Full Year Results

RNS Number : 6288S

Carr's Milling Industries PLC

11 November 2013

 



11 November 2013

CARR'S MILLING INDUSTRIES PLC ("Carr's" or the "Group")

FULL YEAR RESULTS

"New Horizons for Growth"

Carr's (CRM.L), the fully-listed agriculture, food and engineering group, announces results for the 52 weeks ended 31 August 2013.

Financial highlights (continuing operations)

·     Revenue up 15.8% to £468.1m (2012: £404.1m)

·     Profit before taxation up 21.5% to £15.9m (2012: £13.1m)

·     EBITDA up 20.3% to £22.2m (2012: £18.4m)

·     Basic EPS up 31.1% to 128.7p (2012: 98.2p)

·     Adjusted EPS up 26.8% to 128.7p (2012: 101.5p)

·     Proposed final dividend of 16.5p up 13.8% resulting in a total for the period of 32.0p (2012: 29.0p)

·     Capital expenditure of £19.1m during the period with net debt of £22.1m at the period end (2012:£2.5m)

Commercial highlights

·     Agriculture revenue up 15.9% to £340.4m with profit before tax (including contribution from associate and JVs) up 22.5% to £11.6m.  Performance reflects the beneficial impact of the weather in the UK and USA as well as market share gains and the expansion of the retail network.

·     Food revenue up 17.0% to £94.2m, with profit before tax up 26.5% to £0.6m reflecting increased sales volumes and the benefit of port locations for imported wheat following the poor UK wheat harvest.

·     Engineering revenue up 12.4% to £33.4m, reflecting a busy period at Wälischmiller and MSM but with profit before tax down 10.6% to £4.2m following Bendalls' settlement with Bechtel.

Chris Holmes, Chairman, said:

"With a new Chief Executive and Group Finance Director this has been a year of transition for Carr's, a transition which has been effected smoothly and successfully. The Group has achieved a record profit for the year, building on last year's success.  This success can be attributed to strong operational performance, on-going pursuit of our strategic aims, benefits from the investments in assets, research and innovation, as well as assistance from adverse weather conditions, particularly in the UK and USA." 

Enquiries:

Carr's Milling Industries PLC Tim Davies (Chief Executive Officer) Neil Austin (Group Finance Director)	01228-554 600
Powerscourt Nick Dibden Sophie Moate	020 7250 1446 [e-mail]

Notes to Editors

Carr's Milling Industries (CRM.L) is an international leader in the provision of essential industrial services focused on the agriculture, food and engineering sectors. The group offers a range of services including the manufacturing and supply of flour, remote handling equipment, farm machinery, feed blocks for livestock, and a UK network of rural stores, with a facility footprint spanning the UK, Europe and North America, supplying 31 countries around the world.  The Group is listed on the London Stock Exchange.  www.carrs-milling.com

Chairman's Statement

Review of the Year

I am pleased to report that the Group achieved a record profit for the year, building on last year's success.  This success can be attributed to strong operational performance, on-going pursuit of our strategic aims, benefits from the innovation and investments that we've made, as well as assistance from adverse weather conditions, particularly in the UK and the USA.

All divisions exceeded budget expectations demonstrating management's ability to adapt to changing environments, as well as continuing to provide our high quality products and excellent customer service, whilst also pursuing new opportunities through geographical expansion and product development.

This commitment from the team, combined with the performance of the Group's strategic investments in joint ventures and associate, resulted in a 21.5% increase in profit before tax.  Our international operations contributed 46.6% of the Group's profit before tax.

During the year the Group further capitalised on its well invested assets, expanded trading with new customers and formed new collaborations with a view to further geographical and product expansion. "A perfect storm" of weather conditions, with a wet summer in 2012 followed by a long winter lasting through to Easter 2013 in the UK and widespread droughts covering the majority of the USA in 2012, supported the strong performance of our Agriculture and Food divisions. The Engineering division, particularly Carrs MSM and Wälischmiller, continued to perform well due to our innovative product offering and on-going development in new technologies.

Financial Review

Revenue for the period increased by 15.8% to £468.1 million (2012: £404.1 million).  Profit before tax was up 21.5% to £15.9 million (2012: £13.1 million).

Basic earnings per share for the period were up by 31.1% to 128.7 pence (2012: 98.2 pence) with fully diluted earnings per share of 126.4 pence (2012: 97.5 pence) and adjusted earnings per share of 128.7 pence (2012: 101.5 pence).

Net cash generated from operating activities was £4.0 million (2012: £8.3 million).  At the end of the period the Group had net debt of £22.1 million compared to net debt of £2.5 million at 1 September 2012.  This increase in net debt largely reflected total capital expenditure during the period of £19.1 million, of which £9.2 million was subsequently refinanced on a long term finance lease, and we continue to operate with ample headroom. Working capital increased by £9.0 million and contributions to the deficit in the pension scheme totalled £2.9 million. The pension deficit at the period end, before the related deferred tax asset, was £3.3m (2012: £5.4m).

During the year the Group extended its revolving credit facility from £10.0 million to £15.0 million, and with the exception of the bank overdraft facility of £5.0 million, which is renewed annually, the other facilities are committed through to November 2014.

Even after a period of substantial capital investment, our gearing and interest cover remain well within our conservative levels.  This sound financial position means that Carr's is well placed to continue to make strategic investments to drive growth in our businesses.

Dividend

The Board is proposing a 13.8% increase in the final dividend to 16.5 pence per ordinary share, which together with the two interim dividends of 7.75 pence per share each, paid in May and October 2013, make a total of 32.0 pence per share for the year (2012: 29.0 pence per share).  The final dividend, if approved by shareholders, will be paid on 17 January 2014 to shareholders on the register at the close of business on 20 December 2013 and the shares will go ex-dividend on 18 December 2013.

Board Composition and Corporate Governance

Ron Wood retired as Group Finance Director on 30 April, and I stepped down as Chief Executive on 28 February, taking over as Chairman from Lord Inglewood, who retired on the same date.   I am pleased to confirm that Tim Davies, who was appointed as our new Chief Executive Officer on 1 March, and Neil Austin, our new Group Finance Director, have got off to a strong start, building on the established foundations and driving the Company forward. All the Board changes have been effected very smoothly, assisted by the continuing Non-Executive Directors Alistair Wannop and Robert Heygate, along with the senior management across the Group.

I would like to take this opportunity to thank Lord Inglewood for his contribution as both a Non-Executive Director and Chairman of the Company through many successful and challenging years.  I would also like to thank Ron Wood for his commitment and dedication to the Company over 25 years.  It was a great pleasure to work with Ron and, with his support and financial tenacity, grow the business to the success it has become and will no doubt continue to be.

Outlook

The current financial year has got off to a strong start. The investments that we have made across the Group in terms of acquisitions, organic growth, and in our people are all making a contribution to the year's performance.

While the weather conditions that provided "the perfect storm" are unlikely to be repeated, the Agriculture division will benefit from the investment in the expansion of the UK and USA AminoMaxÒ facilities.  The expansion of operations in the USA, with the new business in Silver Springs, Nevada, and the joint venture operation at Iowa, will provide greater geographical coverage in the USA, and expand our existing customer network.

Following the commissioning of our new Kirkcaldy flour mill, further margin improvement is expected in this and future years. The Board is confident in achieving the financial benefits, operational efficiencies, and input savings as expected.

Development of Wälischmiller's new factory and office facilities in Markdorf, Germany are due for completion in December and the technologically advanced operations will benefit from this investment, ensuring enhanced production efficiencies. This, coupled with on-going product development, provides us with exciting opportunities in the short to medium term.  However, the associated one-off relocation costs, coupled with the decrease in nuclear work for the UK businesses, are expected to result in a reduced level of profitability from this division compared to the current year.

The Group remains ideally placed to capitalise on future opportunities, with a strong balance sheet and well invested assets.  The Board will continue to look at how best to achieve its strategic aims and achieve optimal returns for its shareholders.

Chris Holmes

Chairman

Chief Executive's Statement

I have been very impressed by what I have seen and experienced at Carr's in my first six months, most particularly in terms of the quality of the people, its assets and the business itself.  However, what is particularly encouraging is the potential that Carr's has for further sustainable growth.

Agriculture

Profit before tax for the period increased by 7.9% to £8.8 million (2012: £8.1 million) on revenue up by 15.9% to £340.4 million (2012: £293.8 million).  Profit before tax for the period, including contributions from associate and joint ventures, increased by 22.5% to £11.6 million (2012: £9.5 million).

The weather both in the UK and USA had a significant impact on the performance of our agriculture division driving the sales of feed, feed blocks, fuel and animal health products during the year. In the UK the wet autumn had an adverse impact on the quality of forage available and the duration and intensity of the 2012/13 winter accelerated sales. In the USA, the summer droughts of 2012 covered two thirds of the land area and 80% of the nation's farm land resulting in low quality forage. As in the UK, the subsequent harsh winter conditions have not been favourable for farmers, having a detrimental impact on farm incomes.

Importantly, there was underlying growth and market share gains beyond the impact of the weather that supported the record performance in Agriculture, particularly the increasing recognition and sales of our branded products AminoMax®, Crystalyx®, Smartlic® and Feed in a Drum®.

Retail sales in the UK increased by 23% over the prior year attributable to the prolonged, wet winter and our enhanced Country Store retail network.  Despite difficult winter conditions in the UK our high customer service levels were maintained due to the dedication of our staff.  Feed sales increased by 15% over the last year as a direct result of the winter conditions and heating oil, gasoline and diesel sales also benefitted from the weather.

However, we continued to deliver on our strategy of focusing on core trading areas, providing a full complement of products and services for the developing needs of our customers.  Previous investments at fuel depot sites in Lancaster, Cockermouth, Hexham and Carlisle also contributed to the improved performance.

Our branded feed blocks (Crystalyx®, Smartlic® and Feed in a Drum®) continue to achieve significant sales growth. We have commissioned university research in four areas to continue to develop our portfolio of low moisture block products. Significant growth in this area, combined with market share gains and favourable weather conditions, resulted in sales of feed blocks increasing by 9%.  

To support customer demand and future growth into new markets our USA subsidiary, Animal Feed Supplement Inc ("AFS"), purchased Western Feed Supplements, a low moisture feed block manufacturer in Silver Springs, Nevada in June 2013 for £0.8 million.  The plant is strategically located close to the significant cattle population in California which could not previously be accessed cost effectively from our existing plants. In August 2013, a joint venture company, ACC Feed Supplement LLC, was formed between AFS, our wholly owned US subsidiary, and Consumer Supply Distributing LLC ("CSD") to establish a low moisture feed block plant at CSD's plant in Sioux City, Iowa.  The plant will supply products through both companies' existing sales and distribution networks, and is expected to commence production in the fourth quarter of 2014.

AminoMax®, the patented rumen bypass protein product, produced at Watertown, New York State, increased sales on the previous year.  Based on future customer demand for AminoMax® we have invested with our JV partner a further £1.6 million to increase the plant capacity by 65%.  The extended plant commences operation this month.

As a key element of our strategy to be recognised as the leading dairy nutrition company, a new state of the art AminoMax®plant was commissioned at our Lancaster feed mill in July 2013.  The successful commissioning process was supported by the management team from Watertown, USA.

We remain positive about the future prospects for the Agriculture division. With on-going focus on research and development of further beneficial livestock products, we will continue to extend the reach of our products and services both in the UK and internationally.

Food

Revenue increased for our Food division by 17.0% to £94.2 million and profit increased by 26.5% to £0.6 million.

Eighteen months ago the Board approved the £17 million investment in a new state-of-the-art mill at Kirkcaldy, Scotland. In September 2013, flour milling production commenced at the new mill.  This strategic investment in a new technologically advanced mill was made against a backdrop of overcapacity in the UK flour milling market, substantial under investment in flour milling assets across the industry and ever increasing demands from customers for higher food safety standards.  This investment will allow us not only to meet our customers' needs and expectations but also to return the Food division to improved levels of financial performance.  We expect to see the benefits of the Group's investment start to be realised through 2014 with an increase in underlying performance expected to be fully realised in the short to medium term, driven from a mix of cost savings and planned operational efficiencies. The building of the new mill has been completed on time and within budget which is of great credit to all our team who have shown dedication and skill in delivering this project.

The 2012 wheat harvest in the UK was the worst in living memory both in terms of yield and quality. In contrast, the 2013 UK wheat harvest is expected to be good quality albeit due to the poor weather in 2012 planting was reduced and therefore the crop is the smallest since 2001.  The position of our two northern mills, Kirkcaldy, Scotland and Silloth, Cumbria at port locations has been key to the improved performance of the division.  Investment by the Forth Ports Authority and ourselves to open the Kirkcaldy harbour in 2012 has reaped significant rewards as we were able to source quality wheat from international markets with great flexibility and lower logistics costs.  The ability to source quality wheat from different markets, including the UK, is key to risk management within the division. 

Engineering

Profit before tax for the period decreased by 10.6% to £4.2 million (2012: £4.7 million) on revenue up by 12.4% to £33.4 million (2012: £29.7 million).

The objectives of the Engineering division are aligned with those of the Group, and our strategy to achieve this is by investing in the growth and development of the Engineering business through research, innovation and acquisition.

Wälischmiller, the remote handling and robotics business based in Germany, has had an exceptionally successful year.  The second phase of the £4.5 million investment in the new factory and offices at Markdorf is in the final phase and will complete in December 2013. The logistics of transferring the final phase of plant across to the new factory will cause a degree of disruption to production with some additional one-off costs to be incurred as a result. The more efficient production layout and the investment in technology will optimise operations in the forthcoming year. 

The experienced engineering design team continue to research and develop market leading and bespoke products for the nuclear industry and the oil and gas market, representing significant new opportunities for the business. A development contract with Statoil and Shell in Norway is on-going for the adaptation of Telbot®, the remote controlled robotic arm, for use in tank inspection. Wälischmiller recently exhibited at the International Robot Exhibition in Japan, which is the worldwide exhibition on robots and robotics for many industries including the nuclear and oil and gas industries. At the exhibition, the A100 and Joyarm robotic arm were exhibited as well as the V1000, a remote-controlled handling vehicle, which is a new innovative product which has the ability to be completely tailored to customer requirements and can work in in combination with, alongside or separately to the other products of Wälischmiller.

Carrs MSM based in Swindon, Wiltshire builds and services manipulators used mainly in the nuclear industry and research centres. In the period it has achieved record turnover building on the success of last year as it continues to execute sales based on the "life of plant" contract with Sellafield, signed in 2012.  Under the contract Carrs MSM supply master slave manipulator parts critical for the major operating plants at Sellafield.

Bendalls, the specialist fabricator, based in Carlisle is in the process of completing the delayed £4 million pressure vessel contract for a floating production, storage and offloading platform being built by Hyundai for the BP Quad 204 area.  The post-delivery contract issues with Bechtel in the USA reported last year have been resolved at an additional cost of £0.5 million.  While future contracts remain at a low level due to the lack of activity in the UK nuclear industry, particularly at Sellafield, new decommissioning projects are expected to commence in 2014 and Bendalls is well placed to capitalise on these opportunities. In the short term, the focus of Bendalls' current contracts is with the oil and gas industry.

Propects

2014 presents growth opportunities with the realisation of the benefits of the investments that we have made across the Group in terms of acquisitions, expansion, organic development, the new mill at Kirkcaldy, the investment in the expansion of AminoMax® facilities on both sides of the Atlantic and the new Wälischmiller factory and facilities in Germany. The Group is ideally placed to capitalise on future opportunities, with a strong balance sheet and well-invested assets.

Tim Davies

Chief Executive

11 November 2013

 

UNAUDITED CONSOLIDATED INCOME STATEMENT

for the period ended 31 August 2013

	Note	Unaudited 52 week period 2013	Audited 52 week period 2012
		£'000	£,000
Continuing operations
Revenue	2	468,083	404,058
Cost of sales		(419,270)	(360,124)
Gross profit		48,813	43,934
Distribution costs		(21,001)	(18,362)
Administrative expenses		(14,005)	(13,501)
Group operating profit		13,807	12,071
Profit on disposal of property and investment		-	282
Finance income		513	673
Finance costs		(1,318)	(1,348)
Share of post-tax profit in associate		1,953	1,180
Share of post-tax profit in joint ventures		916	201
Profit before taxation	2	15,871	13,059
Taxation	3	(3,130)	(2,954)
Profit for the period from continuing operations		12,741	10,105
Discontinued operations
Loss for the period from discontinued operations		-	(202)
Profit for the period		12,741	9,903
Profit attributable to:
Equity shareholders		11,427	8,510
Minority interests		1,314	1,393
		12,741	9,903
Basic earnings per ordinary share
Profit from continuing operations		128.7p	98.2p
Loss from discontinued operations		-	(2.3)p
	4	128.7p	95.9p
Diluted earnings per ordinary share
Profit from continuing operations		126.4p	97.5p
Loss from discontinued operations		-	(2.3)p
		126.4p	95.2p
Adjusted basic earnings per ordinary share
Profit from continuing operations		128.7p	101.5p
Loss from discontinued operations		-	(2.3)p
	4	128.7p	99.2p

 

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the period ended 31 August 2013

		Unaudited 52 week period 2013	Audited        52 week         period          2012
		£'000	£'000
Profit for the period		12,741	9,903
Other comprehensive income/(expense)
Items that may be reclassified subsequently to profit or loss:
- Foreign exchange translation gains/(losses) arising on              translation of overseas subsidiaries		231	(235)
Items that will not be reclassified subsequently to profit or loss:
- Actuarial losses on retirement benefit obligation:                - Group                - Share of associate		(566) (40)	(2,686) (419)
- Taxation credit on actuarial losses on retirement              benefit obligation:                - Group                - Share of associate		113 8	618 96
Other comprehensive expense for the period, net of tax		(254)	(2,626)
Total comprehensive income for the period		12,487	7,277
Total comprehensive income attributable to:
Equity shareholders		11,173	5,884
Minority interests		1,314	1,393
		12,487	7,277

UNAUDITED CONSOLIDATED BALANCE SHEET

as at 31 August 2013

		Unaudited 2013	Audited 2012
		£'000	£'000
Assets
Non-current assets
Goodwill		5,215	5,199
Other intangible assets		615	728
Property, plant and equipment		53,068	37,158
Investment property		675	1,005
Investment in associate		7,024	5,103
Interest in joint ventures		3,299	2,907
Other investments		72	71
Financial assets
- Non-current receivables		1	2
Deferred tax assets		2,044	2,480
		72,013	54,653
Current assets
Inventories		33,445	27,128
Trade and other receivables		66,434	59,651
Current tax assets		178	-
Financial assets
- Derivative financial instruments		2	-
- Cash and cash equivalents		22,884	23,294
		122,943	110,073
Total assets		194,956	164,726
Liabilities
Current liabilities
Financial liabilities
- Borrowings		(15,545)	(14,176)
- Derivative financial instruments		(8)	(309)
Trade and other payables		(58,282)	(56,108)
Current tax liabilities		(1,639)	(1,552)
		(75,474)	(72,145)
Non-current liabilities
Financial liabilities
- Borrowings		(29,448)	(11,573)
Retirement benefit obligation		(3,272)	(5,351)
Deferred tax liabilities		(3,765)	(3,733)
Other non-current liabilities		(4,956)	(4,064)
		(41,441)	(24,721)
Total liabilities		(116,915)	(96,866)
Net assets		78,041	67,860

Shareholders' equity
Share capital		2,223	2,219
Share premium		8,183	8,118
Equity compensation reserve		326	113
Foreign exchange reserve		415	160
Other reserve		888	901
Retained earnings		57,396	49,075
Total shareholders' equity		69,431	60,586
Minority interests in equity		8,610	7,274
Total equity		78,041	67,860

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the period ended 31 August 2013

Share Capital £'000

Share Premium £'000

Equity Compensation Reserve £'000

Foreign Exchange Reserve £'000

Other Reserve £'000

Retained Earnings £'000

Total Shareholders' Equity £'000

Minority Interests £'000

Total £'000

At 4 September 2011	2,216	8,059	84	360	913	45,343	56,975	5,869	62,844
Profit for the period	-	-	-	-	-	8,510	8,510	1,393	9,903
Other comprehensive expense	-	-	-	(235)	-	(2,391)	(2,626)	-	(2,626)
Total comprehensive (expense)/income	-	-	-	(235)	-	6,119	5,884	1,393	7,277
Dividends paid	-	-	-	-	-	(2,372)	(2,372)	-	(2,372)
Equity-settled share-based payment transactions, net of tax	-	-	29	-	-	8	37	12	49
Allotment of shares	3	59	-	-	-	-	62	-	62
Transfer	-	-	-	35	(12)	(23)	-	-	-
At 1 September 2012	2,219	8,118	113	160	901	49,075	60,586	7,274	67,860

At 2 September 2012	2,219	8,118	113	160	901	49,075	60,586	7,274	67,860
Profit for the period	-	-	-	-	-	11,427	11,427	1,314	12,741
Other comprehensive income/(expense)	-	-	-	231	-	(485)	(254)	-	(254)
Total comprehensive income	-	-	-	231	-	10,942	11,173	1,314	12,487
Dividends paid	-	-	-	-	-	(2,619)	(2,619)	-	(2,619)
Equity-settled share-based payment transactions, net of tax	-	-	213	-	-	9	222	22	244
Allotment of shares	4	65	-	-	-	-	69	-	69
Transfer	-	-	-	24	(13)	(11)	-	-	-
At 31 August 2013	2,223	8,183	326	415	888	57,396	69,431	8,610	78,041

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

for the period ended 31 August 2013

	Note	Unaudited 52 week period 2013	Audited 52 week period 2012
		£'000	£'000
Cash flows from operating activities
Cash generated from operations	5	7,233	11,974
Interest received		746	434
Interest paid		(1,280)	(1,385)
Tax paid		(2,707)	(2,710)
Net cash generated from operating activities		3,992	8,313
Cash flows from investing activities
Acquisition of subsidiaries (net of overdraft acquired)		(810)	(2,063)
Disposal of subsidiary		-	(350)
Loan to joint ventures		(807)	(881)
Purchase of intangible assets		(108)	(54)
Proceeds from sale of property, plant and equipment		221	643
Purchase of property, plant and equipment		(9,937)	(8,855)
Proceeds from sale of investment property		268	94
Purchase of investment property		-	(300)
Purchase of investments		(26)	(4)
Disposal of investment		10	107
Redemption of preference shares in joint venture		150	100
Net cash used in investing activities		(11,039)	(11,563)
Cash flows from financing activities
Proceeds from issue of ordinary share capital Net proceeds from issue of new bank loans		68 11,581	62 2,381
Finance lease principal repayments		(1,118)	(940)
Repayment of borrowings		(1,333)	(5,911)
(Decrease)/increase in other borrowings		(193)	628
Dividends paid to shareholders		(2,619)	(2,372)
Receipt of grant income		350	-
Net cash generated from/(used in) financing activities		6,736	(6,152)
Effect of exchange rate changes		110	(171)
Net decrease in cash and cash equivalents		(201)	(9,573)
Cash and cash equivalents at beginning of the period		22,876	32,449
Cash and cash equivalents at end of the period		22,675	22,876

NOTES TO THE UNAUDITED PRELIMINARY STATEMENT

1. Basis of preparation

     The Group's unaudited Preliminary Announcement does not constitute statutory consolidated financial statements for the 52 week period ended 31 August 2013 or the 52 week period ended 1 September 2012, which will be filed with the Registrar of Companies for the 52 week period ended 31 August 2013, following the Company's annual general meeting.

     The financial statements for the 52 week period ended 1 September 2012 were unqualified and have been delivered to the Registrar of Companies.

2. Segmental information

	Revenue		Profit/(loss) before taxation
	2013	2012	2013	2012
	£'000	£'000	£'000	£'000
Agriculture	340,441	293,796	8,751	8,108
Food	94,172	80,472	559	442
Engineering	33,423	29,743	4,203	4,702
	468,036	404,011	13,513	13,252
Adjustments	47	47
	468,083	404,058
Head office net expense			(457)	(1,034)
Retirement benefit charge			(222)	(477)
Adjustments related to derivative financial    instruments			236	(236)
Adjustments related to intangible assets			-	(122)
Other adjustments			(68)	13
Profit on disposal of property and investment			-	282
Share of post-tax profit in associate			1,953	1,180
Share of post-tax profit in joint ventures			916	201
Profit before taxation			15,871	13,059

 3. Taxation

		2013	2012
		£'000	£'000
(a) Analysis of the charge in the period Current tax: UK corporation tax   Current period   Prior period Foreign tax   Current period   Prior period		669 25 1,826 8	827 (160) 1,931 -
Group current tax		2,528	2,598
Deferred tax: Origination and reversal of timing differences   Current period   Prior period		626 (24)	275 81
Group deferred tax		602	356
Tax on profit from ordinary activities		3,130	2,954
(b) Factors affecting tax charge for the period The tax assessed for the period is lower (2012: lower) than the rate of corporation tax in the UK of 23.58% (2012: 25.16%).  The differences are explained below:
		2013 £'000	2012 £'000
Profit before taxation		15,871	13,059
Tax at 23.58% (2012: 25.16%) Effects of: Tax effect of share of profit in associate and joint ventures Tax effect of expenses that are not allowable in determining taxable profit Effects of different tax rates of foreign subsidiaries Effects of changes in tax rates Under/(over) provision in prior years Other		3,742 (677)   153 353 (457) 9 7	3,286 (347) 65 269 (262) (79) 22
Total tax charge for the period		3,130	2,954

4. Earnings per share

Basic earnings per share are based on profit attributable to shareholders and on a weighted average number of shares in issue during the period of 8,880,841 (2012: 8,868,438).  The calculation of diluted earnings per share is based on 9,037,234 shares (2012: 8,935,696).

	2013		2012
	Earnings £'000	Earnings per share pence	Earnings £'000	Earnings  per share pence
Continuing operations
Earnings per share - basic	11,427	128.7	8,712	98.2
Amortisation and non-recurring items:
Amortisation of intangible assets	252	2.8	492	5.5
Taxation relief on amortisation	(64)	(0.7)	(120)	(1.3)
Derivative financial instrument (gain)/loss in   respect of property, plant and equipment	(236)	(2.7)	236	2.7
Taxation/(relief) on derivative (gain)/loss	54	0.6	(54)	(0.6)
Profit on disposal of property	-	-	(175)	(2.0)
Taxation on profit on disposal of property	-	-	44	0.5
Profit on disposal of investment	-	-	(107)	(1.2)
Taxation relief on disposal of investment	-	-	(23)	(0.3)
Earnings per share - adjusted	11,433	128.7	9,005	101.5
Discontinued operations
Earnings per share - basic and adjusted	-	-	(202)	(2.3)
	11,433	128.7	8,803	99.2

5. Cash generated from operations

	2013	2012
	£'000	£'000
Profit for the period	12,741	10,105
Adjustments for:
Tax	3,130	2,954
Depreciation of property, plant and equipment	5,165	4,165
Depreciation of investment property	62	20
Intangible asset amortisation	252	492
Profit on disposal of property, plant and equipment	(108)	(153)
Profit on disposal of investment property	-	(45)
Profit on disposal of investment	(14)	(107)
Amounts written off property, plant and equipment	7	1
Amortisation of grants	(50)	(50)
Net fair value loss on share based payments	244	49
Net foreign exchange differences	(220)	138
Net fair value (gains)/losses on derivative financial instruments in  operating profit	(303)	309
Interest income	(513)	(673)
Interest expense and borrowing costs	1,354	1,403
Share of profit from associate and joint ventures	(2,869)	(1,381)
IAS19 income statement credit in respect of employer contributions	(2,867)	(3,772)
IAS19 income statement charge	222	477
Changes in working capital (excluding the effects of acquisitions):
Increase in inventories	(6,088)	(3,868)
Increase in receivables	(5,699)	(896)
Increase in payables	2,787	2,806
Cash generated from operations	7,233	11,974

6. Pensions

The Group operates its current pension arrangements on a defined benefit and defined contribution basis. The valuation of the defined benefit scheme under the IAS19 accounting basis showed a deficit net of the related deferred tax asset in the scheme at 31 August 2013 of £2.6m. (2012: £4.1m).

A Group subsidiary undertaking is a participating employer in a defined benefit pension scheme of the associate. The IAS19 accounting basis showed a deficit, for that scheme, net of the related deferred tax asset in the scheme at 31 August 2013 of £3.2m (2012: £3.6m). The Group recognises in its balance sheet approximately 50% of the deficit and deferred tax asset through its investment in associate.

In the period, the retirement benefit charge in respect of the Carr's Milling Industries Pension Scheme 1993 was £222,000 (2012: £477,000).

7. Analysis of changes in net debt

	At 2 September	Cash	Other Non-Cash	Exchange	At 31   August
	2012	Flow	Changes	Movements	2013
	£'000	£'000	£'000	£'000	£'000
Cash and cash equivalents	23,294	(410)	-	-	22,884
Bank overdrafts	(418)	99	-	110	(209)
	22,876	(311)	-	110	22,675
Loans and other borrowings: - current - non-current	(12,864) (10,445)	1,094 (11,149)	(1,492) 1,457	- -	(13,262) (20,137)
Finance leases:
- current	(894)	1,118	(2,298)	-	(2,074)
- non-current	(1,128)	-	(8,183)	-	(9,311)
Net debt	(2,455)	(9,248)	(10,516)	110	(22,109)

8.         The Board of Directors approved the preliminary announcement on 11 November 2013.

9.         The results included in the preliminary announcement are unaudited.  The financial information set out in this announcement does not constitute the statutory accounts for the periods ended 31 August 2013 and 1 September 2012.  The statutory accounts for the period ended 31 August 2013 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

10.       The Company intends to post a Summary Report and Accounts to shareholders by 18 December 2013.  The full Report and Accounts will be available upon request from the Company Secretary, Carr's Milling Industries PLC, Old Croft, Stanwix, Carlisle, CA3 9BA or alternatively on the Company's website: www.carrs-milling.com

 

 

END

 

 

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