearance
by the Competition Authorities.
Dividend increased
The Board is proposing an increase in the final dividend of
10 per cent to 14.7p per ordinary share. Along with the
interim dividend of 7.0p per share paid in January 2009
this makes a total for the year of 21.7p per ordinary share,
an increase of 9 per cent on last year’s 19.9p. The final
dividend, if approved by Shareholders, will be paid on 4
September 2009 to Shareholders on the register at the
close of business on 3 July 2009. Shares will go ex-dividend
on 1 July 2009. Shareholders will again have the option to
receive the dividend by way of scrip issue.
Strategy
This has been a successful year for the Company and the
continued development of the business was recognised
The Board’s strategy for the development of the business
has delivered rising profits and strong returns for
Cranswick plc Report & Accounts 2009
3
Cranswick is now fully
focused on the food
business
4
Cranswick plc Report & Accounts 2009
The past year has seen
continued growth for
Cranswick
34.7
31.1
32.7
33.0
21.6
21.2
19.8
17.5
11.7
9.3
7.1
Profit before tax
1990-2009 (£m)
5.0
4.0
3.0
3.1
2.2
2.3
1.7
1.4
0.9
‘90 ‘91
‘92
‘93
‘94
‘95
‘96
‘97
‘98
‘99
‘00
‘01
‘02
‘03
‘04
‘05
‘06
‘07
‘08
‘09
Shareholders. Over the past 10 years compound annual
rates of growth in total sales, profit before tax, earnings
per share and dividends per share have all been well into
double digits.
and has been Finance Director since 1993. The Board would
like to thank John for his invaluable advice and guidance
during a period which saw turnover of the business rise
from £110 million to £653 million, and to wish him well
for the years ahead.
The strategy has been to develop a range of complementary
activities, in growing sectors of the market, emanating
from the Company’s origins in pig feed and pig production.
This has seen the business develop, by way of acquisitions
and organically, a strong presence in the food sector.
The activities in the pet sector evolved from the original
agribusiness activity.
In recent years the original agribusiness activity was sold
and the decision was made last year to focus fully on the
food business. Last month the Board announced the sale
of the pet activities, following a competitive process, to
a management buy-out (MBO) team and that contracts
had been exchanged for the acquisition of the Bowes of
Norfolk pork processing business.
The MBO is headed up by Derek Black, previously main
board director responsible for the pet division, and Paul
West, managing director of Tropical Marine Centre.
Mark Bottomley, Group Financial Controller,
joined
Cranswick in January 2008 and will be appointed Finance
Director on John’s retirement. Mark qualified as a chartered
accountant with Binder Hamlyn and has wide commercial
experience including time spent within the food sector.
Staff
I mentioned earlier in my Statement the challenges that
the business successfully confronted during the year. It
is a tribute to the staff that this was achieved. Around
the Company we have a number of management teams
each of which are strongly supported by their respective
colleagues and on behalf of the Board I thank you all for
your expertise and commitment once again. I would also
like to thank all employees in the pet activity for their
endeavours over the years and wish them enjoyment and
success in the business under its new ownership.
Board changes
Outlook
Derek Black resigned from the Board on completion of
the sale of the pet business. The Board offers its thanks to
Derek for the 29 years of service he gave to the Company,
including 21 years as a Director. Derek’s enthusiasm for
the business initially in the grain trading activity, prior to
its sale, and subsequently in the pet business has been
limitless and we wish him well going forward.
Cranswick has a well invested asset base, is strongly cash
generative, has skilled operational management teams and
is positioned in a number of growth categories of the food
sector. The Company has commenced the new financial
year in line with management expectations and is well
placed to continue its successful development.
John Lindop is retiring at the end of May on reaching the
age of 60 years. John has been with Cranswick for 17 years
Martin Davey
Chairman,
18 May 2009
Cranswick plc Report & Accounts 2009
5
Total external sales grew by
9 per cent to £607 million
6
Cranswick plc Report & Accounts 2009
Review of activities
by the Chief Executive, Bernard Hoggarth
The continued growth in sales is pleasing to report. Total
external sales grew by 9 per cent to £607 million. Internal
sales within the Group have risen and totalled in excess of
£87 million. Internal sales consist predominantly of primal
fresh pork to the further processing sites where it’s used
in the production of cooked meats, sausage and air-dried
bacon. Sales to retail multiple customers and discounters
also grew and these together represent over 82 per cent
of total sales. The balance is divided between food service
and third party food producers.
Raw material inflation was a feature of the year and
dealing with this involved the achievement of improved
operating efficiencies, pricing discussions with customers
or a combination of both. Inflation has resurfaced in
recent months. Demand for British pork is strong and has
been favourably publicised by a number of celebrity chefs
including Jamie Oliver. Coupled with a national pig herd
at relatively low levels, in fact less than half the level of
12 years ago, this has impacted pricing. Inflation has also
been influenced by the weakness of sterling against the
euro resulting in a higher price for pig meat imported into
the UK from traditional sources. Despite this the consumer
continues to find pork an attractive proposition compared
to other proteins such as beef and lamb on both price
and health criteria. There is unlikely to be any significant
change in the pork supply side in the short term given that
the minimum lead time for pig production expansion is
about twelve months.
Cranswick is well known as a quality producer and supplier
of pork based products. The portfolio of products embraces
premium, standard plus, standard and value products and
meets the requirements of the consumer in the current
economic environment. Substantial volumes have been
supplied to customers for ‘round pound’ promotions and
equally encouraging has been the volumes at the premium
end for the ‘stay-in and dine’ consumer. Whether it is a
gourmet meal at home or a value ham pack for sandwiches
it’s in the product range.
The upgraded primary processing plant for fresh pork
referred to previously is due for completion early in 2010.
The investment in the plant will make an industry leading
facility of what is already the largest single site fresh
pork processor in the UK. During the year we successfully
assisted our major pig producers to achieve ‘Freedom
Foods’ accreditation across their production units and the
resulting pork is supplied as part of our range of premium
fresh pork. High welfare standards have been a key feature
in broadening the customer base for fresh pork and
contributed to a rise of 14 per cent in sales.
There has been much focus on developing sales from the
new bacon factory at Sherburn and this has been helped
by the consumer’s increased willingness to buy British. The
customer base has been developed further using a 180 year
old recipe from Richard Woodall’s artisan bacon operation
based in Cumbria. All these products are air-dried and
matured in a similar process to that used for the Jack Scaife
branded bacon, produced at Sherburn. This and the launch of
traditional Wiltshire cured products into customers’ ranges
have all helped to generate sales growth of 14 per cent in
the year with further growth expected. Recent weeks have
seen volumes double those of a year ago.
Growth within cooked meats has been predominantly
within the major grocery retailers and promotional
programmes, including ‘round pound’ offers and the use
of tertiary brands have contributed to a sales increase of 4
per cent. Capacity has been increased during the year and
work is continuing at both the Valley Park and Deeside
sites. During the year the lease ended at the Elland
facility where historically cooked poultry products were
produced. This has now been totally integrated into the
Deeside operation. The freehold of the 7 acre (105,000
sq ft factory) Milton Keynes site was recently acquired,
showing savings over previous lease costs.
Sausage sales were up 8 per cent in the year helped by
increased customer penetration of both the premium
Cranswick plc Report & Accounts 2009
7
Our Premier Deli range of continental
products has been a great success
pre-pack and counter categories with leading retailers
and discounters. ‘Simply Sausage’, which is a Cranswick
brand, achieved listings with two leading grocery retailers
and supply of ‘Weight Watchers’ sausage and ‘The Black
Farmer’ under licence continues, with ‘Weight Watchers’
recently gaining additional listings.
The Sandwich Factory had a difficult year, but remained
profitable. There was significant inflation in input costs
and whilst there was some reduction in volumes during
the second half, sales for the year were 11 per cent ahead
of the previous year. The weakness of sterling had a
negative impact on the cost of tuna, prawns, packaging
and seasonally imported salads, putting pressure on
margins. A more stable pricing environment is anticipated
in the current year, new listings have been achieved and
the focus on efficiency continues.
The product range at Continental Fine Foods is largely
supplied from Europe and the continuing weakness of
sterling meant the business had to deal with raw material
inflation on an ongoing basis. This inevitably leads to
pricing discussions with customers and it is pleasing to
report that in the main the situation was understood and
most have been supportive. During the year a greater
presence was developed in the cheese category with
listings achieved for Italian cheeses. There has been strong
growth in antipasti and olive ranges and our own branded
Premier Deli range of continental packs has been a great
success with its ‘credit crunch’ pricing. Large volumes of
corned beef have also been sold with sole supply in certain
areas. Given the trading environment during the year it is
a credit to the Continental team that sales have continued
to rise, in the last year by an encouraging 12 per cent, and
the history of strong growth has continued.
In summary the teams have had to deal with a number
of challenges, but despite this, record results have been
achieved and all employees must be congratulated. Costs
have been reviewed rigorously and all major expenditure
from packaging to power continues to be monitored. I
feel that with the completion of the Bowes acquisition,
expanding product portfolios, industry leading facilities
and the continued commitment and dedication of
our excellent teams, the business can look forward to
continuing its successful development.
8
Cranswick plc Report & Accounts 2009
Group operating
and financial review
Nature, objectives and strategies
The Group’s business
Business objectives
Following the disposal of the pet activities as referred to
below, the Group’s operations are focused entirely on the
production and supply of food products. The performance
of the individual food operations in the year is discussed
in the Review of activities on pages 7 to 8. The business
operates entirely in the UK, although a small proportion
of sales are exported. It manufactures a range of high
quality, predominantly fresh products including fresh
pork, sausages, bacon and cooked meats for sale to the
high street food retailers. It also supplies a range of pre-
sliced, pre-packaged charcuterie products for sale into
these same customers, together with a range of pre-
packed sandwiches predominantly for sale into food
service outlets. The markets in which the food business
operates are competitive both in terms of pricing from
fellow suppliers and the retail environment in general.
The UK food retail market is known to be amongst the
most competitive in the world. Despite this, Cranswick
has a long record of increasing sales and profits through
a combination of investing in modern efficient factories,
developing a range of quality products and making sound
acquisitions. The businesses are under the control of stable,
experienced and talented operational management teams
supported by a skilled workforce.
Environmental matters
The Directors believes that good environmental practices
support the Board’s strategy by enhancing the reputation
of the Group, the efficiency of production and the quality
of products. The industry is subject to a range of UK
and EU legislation. Environmental standards are being
tightened on a regular basis and require increasing levels
of investment. Compliance imposes costs and prolonged
failure to comply could materially affect the Group’s
ability to operate.
Further information on the Group’s policies on minimising
its environmental impact is given in our Corporate Social
Responsibility Statement on page 35 and 36.
It is the Board’s view that meeting the following business
objectives is key to achieving the financial and non-
financial measures that increase Shareholder value:
•
innovative, quality products
Delivering
customers
Maintaining the highest level of service to our
customers
Improving operational efficiency
Securing employee health and safety
Maximising returns on investment
to our
•
•
•
•
Business strategies
The Group’s market strategy is to focus primarily on the
growing quality end of the markets in which we operate,
to establish meaningful and long-lasting relationships
with our major customers by a combination of product
development and high service levels and to invest in quality
facilities and the latest equipment to enable us to operate
as efficiently as possible. Each operating unit within the
Group is given the responsibility for developing its own
plans to deliver the objectives of the Group with particular
emphasis on growing sales through product innovation and
high service levels, improving operational efficiency and
securing employee health and safety. The role of the Board
in achieving Group objectives is to support operational
management and to identify suitable acquisitions that will
take the Group into new and growing areas of the market,
will open up new customer relationships to the Group or
will consolidate existing market positions.
Business KPIs
The Board has assessed that the following KPIs are the
most effective measures of progress towards achieving the
Group’s objectives. A report on performance against these
KPIs is given on page 10.
•
Organic sales growth – year on year increase in sales
Cranswick plc Report & Accounts 2009
9
revenue excluding the impact of acquisitions and
disposals.
Gross return on sales – gross profit as a percentage of
sales revenue
Net return on sales – operating profit as a percentage
of sales revenue
Free cash flow – cash generated from operations less
tax and interest paid
Maximising returns on investment
•
•
•
•
Current and future development
and performance
Business development and performance
The key features of the year have been the record profit
before tax for the Group and the continuing strong
cash generation from operating activities. The record of
unbroken growth in profits now goes back more than
20 years. The trading environment in which we operate
has remained challenging; in particular we experienced
delays in passing on increases in raw material costs earlier
in the year and sterling’s devaluation against the euro
impacted in the second half, particularly in respect of our
Charcuterie products. We have experienced continuing
competitor pressure although the efficiencies that we are
achieving as we put extra volumes through our factories
have mitigated to some extent against those pressures. In
addition we have made good progress in recovering cost
price increases.
Group revenue
Total Group revenue
Less: Revenue from discontinued
operations
Group revenue from continuing
operations
2009
£m
653.3
2008
£m
598.9
(46.5)
(39.7)
606.8
559.2
The Group’s revenue from continuing operations, which
relates entirely to the Group’s food activities has increased
by 9 per cent. Sales of fresh pork have grown by 14 per
cent, sausages by 8 per cent, bacon by 14 per cent,
cooked meats by 4 per cent, charcuterie by 12 per cent
and sandwiches by 11 per cent. Revenue in the income
statement excludes the activities of the pet business,
since under IFRS the results of discontinued operations are
disclosed as a single line item at the foot of the income
statement.
Profit before tax
2009
£m
2008
£m
Group operating profit
continuing
exceptional items
operations
from
before
Net finance costs
Pre-tax profit from continuing
operations before exceptional
items
Exceptional items
38.4
(3.7)
34.7
-
36.5
(4.3)
32.2
0.8
Profit from continuing operations
before tax
34.7
33.0
The increase in Group operating profit from continuing
operations before exceptional items is entirely attributable
to the growth in both sales and profits in the food activities.
The reduction in net finance costs was as a result of the
strong cash flow and the reduction in UK interest rates
during the year.
Discontinued operations
As reported within the Chairman’s Statement on pages 3 to
5 and in note 9 on pages 59 and 60, during April 2009 the
Board announced that the pet division activities had been
sold, following a competitive process, to a management
buyout (MBO) team. Accordingly the results of the pet
division have been reported as discontinued at 31 March
2009. The pet business produces a range of bird and small
animal food for sale into specialist pet and more general
retail outlets, as well as selling tropical marine fish and
aquatic products largely into specialist retailers both in the
UK and abroad.
In the year ended 31 March 2009, the pet division generated
a profit before tax and impairment of £2,038,000 (2008 -
£2,357,000 after crediting an exceptional profit before tax
of £792,000). Turnover was £46.5 million (2008 - £39.7
million).
The net assets of the pet business which have been
classified as assets held for sale at the year-end were £15.8
million, stated after an impairment charge of £2.5 million
and associated deferred tax credit of £2.0 million.
Performance against KPIs
2009
2008
Organic sales growth (continuing)
Gross return on sales (continuing)
Net return on sales (continuing)
9.2%
14.1%
6.3%
20.4%
13.5%
6.5%
Free cash flow
£41.2m
£25.9m
10
Cranswick plc Report & Accounts 2009
The record of unbroken growth
in profits now goes back more
than 20 years...
Cranswick plc Report & Accounts 2009
11
The Company has seen substantial growth in organic
sales over the past year driven by its expertise in product
development, service levels, quality and value with further
sales growth anticipated in the next twelve months.
During the year the Group had some success in passing on
the impact of rising raw material prices and devaluation
of sterling against the euro and this is reflected in the
gross return on sales. Principal cash flows are discussed on
page 13.
Future development
The decision has been made to focus entirely on the food
activities. In April the Board announced the sale of the
pet activities to a MBO team and that contracts had been
exchanged for the acquisition of the Bowes of Norfolk
pork processing business, subject to clearance by the
competition authorities.
The Group will continue to seek to increase sales through
a combination of product development with existing
customers and business gains with new ones. The standard
of our factories will be maintained at the highest level and
further suitable acquisition opportunities will be pursued.
Resources, risks and relationships
Resources
The Group aims to safeguard the assets that give it
competitive advantage, being its reputation for product
innovation, product quality, food safety and service
levels; its modern well-equipped factories; its operational
management and its skilled workforce.
Reputation
It is the responsibility of local operational management
assisted by their own product development team, Group
Technical and Group Health & Safety to maintain and
where possible enhance the Group’s reputation for product
innovation, product quality, food safety and service levels.
Factories
strategies for retaining staff, including the provision of
competitive terms and conditions and share options. The
Group has had a savings-related share option scheme in
place for over 10 years, which is open to all employees
with 2 years’ service and has proved very successful with
many staff now also Shareholders.
Principal risks and uncertainties
The Group annually carries out a formal exercise to identify
and assess the impact of risks on its businesses and the
exercise has recently been reviewed. The Corporate
Governance Statement on pages 25 to 29 describes more
about the Group’s risk management processes.
The more significant risks and uncertainties faced by the
Group, in line with the rest of the food manufacturing
sector, are identified as customer retention, food scares,
business continuity, environmental matters, raw material
prices, margins and profitability, and competition. These
are discussed in more detail below. The Group’s financial
and treasury risks are discussed on page 14 and in note 22
to the financial statements.
Competition and customer retention – the Company
manages the risk of operating in a consolidated sector by
maintaining strong customer relationships. This process is
supported by delivering high levels of service and quality
and by continued focus on product development and
technical innovation.
Food scares – the risk of food scares is mitigated by
ensuring that all raw materials are traceable to source and
that manufacturing, storage and distribution systems are
continually monitored. Further details on raw material
procurement and traceability are set out in the Corporate
Social Responsibility Statement on pages 35 and 36.
Business continuity – business continuity plans are in place
across the Group’s manufacturing facilities and appropriate
insurance cover is in place to mitigate any financial loss.
Environmental matters – the Company’s environmental
policies are set out in the Corporate Social Responsibility
Statement on pages 35 and 36.
The Group has some of the best-invested, modern facilities
in the industry, having invested £92 million over the past
five years, and it intends to continue investing to ensure
that it maintains its competitive edge.
Raw material prices – further details of the Group’s
exposure to and actions to mitigate raw material price
fluctuations are set out on page 14 of this report.
Employees
The Group aims to recruit, train and retain employees
who are valued for their contribution and able to fulfil
their potential in meeting the business objectives of their
operating unit. The Group companies each have their
Legislation in all the markets we serve changes on a
regular basis, and interpretation of existing laws can also
change to create ever tightening standards, often requiring
additional human resources and the provision of new assets
and systems. We are committed to respond positively to
new regulations and ensure that our views are expressed
during consultation exercises.
12
Cranswick plc Report & Accounts 2009
Relationships
Cash flow
The Board encourages businesses to support
local
community organisations and charities in the locations in
which they operate and this is set out in the Corporate
Social Responsibility Statement on pages 35 and 36.
Financial position
and performance
Exceptional items
The exceptional charge of £6.1 million in 2009 relates to
a one-off exceptional deferred tax charge arising from a
change in UK corporation tax legislation in the Finance
Act 2008 to phase out Industrial Buildings Allowances and
is referred to in more detail below. The exceptional item
in 2008 relates to the profit on sale of the feed milling
business of Cranswick Mill of £1.1 million, less £0.3 million
provided against future rental and reinstatement costs
for an unoccupied leasehold property in Thornaby, North
Yorkshire, both stated before a tax credit of £0.4 million.
Finance costs
Finance costs of £3.7 million (2008 - £4.3 million) were
lower than the previous year reflecting the strong cash
generation in the year and the reduction in UK interest
rates, partially offset by higher margins on the new bank
facilities.
Taxation
An analysis of the tax charge is set out in note 8 to the
financial statements. The tax charge as a percentage of
profit before taxation was 28.7 per cent in the current year
and 29.8 per cent in 2008. The exceptional charge for the
year comprises a one-off exceptional deferred tax charge
of £6.1 million arising from a change in UK corporation tax
legislation in the Finance Act 2008 to phase out Industrial
Buildings Allowances. This charge had no impact on the
cash flow of the business during the year and represents
the additional tax payable over the twenty five year period
the allowances would have been available to the Group.
The standard rate of UK Corporation Tax was 28 per cent
for 2009 and 30 per cent in 2008. In addition the Group
benefits from tax amounts taken directly to equity and
included in the Group Statement of Recognised Income
and Expense.
Earnings per share
Cash generated from operating activities was ahead of
the previous year at £44.8 million (2008 - £31.2 million)
of cash and cash equivalents. The net cash outflow
from investing activities of £20.7 million reflects capital
additions of £20.9 million less fixed asset sales proceeds
of £0.2 million. The previous year’s outflow was £20.6
million and comprised capital additions of £25.3 million
less fixed asset sales proceeds of £4.7 million. The £24.4
million of net cash used in financing activities in 2009 is
largely due to interest paid of £3.6 million, dividends paid
of £8.8 million, issue costs of long term borrowings of £1.3
million and net repayment of borrowings of £11.2 million.
The prior year cash outflow from financing of £17.8 million
was largely due to interest paid of £5.3 million, dividends
paid of £7.7 million and repayment of borrowings of £5.4
million. The overall result is a net decrease in cash and cash
equivalents of £0.3 million (2008 - £7.2 million). Net debt
reduced by £11.8 million to £66.6 million (2008 - £78.4
million).
Capital structure
The primary objective of the Group’s capital management
is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its business and
maximise Shareholder value.
The Group regards its Shareholders’ equity as its capital and
manages its capital structure and makes adjustments to it
in light of changes in economic conditions. To maintain
or adjust the capital structure, the Group may adjust
the dividend payment to Shareholders, return capital to
Shareholders or issue new shares. No changes were made
in the objectives, policies or processes during the years
ended 31 March 2009 and 31 March 2008.
The Group’s capital structure is as follows:
Net debt (note 26)
Cranswick
equity
plc
Shareholders’
Capital employed
2009
£m
66.6
166.5
233.1
2008
£m
78.4
155.3
233.7
More details about the Group’s capital structure are set
out in Note 22 Financial Instruments.
Distributions, capital raising
and share repurchases
Basic earnings per share (before exceptional items)
from continuing operations increased by 9 per cent to
53.7 pence. The average number of shares in issue was
46,099,000 (2008 – 45,832,000).
Details of dividends paid and proposed during the year are
given in the Directors’ Report on page 19. The proposed final
dividend for 2009 together with the interim paid in January
2009 amount to 21.7 pence per share which is 9 per cent
Cranswick plc Report & Accounts 2009
13
higher than the previous year. The increase in the share capital
of the Group comprises 125,168 of share options exercised
during the year and 109,299 in respect of scrip dividends.
There were no share repurchases during the year.
Treasury policies
Functional currency
The functional currency of all Group undertakings is
sterling.
Foreign currency risk
The major foreign exchange risk facing the Group is in the
purchasing of charcuterie products. The major currency
involved is the euro. The policy of the Group is to seek
to mitigate the impact of this risk by taking out forward
contracts with UK banks for up to 12 months ahead and
for amounts that commence at approximately 25 per cent
of the requirement and move progressively towards full
cover. At least 2 members of the main Board attend the
monthly meetings of the subsidiary Board at which the
key decisions on currency cover are taken.
Interest rate risk
The Main Board re-set the policy on interest rate risk
following the renegotiation of the Group’s credit facility
in December 2008. The Group’s policy is to manage its
cost of borrowing using a mix of fixed and variable rate
debt. Whilst fixed rate interest bearing debt is not exposed
to cash flow interest rate risk, there is no opportunity
for the Group to enjoy a reduction in borrowing costs in
markets where rates are falling. In addition, the fair value
risk inherent in fixed rate borrowing means that the Group
is exposed to unplanned costs should debt be restructured
or repaid early as part of the liquidity management
process. In contrast, whilst floating rate borrowings are not
exposed to changes in fair value, the Group is exposed to
cash flow risk as costs increase if market rates rise. Cover
was implemented by taking out an interest rate swap
agreement with three UK banks on the amortising portion
(£35 million) of the medium term loan drawn down when
the Group replaced its existing credit facilities during the
year. This is being repaid at the rate of £2.5 million every
3 months from March 2009 to September 2011, with the
balance of £7.5 million repayable in December 2011. In
addition the Group has an existing interest rate swap which
was taken out against the Group’s previous facilities and
is due to expire in September 2009. The hedging policy is
reviewed from time to time as circumstances change. The
monitoring of interest rate risk is handled entirely at head
office, based on the monthly consolidation of cash flow
projections and the daily borrowings position.
Credit risk
Practically all sales are made on credit terms, the majority
of which are to the major UK food retailers. Overdue
accounts are reviewed at the monthly Board meetings of
the operations. The incidence of bad debts is low. Every
attempt is made to resist advance payments for goods and
services; where this proves impossible, arrangements are
put in place, where practical, to guarantee the repayment
of the monies in the event of default. For all major
customers, credit terms are agreed by negotiation and for
all other customers, credit terms are set by reference to
external credit agencies.
Liquidity risk
The Group has historically been very cash generative. The
bank position for each operation is monitored on a daily
basis and capital expenditure is approved at the monthly
Board meeting of each operation at which at least two
members of the main Board are present and reported
at the subsequent monthly main Board meeting. Major
projects are approved by the main Board. Each operation
has access to the Group’s overdraft facility and all term
debt is arranged centrally. The Group replaced its existing
bank credit facilities during the year. The facilities currently
available to the Group are a term loan of £35.0 million
(£15.0 million of which has been drawn down to date)
repayable in December 2011, an amortising loan facility
of £35.0 million repayable in eleven quarterly instalments
of £2.5 million, with a final repayment of £7.5 million in
December 2011, a revolving credit facility of £30.0 million
and an overdraft facility of £20.0 million. Unutilised
facilities at 31 March 2009 were £48.6 million (2008 -
£14.3 million).
Price risk
The major exposure the Group has to raw material price
fluctuations is pig meat, part of which is as a result of
currency movements. The Group does not seek to hedge
against pig price movements because of the downside risk.
Further details of the Group’s financial instruments are
disclosed in note 22 to the accounts.
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 Review of activities on pages 7
and 8. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described
above, as are the Group’s objectives, policies and processes
for managing its capital; its financial risk management
14
Cranswick plc Report & Accounts 2009
objectives; details of its financial instruments and hedging
activities; and its exposure to credit risk and liquidity risk.
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
risk successfully despite the current uncertain economic
outlook.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to
continue in operational existence for the foreseeable
future. For this reason, they continue to adopt the going
concern basis in preparing the financial statements.
On behalf of the Board
John Lindop
Finance Director,
18 May 2009
Cranswick plc Report & Accounts 2009
15
SHERBURN
IN ELMET
MANCHESTER
KINGSTON-UPON-HULL
BARNSLEY
DEESIDE
DENBIGH
ATHERSTONE
MILTON KEYNES
Group Directors &
Business Locations
Cooked Meats
Nick Tranfield
Paul Gartside
Andy Jenkins
Clive Stephens
Fresh Pork
Neil Willis
Bacon
Bill Crossland
Sausages
Linda Watkin
Daniel Nolan
Sandwiches
Tony Cleaver
Paul Nicholson
Simon Ravenscroft
Nick Anderson
Charcuterie
Rollo Thompson
Food Central
Jim Brisby
Malcolm Windeatt
Andrew Caines
16
Cranswick plc Report & Accounts 2009
Directors
Executive Directors
Non-Executive Directors
Martin Davey, Chairman +
Martin qualified as a chartered accountant with Pannell
Kerr Forster. He joined Cranswick and became Finance
Director in 1985. He was appointed Chief Executive in
1988 and became Executive Chairman on 26 July 2004.
Between 5 April 2004 and 5 December 2008 Martin was
a Non-Executive Director of Thorntons plc, on which he
spent one day per month. All fees receivable were paid to
the Company.
John Lindop, Finance
John qualified as a chartered accountant with Robson
Rhodes’ London office. He spent ten years with Northern
Foods plc where he was latterly Group Financial Controller
and Company Secretary. In 1992 he joined Cranswick as
Company Secretary and was appointed to the Board as
Finance Director in 1993. Since 23 March 2007 John has
been a Non-Executive Director of Black Sheep Brewery
plc, on which he spends one day per month. All fees
receivable are paid to the Company. John will retire from
the Company on 31 May 2009.
Bernard Hoggarth, Chief Executive
Bernard holds a National Diploma in Agriculture from the
Norfolk College of Agriculture. He joined Cranswick in
1978, focusing on the agribusiness activity before becoming
involved in the development of the food manufacturing
business during the 1990s. He was appointed a Director in
1988 and Chief Executive of Food in 2004.
Adam Couch
Adam joined Cranswick in 1991 as a management trainee
from Hull University, where he graduated in accountancy.
Adam was appointed a Director in 2003 and is Managing
Director of the Fresh Pork operations.
John Worby +† *
John is a chartered accountant with many years experience
in the food industry. John is currently Group Finance
Director of Genus plc having previously worked for Uniq
plc (formerly Unigate PLC) from 1978 until 2002, in
various roles including Group Finance Director and Deputy
Chairman. He was appointed a Non-Executive Director of
Cranswick plc on 1 August 2005 and is Senior Independent
Director and Chairman of the Audit Committee. John is
also a non executive director of Smiths News plc.
Patrick Farnsworth +† *
Patrick has many years experience in the food industry,
having worked for William Jackson & Son Limited, a Hull-
based private company, since 1965, where he was Joint
Group Managing Director from 1995 until his retirement
in 2005. He was appointed a Non-Executive Director
of Cranswick plc on 1 August 2004 and was the senior
independent Director until 1 August 2005. In April 2009
Patrick was elected as the High Sheriff of the East Riding
of Yorkshire, an appointment that will last for twelve
months.
* Member of Remuneration Committee
† Member of Audit Committee
+ Member of Nomination Committee
Cranswick plc Report & Accounts 2009
17
18
Cranswick plc Report & Accounts 2009
Directors’ report
The Directors submit their report and the audited
accounts of the Group for the year ended 31 March
2009.
Principal activities, business review and
future developments
The Group’s activities during the year were focused in the
food and pet sectors. A review of the business and future
development of the Group and a discussion of the principal
risks and uncertainties faced by the Group is presented in
the Chairman’s Statement and Review of Activities on
pages 3 to 8 and in the Group Operating and Financial
Review on pages 9 to 15.
Results and dividends
The profit on ordinary activities before taxation from
continuing operations was £34.7 million (2008 - £33.0
million). After a taxation charge of £16.0 million (2008 -
£9.2 million), the profit for the year is £19.0 million (2008
- £25.7 million). An interim dividend of 7.0 pence per
ordinary share was paid on 23 January 2009. The Directors
recommend the payment of a final dividend for the year,
which is not reflected in these accounts, of 14.7 pence per
ordinary share which, together with the interim dividend,
represents 21.7 pence per ordinary share, totalling £10.0
million (2008 - 19.9 pence per ordinary share, totalling
£9.2 million). Subject to approval at the Annual General
Meeting, the final dividend will be paid in cash or scrip
form on 4 September 2009 to members on the register
at the close of business on 3 July 2009. The shares will go
ex-dividend on 1 July 2009.
Financial instruments
The Group’s risk management objectives and policy are
discussed in the Treasury Policies section of the Group
Operating and Financial Review on page 14.
Directors and their interests
The appointment and removal of a Director is governed
by the Articles of Association and within the Terms of the
Nomination Committee. The Directors of the Company
currently in office are as stated on page 17. Each of the
Directors served for the whole of the year under review
together with Derek Black who resigned as a director on
24 April 2009 following the disposal of the Pet Division.
Adam Couch and John Worby retire in accordance with
the Articles of Association and, being eligible, each offers
himself for re-election. John Lindop will retire as a director
on 31 May 2009 and Mark Bottomley, the current group
financial controller, has been appointed by the Board as his
replacement with effect from 1 June 2009. Mark will stand
for election at the Annual General Meeting.
Details of the Directors’ beneficial interests in the ordinary
share capital of the Company are included in the Directors’
Remuneration Report on pages 31 to 34.
Major Shareholders
The Company has been informed of the following interests
at 8 May 2009 in the 46,464,612 ordinary shares of the
Company:
AMVESCAP PLC
Number of
Shares
13,439,679
% of issued
share capital
28.92
Legal & General
Investment Management
2,849,953
Jupiter Asset Management
2,423,691
JP Morgan Asset
Management
2,041,798
6.13
5.22
4.39
Cranswick plc Report & Accounts 2009
19
20
Cranswick plc Report & Accounts 2009
Share capital structure
The Company has one class of shares, being ordinary
shares of 10p each. The authorised, allotted and fully paid
up share capital is shown in note 23. There are no special
rights pertaining to any of the shares in issue.
The Directors of Cranswick plc have received limited
authority to disapply Shareholders pre-emption rights in
certain circumstances, to authorise the Company to buy
back a proportion of the Company’s share capital and to
allow the Directors to allot shares. Further resolutions will
be placed before the Annual General Meeting to renew
these powers.
At the last Annual General Meeting the Directors received
authority from the shareholders to:
Allot Shares – this gives Directors the authority to allot
authorised but unissued shares and it is to maintain
the flexibility in respect of the Company’s financing
arrangements. The nominal value of ordinary shares
which the Directors may allot in the period up to the next
Annual General Meeting is limited to £1,540,934 which
represents approximately 33 per cent of the issued share
capital (excluding treasury shares) as at 23 May 2008. The
Directors do not have any present intention of exercising
this authority other than in connection with the issue of
ordinary shares in respect of the dividend offer and the
Company’s share option plans. This authority will expire
on the commencement of the Annual General Meeting
to be held on 27 July 2009.
Disapplication of rights of pre-emption – this
disapplies rights of pre-emption on the allotment of
shares by the Company and the sale by the Company of
treasury shares. The authority will allow the Directors to
allot equity securities for cash, and to sell treasury shares
for cash, on a pro rata basis to existing shareholders
and otherwise on a pro rata basis up to an aggregate
nominal amount of £231,163, representing 5 per cent
of the Company’s issued share capital as at 23 May
2008. Listed Companies that purchase their own shares
are able to hold shares in treasury for subsequent sale,
rather than to cancel them immediately. This authority
will expire on the commencement of the Annual General
Meeting to be held on 27 July 2009.
To buy own shares – the authority allows the Company
to buy its own shares in the market, as permitted under
Article 6 of the Articles of Association of the Company,
up to a limit of 10 per cent of the Company’s issued
share capital. The price to be paid for any share must
not be less than 10p, being the nominal value of a
share, and must not exceed 105 per cent of the average
middle market quotations for the ordinary shares of the
Company as derived from the London Stock Exchange
Daily Official List for the 5 business days immediately
preceding the day on which the ordinary shares are
purchased. The Directors have no immediate plans to
exercise the powers of the Company to purchase its own
shares and undertake that the authority would only be
exercised if the Directors were satisfied that a purchase
would result in an increase in expected earnings per share
and was in the best interests of the Company at the
time. This authority will expire on the commencement of
the Annual General Meeting to be held on 27 July 2009.
The Company is not aware of any agreements between
shareholders that may result in restrictions on the transfer
of securities and for voting rights.
There are no restrictions on the transfer of ordinary shares
in the Company other than where certain restrictions may
apply from time to time, on the Board of Directors and
other senior executive staff, which is imposed by laws and
regulations relating to insider trading laws and market
requirements relating to close periods.
Events since the balance sheet date
As notified to shareholders on 6 April 2009 Cranswick has
exchanged contracts to acquire the whole of the issued
share capital of Bowes of Norfolk Limited, a pork processing
business based in Norfolk, for a cash consideration of £17.2
million. The completion of the transaction is conditional
upon clearance from the UK Competition Authorities
which at this moment in time is ongoing.
On 24 April 2009 the Pet Division was sold to the
management team, headed up by Derek Black, for a
consideration of £17.0 million. There is a mechanism
in place to normalise working capital through a cash
adjustment. Cranswick plc will retain a 5.5 per cent share
in the business going forward. Derek Black resigned as a
main Board Director on that day.
Employment policies
The Group’s policy on employee involvement is to adopt
an open management style, thereby encouraging informal
consultation at all levels about aspects of the Group’s
operations. Employees participate directly in the success
of the business by participation in the SAYE share option
schemes.
Employment policies are designed to provide equal
opportunities irrespective of colour, ethnic or natural
origin, nationality, sex, religion, marital or disabled status.
Full consideration is given to applications for employment
by and the continuing employment, training and career
development of disabled people.
Cranswick plc Report & Accounts 2009
21
Payment policy
The Group and the Company do not have a formal policy
that they follow with regard to payment to suppliers.
Payment terms are agreed with each supplier and every
endeavour is made to adhere to the agreed terms. The
average credit terms for the continuing Group, based on
the year-end trade creditors figure and a 365 day year, are
40 days. The average credit taken by our customers on a
similar basis is 33 days.
Auditors
Ernst & Young LLP, having been reappointed during the
year, have expressed their willingness to continue in office
and a resolution proposing their re-appointment will be
submitted at the Annual General Meeting.
Directors’ statement as to disclosure of
information to auditors
The Directors who were members of the Board at the
time of approving the Directors’ Report are listed on page
17. Having made enquiries of fellow Directors and of the
Company’s auditors, each of these Directors confirm
that:
•
•
to the best of each Director’s knowledge and belief,
there is no information relevant to the preparation
of their report of which the Company’s auditors are
unaware; and
each Director has taken all the steps a Director might
reasonably be expected to have taken to be aware of
relevant audit information and to establish that the
Company’s auditors are aware of that information.
22
Cranswick plc Report & Accounts 2009
Change of control
Articles of Association
There are no agreements that the Company considers
significant and to which the Company is party to, that
would take effect, alter or terminate upon change of
control of the Company following a takeover bid other
than the following:
•
The Company is party to a number of banking
agreements which upon a change of control of the
Company are terminable by the bank upon the
provision of 10 working days notice, and
There are no agreements between the Company and
its directors or employees providing for compensation
for loss of office or employment (whether through
resignation, purported redundancy or otherwise)
that occurs because of a takeover bid other than as
stated in the Directors Remuneration Report relating
to Martin Davey, Derek Black, Bernard Hoggarth and
John Lindop.
•
Long Term Incentive Plan
In the event of a general offer being made to acquire
part or all of the issued share capital of the Company as
a result of which the offeror may acquire control of the
Company, award holders under the Cranswick plc Long
Term Incentive Plan (“LTIP”) will have an opportunity to
exercise their awards either:
(a) immediately before the time at which the change
of control of the Company occurs or any condition
subject to which the offer is made has been satisfied
(“Take-over Date”) but conditional on the Take-over
Date occurring, if the Remuneration Committee issues
a written notice in advance of the Take-over Date to
award holders; or
(b) at any time within 6 months following the Take-over
Date, in any other case.
In the event that the Court sanctions a scheme
of arrangement under Part 26 of the Companies
Act 2006 in connection with a scheme for the Company’s
reconstruction or amalgamation with another company,
award holders under the LTIP may exercise their awards
during the six month period commencing on the date
upon which the scheme of arrangement is sanctioned
by the Court. The LTIP also contains provisions enabling
award holders to exercise their awards if a person becomes
entitled to issue a compulsory acquisition notice under
the provisions relating to the compulsory acquisition of a
company set out in the Companies Act 2006. The period
allowed for exercise in these circumstances is any time up
to the seventh day before the final day upon which that
person remains entitled to serve such a notice.
In each case, the extent to which awards are capable of
exercise depends on the extent to which the performance
targets (as adjusted or amended) have been satisfied.
The Company’s Articles of Association may only be
amended by a special resolution at a general meeting of
the shareholders.
Annual General Meeting and Special
Business to be transacted at the Annual
General Meeting
The notice convening the Annual General Meeting can be
found in the separate Notice of Annual General Meeting
accompanying this Report and Accounts.
Details of the Special Business to be transacted at the
Annual General Meeting are contained in the separate
letter from the Chairman which also accompanies this
Report and Accounts, and covers the Directors’ authority
to allot shares, the partial disapplication of pre-emption
rights and the authority for the Company to buy its own
shares.
By order of the Board
Malcolm Windeatt
Company Secretary,
18 May 2009
Cranswick plc Report & Accounts 2009
23
24
Cranswick plc Report & Accounts 2009
Corporate governance
statement
Statement by the Directors on
compliance with the provisions
of the Combined Code
Principles of good governance
The Board is committed to high standards of corporate
governance. The adoption and maintenance of good
governance is the responsibility of the Board as a whole.
This report, together with the Directors’ Remuneration
Report on pages 31 to 34, describes how the Board applies
the principles of good governance and best practice as set
out in the Combined Code on Corporate Governance (the
“Combined Code”). A statement of compliance with the
Combined Code can be found at the end of this report.
The Board
During the year ended 31 March 2009 the Board consisted
of an Executive Chairman, two Chief Executives, two
other Executive Directors and two Non-Executives who
are deemed to be independent. The Combined Code
recommends that a group the size of Cranswick should
have at least two independent Non-Executive Directors.
However, on 22 December 2008 the Company entered the
FTSE 250 index and as a result the code requires the Board
to include more than two independent Non-Executive
Directors. In line with the Code the Company has therefore
been searching for a suitable candidate to increase the
number of independent Non-Executive Directors. The
Board is confident that it has met this requirement of the
Combined Code in full during the year.
The Board meets each month throughout the year to direct
and control the overall strategy and operating performance
of the Group. To enable them to carry out these
responsibilities all Directors have full and timely access
to all relevant information. A formal schedule of matters
reserved for decision by the Board covers key areas of the
Group’s affairs including acquisition and divestment policy,
approval of budgets, major capital expenditure projects,
profit and cash flow performance and general treasury and
risk management policies. During the year responsibility
for the Group’s day-to-day operations was delegated to
the Chief Executives of the two divisions who, supported
by the Executive Directors and Executive management,
implement the Board’s strategy and manage the Group’s
business. Upon appointment, all Directors undertake a
formal introduction to all the Group’s activities and are
also provided with the opportunity for on-going training
to ensure that they are kept up-to-date on changes in
relevant legislation and the general business environment,
including the review of relevant literature and attending
external courses. Procedures are in place for Directors
to seek both independent advice, at the expense of the
Company, and the advice and services of the Company
Secretary in order to fulfil their duties. The Company
Secretary is responsible to the Board for ensuring that
Board procedures are complied with and for advising the
Board, through the Chairman, on all governance matters.
The appointment and removal of the Company Secretary
is determined by the Board as a whole.
The Board has completed a register relating to potential
conflicts of interest with its Directors and confirms that no
such conflicts exist. This register will be reviewed annually
or at such other time as is necessary.
The Board, led by the Chairman, has carried out a formal
evaluation of its performance and that of its Committees
under a system based on a questionnaire circulated to all
Directors which was used to facilitate a Board discussion.
The evaluation exercise showed that the Board and its
Committees were working well but as expected a number
of actions were agreed to improve effectiveness. The
Chairman has carried out an evaluation of the performance
of individual Directors by individual discussions with
the Board members. He meets with the Non-Executive
Directors at least once a year to consider his conclusions.
In addition, the Non-Executive Directors meet, without the
Cranswick plc Report & Accounts 2009
25
Chairman present, in order to appraise his performance.
The Company’s Articles of Association provide that one
third (but not more than one third) of the Directors retire
by rotation each year and with the proviso that each
Director shall seek re-election at the Annual General
Meeting every three years. All new Directors are subject to
election by Shareholders at the first opportunity following
their appointment.
Directors’ biographies and membership of the various
Committees are shown on page 17. The formal terms of
reference for the main Board Committees together with
the terms and conditions of appointment of Non-Executive
Directors are available for inspection at the Company’s
Registered Office and at the Annual General Meeting.
Board Committees
Audit Committee
The Audit Committee throughout the year comprised of
two independent Non-Executive Directors, John Worby
and Patrick Farnsworth. The Committee is chaired by
John Worby, the Group’s Senior Independent Director,
who is a Chartered Accountant and has considerable
recent relevant financial experience. Patrick Farnsworth
has many years experience in the food industry where he
was Joint Managing Director of William Jackson & Son
Limited until his retirement in 2005. It is a requirement
of the Combined Code that the Audit Committee should
comprise all independent Non-Executive Directors. The
Board is confident that the Group complies with this
requirement.
function. The Audit Committee is also responsible for
recommendations for the appointment, reappointment or
removal of the external auditors and for reviewing their
effectiveness. After a period of five years it was decided
that the external audit function should be put out to tender
and the Committee reviewed presentations from four of
the major auditing firms. The Committee discussed the
various proposals and it was decided that, based on their
proposal and knowledge of the business, Ernst & Young
should be retained as auditors. There were no contractual
obligations in place in reaching this decision and there
has been no time limit given with the auditors but their
performance is to be assessed each year. The Committee
also approves the terms of engagement and remuneration
of the external auditors, and monitors their independence.
There is a policy in place in relation to the types of non-
audit services the external auditors should not carry out so
as not to compromise their independence and these would
include internal accounting or other financial services,
internal audit services or their outsourcing, executive
or management roles or functions, and remuneration
consultancy. There is also a whistle blowing policy in
place which includes arrangements by which staff can, in
confidence, raise concerns about possible improprieties in
matters of financial reporting and other matters.
The terms of reference for the Audit Committee are
available from the Company Secretary.
The Chairman of the Audit Committee will be available at
the Annual General Meeting to respond to any Shareholder
questions that might be raised on the Committee’s
activities.
Remuneration Committee
The Chairman, the Finance Director and the Group
Financial Controller, who is responsible for assessing the
Group’s internal financial controls, together with the
external auditors attend the meetings as appropriate. The
external auditors have the opportunity for direct access
to the Committee without the Executive Directors being
present and the Committee formally meets with the
external auditors at least once a year without the Executive
Directors being present.
The Committee reviews the Group’s accounting policies
and internal reports on accounting and internal financial
control matters together with reports from the external
auditors. The Audit Committee has overall responsibility
for monitoring the integrity of financial statements and
related announcements and for all aspects of internal
control and meets at least three times a year, two of
which involve a review of the Group’s interim and full year
statements. The Audit Committee considers annually the
extent and effectiveness of the work of the internal audit
The Remuneration Committee comprises of Patrick
Farnsworth (Chairman) and John Worby. It is a requirement
of the Combined Code that the Remuneration Committee
should, in the case of smaller companies, consist of at least
two members who are considered by the Combined Code
to be independent. It is a requirement of the Combined
Code that the Remuneration Committee should comprise
all independent Non-Executive Directors. The Board is
confident that the Group complies with this requirement.
Martin Davey, Executive Chairman, attends meetings
of the Remuneration Committee by invitation and in
an advisory capacity. No Director attends any part of a
meeting at which his own remuneration is discussed. The
Executive Directors determine the remuneration of the
Non-Executive Directors.
The Committee recommends to the Board the policy for
executive remuneration and determines, on behalf of the
Board, the other terms and conditions of service for each
Executive Director. It determines appropriate performance
26
Cranswick plc Report & Accounts 2009
conditions for the annual cash bonus and long term
incentive schemes and approves awards and the issue of
options in accordance with the terms of those schemes.
The Remuneration Committee also recommends and
monitors the level and structure of remuneration of senior
management below that of main Board Director. The
Remuneration Committee has access to advice from the
Company Secretary and to detailed analysis of executive
remuneration in comparable companies. In addition from
time to time the Committee undertakes a more detailed
review using external consultants. The last such review was
undertaken by Deloitte in 2008. Details of the Committee’s
current remuneration policies are given in the Directors’
Remuneration Report on pages 31 to 34.
The terms of reference for the Remuneration Committee
are available from the Company Secretary.
The Chairman of the Remuneration Committee will attend
the Annual General Meeting to respond to any Shareholder
questions that might be raised on the Committee’s
activities.
Nomination Committee
The Nomination Committee comprises Martin Davey,
Executive Chairman, who also acts as the Committee’s
Chairman, Patrick Farnsworth,
independent Non-
Executive, and John Worby, independent Non-Executive.
It is a requirement of the Combined Code that a majority
of the members of the Nomination Committee should
be Non-Executive Directors, and the Chairman should
be either the Chairman of the Board or a Non-Executive
Director. The Board is confident that it fully complies with
these requirements of the Combined Code. Due to the size
of the Group and the stability of the Board the Chairman’s
time commitment to the Committee is not anticipated to
be onerous.
The Committee meets at least once a year and reviews
the structure, size and composition of the Board and is
responsible for considering and making recommendations
to the Board on new appointments of Executive and
Non-Executive Directors. It also gives full consideration
to succession planning in the course of its work taking
into account the challenges and opportunities facing the
Group and what skills and expertise are therefore needed
on the Board and from senior management in the future.
The Committee recommended the appointment of Mark
Bottomley as Finance Director with effect from 1 June 2009
when John Lindop retires and it also continues to seek an
additional independent Non-Executive Director. The current
directors seeking re-election at the Annual General Meeting
will be John Worby and Adam Couch. Their biographical
details on page 17 demonstrate the range of experience and
skills which each brings to the benefit of the Company.
The terms of reference for the Nomination Committee are
available from the Company Secretary.
The Chairman of the Nomination Committee will attend
the Annual General Meeting to respond to any Shareholder
questions that might be raised on the Committee’s
activities.
Meetings attendance
Details of the number of meetings of, and members’
attendance at, the Board, Audit, Remuneration and
Nomination Committees during the year are set out in the
table below:
A
u
d
i
t
C
o
m
m
i
t
t
e
e
3
-
-
-
-
-
3
3
C
o
m
m
i
t
t
e
e
R
e
m
u
n
e
r
a
t
i
o
n
6
-
-
-
-
-
6
6
C
o
m
m
i
t
t
e
e
i
N
o
m
n
a
t
i
o
n
2
-
-
2
-
-
2
2
B
o
a
r
d
12
9
12
12
12
12
12
12
No. of meetings
D. Black
A. Couch
M. Davey
B. Hoggarth
J. Lindop
P. Farnsworth
J. Worby
Shareholders
The views of Shareholders expressed during meetings with
them are communicated by the Chairman to the Board as
a whole, and through this process of communication the
Board’s Executive and Non-Executive Directors are able
to gain a sound understanding of the views and concerns
of the major Shareholders. The Chairman discusses
governance and strategy with major Shareholders.
Other Directors are available to meet the Company’s
major Shareholders if requested. The Senior Independent
Director is available to listen to the views of Shareholders,
particularly if they have concerns which contact with the
Chairman has failed to resolve or for which such contact
is inappropriate. Principles of corporate governance and
voting guidelines issued by the Company’s institutional
Shareholders and their representative bodies are circulated
to and considered by the Board. The Board also welcomes
the attendance and questions of Shareholders at the
Annual General Meeting which is also attended by the
Chairmen of the Audit, Remuneration and Nominations
Committees.
Cranswick plc Report & Accounts 2009
27
28
Cranswick plc Report & Accounts 2009
Going concern
The Directors have prepared the accounts on a going
concern basis, having satisfied themselves from a review of
internal budgets and forecasts and current bank facilities
that the Group has adequate resources to continue in
operational existence for the foreseeable future.
Internal Control
The Board of Directors has overall responsibility for the
Group’s systems of internal control, which safeguards
the Shareholders’ investment and the Group’s assets, and
for reviewing its effectiveness. Such a system can only
provide reasonable and not absolute assurance against
material misstatement or loss, as it is designed to manage
rather than eliminate the risk of failure to achieve business
objectives.
The Group operates within a clearly defined organisational
structure with established responsibilities, authorities and
reporting lines to the Board. The organisational structure
has been designed in order to plan, execute, monitor
and control the Group’s objectives effectively and to
ensure that internal control becomes embedded in the
operations.
The Chairman of the Audit Committee reports to the
Board on issues relating to internal controls and risk
management following each Audit Committee meeting.
The Board confirms that the key on-going processes and
features of the Group’s internal risk based control system,
which accord with the Turnbull guidance, have been fully
operative throughout the year and up to the date of the
Annual Report being approved. These include; a process
to identify and evaluate business risk; a strong control
environment; an information and communication process;
a monitoring system and a regular Board review for
effectiveness. The Group Financial Controller is responsible
for overseeing the Group’s internal controls.
During the year the management of the Food and Pet
businesses identified the key business risks within their
operations, considered the financial implications and
assessed the effectiveness of the control processes in place
to mitigate these risks. The Board reviewed a summary
of the findings and this, along with direct involvement
in the strategies of the businesses, investment appraisal
and budgeting process, enabled the Board to report on the
effectiveness of internal control. Following its review the
Board determined that it was not aware of any significant
deficiency or material weakness in the system of internal
control.
Auditor independence
The Board is satisfied that Ernst & Young LLP has adequate
policies and safeguards in place to ensure that auditor
objectivity and independence is maintained. The Group
meets its obligations for maintaining an appropriate
relationship with the external auditors through the
Audit Committee, whose terms of reference include
an obligation to consider and keep under review the
degree of work undertaken by the external auditor, other
than the statutory audit, to ensure such objectivity and
independence is safeguarded. There is also an established
policy for the work the external auditors can and cannot
do so as not to compromise their independence and
in addition, the Chairman of the Audit Committee is
consulted prior to awarding to the external auditors any
non-audit services in excess of £20,000.
During the year the Audit Committee considered
the following factors in assessing the objectivity and
independence of Ernst & Young LLP:
•
•
•
The auditors’ procedures
for maintaining and
monitoring independence, including those to ensure
that the partners and staff have no personal or business
relationships with the Group, other than those in the
normal course of business permitted by UK ethical
guidance.
The auditors’ policies for the rotation of the lead
partner and key audit personnel.
Adherence by management and the auditor to the
Group’s policy for the procurement of non-audit
services.
Compliance with the
Combined Code
The Directors consider that the Group has, during the year
ended 31 March 2009, complied with the requirements of
the Combined Code.
By order of the Board
Malcolm Windeatt
Company Secretary,
18 May 2009
Cranswick plc Report & Accounts 2009
29
30
Cranswick plc Report & Accounts 2009
Directors’ remuneration
report
Information not subject to audit
Remuneration Committee
The Remuneration Committee comprises the Non-
Executive Directors Patrick Farnsworth (Chairman of the
Committee) and John Worby. The Executive Chairman
attends the meetings in an advisory capacity as requested.
The Committee determines the remuneration of the
Company’s Executive Directors and puts forward its
recommendations for approval by the Board. During the
previous year the Committee used the firm of Deloitte as
remuneration consultants and the Committee has used
their advice together with a review of the remuneration
levels at quoted companies of comparable size when
assessing the Executive Directors’ remuneration level.
The remuneration of the Non-Executive Directors is
determined by the Executive Directors and reflects the
time, commitment and responsibility of their roles.
Remuneration policy
The Group’s policy is that the overall remuneration
package offered by the Group should be sufficiently
competitive to attract, retain and motivate high quality
executives and to align the rewards of the Executives with
the progress of the Group whilst giving consideration
to salary levels in similar sized quoted companies in the
sector and in the region. The remuneration package is in
two parts; a non performance part represented by the basic
salary (including benefits) and a significant performance
related element in the form of a profit related bonus and
share based awards. The share based awards are granted
by the Remuneration Committee and only vest on the
achievement of demanding targets aligned to Shareholder
returns and earnings per share. The details of individual
components of the remuneration package and service
contracts are set out below:
Basic salary and benefits
The non performance basic salary, car allowance and
benefits are reviewed annually and are effective from the
1 May. Benefits principally comprise medical insurance.
Bonus scheme
The bonus scheme in operation is based on the achievement
of Group profit targets. The targets are set having regard
to the Company’s budget and market outlook for the year.
For the year to March 2009, this took into account the
challenging economic conditions at the start of the year.
A fixed sum is payable when the target is achieved with
a percentage being payable for results in excess of the
target. The total bonus is capped at 150 per cent of basic
salary. Non-Executive Directors do not participate in the
Group’s bonus scheme. Incentive payments and benefits
are not pensionable.
Share options
The basic salary and the bonus scheme are intended as
the most significant part of Directors’ remuneration; in
addition, executive share options can be proposed by the
Remuneration Committee and are granted periodically to
promote the involvement of senior management in the
longer term success of the Group. Options can only be
exercised if certain performance criteria are achieved by
the Group. For executive options these criteria are based
on total shareholder return over the 3 year performance
period and require the Group to be in the top half of a
basket of food companies quoted on the London Stock
Exchange. The comparison companies are ABF plc, Carrs
Milling Industries plc, Dairy Crest Group plc, Devro plc,
Glanbia plc, Greencore plc, Northern Foods plc, Robert
Wiseman Dairies plc, and Uniq plc. For the Long Term
Incentive Plan (“LTIP”) half the shares granted under the
LTIP are subject to an earnings per share (”EPS”) target
measured against average annual increases in the retail
price index (“RPI”) over a three year period and the other
half to a total shareholder return (“TSR”) target measured
against a comparable group of food companies over a
Cranswick plc Report & Accounts 2009
31
three year period. The comparison companies are Carrs
Milling Industries plc, Dairy Crest Group plc, Devro plc,
Glanbia plc, Greencore plc, Northern Foods plc, Robert
Wiseman Dairies plc, Premier Foods plc and Uniq plc.
The EPS target allows 25 per cent of the shares subject
to the target to be issued at nil cost at an average annual
outperformance of 3 per cent and 100 per cent of the
shares at an average annual outperformance of 7 per cent
with outperformance between 3 and 7 per cent rewarded
pro rata. The TSR target allows 50 per cent of the shares
subject to the target to be issued at nil cost at the 50th
percentile and 100 per cent at the 75th percentile with
performance between the 50th and 75th percentiles
rewarded pro-rata. The Remuneration Committee, who
decides whether performance conditions have been met,
considers these to be the most appropriate measures of
the long term performance of the Group. Directors may
also apply for SAYE options on the same terms as apply to
all other employees.
Pensions
Executive Directors are members of the Group “money-
purchase” pension scheme. Employer contributions are
determined by the service contracts. In some cases there
are payments in lieu of pension contributions at the
option of the individual.
Service contracts
The service contracts for Martin Davey, Derek Black and
Bernard Hoggarth include one year notice periods from 1
May 2006 except in the case of a takeover of the Company
when the notice period is 2 years for the first six months
following the take-over. John Lindop and Adam Couch have
one year rolling contracts which commenced on 30 June
2004 and 1 May 2006 respectively. Patrick Farnsworth
and John Worby have two year appointment letters from
1 January 2008. The contracts for Martin Davey, Derek
Black, Bernard Hoggarth and John Lindop have special
provisions relating to liquidated damages requiring that
the notice period stipulated in the contract will be paid in
Five year sharholder return
full. For the other contracts the Remuneration Committee
will consider the circumstances of an early termination
and determine compensation payments accordingly. As
previously stated Derek Black left the Company on 24
April 2009.
Performance graph
The graph below shows the percentage change (from a
base of 100 in May 2005) in the total shareholder return
(with dividends reinvested) for each of the last five
years on a holding of the Company’s shares against the
corresponding change in a hypothetical holding in the
shares in the FTSE 350 Food Producers and Processors
Price Index (“FTSE FPP”) and the FTSE All Share Index
(“FTSE All Share”). The FTSE FPP and the FTSE All Share
were chosen as representative benchmarks of the sector
and the market as a whole for the business.
Information subject to audit
Directors’ remuneration
The remuneration of Directors for the year was as
follows:
Salary and fees
Bonuses
Benefits
Payment in lieu of pension contribution
Pension contribution
2009
£’000
2,044
1,794
9
77
3,924
509
4,433
2008
£’000
1,967
788
6
249
3,010
448
3,458
Aggregate notional gains made by
Directors on exercise of options
18
9
Cranswick
FTSE All Shares
FTSE 350 Food Producers
Source: Investec
32
Cranswick plc Report & Accounts 2009
Individual Directors’ remuneration, including
pension contributions:
Salary
and fees
£’000
Bonus
Other
Benefits
£’000
£’000
£’000
36
-
41
331
359
586
457
234
-
-
-
75
487
487
487
258
-
-
-
-
77
-
-
-
-
-
1
3
2
2
1
Total
2009
£’000
36
-
41
407
849
1,152
946
493
Total
2008
£’000
Pension
2009
£’000
Pension
2008
£’000
35
53
38
564
505
789
684
342
-
-
-
62
68
114
95
170
-
11
-
59
63
105
81
129
Non-Executive
Directors:
PW Farnsworth
RN Taylor
JG Worby
Executive Directors:
DJ Black
AH Couch
MTP Davey
B Hoggarth
JD Lindop
“Other” comprises payments in lieu of pension contribution.
Benefits principally comprise medical insurance.
Sheep Brewery plc. His fees in this capacity are paid to
the Company; amounts receivable for the year ended 31
March 2009 were £11,383 (2008 - £10,980).
The number of Directors who were active members of the
money purchase pension scheme during the year was 5
(2008 - 6).
Share options
Martin Davey was a Non-Executive Director of Thornton’s
plc until his resignation on 5 December 2008. His fees in this
capacity were paid to the Company; amounts receivable
for the year ended 31 March 2009 were £32,250 (2008 -
£41,675). John Lindop is a Non-Executive Director of Black
Executive share option scheme
The Group operates an executive share option scheme and
a long term incentive plan for senior executives, including
Directors, and a savings related share option scheme which
is available to all employees. The interests of the Directors
in these schemes were as follows:
At 1 April
2008
No
50,000
50,000
50,000
50,000
DJ Black
AH Couch
MTP Davey
B Hoggarth
JD Lindop
50,000
Granted
in the year
No
Exercised
in the year
No
Lapsed At 31 March
2009
No
No
Exercise price
Range of
exercise dates
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
p
601.0
50,000
601.0
50,000
601.0
50,000
601.0
50,000
601.0
4 July 2008/
3 July 2015
4 July 2008/
3 July 2015
4 July 2008/
3 July 2015
4 July 2008/
3 July 2015
4 July 2008/
3 July 2015
No share options were exercised in the year apart from the
SAYE Scheme shown below.
The executive share options of each Director are exercisable
subject to the attainment of performance criteria based
on the total return to Shareholders during the 3 year
performance period being in the top half of a basket of
food companies quoted on the London Stock Exchange.
The performance criteria relating to these options have
been achieved; however the options have not yet been
exercised.
Cranswick plc Report & Accounts 2009
33
Long term incentive plan
At 1 April
2008
No
Granted
in the year
No
Exercised
in the year
No
Lapsed At 31 March
2009
No
No
Exercise
price
p
Range of
exercise dates
DJ Black
AH Couch
MTP Davey
B Hoggarth
JD Lindop
50,000
50,000
50,000
50,000
50,000
25,000
25,000
25,000
25,000
25,000
-
-
-
-
-
-
-
-
-
-
75,000
75,000
75,000
75,000
75,000
Nil
Nil
Nil
Nil
Nil
1 Sept 2009/1 June 2018
1 Sept 2009/1 June 2018
1 Sept 2009/1 June 2018
1 Sept 2009/1 June 2018
1 Sept 2009/1 June 2018
The options of each Director under the Long Term Incentive
Plan are exercisable after 3 years on the attainment of
certain performance criteria detailed on page 76.
The options granted in the year are exercisable between
1 June 2011 and 1 June 2018. The share price at the time
of issue was 632p.
Savings related share option scheme
At 1 April
2008
Granted
in the year
Exercised
in the year
Lapsed
At 31 March
2009
No
2,655
7,474
1,443
1,660
2,367
No
3,067
2,484
2,025
2,025
-
No
-
4,412
-
794
-
No
822
1,785
1,443
866
-
No
4,900
3,761
2,025
2,025
2,367
Weighted
average
exercise price
p
Range of
exercise dates
436
472
474
474
1 Mar 2010/1 Sept 2016
1 Mar 2013/1 Sept 2016
1 Mar 2012/1 Sept 2012
1 Mar 2012/1 Sept 2012
442
1 Mar 2010/1 Sept 2010
DJ Black
AH Couch
MTP Davey
B Hoggarth
JD Lindop
The Directors are eligible, as are other employees of the
Group, to participate in the SAYE scheme, which by its
nature does not have performance conditions.
The following Directors exercised savings related share
options during the year:
Number
Date
exercised
Exercise
Price
p
Market
Price
p
Notional
Gain
£’000s
DJ Black
AH Couch
MTP Davey
P Farnsworth
B Hoggarth
AH Couch
4,412 27 Feb ‘09
264.0
644.0
B Hoggarth
794 27 Feb ’09
471.0
644.0
17
1
JD Lindop
J Worby
Directors’ beneficial interests (unaudited)
At 31 March 2009
Ordinary Shares
At 31 March 2008
Ordinary Shares
88,758
61,921
200,426
1,121
108,388
109,232
1,641
88,758
55,644
200,426
1,082
107,594
106,513
1,641
Market price of shares
The market price of the Company’s shares at 31 March
2009 was 544.5 pence per share. The highest and lowest
market prices during the year for each share option that
is unexpired at the end of the year are as follows:
Options in issue
throughout the year
Highest
Lowest
745.0p
506.0p
Options
the year:
issued during
- SAYE
657.0p
544.5p
- Executive
731.5p
511.0p
All the above interests are beneficial.
There have been no further changes to the above interests
in the period from 1 April 2009 to 8 May 2009 except in the
case of the holding of Derek Black, who resigned on 24 April
2009, and has pledged 73,749 shares as security as part of
the financing of the deal to buy the Pet Division which was
sold to the management team led by him on that date.
On behalf of the Board
Patrick Farnsworth
Chairman of the Remuneration Committee,
18 May 2009
34
Cranswick plc Report & Accounts 2009
Corporate social
responsibility statement
its
takes
responsibilities
Cranswick
to employees,
customers, Shareholders and the environment very
seriously. We increasingly recognise that a balanced and
committed approach to all the aspects of Corporate Social
Responsibility will bring benefits to all of the Company’s
stakeholders and will strengthen our business position
and credentials to facilitate future sustainable growth and
development.
Workplace
20,000
18,000
16,000
14,000
12,000
10,000
8,000
Accidents per 100,000 employees
2005
2006
2007
2008
2,200
2,000
1,800
1,600
1,400
1,200
1,000
The Group aims to recruit, train and retain employees
who are valued for their contribution and able to fulfil
their potential in meeting the business objectives of their
operating unit. The Group companies each have their own
strategies for retaining staff, including the provision of
competitive terms, conditions and share options.
The Group employs 3,541 permanent members of staff
compared with 3,428 the previous year. Permanent staff
levels are supplemented to take account of promotional
or seasonal activity by a further 1200 agency personnel.
Careful auditing of the supplying agencies is carried out to
ensure adherence to best practice, and for food handlers all
supplying agencies are required to be registered under the
Gangmasters (Licensing) Act 2004.
The business takes the health and safety of its employees
very seriously and is committed to high levels of training
to ensure that our factories and processes remain safe
and fulfilling places to work. Health and safety is reviewed
regularly at board level, and each site has NEBOSH trained
managers to take local responsibility and carry out risk
assessments, training, accident investigation and reduction
activities. This information is centrally logged into a database
which is managed, coordinated and reported on by the Group
Health and Safety Manager. Sites are internally audited to
ensure that standards are maintained and improved, and the
Group has committed to accredit all operating sites to meet
the British Standard 18001 (Occupational Health and Safety
Management Systems) over the next three years.
Accident rates have shown a decrease over the past four
years, and we remain focussed on further reduction in both
reportable accidents (under RIDDOR) and total accident rates.
Total recorded accidents (LHS) RIDDOR reportable accidents (RHS)
Employee training is an important factor in maintaining a
safe and efficient workplace, and the Company encourages
and supports appropriate development of all staff. The
Group has entered a partnership with the East Riding
College to help strengthen its training in Food Safety,
Health and Safety and HACCP, and over 1000 employees
are currently involved in NVQ training at various levels.
Environment
Following the review of our environmental credentials
in 2007, this year has been dedicated to identifying
improvements and actioning them at a site level. Base year
(2007) data has been reviewed and our carbon footprint
recalculated for 2008. Process changes at key sites have
resulted in a fall in the comparative carbon footprint
by 15%, and we are confident that in the medium term
we will deliver energy efficiency improvements and
landfill reductions to help us meet our carbon reduction
commitments.
level
Environmental progress at site and Group
is
measured and reported to the Board against performance
benchmarks for energy efficiency, water usage, and landfill,
relative to production tonnages. As awareness of both the
environmental and cost benefits of these improvements
grows, so does the impetus for change. Operational directors
are measured against the benchmarks and best practice
information is centrally coordinated and communicated
around the Group, and discussed at Board level.
We continue to work with the Carbon Trust and Envirowise
to bring external expertise to the Group. Longer term
Cranswick plc Report & Accounts 2009
35
environmental initiatives and innovative solutions to
waste and energy use are now being evaluated. One site
has been identified which would support the development
of wind energy and anaerobic digestion offers a further
environmentally attractive route, either in-house or
through partnership.
Our waste stream to landfill has now been significantly
reduced through Waste to Energy Schemes – five sites
have shown a double digit fall in landfill per tonne of
production over the last year. One site in particular has
reduced its landfill by over 90% by this route. As these
and biocomposting schemes are further developed,
other sites will have a low carbon option for disposing
of an increased proportion of “conventional” landfill
or rendering material. All sites are now recycling waste
cardboard and plastic.
Reductions in packaging weights continue through a
combination of reduced material thickness and a move
away from cardboard sleeves towards printed films.
The Cranswick plc website www.cranswick.co.uk has
been expanded to cover the environmental initiatives we
are taking, entitled Greenthinking. We encourage an open
approach to these issues, and a question and answer element
and contact facilities are provided to help interested parties
find the appropriate detail at the desired level.
Three sites are now certified under the international
standard for environmental management, ISO14001, with
a fourth preparing for accreditation. For the first time we
will participate in the Carbon Disclosure Project for 2009
www.cdproject.net in common with over 70% of the
FTSE350 companies.
Key to our food quality is ensuring that our raw materials
(meat, ingredients and packaging) are traceable to source
and where raw materials are identity preserved we will
challenge the supplier to prove their traceability systems
to our satisfaction. The approval of our raw material
suppliers is centrally controlled and involves independent
third party audit or approval by our own Group Technical
Services team. We are committed to clear informative
labelling which allows consumers to make informed
purchasing decisions.
Cranswick’s success has been built on the strength and health
of the British pig market and the Group has always been a
staunch supporter of the British farmer. Producer groups
and development initiatives with retailers, farmers and
agricultural colleges are all aimed at improving the business
relationships throughout the pig production chain to bolster
the market against increasing worldwide competition.
The Group does not have a formal policy with regard to
payment of suppliers, but it does agree individual payment
terms appropriate to their market sector and makes every
endeavour to meet those agreements. Sites are separately
managed and encouraged to source locally where it serves
the Company’s best interests. For instance, approximately
70% of our contracted pigs are sourced within 50 miles
of our pork processing unit near Hull. Central purchasing
agreements for major purchases of raw materials and
consumables are increasingly being implemented to take
best advantage of the prevailing markets.
We register all our production sites on the SEDEX scheme
website to enable our customers and suppliers to share
ethical data and assist
in continuous performance
improvement.
Market place
Community
As a business we recognise our responsibilities to create
and produce food and other products which are safe, legal
and wholesome. All our food production sites have been
independently audited against the requirements of the
BRC Global Standard for Food Safety and approved to a
Grade A standard. Our customer base is heavily focussed
on the major retailers and other suppliers into them, both
of whom audit and monitor our performance to exacting
standards. Food safety continues to be paramount and
qualified technical personnel at site level are centrally
coordinated to ensure that our products and processes
meet the increasing demands of our customers.
We aim to offer our customers a range of products
which are ethically acceptable and sustainable. We have
actively reduced the level of salt in our products to comply
with FSA targets and declare nutritional Guideline Daily
Amounts (GDA) on our branded ranges and own-label
products for our retail customers and we also make a
number of products which are targeted as healthy eating
options such as low and reduced fat, including a range for
‘Weight Watchers’. Where allergens are present these are
declared on pack and our range includes products which
are gluten free.
We encourage our sites to involve themselves in charitable
activities and participation includes sponsored marathons,
cycle rides and other fund raising activities. Overall some
75% of our employees live within 10 miles of their place
of work, so local involvement particularly in rural locations
can be very beneficial.
Cranswick are significant employers in many areas of the
country, and we recognise that as well as being a benefit
to the community, we can also be an imposition on our
immediate neighbours. Through consultation we aim to
be sensitive to their needs and take positive steps to limit
vehicle movement, noise, odour and other nuisance to co-
exist with and benefit the local economy. For example,
as part of the redevelopment of our pork processing site,
we have put in new roads to relieve traffic flow into the
outskirts of the village and planted acres of trees to reduce
the visual impact of the site.
By order of the Board
Malcolm Windeatt
Company Secretary,
18 May 2009
36
Cranswick plc Report & Accounts 2009
Statement of Directors’
responsibilities in relation to the
financial statements
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable United Kingdom law and those International
Financial Reporting Standards as adopted by the European
Union.
The Directors confirm to the best of their knowledge:
•
•
the financial statements, prepared in accordance with
the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position
and profit of Cranswick plc and the undertakings
included in the consolidation taken as a whole; and
the management report includes a fair review of the
development and performance of the business and
the position of Cranswick plc and the undertakings
included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
The Directors are required to prepare financial statements
for each financial year which present fairly the financial
position of the cash flows of the Company and of the
Group and the financial performance of the Group for
that period. In preparing those financial statements, the
Directors are required to:
•
select suitable accounting policies and then apply
them consistently;
•
•
•
present information, including accounting policies, in
a manner that provides relevant, reliable, comparable
and understandable information; and
provide additional disclosures when compliance with
the specific requirements in IFRSs is insufficient to
enable users to understand the impact of particular
transactions, other events and conditions on the
entity’s financial position and financial performance;
and
state that the Company and the Group have complied
with IFRSs, subject to any material departures
disclosed and explained in the financial statements.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any
time the financial position of the Company and of the
Group and enable them to ensure that the financial
statements comply with the Companies Act 1985 and
Article 4 of the IAS Regulation. They are also responsible
for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection
of fraud and other irregularities.
On behalf of the Board
M Davey
Chairman
18 May 2009
J Lindop
Finance Director
Cranswick plc Report & Accounts 2009
37
Report of the auditors
to the members of Cranswick plc
Independent auditor’s report to
the members of Cranswick plc
audited in accordance with relevant legal and regulatory
requirements and International Standards on Auditing
(UK and Ireland).
We have audited the group and parent company financial
statements (the “financial statements”) of Cranswick plc
for the year ended 31 March 2009 which comprise the
Group Income Statement, the Group and Parent Company
Statements of Recognised Income and Expense, the Group
and Parent Company Balance Sheets, the Group and
Parent Company Cash Flow Statements and the related
notes 1 to 31. These financial statements have been
prepared under the accounting policies set out therein.
We have also audited the information in the Directors’
Remuneration Report that is described as having been
audited.
This report is made solely to the Company’s members, as
a body, in accordance with Section 235 of the Companies
Act 1985. Our audit work has been undertaken so that we
might state to the Company’s members those matters we
are required to state to them in an auditors’ report and
for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members
as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities
of directors and auditors
The Directors’ responsibilities for preparing the Annual
Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable United
International Financial Reporting
Kingdom
Standards (IFRSs) as adopted by the European Union are
set out in the Statement of Directors’ Responsibilities.
law and
Our responsibility is to audit the financial statements
and the part of the Directors’ Remuneration Report to be
We report to you our opinion as to whether the financial
statements give a true and fair view and whether the
financial statements and the part of the Directors’
Remuneration Report to be audited have been properly
prepared in accordance with the Companies Act 1985
and, as regards the group financial statements, Article
4 of the IAS Regulation. We also report to you whether
in our opinion the information given in the Directors’
Report is consistent with the financial statements. The
information given in the Directors’ Report includes that
specific information presented in the Operating and
Financial Review that is cross referred from the Principal
Activities, Business Review and Future Developments
section of the Directors’ Report.
In addition we report to you if, in our opinion, the
Company has not kept proper accounting records, if we
have not received all the information and explanations we
require for our audit, or if information specified by law
regarding Directors’ remuneration and other transactions
are not disclosed.
We review whether the Corporate Governance Statement
reflects the Company’s compliance with the nine
provisions of the 2006 Combined Code specified for
our review by the Listing Rules of the Financial Services
Authority, and we report if it does not. We are not required
to consider whether the board’s statements on internal
control cover all risks and controls, or form an opinion
on the effectiveness of the group’s corporate governance
procedures or its risk and control procedures.
We read other information contained in the Annual
Report and consider whether it is consistent with the
audited financial statements. The other information
comprises only the Directors’ Report, the unaudited part
38
Cranswick plc Report & Accounts 2009
of the Directors’ Remuneration Report, the Chairman’s
Statement, the Review of Activities, the Operating and
Financial Review, the Corporate Social Responsibility
Statement, the Corporate Governance Statement, the five
year statement and Shareholder information. We consider
the implications for our report if we become aware of
any apparent misstatements or material inconsistencies
with the financial statements. Our responsibilities do not
extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the
Auditing Practices Board. An audit includes examination,
on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements and the part of
the Directors’ Remuneration Report to be audited. It also
includes an assessment of the significant estimates and
judgments made by the Directors in the preparation of
the financial statements, and of whether the accounting
policies are appropriate to the Group’s and Company’s
circumstances, consistently applied and adequately
disclosed.
We planned and performed our audit so as to obtain all
the information and explanations which we considered
necessary in order to provide us with sufficient evidence
to give reasonable assurance that the financial statements
and the part of the Directors’ Remuneration Report to be
audited are free from material misstatement, whether
caused by fraud or other irregularity or error. In forming
our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements
and the part of the Directors’ Remuneration Report to be
audited.
Opinion
In our opinion:
•
the group financial statements give a true and fair
view, in accordance with IFRSs as adopted by the
European Union, of the state of the Group’s affairs as
at 31 March 2009 and of its profit for the year then
ended;
the parent company financial statements give a true
and fair view, in accordance with IFRSs as adopted by
the European Union as applied in accordance with the
provisions of the Companies Act 1985, of the state of
the parent company’s affairs as at 31 March 2009;
the financial statements and the part of the Directors’
Remuneration Report to be audited have been properly
prepared in accordance with the Companies Act 1985
and, as regards the group financial statements, Article
4 of the IAS Regulation; and
the information given in the Directors’ Report is
consistent with the financial statements.
•
•
•
Ernst & Young LLP
Registered auditor
Hull, 18 May 2009
Cranswick plc Report & Accounts 2009
39
Group income statement
for the year ended 31 March 2009
2009
2008
Before
exceptionals
Exceptionals
Total
Before
exceptionals
Exceptionals
Total
£’000
£’000
£’000
£’000
£’000
£’000
606,774 -
606,774
559,229 -
559,229
N
o
t
e
s
3
Revenue
Cost of sales
Gross profit
Operating profit from
continuing operations
Profit on disposal of property,
plant and equipment
Profit from continuing
operations before finance and
taxation
Finance revenue
Finance costs
Profit from continuing
operations before tax
Operating expenses
(46,984) -
(46,984)
(39,157) -
(521,402) -
85,372 -
(521,402)
(483,589) -
85,372
75,640 -
(483,589)
75,640
(39,157)
4
38,388 -
38,388
36,483 -
36,483
5 -
-
-
-
830
830
3
7
7
38,388 -
3 -
(3,703) -
38,388
36,483
830
37,313
3
4 -
(3,703)
(4,330) -
4
(4,330)
32,987
(9,162)
830
425
Taxation
8,5
(9,951)
(6,063)
(16,014)
(9,587)
34,688 -
34,688
32,157
24,737
(6,063)
18,674
22,570
1,255
23,825
314
18,988
-
18,988
18,988
53.7p
53.5p
55.5p
55.4p
40.5p
40.4p
41.2p
41.1p
49.1p
48.8p
51.9p
51.6p
1,832
25,657
25,605
52
25,657
51.9p
51.5p
55.9p
55.5p
Profit for the year from
continuing operations
Discontinued operations:
Profit for the year from
discontinued operations
Profit for the year
Profit for the year attributable
to:
Equity holders of the parent
Minority interest
Earnings per share (pence)
From continuing operations:
Basic
Diluted
On profit for the year:
Basic
Diluted
9
25
12
12
12
12
40
Cranswick plc Report & Accounts 2009
Group statement of recognised income and expense
for the year ended 31 March 2009
Income and expense recognised directly in equity
Movement on hedging items:
Amount recognised in equity during the period
Amount removed from equity and included in the income statement
Exchange differences on retranslation of foreign operations
Deferred tax recognised directly in equity
Corporation tax recognised directly in equity
Net (expense)/income recognised directly in equity
Profit for the year
Total recognised income and expense for the year
Attributable to:
Equity holders of the parent
Minority interest
2009
£’000
2008
£’000
263
(1,029)
(29)
303
39
(453)
18,988
18,535
-
18,535
18,535
504
196
(17)
(725)
88
46
25,657
25,703
25,651
52
25,703
Company statement of recognised income and expense
for the year ended 31 March 2009
Income and expense recognised directly in equity
Movement on hedging items:
Amount recognised in equity during the period
Amount removed from equity and included in the income statement
Deferred tax recognised directly in equity
Net income/(expense) recognised directly in equity
Profit for the year
Total recognised income and expense for the year
2009
£’000
2008
£’000
124
(70)
15
69
9,385
9,454
(432)
196
20
(216)
11,011
10,795
Cranswick plc Report & Accounts 2009
41
N
o
t
e
s
13
14
16
17
18
26
2009
£’000
2008
£’000
117,756
91,688
209,444
28,464
73,655
263
4,399
106,781
117,756
92,721
210,477
30,638
77,348
1,029
3,770
112,785
9
20,387
-
336,612
323,262
19
20
21
(75,273)
(34,872)
(5,955)
(334)
(73,025)
(31,811)
(3,798)
(153)
(116,434)
(108,787)
19 -
20
8
21
9
23
25
25
25
25
(36,382)
(11,557)
(1,166)
(49,105)
(8)
(50,414)
(7,463)
(1,336)
(59,221)
(4,591)
-
(170,130)
(168,008)
166,482
155,254
4,646
49,760
2,939
239
108,898
166,482
4,623
48,693
1,939
1,034
98,965
155,254
Group balance sheet
31 March 2009
Non-current assets
Goodwill
Property, plant and equipment
Total non-current assets
Current assets
Inventories
Trade and other receivables
Other financial assets
Cash and cash equivalents
Total current assets
Assets held for sale
Total assets
Current liabilities
Trade and other payables
Other financial liabilities
Income tax payable
Provisions
Total current liabilities
Non-current liabilities
Other payables
Other financial liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Liabilities held for sale
Total liabilities
Net assets
Equity
Called-up share capital
Share premium account
Share-based payments
Hedging and translation reserves
Retained earnings
Equity attributable to members of the parent company
M Davey
Chairman
18 May 2009
J Lindop
Finance Director
42
Cranswick plc Report & Accounts 2009
Company balance sheet
31 March 2009
Non-current assets
Property, plant and equipment
Investments in subsidiary undertakings
Deferred tax assets
Total non-current assets
Current assets
Trade and other receivables
Other financial assets
Total current assets
Non-current assets held for sale
Total assets
Current liabilities
Trade and other payables
Other financial liabilities
Income tax payable
Total current liabilities
Non-current liabilities
Other financial liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Called-up share capital
Share premium account
General reserve
Merger reserve
Share-based payments
Hedging reserve
Retained earnings
Equity attributable to members of the parent company
M Davey
Chairman
18 May 2009
J Lindop
Finance Director
2009
£’000
2008
£’000
1,959
155,426
2,348
155,426
23
-
157,408
157,774
22,167
124
22,291
343
-
44,239
70
44,309
180,042
202,083
N
o
t
e
s
14
15
8
17
18
9
19
20
(46,048)
(28,290)
(216)
(74,554)
20
(36,382)
8 -
(36,382)
(54,994)
(28,518)
(90)
(83,602)
(50,414)
(359)
(50,773)
(110,936)
(134,375)
69,106
67,708
23
25
25
25
25
25
25
4,646
49,760
4,000
1,806
568
124
8,202
69,106
4,623
48,693
4,000
1,806
317
70
8,199
67,708
Cranswick plc Report & Accounts 2009
43
Group cash flow statement
for the year ended 31 March 2009
Operating activities
Profit for the year
Adjustments to reconcile Group profit for the year
to net cash inflows from operating activities
Tax on discontinued operations
Tax on continuing operations
Net finance costs
Depreciation and impairment of property, plant and equipment
Share based payments
Release of government grants
Profit on sale of property, plant and equipment
Increase in inventories and biological assets
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Tax paid
Net cash from operating activities
Cash flows from investing activities
Interest received
Acquisition of subsidiaries
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of subsidiary
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Proceeds from issue of share capital
Proceeds from borrowings
Issue costs of long-term borrowings
Repayment of borrowings
Dividends paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of foreign exchange rates
Cash and cash equivalents at end of period
44
Cranswick plc Report & Accounts 2009
N
o
t
e
s
2009
£’000
2008
£’000
18,988
25,657
(820)
16,014
3,971
13,859
1,000
(7)
(87)
(3,966)
(1,971)
6,381
53,362
(8,602)
44,760
3
525
9,162
4,646
10,090
921
(29)
(2,170)
(6,077)
(10,209)
7,732
40,248
(9,046)
31,202
4
(54)
(20,948)
(25,295)
258
4,228
500
(20,687)
(20,617)
-
-
(3,591)
462
59,000
(1,280)
(70,206)
(8,769)
(24,384)
(311)
(7,698)
(29)
(8,038)
(5,332)
683
(5,420)
(7,734)
(17,803)
(7,218)
(494)
14
(7,698)
-
-
26
26
Company cash flow statement
for the year ended 31 March 2009
Operating activities
Profit for the year
Adjustments to reconcile profit for the year
to net cash inflows from operating activities
Dividends received
Taxation
Net finance costs
Depreciation and impairment of property, plant and equipment
Share based payments
Decrease in trade and other receivables
Decrease in trade and other payables
Cash generated from operations
Tax paid
Net cash from operating activities
Cash flows from investing activities
Dividends received
Purchase of property, plant and equipment
Payments to acquire investments in subsidiaries
Proceeds from sale of investments in subsidiaries
Net cash from investing activities
Cash flows from financing activities
Interest paid
Dividends paid to equity Shareholders
Proceeds from issue of share capital
Proceeds from borrowings
Issue costs of long-term borrowings
Repayment of borrowings
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
26
26
N
o
t
e
s
2009
£’000
2008
£’000
9,385
11,011
(8,769)
108
8,064
171
251
22,445
(9,245)
22,410
(349)
22,061
8,769
(125)
-
-
(9,772)
163
10,743
33
107
25,597
(30,811)
7,071
(151)
6,920
9,772
(42)
(16)
500
8,644
10,214
(7,592)
(8,769)
462
59,000
(1,280)
(70,171)
(28,350)
2,355
(8,512)
(6,157)
(11,073)
(7,734)
683
-
-
(5,420)
(23,544)
(6,410)
(2,102)
(8,512)
Cranswick plc Report & Accounts 2009
45
Notes to the accounts
1. Authorisation of financial statements
and statement of compliance with IFRS
The Group and Company financial statements of Cranswick plc (the “Company”) for the year ended 31 March 2009 were
authorised for issue by the Board of Directors on 18 May 2009 and the balance sheets were signed on the Board’s behalf
by M Davey and J Lindop. Cranswick plc is a public limited company incorporated and domiciled in England and Wales.
The Company’s ordinary shares are traded on the London Stock Exchange.
The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union. The Company’s financial statements have been prepared in accordance with
IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.
The principal accounting policies adopted by the Group and by the Company are set out in note 2.
The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to
publish its individual income statement and related notes.
2. Accounting policies
Basis of preparation
The financial statements of Cranswick plc, both consolidated and company, have been prepared under IFRS as adopted by
the European Union. A summary of the principal accounting policies, which have been consistently applied throughout
the year and the preceding year, is as follows:
Basis of consolidation
The Group financial statements consolidate the financial statements of Cranswick plc and its subsidiaries. The results of
undertakings acquired or sold are consolidated for the periods from the date of acquisition or up to the date of disposal.
Acquisitions are accounted for under the purchase method of accounting.
Judgements and key sources of estimation uncertainty
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect
the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and
expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates.
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those
involving estimations, which have the most significant effect on the amounts recognised in the financial statements:
•
•
•
Share based payments
Note 24 – measurement of share based payments
Goodwill
Provisions
Note 13 – measurement of the recoverable amount of cash generating units containing goodwill
Note 21 – provisions
46
Cranswick plc Report & Accounts 2009
Foreign currencies
In the accounts of the Group’s companies, individual transactions denominated in foreign currencies are translated into
functional currency at the actual exchange rates ruling at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies are translated into functional currency at the rates ruling at the balance sheet date.
Profits and losses on both individual foreign currency transactions during the year and monetary assets and liabilities are
dealt with in the income statement.
On consolidation, the income statements of the overseas subsidiaries are translated at the average exchange rates for
the year and the balance sheets at the exchange rates at the balance sheet date. The exchange differences arising as a
result of translating income statements at weighted average rates and restating opening net assets at closing rates are
taken to the translation reserve and the gain or loss on disposal of an overseas subsidiary is calculated after taking into
account cumulative exchange gains or losses in respect of that subsidiary. Cumulative exchange differences at the date
of transition to IFRS were deemed to be nil.
Revenue
Revenue is recognised to the extent it is probable that the economic benefits will flow to the Group and the revenue and
any associated costs can be measured reliably. Revenue on the sale of goods is recognised when the significant risks and
rewards of ownership of the goods have passed to the buyer on despatch and represents the value of sales to customers net
of discounts, similar allowances and estimates of returns and excludes value added tax.
Intangible assets
Goodwill is the excess of the fair value of the consideration paid for a business over the fair value of the identifiable assets,
liabilities and contingent liabilities acquired. Goodwill is capitalised and subject to an impairment review, both annually and
when there are indications that the carrying value may not be recoverable.
Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates.
Where the recoverable amount is less than the carrying amount, an impairment loss is recognised. When an entity is disposed
of, any goodwill associated with it is included in the carrying amount of the operation when determining the gain or loss on
disposal except that goodwill arising on acquisitions prior to 31 March 2004 which was previously deducted from equity is
not recycled through the income statement.
Intangible assets acquired as part of an acquisition of a business are capitalised at fair value separately from goodwill only if
the fair value can be measured reliably on initial recognition and the future economic benefits are expected to flow to the
Group.
Taxation
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date. Deferred
tax is provided on temporary differences at the balance sheet date between the tax base of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
i) except where the deferred income tax liability arises from the initial recognition of goodwill or the initial recognition
of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, except where the timing of
the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future.
ii)
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that the temporary differences will reverse in the foreseeable
future and taxable profits will be available against which the temporary differences can be utilised:
i) except where the deferred
income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or a liability in a transaction that is not a business combination
Cranswick plc Report & Accounts 2009
47
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
ii)
in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are
only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future
and taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that apply to the period when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at
the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.
Otherwise income tax is recognised in the income statement.
Property, plant and equipment
Property, plant and equipment are included at cost less accumulated depreciation and any provision for impairment.
Freehold land is not depreciated. Depreciation is charged on property, plant and equipment on the depreciable amount, being
cost less the estimated residual value (based on prices prevailing at the balance sheet date) on a straight line basis over their
estimated useful economic lives, or the estimated useful economic lives of their individual parts.
Useful economic lives are principally as follows:
Freehold buildings
Short leasehold improvements
Plant and equipment
Motor vehicles
50 years
Residue of lease
5 - 11 years
4 years
The carrying value of property, plant and equipment is reviewed for impairment individually or at the cash generating unit
level when events or changes in circumstances indicate that the carrying value may not be recoverable.
Capitalised borrowing costs
Borrowing costs incurred in financing the construction of qualifying assets such as property, plant and equipment are
capitalised up to the date at which the relevant asset is substantially complete. Borrowing costs are calculated using the
Group’s weighted average cost of borrowing during the period of capitalisation. All other borrowing costs are expensed as
incurred.
Accounting for leases
i) Finance leases
Assets which are financed by leasing agreements that transfer substantially all the risks and rewards of ownership
to the lessee (finance leases) are capitalised at the inception of the lease at fair value or, if lower, the present value
of the minimum lease payments, in ‘Property, plant and equipment’ and the corresponding capital cost is shown
as an obligation to the lessor in ‘Borrowings’. Depreciation is charged to the income statement over the shorter
of the estimated useful life and the term of the lease. The interest element of the rental obligations is allocated
to accounting periods during the lease term to reflect a constant rate of interest on the remainder of the capital
amount outstanding.
ii) Operating leases
Leases, which are not finance leases, are classified as operating leases. Lease payments are charged to the income
statement on a straight line basis over the term of the lease.
Government grants and contributions
UK Regional Development Grants and grants receivable from the European Union and DEFRA in respect of property,
plant and equipment are credited to deferred income and released to the income statement over the relevant
depreciation period.
48
Cranswick plc Report & Accounts 2009
Inventories
Inventories, with the exception of biological assets (tropical marine fish), are stated at the lower of cost (on a first in,
first out basis) and net realisable value after making allowance for any obsolete or slow-moving items. In the case of
finished goods, cost comprises direct materials, direct labour and an appropriate proportion of manufacturing fixed and
variable overheads based on a normal level of activity.
Biological assets
Biological assets are included in the balance sheet at fair value less estimated point of sale costs. Gains and losses are
charged to the income statement in the period in which they arise.
Cash and cash equivalents
Cash equivalents are defined as cash at bank and in hand including short term deposits with original maturity within
3 months. For the purposes of the Group cash flow statement, cash and cash equivalents consist of cash and cash
equivalents net of outstanding bank overdrafts.
Financial instruments
i) Debt instruments, including bank borrowings
Debt instruments are initially recognised at the fair value of net proceeds received after the deduction of issue costs.
Subsequently debt instruments are recognised at amortised cost using the effective interest method. Issue costs are
charged to the income statement over the term of the debt at a constant rate on the balance sheet carrying amount
under the effective interest method.
ii) Derivative financial instruments
The Group uses derivative financial instruments such as foreign currency contracts and interest rate swaps to
hedge its cash flow risks associated with interest rate and foreign currency fluctuations. Such derivative financial
instruments are stated at fair value.
The fair value of forward contracts is calculated by reference to current forward exchange rates for contracts with a
similar maturity profile. The fair value of interest rate swaps is determined by reference to market values for similar
instruments.
Where derivatives meet the hedging criteria under IAS 39 for cash flow hedges the portion of the gain or loss on the
hedging instrument that is determined to be an effective hedge is recognised directly in equity and the ineffective
portion is recognised in the income statement. Gains or losses recognised in equity are transferred to the income
statement in the same period in which the hedged item affects the net profit or loss.
For derivatives that do not qualify for hedge accounting under IAS 39, any gains or losses arising from changes in fair
value are taken directly to net profit or loss for the period.
Employee benefits
i) Pensions
The Group operates a number of defined contribution schemes for employees under which contributions are paid into
schemes managed by major insurance companies. Contributions are calculated as a percentage of employees’ earnings
and obligations for contributions to the schemes are recognised as cost of sales or operating expenses in the income
statement in the period in which they arise.
ii) Equity settled share based payments
The Group operates a savings related share option scheme under which options have been granted to Group employees
(‘SAYE scheme’). The Group reflects in the income statement the cost of share based payments granted to its own
employees. The fair value of options granted after 7 November 2002 which had not vested prior to 1 January 2005 is
calculated using the Black-Scholes model and the resulting cost is charged to the income statement over the vesting
period.
In addition, the Group operates an Executive share option scheme and a Long Term Incentive Plan (‘LTIP’) for Senior
Executives. Share options issued are exercisable subject to the attainment of certain market based and non-market based
performance criteria. The fair value of options granted after 7 November 2002 which had not vested prior to 1 January
Cranswick plc Report & Accounts 2009
49
2005, is calculated using mathematical models, including the Black-Scholes model, modified for the impact of market
based performance criteria and the resulting cost is charged to the income statement over the vesting period.
The Company and Group re-assesses its estimate of the number of options that are expected to become exercisable
at each balance sheet date as a result of changes in the expectation of achievement of non-market based performance
conditions. Any adjustments to the original estimates are recognised in the income statement.
Non-current assets held for sale
Non-current assets and disposal groups classified as held for sale are measured at the lower of carrying amount and fair
value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be
recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the
sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management
must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year
from the date of classification.
In the consolidated income statement for the reporting period, and for the comparable period of the previous year, income
and expenses from discontinued operations are reported separately from continuing income and expenses down to the level
of profit after taxes, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting
profit or loss (after taxes) is reported separately in the income statement.
Property, plant and equipment once classified as held for sale are not depreciated.
Exceptional items
Exceptional items are material items which derive from events or transactions that fall within the ordinary activities of the
reporting entity and which individually or, if of a similar type, in aggregate need to be disclosed by virtue of their size or
incidence if the financial statements are to give a true and fair view.
Dividends
Dividends receivable by the Company are recognised in the income statement if they are declared, appropriately authorised
and no longer at the discretion of the entity paying the dividend, prior to the balance sheet date. Dividends payable by
the Company are recognised when declared and therefore final dividends proposed after the balance sheet date are not
recognised as a liability at the balance sheet date. Dividends paid to Shareholders are shown as a movement in equity rather
than on the face of the income statement.
Investments
Investments in subsidiaries are shown at cost less any provision for impairment.
New standards and interpretations applied
The Group has adopted the following new IFRIC interpretations during the year. Adoption of these interpretations did not
have any effect on the financial performance or position of the Group.
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 12
IFRIC 14
Service Concession Arrangements
The Limit on a Defined Benefit Asset, Minimum Funding Requirement and their Interaction
New standards and interpretations not applied
The IASB and IFRIC have issued a number of new standards and interpretations with an effective date after the date of these
financial statements. The Directors do not consider that the adoption of these standards and interpretations will have a
material impact on the Group’s and Company’s financial statements in the period of initial application. The standards not
applied are as follows:
50
Cranswick plc Report & Accounts 2009
International Accounting Standards (IAS/IFRS)
Effective date
IFRS 1 and IAS 27
Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
1 January 2009
IFRS 2
IFRS 3
IFRS 7
IFRS 8
IAS 1
IAS 23
IAS 27
Share-based Payments – Vesting Conditions and Cancellations
Business Combinations (revised January 2008)
Financial Instruments - Disclosures (amended)
Operating Segments
Presentation of Financial Statements (revised September 2007)
Borrowing Costs (revised March 2007)
Consolidated and Separate Financial Statements (amended)
IAS 32 and IAS 1
Financial Instruments Puttable at Fair Value and Obligations
arising on Liquidation
IAS 39
Eligible Hedged Items
Improvements to IFRS
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 13
IFRIC 15
IFRIC 16
IFRIC 17
Customer Loyalty Programmes
Agreements for the Construction of Real Estate
Hedges of a Net Investment in a Foreign Operation
Distributions of Non-cash Assets
1 January 2009
1 July 2009
1 January 2009
1 January 2009
1 January 2009
1 January 2009
1 July 2009
1 January 2009
1 July 2009
Various effective
dates
Effective date
1 July 2008
1 January 2009
1 October 2008
1 July 2009
Upon adoption of IFRS8, the Group will have to disclose additional information about its operating segments, although
it is anticipated there will be no effect on reported income and net assets.
Cranswick plc Report & Accounts 2009
51
3. Revenue and segmental analysis
The Group’s primary business segments during the year were Food and Pet as the Group’s management and reporting
structure is set out along these lines and the two segments exhibit different risks and rates of return. The results are
discussed in the review of activities. Secondary segment information is presented geographically. There are no significant
transactions between the primary segments.
Business segments
Food
2009
Pet
Continuing Discontinued
£’000
£’000
Total
£’000
Food
Continuing
£’000
2008
Pet
Discontinued
£’000
Total
£’000
Revenue
606,774
46,491
653,265
559,228
39,665
598,893
Segment results before exceptionals
43,481
2,309
45,790
39,275
1,885
41,160
Exceptional items
Segment results
Central costs
-
- -
830
792
1,622
43,481
2,309
45,790
40,105
2,677
42,782
(5,093)
-
(5,093)
(2,792) -
(2,792)
Profit before finance and tax
38,388
2,309
40,697
Net finance costs
(3,700)
(271)
(3,971)
37,313
(4,326)
2,677
39,990
(320)
(4,646)
Fair value remeasurement loss
-
(2,544)
(2,544)
-
-
-
Profit before tax
Income taxes
Profit for the year
Assets and liabilities
34,688
(16,014)
18,674
(506)
34,182
32,987
2,357
35,344
820
314
(15,194)
(9,162)
(525)
(9,687)
18,988
23,825
1,832
25,657
Assets (excluding goodwill)
193,492
20,387
213,879
177,855
22,790
200,645
Goodwill
117,756
-
117,756
117,756 -
117,756
Assets (including goodwill)
311,248
20,387
331,635
295,611
22,790
318,401
Unallocated assets
Total assets
4,977
336,612
4,861
323,262
Segment liabilities
70,970
4,591
75,561
67,912
4,184
72,096
Unallocated liabilities
Total liabilities
94,569
170,130
95,912
168,008
Unallocated assets and liabilities comprise certain items of property, plant and equipment, loan notes, net debt and
taxation balances.
20,136
10,930
1,069
21,205
718
11,648
24,420
9,545
1,330
545
25,750
10,090
Other segment information
Capital expenditure:
Property, plant and equipment
Depreciation
52
Cranswick plc Report & Accounts 2009
Geographical segments
The following table sets out sales by destination, regardless of where the goods were produced:
Sales revenue by geographical market
2009
Continuing
£’000
2009
Discontinued
£’000
2009
Total
£’000
2008
Continuing
£’000
2008
Discontinued
£’000
UK
599,639
43,640
643,279
551,405
Continental Europe
Rest of World
7,135
-
2,443
408
9,578
408
7,823
-
606,774
46,491
653,265
559,228
37,087
2,092
486
39,665
2008
Total
£’000
588,492
9,915
486
598,893
The following tables set out the geographical location of the Group’s assets and of additions to property, plant and
equipment and intangible assets:
Carrying amount of segment assets, including goodwill
2009
Continuing
£’000
2009
Discontinued
£’000
2009
Total
£’000
2008
Continuing
£’000
2008
Discontinued
£’000
2008
Total
£’000
UK
Continental Europe
Unallocated assets
311,248
-
4,977
316,225
19,115
1,272
-
330,363
295,611
22,790
318,401
1,272
4,977
-
4,861
-
-
-
4,861
20,387
336,612
300,472
22,790
323,262
Additions to property, plant and equipment and intangible assets
2009
Continuing
£’000
2009
Discontinued
£’000
UK
Continental Europe
20,136
-
20,136
444
625
1,069
2009
Total
£’000
20,580
625
21,205
2008
Continuing
£’000
2008
Discontinued
£’000
24,420
-
24,420
1,330
-
1,330
2008
Total
£’000
25,750
-
25,750
Cranswick plc Report & Accounts 2009
53
4. Group operating profit
This is stated after charging/(crediting):
Operating costs:
Selling and distribution
Administration
Depreciation of property, plant
and equipment
Impairment of property plant
and equipment
Operating lease payments –
minimum lease payments
Net foreign currency differences
Cost of inventories recognised
as an expense
Increase in provision for
inventories
Audit of these financial
statements*
2009
2009
Continuing Discontinued
£’000
£’000
2009
Total
£’000
2008
Continuing
£’000
2008
Discontinued
£’000
25,979
21,005
46,984
2,700
5,981
8,681
28,679
26,986
55,665
21,259
17,898
39,157
1,724
5,943
7,667
2008
Total
£’000
22,983
23,841
46,824
10,930
718
11,648
9,545
545
10,090
Release of government grants
(7) -
(7)
(29)
119
2,092
2,211
-
-
-
-
(29)
5,015
(41)
4,717
521
190
402
4,907
923
4,962
(16)
53
(25)
475,070
31,391
506,461
411,785
26,974
438,759
177
128
62
17
239
145
129
-
146
19
129
165
* £25,000 relates to the Company (2008 - £28,000) and £120,000 (2008 - £137,000) relates to audit of the financial statements of
subsidiaries.
In addition, payments to Ernst & Young LLP for non-audit services amounted to £85,000 (2008 - £117,000) of which
£4,000 related to an audit related service (2008 – £4,000), £15,000 (2008 - £44,000) related to due diligence services
and £66,000 (2008 - £69,000) to taxation.
Fees paid to Ernst & Young LLP for non-audit services by the Company itself are not disclosed in the individual accounts
of Cranswick plc because Group financial statements are prepared which are required to disclose such fees on a
consolidated basis.
54
Cranswick plc Report & Accounts 2009
5. Exceptional items
Non-recurring (expense)/ income during the year was as follows:
2009
Continuing
£’000
2009
Discontinued
£’000
2009
Total
£’000
2008
Continuing
£’000
2008
Discontinued
£’000
2008
Total
£’000
Recognised below operating
profit
Profit on disposal of property
plant and equipment
-
Deferred tax on abolition of
Industrial Buildings Allowances
Corporation tax credit on
exceptionals
Deferred tax credit/(charge) on
exceptionals
Cash flow impact of
exceptionals
-
-
-
(6,063)
(6,063)
-
-
-
-
(541)
(541)
-
-
-
-
830
792
1,622
(6,604)
-
-
-
(6,604)
830
792
1,622
90 -
335
(238)
90
97
2,304
1,522
3,826
6. Employees
Group
Staff costs:
Wages and salaries
Social security costs
Other pension costs
2009
2009
Continuing Discontinued
£’000
£’000
2009
Total
£’000
2008
Continuing
£’000
2008
Discontinued
£’000
69,199
6,370
1,364
76,933
4,769
73,968
447
70
6,817
1,434
5,286
82,219
68,439
5,686
1,316
75,441
4,388
417
62
4,867
2008
Total
£’000
72,827
6,103
1,378
80,308
Included within wages and salaries is a total expense for share based payments of £1,000,000, of which £143,000 related
to discontinued operations (2008 - £921,000, of which £105,000 related to discontinued operations) all of which arises
from transactions accounted for as equity-settled share based payment transactions.
Company
Staff costs:
Wages and salaries
Social security costs
Other pension costs
2009
£’000
2,661
295
403
3,359
2008
£’000
1,376
163
534
2,073
Included within wages and salaries is a total expense for share based payments of £251,000 (2008 - £107,000) all of
which arises from transactions accounted for as equity-settled share based payment transactions.
Cranswick plc Report & Accounts 2009
55
The average monthly number of employees during the year was:
Group
Production
Selling and distribution
Administration
2009
Continuing
Number
2009
Discontinued
Number
2009
Total
Number
2008
2008
Continuing Discontinued
Number
Number
2008
Total
Number
2,988
193
168
3,349
114
43
35
192
3,102
236
203
3,541
2,815
207
218
3,240
118
28
42
188
2,933
235
260
3,428
The Group and Company consider the Directors to be the Key Management Personnel. Details of each Director’s
remuneration, pension contributions and share options are detailed in the Directors’ Remuneration Report on pages 31
to 34. The employee costs shown above include the following emoluments in respect of Directors of the Company:
Group and Company
Directors’ remuneration
(excluding IFRS 2 share option
charge)
Aggregate gains made by
Directors on exercise of share
options
2009
2009
Continuing Discontinued
£’000
£’000
2009
Total
£’000
2008
2008
Continuing Discontinued
£’000
£’000
2008
Total
£’000
3,964
469
4,433
2,835
623
3,458
18 -
18
8
1
9
7. Finance revenue and costs
2009
2009
Continuing Discontinued
£’000
£’000
2009
Total
£’000
2008
Continuing
£’000
2008
Discontinued
£’000
Finance revenue
Bank interest received
Finance costs
(3) -
Loan note interest paid
27 -
(3)
27
2008
Total
£’000
(4)
(4)
-
54
-
54
3,642
271
3,913
4,233
320
4,553
3,669
271
3,940
Total finance costs
3,703
271
34 -
34
3,974
4,287
43
4,330
320
-
320
4,607
43
4,650
The interest relates to financial assets and liabilities carried at amortised cost together with the impact of interest rate
swaps.
56
Cranswick plc Report & Accounts 2009
Bank interest paid and similar
charges
Total interest expense for
financial liabilities not at fair
value through profit or loss
Movement in discount on
provisions
8. Taxation
a) Analysis of tax charge in the year
Tax charge based on the profit for the year:
UK corporation tax:
UK corporation tax on profits of the year
Adjustments in respect of previous years
Overseas tax:
Overseas tax on profits of the year
Adjustments in respect of previous years
Total current tax
UK deferred tax:
Origination and reversal of temporary differences
Adjustments in respect of previous years
Total deferred tax
2009
£’000
11,112
(314)
10,798
10,798
3,956
440
4,396
-
-
2008
£’000
9,038
6
9,044
-
54
9,098
599
(10)
589
Tax on profit on ordinary activities
15,194
9,687
The tax charge in the income statement is disclosed as follows:
Income tax expense on continuing operations
Income tax (credit)/expense on discontinued operations
Tax relating to items charged or credited directly to equity:
Group
Deferred tax (credit)/charge on share based payments
Deferred tax (credit)/charge on revaluation of cash flow hedges
Corporation tax credit on share options exercised
Tax (credit)/charge in the statement of recognised income and expense
Company
Deferred tax charge/(credit) on revaluation of cash flow hedges
Deferred tax (credit)/charge on share options exercised
Tax credit in the statement of recognised income and expense
2009
£’000
16,014
(820)
15,194
2009
£’000
(90)
(213)
(39)
(342)
2009
£’000
15
(30)
(15)
2008
£’000
9,162
525
9,687
2008
£’000
535
190
(88)
637
2008
£’000
(72)
52
(20)
Cranswick plc Report & Accounts 2009
57
b) Factors affecting tax charge for the period
The tax assessed for the year is higher (2008: lower) than the standard rate of corporation tax in the UK. The differences
are explained below:
-
-
-
-
-
-
2009
£’000
34,182
9,571
145
619
(872)
(456)
6,004
57
126
15,194
2009
£’000
10,883
811
326
(463)
11,557
2009
£’000
(935)
(114)
(122)
6,004
-
(437)
4,396
2008
£’000
35,344
10,603
69
(741)
(535)
241
50
9,687
2008
£’000
5,814
933
974
(258)
7,463
2008
£’000
390
10
(5)
194
589
Profit on ordinary activities before tax
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK
of 28 per cent (2008 - 30 per cent)
Effect of:
Disallowed expenses
Impairment of assets held for resale
Release of deferred tax on discontinued operations
Release of deferred tax on change of tax base
Industrial buildings allowances
Rollover and indexation
Deferred tax rate difference
Other
Adjustments in respect of prior years
Total tax charge for the year
c) Deferred tax
Group
The deferred tax included in the balance sheet is as follows:
Deferred tax liability in the balance sheet
Accelerated capital allowances
Rollover and holdover relief
Other temporary differences
Share based payments
Deferred tax liability
The deferred tax included in the income statement is as follows:
Deferred tax in the income statement
Accelerated capital allowances
Share based payments
Rollover relief
Industrial buildings allowances
Other temporary differences
Deferred income tax expense
58
Cranswick plc Report & Accounts 2009
Company
The deferred tax included in the balance sheet is as follows:
Deferred tax (asset)/liability in the balance sheet
Accelerated capital allowances
Rollover relief
Other temporary differences
Share based payments
Deferred tax (asset)/liability
2009
£’000
32
56
36
(147)
(23)
2008
£’000
165
39
208
(53)
359
d) Temporary differences associated with Group investments
At 31 March 2009 no deferred tax liability has been recognised (2008 - £nil) in respect of any taxes that would be
payable on the unremitted earnings of certain of the Group’s subsidiaries as the Group can control the timing of any
such payments. There are no income tax consequences to the Group in relation to dividends paid to Shareholders.
9. Discontinued operations
On 17 April 2009, the Board announced its decision to dispose of the trade and certain assets and liabilities of the Group’s
Pet Division for an initial consideration of £17.0 million. There is a mechanism in place to normalise working capital
through a cash adjustment. Cranswick plc will retain a 5.5 per cent share in the business going forward. The Pet Division
manufactures and sells bird food and also imports and sells tropical marine fish and related products. The disposal was
completed on 24 April 2009 and the final gain or loss on disposal will be recognised in the income statement in 2010.
As at 31 March 2009 the assets of the Pet Division that are being disposed of were classified as held for resale and the
assets and liabilities of the division are carried at their fair value. The loss on reclassification to held for resale has been
recognised in the income statement in the current year.
The results of the Pet Division for 2009 and 2008 are presented below:
Revenue
Expenses
Operating profit
Exceptional gain on sale of property, plant and equipment
Finance cost
Loss recognised on remeasurement to fair value
(Loss)/profit before tax from discontinued operations
Tax credit/(expense)
Profit for the year from discontinued operations
The tax credit/(expense) is analysed as follows:
On profit on ordinary activities for the year
Exceptional charge on abolition of IBAs
On exceptional gain on sale of property, plant and equipment
On reclassification to assets held for resale
2009
£’000
46,491
(44,182)
2,309
(271)
(2,544)
-
(506)
820
314
(607)
(541)
1,968
820
-
-
2008
£’000
39,665
(37,780)
1,885
792
(320)
2,357
(525)
1,832
(287)
(238)
(525)
-
-
The cash flow impact of exceptional items is £nil (2008 - £1,522,000 received in relation to asset disposals after
associated costs).
Cranswick plc Report & Accounts 2009
59
The major classes of assets and liabilities of the Pet Division being disposed of, as at 31 March 2009 were as follows:
Assets
Property, plant and equipment
Trade and other receivables
Inventories
Assets classified as held for resale
Liabilities
Trade and other payables
Liabilities classified as held for resale
Net assets held for resale
2009
£’000
8,210
6,037
6,140
20,387
4,591
4,591
15,796
Of the property, plant and equipment held for resale, £343,000 (after impairment charge of £119,000) was held by
the Company.
The net cash flows attributable to the discontinued Pet Division are as follows:
Operating cash flows
Investing cash flows
Financing cash flows
Net inflow/(outflow)
Profit per share from discontinued operations:
Basic
Diluted
2009
£’000
2,576
(1,068)
(562)
946
0.7p
0.7p
2008
£’000
845
(1,300)
(629)
(1,084)
4.0p
4.0p
10. Profit attributable to members
Of the profit attributable to members, the sum of £9,385,000 (2008 - £11,011,000) has been dealt with in the accounts
of Cranswick plc.
11. Equity dividends
Declared and paid during the year:
Final dividend for 2008 - 13.4p per share (2007 – 12.2p)
Interim dividend for 2009 - 7.0p per share (2008 – 6.5p)
Dividends paid
2009
£’000
6,169
3,228
9,397
2008
£’000
5,587
2,980
8,567
Proposed for approval of Shareholders at the Annual General Meeting on 27 July 2009:
Final dividend for 2009 – 14.7p (2008 – 13.4p)
6,801
6,195
60
Cranswick plc Report & Accounts 2009
12. 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 £18,988,000 (2008 - £25,605,000) 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 Group discloses in its consolidated income statement as exceptional items those material items which individually
or, if of a similar type, in aggregate need to be disclosed by virtue of their size or incidence if the financial statements
are to give a true and fair view. Accordingly, basic and diluted earnings per share are also presented on this basis using
the weighted average number of ordinary shares for both basic and diluted amounts as per the table below:
Basic weighted average number of shares
Dilutive potential ordinary shares – share options
2009
2008
Thousands
Thousands
46,099
127
46,226
45,832
286
46,118
Basic weighted average number of shares for 2009 excludes 195,000 shares (2008 – 195,000 shares) held during the
year by the Cranswick plc Employee Benefit Trust.
13. Intangible fixed assets
Group
Cost
At 31 March 2007
Acquisition of subsidiary undertakings
At 31 March 2008 and 31 March 2009
Impairments as at 31 March 2007, 2008 and 2009
Net book amounts at 31 March 2008 and 31 March 2009
Goodwill
£’000
117,520
236
117,756
-
117,756
In August 2008, the Group increased its investment in Cranswick Gourmet Bacon Company Ltd from 85 per cent to
100 per cent for a cash consideration of £38,000 and loan notes of £336,000. Goodwill arising from this amounted to
£219,000.
The Group has no other intangible assets.
Goodwill is subject to annual impairment testing. Goodwill acquired through business combinations has been allocated
for impairment testing purposes to the following principal cash-generating units:
Cash generating unit
Cooked meats
Sandwiches
Continental Fine Foods
Other
2009
£’000
86,903
16,526
10,968
3,359
117,756
2008
£’000
86,903
16,526
10,968
3,359
117,756
Cranswick plc Report & Accounts 2009
61
Assumptions used
The recoverable amount for each cash generating unit has been determined based on value in use calculations using
annual budgets for each business for the following year, approved by the Board of Directors, and cash flow projections
for the next four years. Forecast replacement capital expenditure is included from budgets and thereafter is assumed to
represent 100 per cent of depreciation.
Subsequent cash flows are forecast to grow in line with an assumed long-term industry growth rate of between 4 and 5
per cent derived from third party market information.
A discount rate of 9.3 per cent has been used (2008 - 9.1 per cent) being management’s estimate of the Group’s
weighted average cost of capital.
The calculation is most sensitive to the following assumptions:
•
•
•
Sales volumes
Gross margin
Discount rate
Sales volumes are influenced by the growth of the underlying food segment, the market shares of our customers,
selling prices, and the quality of our products and service. Historical volumes are used as the base and adjusted over the
projection period in line with current growth rates.
Gross margin depends upon average selling prices, the cost of raw materials and changes in the cost of production
overheads. Historical margins are used as the base, adjusted for management’s expectations derived from experience.
All calculations of this nature are sensitive to the discount rate used. Management’s estimate of the Group’s weighted
average cost of capital has been used for each cash generating unit.
Management believes that currently the assumptions used are unlikely to change to an extent which would reduce value
in use below the value of the recoverable amount. Assumptions and projections are updated on an annual basis.
62
Cranswick plc Report & Accounts 2009
14. Property, plant and equipment
Group
Cost
At 31 March 2007
Additions
Disposals
At 31 March 2008
Additions
Transfers between categories
Transfers to assets held for resale
Disposals
At 31 March 2009
Depreciation
At 31 March 2007
Charge for the year
Relating to disposals
At 31 March 2008
Charge for the year
Transfers to assets held for resale
Impairment loss
Relating to disposals
At 31 March 2009
Net book amounts
At 31 March 2007
At 31 March 2008
At 31 March 2009
1,698
5,272
(1,698)
-
5,272
161,252
Freehold
land and
buildings
£’000
27,803
8,218
Leasehold
improvements
Plant,
equipment
and vehicles
Assets in the
course of
construction
£’000
£’000
£’000
16,805
55
94,163
-
15,779
1,698
(1,556)
-
(7,540)
-
34,465
8,347
(5,632)
-
-
-
-
16,860
102,402
95
(535)
7,491
1,698
(8,108)
(1,103)
37,180
16,420
102,380
2,548
467
(654)
-
2,361
472
(2,047)
1,567
6,898
911
7,809
864
(535)
477
-
-
49,048
8,712
(5,226)
52,534
10,312
(3,483)
167
(934)
2,353
8,615
58,596
-
-
-
-
-
-
-
-
-
-
-
25,255
32,104
34,827
9,907
9,051
7,805
45,115
-
49,868
43,784
1,698
5,272
Total
£’000
138,771
25,750
(9,096)
155,425
21,205
(14,275)
(1,103)
58,494
10,090
(5,880)
62,704
11,648
(6,065)
2,211
(934)
69,564
80,277
92,721
91,688
Included in freehold land and buildings is land with a cost of £3,198,000 (2008 - £3,853,000) which is not depreciated
relating to the Group and £795,000 (2008 - £1,210,000) relating to the Company. The cost of freehold land and buildings
includes £935,000 (2008 - £935,000) in respect of capitalised interest. £nil of interest, which was the whole amount
eligible, was capitalised during the year (2008 - £397,000).
Cranswick plc Report & Accounts 2009
63
Company
Cost
At 31 March 2007
Additions
Disposals
At 31 March 2008
Additions
Transfers to assets held for resale
At 31 March 2009
Depreciation
At 31 March 2007
Charge for the year
Relating to disposals
At 31 March 2008
Charge for the year
Transfers to assets held for resale
Impairment loss
At 31 March 2009
Net book amounts
At 31 March 2007
At 31 March 2008
At 31 March 2009
15. Investment in subsidiary undertakings
Company
Shares at cost:
At 31 March 2007
Disposals
At 31 March 2008 and 31 March 2009
-
-
-
-
Freehold
land and
buildings
£’000
Plant,
equipment and
vehicles
£’000
2,431
2,431
72
43
(5)
110
125
(475)
-
1,956
235
-
-
131
21
152
21
(132)
119
160
2,300
2,279
1,796
33
12
(4)
41
31
72
39
69
163
Total
£’000
2,503
43
(5)
2,541
125
(475)
2,191
164
33
(4)
193
52
(132)
119
232
2,339
2,348
1,959
£’000
155,430
(4)
155,426
During the prior year the Group disposed of its investment in Cranswick GmbH for a cash consideration of £500,000 as
part of the disposal of the feed milling business. The profit on disposal was included as part of the exceptional item in
that year.
The principal subsidiary undertakings during the year were:
Food
Cranswick Country Foods plc
Studleigh-Royd Limited
Brookfield Foods Limited
The Sandwich Factory Group Limited (registered in Scotland)
Delico Limited
Pet
Cranswick Pet & Aquatics plc
64
Cranswick plc Report & Accounts 2009
Except where otherwise stated, each of the companies is registered in England and Wales and Cranswick plc holds
directly 100 per cent of the shares and voting rights of each subsidiary undertaking. On 17 April 2009, the trade and
certain assets and liabilities of Cranswick Pet & Aquatics plc were disposed of by the Group (Note 9).
16. Inventories
Group
Raw materials
Finished goods and goods for resale
Biological assets (see below)
2009
£’000
24,944
3,520
28,464
-
2008
£’000
24,218
6,278
142
30,638
The Group breeds and imports tropical marine fish and other invertebrates for supply to specialist aquatic retailers. At
31 March 2009 marine stock was held within assets held for resale at fair value. There are no inventories held by the
Company.
17. Trade and other receivables
Financial Assets:
Trade receivables
Amounts owed by Group undertakings
Other receivables
Non-financial assets:
Prepayments and accrued income
Trade receivables continuing operations
Trade receivables held for resale
Group
Company
2009
£’000
2008
£’000
64,438
68,504
-
2,810
67,248
6,407
73,655
64,438
5,614
70,052
-
3,474
71,978
5,370
77,348
68,504
-
68,504
2009
£’000
-
21,852
253
22,105
62
22,167
-
-
-
2008
£’000
-
44,177
20
44,197
42
44,239
-
-
-
Cranswick plc Report & Accounts 2009
65
Financial assets are carried at amortised cost. As at 31 March, the analysis of trade receivables that were past due but
not impaired is as follows:
Group
Trade receivables
Of which:
Not due
Past due date in the following periods:
£’000
64,438
68,504
£’000
56,425
57,683
Less than
30 days
£’000
Between 30 and
60 days
£’000
More than 60
days
£’000
6,572
7,718
1,006
2,061
435
1,042
2009
2008
Trade receivables are non-interest bearing and are generally on 30-60 days’ terms and are shown net of a provision for
impairment. As at 31 March 2009, trade receivables at nominal value of £352,000 (2008 - £634,000) were impaired and
fully provided for. Provision is made when there is objective evidence that the Group will not be able to recover balances
in full. Balances are written off when the probability of recovery is assessed as being remote.
Movements in the provision for impairment of receivables were as follows:
Bad debt provision
At 31 March 2007
Provided in year
Written off
At 31 March 2008
Provided in year
Transferred to assets held for resale
Written off
At 31 March 2009
There are no bad debt provisions against other receivables.
18. Other financial assets (current)
Forward currency contracts
Interest rate swap (1)
Interest rate swap (2)
Movement on hedged items:
Amounts recognised in equity
Amounts removed from equity and included in
the income statement
£’000
591
167
(124)
634
998
(782)
(498)
352
Group
Company
2009
£’000
139
-
124
263
2008
£’000
959
70
-
1,029
2009
£’000
2008
£’000
-
-
124
124
-
70
-
70
Group
Company
2009
£’000
263
(1,029)
(766)
2008
£’000
2009
£’000
2008
£’000
504
196
700
124
(432)
(70)
54
196
(236)
Movements on hedged foreign currency contracts are recycled through cost of sales. Interest rate movements on hedged
bank borrowings are recycled through finance costs. All ‘Other’ financial assets, are used for hedging.
66
Cranswick plc Report & Accounts 2009
Forward currency contracts
Forward currency contracts are used to hedge a proportion of anticipated purchases denominated in foreign currencies
and are held at fair value in the balance sheet. To the extent that these forward contracts represent effective hedges,
movements in fair value are taken directly to equity and are then recycled through the income statement in the period
during which the hedged item impacts the income statement. A description of amounts and maturities is contained in
note 22.
Interest rate swap (1)
Under the terms of this interest rate swap (relating to the Group’s previous bank facilities, which have now been repaid)
the Group receives LIBOR interest and pays fixed interest of 4.98 per cent. The notional principal amount of the swap
stood at £9,000,000 as at 31 March 2009 and reduces in equal semi-annual instalments of £4,500,000 to £nil by January
2010.
Interest rate swap (2)
Under the terms of this interest rate swap (relating to the Group’s new bank facilities) the Group receives LIBOR interest
and pays fixed interest of 2.04 per cent. The notional principal amount of the swap stood at £33,750,000 as at 31
March 2009 and reduces in equal quarterly instalments of £1,750,000 with a final notional payment of principal of
£16,250,000 in December 2011.
19. Trade and other payables
Current
Trade payables
Amounts owed to Group undertakings
Other payables
Deferred income
Non-current
Deferred income
20. Other financial liabilities
Current
Bank overdrafts
Amounts outstanding under revolving credit facility
Current instalments due on bank loan
Loan notes
Interest rate swap (1) – (note 18)
Group
Company
2009
£’000
2008
£’000
50,236
52,763
-
-
25,036
20,262
1
-
2009
£’000
201
41,745
4,102
-
2008
£’000
154
54,057
783
-
75,273
73,025
46,048
54,994
-
8
-
-
Group
Company
2009
£’000
12,437
9,000
12,500
762
173
2008
£’000
11,468
8,000
11,250
1,093
-
2009
£’000
6,157
9,000
12,500
460
173
2008
£’000
8,512
8,000
11,250
756
-
34,872
31,811
28,290
28,518
Non-current
Non-current instalments due on bank loan
36,382
50,414
36,382
50,414
Cranswick plc Report & Accounts 2009
67
All financial liabilities are amortised at cost.
A bank overdraft facility of £20 million (2008 - £20 million) is in place until December 2011, of which £12,437,000
(2008 - £11,468,000) was utilised at 31 March 2009. Interest is payable at a margin over base rate.
A revolving credit facility of £30 million is in place of which £9 million was utilised as at 31 March 2009 (2008 - facility
of £10 million of which £8 million was utilised). This facility expires in December 2011. Interest is payable on the loan
at a margin of 1.75 per cent above LIBOR.
The maturity profile of bank loans is as follows:
Group
Company
In one year or less
Between one year and two years
Between two and five years
Unamortised issue costs
2009
£’000
12,500
10,000
2008
£’000
11,250
50,625
2009
£’000
12,500
10,000
27,500
-
27,500
-
50,000
(1,118)
48,882
61,875
(211)
61,664
50,000
(1,118)
48,882
2008
£’000
11,250
50,625
61,875
(211)
61,664
The balance outstanding on the term loan of £50.0 million is repayable in 11 quarterly instalments of £2.5 million from
April 2009, followed by a single payment of £22.5 million in December 2011. Interest is payable on the loan at a margin
of 1.75 per cent above LIBOR. The loan is unsecured. The loan is subject to normal bank covenant arrangements. Under
the terms of the interest rate swap relating to the facilities the Group receives LIBOR interest and pays fixed interest of
2.04 per cent.
Loan notes bear interest based on base rate and are repayable on demand at six-monthly intervals.
21. Provisions
Group
At 1 April 2008
Provided in the year
Utilisation in the year
Unwinding of discount
At 31 March 2009
Analysed as:
Current liabilities
Non-current liabilities
Lease
provisions
£’000
1,489
87
(110)
34
1,500
2008
£’000
153
1,336
1,489
Group
2009
£’000
334
1,166
1,500
Lease provisions are held against dilapidation obligations on leased properties and for the costs of onerous leases for
property, plant and machinery. These provisions are expected to be utilised over the next five years. There are no
provisions held by the Company.
68
Cranswick plc Report & Accounts 2009
22. Financial instruments
An explanation of the Company and Group’s financial instruments risk management strategy is set out on pages 9 to 15
in the Group Operating and Financial Review.
Interest rate risk profile of financial assets and liabilities
The interest rate profile of the interest earning financial assets and interest bearing liabilities of the Group as at 31 March
2009 and their weighted average interest rates is set out below:
Group
As at 31 March 2009
Weighted
average
effective
interest
rate
%
Total
At floating
interest
rates
1 year
or
less
Fixed interest
1-2 years
2-3 years
£’000
£’000
£’000
£’000
£’000
Financial liabilities:
Bank overdrafts
Revolving credit facility
Bank loan (including the effect
of interest rate swaps)
5.11%
(12,437)
(12,437) -
3.48%
(9,000)
(9,000) -
3.67% (50,000)
(7,250)
(16,000)
Loan notes
2.40%
(762)
(762) -
-
-
-
-
-
(7,000)
(19,750)
-
(72,199)
(29,449)
(16,000)
(7,000)
(19,750)
Less: effect of interest rate swaps
-
(42,750)
16,000
7,000
19,750
Total financial liabilities excluding the effect
of interest rate swaps
(72,199)
(72,199) -
Financial assets: Cash at bank
2.86%
4,399
4,399 -
(67,800)
(67,800) -
-
-
-
-
-
-
As at 31 March 2008
Weighted
average
effective
interest
rate
%
Total
At floating
interest
rates
1 year
or
less
Fixed interest
1-2 years
2-3 years
£’000
£’000
£’000
£’000
£’000
Financial liabilities:
Bank overdrafts
Revolving credit facility
Bank loan (including the effect
of interest rate swaps)
6.54%
(11,468)
(11,468)
6.22%
(8,000)
(8,000)
-
-
-
-
6.05%
(61,875)
(43,875)
(9,000)
(9,000)
Loan notes
5.24%
(1,093)
(1,093)
-
-
(82,436)
(64,436)
(9,000)
(9,000)
Less: effect of interest rate swaps
-
(18,000)
9,000
9,000
Total financial liabilities excluding the effect
of interest rate swaps
(82,436)
(82,436)
Financial assets: Cash at bank
4.54%
3,770
3,770
(78,666)
(78,666)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The maturity profile of bank loans is set out in note 20.
Cranswick plc Report & Accounts 2009
69
The interest rate profile of the interest earning financial assets and interest bearing liabilities of the Company as at 31
March 2009 and their weighted average interest rates is set out below:
Company
As at 31 March 2009
Weighted
average
effective
interest
rate
%
Total
At floating
interest
rates
1 year
or
less
Fixed interest
1-2 years
2-3 years
£’000
£’000
£’000
£’000
£’000
Financial liabilities:
Bank overdrafts
Revolving credit facility
Bank loan (including the effect
of interest rate swaps)
5.11%
3.48%
(6,157)
(6,157) -
(9,000)
(9,000) -
3.67%
(50,000)
(7,250)
(16,000)
Loan notes
2.40%
(460)
(460) -
-
-
-
-
-
(7,000)
(19,750)
-
(65,617)
(22,867)
(16,000)
(7,000)
(19,750)
Less: effect of interest rate swaps
-
(42,750)
16,000
7,000
19,750
Total financial liabilities excluding the effect
of interest rate swaps
(65,617)
(65,617) -
Financial assets: Cash at bank
2.86% -
-
-
(65,617)
(65,617) -
-
-
-
-
-
-
As at 31 March 2008
Financial liabilities:
Bank overdrafts
Revolving credit facility
Bank loan (including the effect
of interest rate swaps)
Loan notes
Weighted
average
effective
interest
rate
%
6.54%
6.22%
6.05%
5.24%
Total
At floating
interest
rates
1 year
or
less
Fixed interest
1-2 years
2-3 years
£’000
£’000
£’000
£’000
£’000
(8,512)
(8,000)
(8,512) -
(8,000) -
-
-
-
-
(61,875)
(43,875)
(9,000)
(9,000) -
(756)
(756)
-
-
-
(79,143)
(61,143)
(9,000)
(9,000) -
Less: effect of interest rate swaps
-
(18,000)
9,000
9,000 -
Total financial liabilities excluding the effect
of interest rate swaps
(79,143)
(79,143) -
Financial assets: Cash at bank
4.54% -
-
-
(79,143)
(79,143) -
-
-
-
-
-
-
Currency profile
The Group’s financial assets at 31 March 2009 include sterling denominated cash balances of £2,853,000 (2008 -
£1,648,000), Danish krona £8,000 (2008 - £99,000), euro £1,378,000 (2008 - £611,000) and US dollar £160,000 (2008 -
£1,412,000), all of which are held in the UK with the exception of Danish krona £nil (2008 - £98,000) and euro £297,000
(2008 - £nil).
The proportion of the Group’s net assets denominated in foreign currencies is immaterial.
The Group’s financial assets and liabilities are denominated in sterling.
70
Cranswick plc Report & Accounts 2009
Credit risk
The Group makes a significant proportion of its sales to the major UK supermarket groups, which correspondingly
represent a significant proportion of the Group’s trade receivables at any one time. Based on the financial strength of
these customers, the Directors do not consider that the Group faces a significant credit risk in this regard.
All cash financial assets are held by UK financial institutions, with the exception of £297,000 held in euros with a
Portugese bank. The maximum credit exposure relating to financial assets is represented by their carrying values as at
the balance sheet date.
Fair value of financial instruments
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing
parties on an arm’s length basis. Fair value is determined by reference to market prices where an active market exists or
from discounting future cash flows based on market yield curves. All derivative financial instruments are shown on the
balance sheet at fair value.
The fair value of floating rate assets and liabilities is estimated to be equivalent to book value.
Group
2009
2008
Financial assets
Cash
Forward currency contracts
Interest rate swap (2) – (note 18)
Financial liabilities
Bank overdraft
Amounts outstanding under revolving credit facility
Bank loan, gross of issue costs
Loan notes
Interest rate swap (1) – (note 18)
At 31 March
Company
Financial asset
Book value
£’000
Fair value
£’000
Book value
£’000
Fair value
£’000
4,399
139
124
4,662
(12,437)
(9,000)
(50,000)
(762)
(173)
4,399
139
124
4,662
(12,437)
(9,000)
(50,000)
(762)
(173)
3,770
959
70
4,799
(11,468)
(8,000)
(61,875)
(1,093)
-
3,770
959
70
4,799
(11,468)
(8,000)
(61,875)
(1,093)
-
(72,372)
(72,372)
(82,436)
(82,436)
(67,710)
(67,710)
(77,637)
(77,637)
2009
2008
Book value
£’000
Fair value
£’000
Book value
£’000
Fair value
£’000
Interest rate swap (2) – (note 18)
124
124
70
70
Financial liabilities
Bank overdraft
Amounts outstanding under revolving credit facility
Bank loan, gross of issue costs
Loan notes
Interest rate swap (1) – (note 18)
(6,157)
(9,000)
(6,157)
(9,000)
(50,000)
(50,000)
(460)
(173)
(460)
(173)
(8,512)
(8,000)
(61,875)
(756)
-
(8,512)
(8,000)
(61,875)
(756)
-
(65,790)
(65,790)
(79,143)
(79,143)
At 31 March
(65,666)
(65,666)
(79,073)
(79,073)
Cranswick plc Report & Accounts 2009
71
The book value of trade and other receivables and trade and other payables equates to fair value for the Group and
Company. Details of these financial assets and liabilities are included in notes 17 and 19.
Hedges
Financial instruments designated as cash flow hedges are held at fair value in the balance sheet. The Group hedges two
types of cash flows:
i) Forward contracts to hedge expected future purchases
The Group hedges a proportion of its near-term expected purchases denominated in overseas currencies. Where these
hedges meet the hedge criteria of IAS 39 changes in fair value are posted directly to equity and subsequently recycled
through the income statement at the time that the hedged item affects profit or loss.
Group
euros
Amount
Maturities
Exchange rates
€6,500,000 1 April 2009 to 15 July 2009
€1.22 – €1.47
Fair value
£’000
139
These contracts were effective cash flow hedges under the criteria set out in IAS 39 and therefore these fair value gains
were recognised directly in equity.
The Company does not hold any forward contracts.
Interest rate swaps
ii)
The Group hedges a proportion of the interest cash flows payable in respect of bank loans.
•
•
Interest rate swap (1) – (note 18)
Under the terms of this interest rate swap (relating to the Group’s previous bank facilities, which have now been
repaid) the Group receives LIBOR interest and pays fixed interest of 4.98 per cent. The notional principal amount of
the swap stood at £9,000,000 as at 31 March 2009 and reduces in equal semi-annual instalments of £4,500,000 to
£nil by January 2010.
The swap was an ineffective cash flow hedge under the criteria set out in IAS 39 and therefore movements in fair
value have been posted to the income statement.
Interest rate swap (2) – (note 18)
Under the terms of this interest rate swap (relating to the Group’s new bank facilities) the Group receives LIBOR
interest and pays fixed interest of 2.04 per cent. The notional principal amount of the swap stood at £33,750,000
as at 31 March 2009 and reduces in equal quarterly instalments of £1,750,000 with a final notional payment of
principal of £16,250,000 in December 2011.
The swap was an effective cash flow hedge under the criteria set out in IAS 39 and therefore movements in fair value
have been posted directly to equity and are recycled through the income statement at the time the hedged item
affects the income statement.
72
Cranswick plc Report & Accounts 2009
Interest rate risk
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables
held constant, of the Group’s profit before tax (through the impact on floating rate borrowings). There is no material
impact on the Group’s equity.
Currency derivatives have not been included in the sensitivity analysis below as they are not considered to be exposed
to interest rate risk.
2009
sterling
2008
sterling
Increase / decrease in basis points
Effect on profit before tax
£000
+100
-100
+100
-100
(565)
565
(576)
576
Liquidity risk
The tables below summarise the maturity profile of the Group’s financial liabilities at 31 March 2009 and 2008 based
on contractual undiscounted payments.
Year ended 31 March 2009
Bank overdraft
Revolving credit facility
Bank loan
Loan notes
Trade and other payables
Interest rate swap (1) - (note 18)
Year ended 31 March 2008
Bank overdraft
Revolving credit facility
Bank loan
Loan notes
Trade and other payables
Less than
1 year
£’000
12,437
9,000
12,715
762
75,273
173
1 to 2
years
£’000
-
-
2 to 5
years
£’000
-
-
10,558
30,032
-
-
-
-
-
-
Total
£’000
12,437
9,000
53,305
762
75,273
173
110,360
10,558
30,032
150,950
Less than
1 year
£’000
11,468
8,000
11,715
1,093
73,025
1 to 2
years
£’000
-
-
54,591
-
8
105,301
54,599
2 to 5
years
£’000
-
-
-
-
-
-
Total
£’000
11,468
8,000
66,306
1,093
73,033
159,900
Cranswick plc Report & Accounts 2009
73
23. Called-up share capital
Group and Company
Authorised
2009
Number
2008
Number
2009
£’000
2008
£’000
Ordinary shares of 10p each
63,600,000
63,600,000
6,360
6,360
Allotted, called-up and fully paid
Ordinary shares of 10p each
2009
Number
2008
Number
2009
£’000
2008
£’000
At 1 April
On exercise of share options
Scrip dividends
At 31 March
46,225,491
45,954,326
4,623
4,595
125,168
109,299
167,554
103,611
12
11
17
11
46,459,958
46,225,491
4,646
4,623
On 5 September 2008, 77,905 ordinary shares were issued at 567.7 pence as a result of Shareholders exercising the scrip
dividend option in lieu of the cash payment for the 2008 final dividend.
On 23 January 2009, 31,394 ordinary shares were issued at 593.1 pence as a result of Shareholders exercising the scrip
dividend option in lieu of the cash payment for the 2009 interim dividend.
During the course of the year, 125,168 ordinary shares were issued to employees exercising SAYE options at prices
between 255.0 pence and 471.0 pence.
Of the unissued ordinary share capital £100,385 is reserved for allotment under the Savings Related and Executive Share
Option Schemes. The options are exercisable as follows:
Savings related
Savings related
Savings related
Savings related
Savings related
Savings related
Savings related
Savings related
Executive
Number
6,396
5,816
6,511
59,300
52,258
66,474
47,284
284,808
475,000
Exercise price
Exercise period
264p
415p
255p
375p
471p
679p
665p
474p
March 2005 to October 2009
March 2006 to October 2010
March 2007 to October 2011
March 2008 to October 2012
March 2009 to October 2013
March 2010 to October 2014
March 2011 to October 2015
March 2012 to October 2016
601p
July 2008 to July 2015
On 7 September 2007, 27,239 ordinary shares were issued at 844.1 pence as a result of Shareholders exercising the scrip
dividend option in lieu of the cash payment for the 2007 final dividend.
On 25 January 2008, 76,372 ordinary shares were issued at 790.0 pence as a result of Shareholders exercising the scrip
dividend option in lieu of the cash payment for the 2008 interim dividend.
During the course of the prior year, 137,554 ordinary shares were issued to employees exercising SAYE options at prices
between 255.0 pence and 679.0 pence, and 30,000 ordinary shares were issued to Directors and employees exercising
Executive share options at a price of 601.0 pence per ordinary share.
74
Cranswick plc Report & Accounts 2009
24. Share based payments
The Group operates three share option schemes, a Revenue approved scheme (SAYE), an unapproved scheme (Executive
Share Option) and a Long Term Incentive Plan (LTIP), all of which are equity settled.
Executive Share Option Scheme
Share options are granted periodically to promote the involvement of senior management in the longer term success of
the Group. Options can only be exercised if certain performance conditions are met by the Group. These conditions are
based on total Shareholder return over the performance period and require the Group to be in the top half of a basket
of food companies quoted on the London Stock Exchange selected by the remuneration Committee. Options have a
contractual life of ten years.
Directors may also apply for SAYE options on the same terms as apply to all other employees.
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, Executive
share options during the year:
Group
Outstanding as at 1 April
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding as at 31 March
2009
Number
490,000
(15,000)
-
-
2009
WAEP
£
6.01
6.01
-
-
2008
Number
535,000
(15,000)
(30,000)
-
475,000
6.01
490,000
Exercisable at 31 March
475,000
6.01
-
Company
Outstanding as at 1 April
Forfeited during the year
Exercised during the year
Expired during the year
2009
Number
265,000
-
-
-
2009
WAEP
£
6.01
-
-
-
2008
Number
265,000
-
-
-
2008
WAEP
£
6.01
6.01
6.01
-
6.01
-
2008
WAEP
£
6.01
-
-
-
Outstanding as at 31 March
265,000
6.01
265,000
6.01
Exercisable at 31 March
265,000
6.01
-
-
For the share options outstanding as at 31 March 2009, the weighted average remaining contractual life is 6.25 years.
(2008 - 7.25 years).
There were no options granted during the year.
The range of exercise prices for options outstanding at the end of the year was £6.01.
Cranswick plc Report & Accounts 2009
75
Long Term Incentive Plan (LTIP)
During the course of the year 177,500 options at nil cost were granted to Directors and senior executives, the share
price at that time was 632.0 pence. There is a three year performance period at the end of which half the options will
be measured against earnings per share (EPS) targets and the other half measured against total shareholder return
(TSR) targets. The EPS target allows 25 per cent of the shares subject to the target to be issued at nil cost at an
outperformance of 3 per cent and 100 per cent of the shares at an outperformance of 7 per cent with outperformance
between 3 and 7 per cent rewarded pro-rata. The TSR target allows 50 per cent of the shares subject to the target to
be issued at nil cost at the 50th percentile and 100% at the 75th percentile with performance between the 50th and
75th percentile rewarded pro-rata. The comparison companies are Carrs Milling Industries plc, Dairy Crest Group plc,
Devro plc, Glanbia plc, Greencore plc, Northern Foods plc, Robert Wiseman Dairies plc, Premier Foods plc and Uniq
plc. The options have a contractual life of ten years. 15,000 options were forfeited during the year leaving 542,500
outstanding.
Group
Outstanding as at 1 April
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding as at 31 March
Exercisable at 31 March
Company
Outstanding as at 1 April
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding as at 31 March
Exercisable at 31 March
2009
Number
380,000
177,500
(15,000)
-
-
542,500
-
2009
Number
250,000
125,000
-
-
-
375,000
-
2009
WAEP
£
-
-
-
-
-
-
-
2009
WAEP
£
-
-
-
-
-
-
-
2008
Number
190,000
190,000
-
-
-
380,000
-
2008
Number
125,000
125,000
-
-
-
250,000
-
2008
WAEP
£
-
-
-
-
-
-
-
2008
WAEP
£
-
-
-
-
-
-
-
The weighted average fair value of options granted during the year was £5.63 (2008 - £7.83). The range of exercise prices
for options outstanding at the end of the year was £nil.
All Employee Share Option Scheme (SAYE)
All employees are entitled to a grant of options once they have been in service for two years or more. The exercise price
is equal to the market price of the shares less 20 per cent on the date of the grant. The contractual life of the options
is 3, 5 or 7 years.
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, SAYE
share options during the year.
76
Cranswick plc Report & Accounts 2009
Group
Outstanding as at 1 April
Granted during the year (note i)
Forfeited during the year
Exercised during the year (note ii)
Expired during the year
Outstanding as at 31 March (note iii)
2009
Number
504,672
284,808
(135,068)
(125,168)
-
529,244
2009
WAEP
£
5.16
4.74
6.28
3.69
-
5.00
2008
Number
605,870
102,204
(66,208)
(137,194)
-
504,672
Exercisable at 31 March
17,461
3.20
11,978
Company
Outstanding as at 1 April
Granted during the year (note i)
Forfeited during the year
Exercised during the year (note ii)
Expired during the year
Outstanding as at 31 March
Exercisable at 31 March
2009
Number
10,599
9,371
(5,339)
(2,580)
-
12,051
-
2009
WAEP
£
5.28
4.74
6.71
4.71
-
5.08
-
2008
Number
16,387
3,793
-
(9,581)
-
10,599
-
2008
WAEP
£
4.42
6.65
5.14
3.66
-
5.16
3.91
2008
WAEP
£
4.20
6.65
-
3.98
-
5.28
-
i) The share options granted during the year were at £4.74, representing a 20 per cent discount on the price at the
relevant date.
ii) The weighted average share price at the date of the exercise for the options exercised was £6.37 (2008 - £6.58).
iii) Included within this balance are options over 6,396 shares (2008 – 18,756 shares) that have not been recognised
in accordance with IFRS 2 as options were granted on or before 7 November 2002. These options have not been
subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2.
For the share options outstanding as at 31 March 2009 the weighted average remaining contractual life is 3.58 years.
(2008 - 2.56 years).
The weighted average fair value of options granted during the year was £1.54 (2008 - £2.96). The range of exercise prices
for options outstanding at the end of the year was £2.55 - £6.79 (2008 - £2.55 - £6.79).
The fair value of the Executive, SAYE and LTIP equity settled options granted is estimated as at the date of grant using
the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were
granted. The following table lists the inputs to the model used for the years ended 31 March 2009 and 31 March 2008.
Group and Company
2009
2008
Dividend yield
Expected share price volatility
Risk free interest rate
Expected life of option (years)
Exercise prices
1.9% - 4.3%
24.5% - 31.0%
3.00% - 5.80%
3,5,7 years
£nil - £6.79
1.9% - 4.1%
24.5% - 31.0%
4.29% - 5.80%
3,5,7 years
£nil - £6.79
Cranswick plc Report & Accounts 2009
77
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may
occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which
may not necessarily be the actual outcome.
The initial fair value of executive options is adjusted to take into account the market-based performance condition.
25. Reconciliation of movements in equity
Group
Attributable to equity holders of the parent
Share
capital
Share
premium
(Note 1)
£’000
(Note 2)
£’000
Share
based
payments
(Note 5)
£’000
Hedging
reserve
Translation
reserve
Retained
earnings
Minority
interest
Total
equity
Total
(Note 6)
£’000
(Note 7)
£’000
£’000
£’000
£’000
£’000
At 1 April 2007
4,595
47,204
1,018
Cash flow hedges
Exchange
differences
Profit for the year
Exercise of options
Scrip dividends
Share based
payments
Deferred tax
recognised directly
in equity
Corporation tax
recognised directly
in equity
Purchase of
minority interest
Dividends
-
-
-
17
11
-
-
-
-
-
-
-
-
666
823
-
-
-
-
-
-
-
-
-
-
921
-
-
-
-
329
700
-
-
-
-
-
-
-
-
-
At 1 April 2008
4,623
48,693
1,939
1,029
Cash flow hedges
Exchange
differences
Profit for the year
Exercise of options
Scrip dividends
Share based
payments
Deferred tax
recognised directly
in equity
Corporation tax
recognised directly
in equity
Dividends
-
-
-
12
11
-
-
-
-
-
-
-
450
617
-
-
-
-
-
-
-
-
-
1,000
-
-
-
(766)
-
-
-
-
-
-
-
-
22
-
(17)
82,564
135,732
103
135,835
-
-
700
(17)
-
-
700
(17)
25,605
25,605
52
25,657
-
-
-
-
-
-
-
-
5
-
-
-
-
683
834
921
(725)
(725)
88
-
88
-
(8,567)
(8,567)
98,965
155,254
213
(553)
(29)
-
(29)
-
-
-
-
-
-
-
18,988
18,988
-
-
-
90
39
462
628
1,000
90
39
(9,397)
(9,397)
-
-
-
-
-
683
834
921
(725)
88
(155)
(155)
-
-
-
-
-
-
-
-
-
-
-
-
(8,567)
155,254
(553)
(29)
18,988
462
628
1,000
90
39
(9,397)
166,482
At 31 March 2009
4,646
49,760
2,939
263
(24) 108,898
166,482
78
Cranswick plc Report & Accounts 2009
Company
Share
capital
Share
premium
General
reserve
Merger
reserve
(Note 1)
£’000
(Note 2)
£’000
(Note 3)
£’000
(Note 4)
£’000
Share
based
payments
(Note 5)
£’000
Hedging
reserve
Retained
earnings
Total
(Note 6)
£’000
£’000
£’000
At 1 April 2007
4,595
47,204
4,000
1,806
210
306
5,735
63,856
Cash flow hedges
Profit for the year
Exercise of options
Scrip dividends
Share based
payments
Deferred tax
recognised
directly in equity
Dividends
At 1 April 2008
Cash flow hedges
Profit for the year
Exercise of options
Scrip dividends
Share based
payments
Deferred tax
recognised
directly in equity
Dividends
-
-
-
-
-
-
-
-
-
-
17
11
4,623
12
11
-
-
-
-
-
-
-
-
-
-
-
-
666 -
823 -
-
-
-
-
-
48,693
450 -
617 -
-
-
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,806
-
-
-
-
-
-
-
-
-
-
-
-
(236) -
(236)
11,011
11,011
-
-
-
-
-
-
70
54
683
834
107
20
20
(8,567)
(8,567)
8,199
67,708
(15)
9,385
39
9,385
462
628
251
30
30
(9,397)
(9,397)
-
-
-
107 -
317
-
-
-
-
-
251 -
-
-
At 31 March 2009
4,646
49,760
4,000
1,806
568
124
8,202
69,106
Notes:
1. Share capital
The balance classified as share capital represents the nominal value of ordinary 10p shares issued.
2. Share premium
The balance classified as share premium includes the net proceeds in excess of nominal value on issue of the
Company’s equity share capital, comprising 10p ordinary shares.
3. General reserve
This reserve arose in 1993 when the High Court of Justice granted permission to reduce the Company’s share
premium account by £4,000,000 which was credited to a separate reserve named the general reserve.
4. Merger reserve
Where shares have been issued as consideration for acquisitions, the value of shares issued in excess of nominal
value has been credited to the merger reserve rather than to the share premium account.
5. Share based payments reserve
This reserve records the fair value of share based payments expensed in the income statement.
6. Hedging reserve
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined
to be an effective hedge.
7. Translation reserve
This reserve records exchange differences arising from the translation of the financial statements of foreign
subsidiaries.
Cranswick plc Report & Accounts 2009
79
26. Additional cash flow information
Analysis of Group net debt
Cash and cash equivalents
Overdrafts
Other financial assets
Other financial liabilities
Revolving credit
Bank loans
Loan notes
Net debt
At
31 March
2008
Cash
flow
£’000
£’000
Other
non cash
changes
£’000
At
31 March
2009
£’000
3,770
(11,468)
(7,698)
70
(7,628)
-
(8,000)
(61,664)
(1,093)
(78,385)
658
(969)
(311)
-
(311)
-
(1,000)
13,155
331
12,175
(29)
-
(29)
193
164
(173)
-
(373)
-
(382)
4,399
(12,437)
(8,038)
263
(7,775)
(173)
(9,000)
(48,882)
(762)
(66,592)
Net debt is defined as cash and cash equivalents and derivatives at fair value less interest bearing liabilities (net of
unamortised issue costs). Cash and cash equivalents all relate to continuing operations.
At
31 March
2007
Cash
flow
£’000
£’000
Other
non cash
changes
£’000
At
31 March
2008
£’000
2,262
(2,756)
(494)
306
(188)
(2,000)
(72,794)
(927)
(75,909)
1,494
(8,712)
(7,218)
-
(7,218)
(6,000)
11,250
170
(1,798)
14
-
14
(236)
(222)
-
(120)
(336)
(678)
3,770
(11,468)
(7,698)
70
(7,628)
(8,000)
(61,664)
(1,093)
(78,385)
Cash and cash equivalents
Overdrafts
Other financial assets
Revolving credit
Bank loans
Loan notes
Net debt
80
Cranswick plc Report & Accounts 2009
Analysis of Company net debt
Overdrafts
Other financial assets
Other financial liabilities
Revolving credit
Bank loans
Loan notes
Net debt
Overdrafts
Other financial assets
Revolving credit
Bank loans
Loan notes
Net debt
At
31 March
2008
Cash
flow
£’000
£’000
Other
non cash
changes
£’000
At
31 March
2009
£’000
(8,512)
2,355
-
70
-
(8,442)
2,355
-
-
(8,000)
(61,664)
(756)
(78,862)
At
31 March
2007
-
-
(1,000)
13,155
296
14,806
Cash
flow
£’000
£’000
(2,102)
(6,410)
-
306
-
(1,796)
(6,410)
(2,000)
(72,794)
(927)
(77,517)
-
-
(6,000)
11,250
171
(989)
54
54
(173)
(6,157)
124
(6,033)
(173)
(9,000)
(373)
(48,882)
(460)
(492)
(64,548)
Other
non cash
changes
£’000
(236)
(236)
(120)
At
31 March
2008
£’000
(8,512)
70
(8,442)
(8,000)
(61,664)
(756)
(356)
(78,862)
27. Contingent liabilities
The Company, together with its subsidiary undertakings, has entered into a cross guarantee with Lloyds TSB Bank plc,
The Royal Bank of Scotland plc and Clydesdale Bank plc in respect of the Group’s facilities with those banks. Drawn
down amounts totalled £71,437,000 as at 31 March 2009 (2008 - £81,343,000).
For the Company, the amounts drawn down by other group companies which were guaranteed by the Company at the
year end totalled £6,280,000 (2008 - £2,956,000).
Cranswick plc Report & Accounts 2009
81
28. Commitments
a) The Directors have contracted for future capital expenditure for property, plant and equipment totalling £3,083,000
(2008 - £7,347,000).
b) The Group’s future minimum rentals payable under non-cancellable operating leases are as follows:
Group
Not later than one year
After one year but not more than five years
After five years
The Company has no non-cancellable operating leases.
29. Pension commitments
2009
£’000
2,718
7,481
14,007
24,206
2008
£’000
3,737
9,890
24,067
37,694
The Group operates a number of defined contribution pension schemes whereby contributions are made to schemes
operated by major insurance companies. Contributions to these schemes are determined as a percentage of employees’
earnings and the amount charged to the income statement is disclosed in note 6. Contributions owing to the insurance
companies at the year-end, included in trade and other payables, amounted to £55,000 (2008 - £nil).
30. 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 only
Related party
Subsidiaries
2009
2008
Services rendered to the
related party
£’000
Dividends received from
related party
£’000
15,660
15,015
8,769
9,772
Amounts owed by or to subsidiary undertakings are disclosed in the Company balance sheet on page 43. Any such
amounts are unsecured and repayable on demand.
Remuneration of key management personnel
Short-term employee benefits
Post-employment benefits
Share-based payment
82
Cranswick plc Report & Accounts 2009
2009
£’000
3,924
509
579
5,012
2008
£’000
3,010
448
451
3,909
31. Post balance sheet events
As notified to shareholders on 6 April 2009 Cranswick has exchanged contracts to acquire the whole of the issued share
capital of Bowes of Norfolk Limited, a pork processing business based in Norfolk, for a cash consideration of £17.2
million. The completion of the transaction is conditional upon clearance from the UK Competition Authorities which at
this moment in time is ongoing.
On 24 April 2009 the Pet Division was sold to the management team, headed up by Derek Black, for a consideration
of £17.0 million. There is a mechanism in place to normalise working capital through a cash adjustment. Cranswick plc
will retain a 5.5 per cent share in the business going forward. Derek Black resigned as a main board director on that day.
Derek Black will be a shareholder and director of the new company.
Cranswick plc Report & Accounts 2009
83
Advisers
Secretary
Malcolm Windeatt FCA
Company Number
1074383
Registered Office
Stockbrokers
Registrars
Auditors
Solicitors
Bankers
74 Helsinki Road
Sutton Fields
Hull
HU7 0YW
Investec Investment Banking – London
Brewin Dolphin Securities – Newcastle
Capita IRG plc
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 0GA
Ernst & Young LLP – Hull
Rollits – Hull
Lloyds TSB Bank plc
The Royal Bank of Scotland plc
Clydesdale Bank plc
Merchant Bankers
N M Rothschild & Sons – Leeds
84
Cranswick plc Report & Accounts 2009
Shareholder information
Five year statement
2009
£’m
2008
£’m
2007
£’m
2006
£’m
2005
£’m
Turnover *
606.8
559.2
479.8
401.6
282.8
Profit before tax *
34.7
33.0
32.1
30.6
20.6
Earnings per share *
40.5p
51.9p
49.3p
50.3p
37.2p
Dividends per share
21.7p
19.9p
18.1p
16.5p
14.5p
Capital expenditure
21.2
25.8
11.8
14.3
19.1
Net debt
Net assets
(66.6)
(78.4)
(75.9)
(77.1)
(92.4)
166.5
155.3
135.8
112.4
92.8
*: excludes discontinued Pet Division operations for all years presented.
Dividends per share relate to dividends declared in respect of that year.
Net debt is defined as per note 26 to the accounts.
Financial calendar
Preliminary announcement of full year results
Publication of Annual Report
Annual General Meeting
Payment of final dividend
Announcement of interim results
Payment of interim dividend
May
July
July
September
November
January
Cranswick plc Report & Accounts 2009
85
Shareholder analysis
at 8 May 2009
Classification
Private Shareholders
Corporate bodies and nominees
Size of holding (shares)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 50,000
50,001 – 100,000
Above 100,000
Share price
Share price at 31 March 2008
Share price at 31 March 2009
High in the year
Low in the year
Number of
holdings
Number of
shares
6,289,870
40,174,742
46,464,612
331,758
1,254,224
840,234
3,165,142
3,392,412
37,480,842
46,464,612
1,158
591
1,749
816
558
118
138
48
71
1,749
515p
544p
745p
506p
Share price movement
Cranswick’s share price movement over the five year period to May 2009 and comparison against the FTSE 350 Food
Producers and Processors Price Index (“FTSE FPP”) and against the FTSE All Share Price Index (“FTSE All Share”), both
rebased at May 2004, is shown below:
Cranswick
FTSE All Shares
FTSE 350 Food Producers
Source: Investec
86
Cranswick plc Report & Accounts 2009
Professional awards
Some of the awards in recent years
to Cranswick businesses
Meat Management Awards 2009
2009 Winner Manufacturer of the Year
Grocer Own Label Excellence Award
2009 Winner Delicatessen Meat Category – Sainsbury
Taste The Difference Traditional Spiced Ham
Winner Bacon & Sausage Category – Morrisons
The Best Lightly Oak Smoked Sweetcure
Rindless Back Bacon
2008 Winner Meat & Poultry Grocer Own Label
Category – Applewood Smoked Bacon
BPEX Foodservice Pork Product
of the Year Competition
2008 Gold
Gold
Gold
Best Cured Product – Jack Scaife
Hand Cured, Air Dried Gammon Steak
Best Fresh Pork Cut – Outdoor Reared
Hampshire Breed Thick Cut Pork Chops
Best Pork Ready Meal – Ham Shanks
in Dijonnaise Sauce
Silver Best Innovative Pork Product –
Smokey Flavour Maple BBQ Ribs
Best Innovative Pork Product –
Pork Shanks
Best Cured Product –
Muscavado Sweetcure Streaky Bacon
Gold
2007 Gold
British Turkey Awards
2006 Winner Best Ready to Eat Product award –
Sainsburys Taste the Difference Free
Range Turkey Breast
Meat and Poultry News Awards
2009 Winner Producer of the Year Award –
Cranswick plc supplier-
Thomas Dent of Penrith in Cumbria
2005 Winner Manufacturer of the Year
Super Meat Awards
2007 Winner Best Pork or Bacon Product –
Truly Irresistible Oak Smoked
Dry Cured Back Bacon
Finalist Best Pork or Bacon Product –
Sainsburys Taste the Difference Slow
Cook Outdoor Reared
British Pork Belly
Finalist Best Sausage Product – Sainsburys
Taste the Difference British Pork and
Caramelised Red Onion Sausages
Finalist Best Organic Product –
Sainsburys So Organic Dry Cured
British Bacon
Silver Best Cured Product –
2005 Finalist Best Sausage Product –
Muscavado Sweetcure Back Bacon
Silver Best Fresh Pork Cut –
Hampshire Outdoor Reared Rib Roast
Yorkshire Company of the Year 2007
2007 Winner Yorkshire Business Enterprise Award
Food Awards 2006
2006 Winner Best Packaging for a Product –
Sainsburys Taste The Difference
Dry Cured Sweet Cure Back Bacon
Aberdeen Angus Beef Sausage
Meat Industry Awards
2006 Winner Sausage of the Year – Sainsburys
‘Pancetta & Parmesan’ sausage
Guild of Fine Food Retailers
‘Great Taste’ Awards
2008 Gold
Taste The Difference Ultimate
Oak Smoked Bacon
Smoked Streaky Bacon
2005 Gold
Silver Unsmoked Streaky Bacon
Silver Chilli and Coriander Sausage
Bronze Pork Sausage
British Sandwich Association Awards
2005 Winner En-Route Retailer of the Year category
Finalist British Sandwich Designer of the Year
Cranswick plc Report & Accounts 2009
87
Production facilities
Fresh pork
Sausages
Bacon
Cooked meats
88
Cranswick plc Report & Accounts 2009
Cranswick was formed in the 1970s by farmers in East Yorkshire to produce
animal feed. The Company went on to the Stock Market in 1985 and
since that time has evolved into a business that is highly focused on the
food sector. Activities include the supply of fresh pork, gourmet sausages,
charcuterie, cooked meats, sandwiches and traditional dry cured bacon.
This now represents 100 percent of sales as the pet and aquatics business
was sold subsequent to the year end and has been treated as discontinued.
Financial highlights
Turnover
(£m)
606.8
559.2
Profit before tax*
(£m)
Earnings per share*
(pence)
Dividends per share
(pence)
34.7
32.2
53.7
21.7
49.1
19.9
2008 2009
2008 2009
2008 2009
2008 2009
• Turnover from continuing operations up 9 per cent to £607m
• Profit before tax from continuing operations up 8 per cent at £34.7m*
•
Increase of 9 per cent in earnings per share from continuing operations to 53.7p*
• Dividend up 9 per cent to 21.7p per share
*Before exceptional items
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Report & Accounts
Year ended 31 March
2009
Registered office: Helsinki Road, Sutton Fields, Hull HU7 0YW
Tel. 01482 372000
www.cranswick.co.uk