LONDON (Alliance News) - Dairy Crest Group PLC on Wednesday said it completed a fundraising conducted in order to expand its cheese unit.
Earlier on Wednesday, Dairy Crest said it would place up to 14.1 million shares at a price of 495.00 pence each, representing about 10% of its currently issued shares. Later, the company confirmed it had raised the intended GBP70 million in gross proceeds at the planned price and share volume.
The stock was trading 8.0% lower at 493.80p per share on Wednesday morning.
The mid-cap dairy products maker said its directors bought a total of 37,151 of the placing shares.
Following the admission, the group has 155.5 million issued shares overall.
Dairy Crest said it intends to use the funds to expand its cheese business, as it saw a high demand for its Cathedral City brand during the year. The total cost of development, which is expected to take next four to five years, is expected to reach GBP85.0 million.
The group said it plans to enlarge its production capacity constraints within its existing facility at Davidstow in Cornwall. As a result, its cheese production capacity will be expanded to 77,000 tonnes from 54,000 tonnes per annum.
In addition, the company said it will use part of the proceeds to become self-sufficient in the supply of water and will improve its energy resilience at Davidstow creamery, thereby reducing the site's environmental impact.
The placing will be conducted through an accelerated bookbuild process, Dairy Crest said, with Peel Hunt LLP and Shore Capital Stockbrokers Ltd acting as joint bookrunners.
The dairy products maker also said on Wednesday said its performance during its recently-ended financial year was "robust" despite significant price inflation, as a reduction in pension scheme liabilities pushed profit up.
said it intends to conduct a placing to institutional investors to finance an expansion of its cheese business.
FTSE 250-listed Dairy Crest - which owns the Cathedral City, Clover, Frylight and Country Life brands - reported a pretax profit of GBP179.2 million for the financial year ended March, multiplying from GBP40.3 million the prior year.
The result was predominantly helped by an exceptional gain in relation to its pension fund of GBP130.9 million.
Adjusted pretax profit grew 3% to GBP62.3 million from GBP60.6 million.
Revenue came in 10% higher year-on-year at GBP456.8 million compared to GBP416.6 million, as the group saw an increase across the majority parts of the business except third party warehousing revenue.
Cheese & Functional Ingredients revenue rose 8.8% to GBP277.2 million from GBP254.8 million the year before while Butters, Spreads & Oils revenue grew to GBP174.2 million from GBP150.7 million.
Dairy Crest proposed the final dividend of 16.3 pence per share, unchanged from the prior year. This brings the total payout to 22.6p, slightly higher than 22.5p paid the year before.
The company also noted that its stock valuations and levels of debt were temporarily affected by input cost inflation. Total borrowing facilities stood at GBP368.0 million at the end of financial year.
"This has been a year of considerable progress for Dairy Crest. We have delivered a strong performance, broadly maintaining our industry-leading margins against a backdrop of unprecedented cost inflation in the butters market," said Chief Executive Mark Allen.
"We will continue to invest in our brands, supply chain and infrastructure to ensure that we are well positioned to capitalise on future growth opportunities," Allen added.
