Cavaghan hit by BSE

Cavaghan & Grey, the food group, said the BSE problem had "significantly affected the business and will continue to affect sales". Though pre- tax profits rose by pounds 5.4m to pounds 7.2m, sales at the frozen food retailing business were pounds 8.3m lower at pounds 39.4m due largely to a 40 per cent slump in sales of beef products.

In frozen food catering, operating profits were also affected by the BSE issue. However, the company said it was developing a larger range of fish and vegetable based products to reflect changing consumer purchasing trends.

Management said the company's chilled prepared foods business, which makes ready made meals for Marks & Spencer, had a programme of new product launches in place for autumn and Christmas. It said these, together with cost-cutting and the benefits from its capital expenditure programme, left the group well placed for the current year.

Group pre-tax profits were pounds 5.5m compared with pounds 988,000 the previous year when the figures were scarred by pounds 2.7m of exceptional charges, largely related to stock write-offs caused by "mad cow disease". The final dividend was 3.7p. The shares were unchanged at 60p.