Interim Results
Carr's Milling Industries PLC
23 April 2007
CARR'S MILLING INDUSTRIES PLC- INTERIM ANNOUNCEMENT
trading in line with current market expectations
Carr's (CRM.L), the Cumbria-based agriculture, food and engineering group,
announces a creditable performance for the 26 weeks to 3 March 2007 in the
context of adverse external factors affecting the Food and Agriculture
Divisions. The Group's pre-tax profit would have improved but for the impact of
high wheat prices in the Food Division.
FINANCIAL HIGHLIGHTS
•Revenue increased by 0.5% to £110.97m.
•Pre-tax profit reduced by 10.1% to £3.57m (reported) and by 12.3% to
£4.01m (adjusted*).
•Basic earnings per share were lower by 11.8% at 30.6p (reported) and by
16.0% at 32.5p (adjusted*).
•The interim dividend per share is unchanged at 5.5p.
* Adjusted figures exclude the amortisation of intangible assets, but include
share of operating profit in associate and joint ventures.
COMMERCIAL HIGHLIGHTS
•Agriculture, much the largest Division, increased its revenue and its
profit. In the UK, the Caltech feed block business again traded well; the
Carrs Billington Agriculture compound and blended feed business increased
sales and market share through service and product innovation; but
fertiliser revenue and margins again declined. In the USA, the Animal Feed
Supplement feed block business increased sales volumes by 14%.
•The Food Division's profit virtually halved following an unsuccessful
attempt to pass on to customers the full cost of both the rapid and massive
increase in wheat prices and significantly higher energy costs.
•Engineering traded solidly, albeit with reduced revenue and with profits
similar to the strong comparator period.
With regard to prospects, Richard Inglewood, Chairman, stated ' Trading in our
markets presents many challenges, but in the past the Group has succeeded in
combating adverse conditions and achieving growth. Following the trading
statement on 14 February 2007, the Company is trading in line with the market's
expectations.'
Presentation:
Today, there will be a presentation to brokers' analysts and private client
investment advisers between 13.00 and 14.00, over a sandwich lunch, at the
offices of Bankside Consultants, 1 Frederick's Place, London EC2R 8AE. Those
wishing to attend are asked to notify Charles Ponsonby of Bankside Consultants
on 020-7367 8851 /charles.ponsonby@bankside.com
Enquiries:
Carr's Milling Industries plc 01228-554 600
Chris Holmes (Chief Executive
Officer)
Ron Wood (Finance Director)
Bankside Consultants Limited
Charles Ponsonby 020-7367 8851
CHAIRMAN'S INTERIM STATEMENT
The unaudited Group result for the 26 weeks to 3 March 2007 is a creditable
performance in the context of adverse external factors affecting the Food and
Agriculture Divisions. Principal amongst these was the massive increase in wheat
prices impacting the cost of flour, primarily, and animal feed, but other market
difficulties continued to affect the UK compound feed and fertiliser businesses,
in particular.
FINANCIAL REVIEW
Although revenue was marginally up at £110.97m (2006: £110.39m), reported
pre-tax profit reduced by 10.1% to £3.57m (2006: £3.97m) and basic earnings per
share was 11.8% lower at 30.6p (2006: 34.7p). The result for the period reflects
a £0.14m increase in pension-related costs to £0.62m (2006: £0.48m).
Adjusted Group pre-tax profit reduced by 12.3% to £4.01m (2006: £4.57m), with an
adjusted operating margin of 4.1% (2006: 4.8%). Adjusted earnings per share was
16.0% lower at 32.5p (2006: 38.7p). Adjusted figures exclude the amortisation of
intangible assets, but include the share of operating profit in associate and
joint ventures.
Period end shareholders' equity totalled £21.8m, as against £20.4m at 2
September 2006 and £22.1m at 4 March 2006. Net debt totalled £18.1m as against
£13.9m and £21.7m, respectively, with gearing of 83%, as against 68% and 98%,
respectively. Net finance costs of £0.44m (2006: £0.58m) were covered 7.6 times
(2006: 7.3 times) by Group operating profit.
INTERIM DIVIDEND
The Board has declared an unchanged interim dividend per share of 5.5p, to be
paid on 31 May 2007 to shareholders on the register at close of business on 4
May 2007, with an ex-dividend date of 2 May 2007.
BUSINESS REVIEW
The £0.56m decrease in adjusted Group pre-tax profit reflected the virtual
halving of the Food Division's operating profit. Agriculture, much the largest
Division, increased its profit, if the results of the associate and joint
ventures are taken into account. Engineering, much the smallest Division,
experienced a similar level of profit to the strong comparator period last year.
The Group's pre-tax profit would have improved but for the impact of high wheat
prices on the Food Division.
Agriculture
The Group's Agriculture business comprises, in the UK (primarily in the North
West of England and South West of Scotland), four related activities - animal
feed manufacture, fertiliser blending, agricultural retailing and oil
distribution - and, in the USA and Germany, animal feed manufacture.
Operating profit (before retirement benefit charge) of £2.57m (2006: £2.61m) was
achieved on a revenue of £81.89m (2006: £80.46m).
United Kingdom
Agriculture's UK market place was even more challenging than last year. This
reflected the continuance of a low farm gate milk price (with farmers receiving
as little as 17 pence per litre during the period), high energy costs, and
over-capacity in the animal feed market in the Group's trading area.
Additionally, the high wheat prices impacted animal feed margins, as some of the
cost increase could not immediately be passed on to customers, few of whom are
arable farmers. In England, farmers experienced delays in receipt of the Single
Farm Payment subsidy, albeit not as severe as in the previous year, causing
uncertainty in their cash flow.
The Group's low moisture feed block business in the UK is Caltech, with a plant
at Silloth (Cumbria). This successful business traded well across the full
product range and benefited from the launch of a trialled health product,
Garlyx, for ruminant animals and the equine market.
The Group's principal compound and blended feed block business in the UK is
Carrs Billington Agriculture, in association with Edward Billington & Sons
Limited. This business has four compound feed mills - at Carlisle (Cumbria),
Lancaster (Lancashire), Langwathby (Cumbria) and Stone (Staffordshire) - and
three blended feed mills - at Askrigg (North Yorkshire), Kirkbride (Cumbria) and
Lancaster. In the period, Carrs Billington Agriculture increased sales and
market share through service and product innovation.
In November 2006, Afgritech, a 50:50 joint venture with Afgri Operations, one of
the largest South African agriculture companies, launched AminoMaxTM, a patented
innovative rumen bypass protein for feeding to cattle and sheep, produced at the
Langwathby mill. Initially available only to customers of Carrs Billington
Agriculture, Afgritech has assisted in winning new customers for the Group. Work
is ongoing to extend the sale of AminomaxTM to the USA animal feed market.
Bibby Agriculture is a joint venture company, 50% owned by Carrs Billington
Agriculture (Sales). It was formed in 2005 to sell animal feed manufactured by
its shareholders, fertiliser and other farming supplies in Wales and bordering
counties. In the period, Bibby Agriculture traded well, ahead of budget.
The Autumn sales of fertiliser from the three manufacturing and blending plants,
at Invergordon (Easter Ross), Montrose (Angus) and Silloth (Cumbria), producing
a wide range of fertilisers, were lower than last year. In the first half,
revenue and margins declined, ahead of the March/April peak selling period,
reflecting farmers' cautious approach to market conditions.
Carr's agricultural retailing comprises 14 branches from Perth in the North to
Leek (Staffordshire) in the South, selling farm supplies. Carr's Machinery
distributes new and used agricultural and ground care machinery from six of
these branches, in the North of England and the South West of Scotland. In the
period, sales of farm inputs, machinery and parts exceeded budget.
Wallace Oils, which was acquired in April 2005, supplies oils and lubricants to
a broad customer base out of three depots, located at Carlisle, Dumfries and
Stranraer, the latter two in Dumfries and Galloway. In the period, the oil
business exceeded budget despite severe competition and the milder weather. In
January 2007, the entire share capital of Johnstone Fuels and Lubricants Limited
was acquired; Johnstone Fuels is an oil distribution business with three depots,
at Dumfries, Castle Douglas and Newton Stewart, all of them in Dumfries and
Galloway. In the year ended 30 April 2006, Johnstone Fuels reported an audited
turnover of £13.5m and at that date it had shareholders' funds of approximately
£0.9m. The integration of the Johnstone Fuels and Wallace Oils businesses is
progressing well and it is planned to combine the two depots at Dumfries.
Overseas
The Group's principal overseas business is the wholly-owned Animal Feed
Supplement Inc., which produces low moisture feed block at two plants in the
USA, at Belle Fourche (South Dakota) and Poteau (Oklahoma). In the period,
Animal Feed Supplement traded strongly, with sales volumes up 14% on last year.
In January 2006, Crystalyx Products GmbH, a 50:50 joint venture with Agravis,
one of Germany's largest agricultural companies, commissioned a new low moisture
animal feed plant to manufacture Crystalyx in Oldenburg, North West Germany for
the domestic market. In the period, Crystalyx Products traded ahead of
expectations and expanded its market base with sales into Eastern Europe.
Food
Carr's principal food companies are the flour millers: Carr's Flour Mills at
Silloth (Cumbria), Hutchisons at Kirkcaldy (Fife) and Greens at Maldon (Essex).
Operating profit (before retirement benefit charge) of £0.92m (2006: £1.70m) was
achieved on a revenue of £25.14m (2006: £24.53m).
The feature of the period was the rapid and massive increase in wheat prices,
with year-on-year prices higher by approximately £30/tonne or 40%. This rise in
price was a global trend driven partly by a disastrous harvest in Australia and
increased demand for cereals in the bio-fuel industry. Energy costs were also
significantly higher than the previous year, with the last of the mills moving
to a higher cost contract. In a highly competitive market, the flour industry
has so far been unsuccessful in its attempt to pass on to customers the full
cost of these increases, resulting in a significant deterioration in flour
margins.
Engineering
Engineering comprises Bendalls and R Hind, both of which are based in Carlisle,
and Carrs MSM, which is based in Swindon. Bendalls, whose specialism is
precision welding, designs and manufactures process plant and equipment; R Hind
provides vehicle bodybuilding and accident repairs for cars and commercial
vehicles; and Carrs MSM designs and manufactures master slave manipulators,
which are key components for many industries but notably the nuclear industry.
Operating profit (before retirement benefit charge) of £0.59m (2006: £0.59m) was
achieved on a revenue of £3.87m (2006: £5.32m).
In the period, Engineering traded solidly, albeit with reduced revenue and with
profit similar to the strong comparator period. The build-up of work on nuclear
decommissioning for British Nuclear Group in West Cumbria is slow as the time
from quotation to order is long. In the period, Bendalls completed its
fabrication for the SeaGen next generation tidal energy device for installation
in Strangford Lough in Northern Ireland later this year.
OUTLOOK
Agriculture
Market conditions are tough and the Division has traded well to achieve these
results in the first half year. We do not expect to see much change in trading
conditions for the remainder of 2007. However, development of the AminomaxTM
product in the UK and the USA, and expansion of our market for Crystalyx in
mainland Europe, is expected to achieve growth in the years ahead.
Food
The flour market remains highly competitive. Carrs Flour Mills is continuing to
cut costs where this can be achieved without affecting the high quality of its
products or service.
Engineering
The order book across the three businesses has improved in recent months, albeit
that Bendalls will have a lower activity level in the third quarter. The result
for the year is expected to be similar to 2006, which returned an enhanced
performance over previous years.
Overall
Trading in our markets presents many challenges, but in the past the Group has
succeeded in combating adverse conditions and achieving growth. Following the
trading statement on 14 February 2007, the Company is trading in line with the
market's expectations.
Richard Inglewood
Chairman 23 April 2007
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the 26 weeks ended 3 March 2007
26 weeks ended 26 weeks ended 52 weeks ended
3 March 4 March 2 September
2007 2006 2006
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Continuing operations
Revenue 110,970 110,388 242,576
Net operating expenses (107,632) (106,143) (235,460)
Group operating profit 3,338 4,245 7,116
Analysed as:
Operating profit before 3,540 4,719 7,987
non-recurring items and
amortisation
Non-recurring items and (202) (474) (871)
amortisation
Group operating profit 3,338 4,245 7,116
Interest receivable and similar 216 92 384
income
Interest payable and similar (658) (671) (1,395)
charges
Share of post-tax profit in 669 299 218
associate and joint ventures
Profit before taxation 3,565 3,965 6,323
Taxation (902) (1,130) (1,989)
Profit for the period 2,663 2,835 4,334
Profit/(loss) attributable to 140 (14) 139
minority interest
Profit attributable to equity 2,523 2,849 4,195
shareholders
2,663 2,835 4,334
Dividend per share (pence)
Paid 12.5 11.0 16.5
Proposed 5.5 5.5 12.5
Earnings per share (pence)
Basic 30.6 34.7 51.0
Diluted 30.1 34.3 50.4
UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the 26 weeks ended 3 March 2007
26 weeks 26 weeks 52 weeks
ended ended ended
3 March 4 March 2 September
2007 2006 2006
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Foreign exchange translation
differences arising on
translation of overseas (38) 153 (150)
subsidiaries
Actuarial (losses)/gains on
retirement benefit obligation:
- Group - (972) (3,900)
- Share of associate - - 206
Taxation credit/(charge) on
actuarial movement
on retirement benefit obligation:
- Group - 292 1,170
- Share of associate - - (62)
Net expenses recognised directly
in equity (38) (527) (2,736)
Profit for the period 2,663 2,835 4,334
Total recognised income for the 2,625 2,308 1,598
period
Attributable to minority interest 140 (14) 139
Attributable to equity 2,485 2,322 1,459
shareholders
2,625 2,308 1,598
UNAUDITED CONSOLIDATED BALANCE SHEET
as at 3 March 2007
As at As at As at
3 March 4 March 2 September
2007 2006 2006
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Assets
Non-current assets
Goodwill 845 155 235
Other intangible assets 835 1,249 802
Property, plant and equipment 29,145 29,288 29,172
Investment property 766 818 794
Investment in associate 1,487 1,092 982
Interest in joint ventures 869 863 704
Other investments 254 255 254
Financial assets
- Derivative financial 96 7 37
instruments
- Non-current receivables 101 216 208
Deferred tax assets 5,061 4,286 5,162
39,459 38,229 38,350
Current assets
Inventories 18,551 19,365 11,944
Trade and other receivables 38,729 39,787 33,546
Current tax assets 4 1 1
Cash and cash equivalents 716 94 2,292
58,000 59,247 47,783
Total assets 97,459 97,476 86,133
Liabilities
Current liabilities
Financial liabilities
- Borrowings (12,408) (15,131) (9,682)
- Derivative financial (1) - (27)
instruments
Trade and other payables (32,677) (31,959) (25,387)
Current tax liabilities (1,564) (1,773) (1,324)
(46,650) (48,863) (36,420)
Non-current liabilities
Financial liabilities
- Borrowings (6,361) (6,641) (6,512)
- Derivative financial - (33) -
instruments
Retirement benefit obligation (15,137) (12,905) (15,796)
Deferred tax liabilities (3,647) (3,712) (3,600)
Other non-current liabilities (1,787) (1,550) (1,524)
(26,932) (24,841) (27,432)
Total liabilities (73,582) (73,704) (63,852)
Net assets 23,877 23,772 22,281
Shareholders' equity
Ordinary shares 1,963 2,058 2,058
Share premium 5,073 5,004 5,004
Equity compensation reserve 46 - 22
Foreign exchange reserve (268) 73 (230)
Other reserve 1,586 1,616 1,601
Retained earnings 13,401 13,325 11,895
Total shareholders' equity 21,801 22,076 20,350
Minority interests in equity 2,076 1,696 1,931
Total equity 23,877 23,772 22,281
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
for the 26 weeks ended 3 March 2007
26 weeks ended 26 weeks ended 52 weeks ended
3 March 4 March 2 September
2007 2006 2006
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Cash flows from operating
activities
Cash generated from/(used by) 585 (1,579) 11,069
operations
Interest received 204 233 379
Interest paid (574) (888) (1,755)
Tax paid (724) (1,011) (2,454)
Net cash (used by)/generated from (509) (3,245) 7,239
operating activities
Cash flows from investing
activities
Acquisition of subsidiaries (net (1,049) - (3)
of cash acquired)
Investment in joint ventures - (685) (710)
Net payment of loans to joint (90) - (280)
ventures
Receipt of non-current receivable 100 - -
Purchase of intangible assets (5) - (9)
Proceeds from sale of property, 139 111 192
plant and equipment
Purchase of property, plant and (1,275) (1,488) (2,901)
equipment
Proceeds from sale of investments - - 1
Net cash used by investing (2,180) (2,062) (3,710)
activities
Cash flows from financing
activities
Net proceeds from issue of 75 32 32
ordinary share capital
Net purchase of own shares held (101) - -
in trust
Net proceeds from issue of new 1,500 1,500 -
bank loans and other borrowings
Finance lease principal (486) (529) (1,047)
repayments
Repayment of borrowings (2,069) (618) (2,487)
Dividends paid to shareholders (1,032) (905) (1,358)
Net cash used by financing (2,113) (520) (4,860)
activities
Effects of exchange rate changes 3 36 (88)
Net decrease in cash and cash (4,799) (5,791) (1,419)
equivalents
Cash and cash equivalents at 1,084 2,503 2,503
beginning of the period
Cash and cash equivalents at end (3,715) (3,288) 1,084
of the period
Cash and cash equivalents
consists of:
Cash and cash equivalents per the 716 94 2,292
balance sheet
Bank overdrafts included in (4,431) (3,382) (1,208)
borrowings
(3,715) (3,288) 1,084
NOTES TO THE UNAUDITED INTERIM FINANCIAL RESULTS
1. Basis of preparation
The financial information for the 26 weeks to 3 March 2007 does not constitute
statutory accounts for the purposes of section 240 of the Companies Act 1985 and
has not been audited. No statutory accounts for the period have been delivered
to the Registrar of Companies.
The financial information in respect of the 52 weeks ended 2 September 2006 has
been produced using extracts from the statutory accounts for this period.
Consequently, this does not constitute the statutory information for the 52
weeks ended 2 September 2006, which was audited. The statutory accounts for this
period have been filed with the Registrar of Companies. The auditors' report on
these accounts was unqualified and did not contain a statement under sections
237(2) or (3) of the Companies Act 1985.
The annual financial statements of the Group, for the 52 weeks to 1 September
2007, will be prepared in accordance with International Financial Reporting
Standards as adopted for use in the EU ('IFRS'). This Interim Report has been
prepared in accordance with the Listing Rules of the Financial Services
Authority. The Group has chosen not to adopt IAS34, 'Interim financial
statements', in preparing its 2007 interim statements.
The directors approved the Interim Report on 23 April 2007.
The interim financial information has been prepared on the historical cost
basis, except for certain assets, which are held at deemed cost and derivative
financial instruments and share-based payments, which are included at fair
value.
2. Accounting policies
The accounting policies used in the preparation of the financial information for
the 26 weeks to 3 March 2007 have been consistently applied to all the periods
presented and are set out in full in the Group's financial statements for the 52
weeks ended 2 September 2006. A copy of these financial statements is available
from the Company's registered office at Old Croft, Stanwix, Carlisle, CA3 9BA.
3. Segmental information
The segment results for the 26 weeks to 3 March 2007 are as follows:
+---------------------+-----------+-------+-----------+-------+--------+
| |Agriculture| Food|Engineering| Other| Group|
| | £'000| £'000| £'000| £'000| £'000|
+---------------------+-----------+-------+-----------+-------+--------+
|Total gross segment | 82,044| 25,142| 3,924| 79| 111,189|
|revenue | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Inter-segment revenue| (157)| (7)| (55)| -| (219)|
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Revenue | 81,887| 25,135| 3,869| 79| 110,970|
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Operating profit/ | | | | | |
|(loss) before | 2,565| 919| 586| (112)| 3,958|
|retirement benefit | | | | | |
|charge | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Analysed as: | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Before non-recurring | | | | | |
|items and | 2,608| 1,078| 586| (112)| 4,160|
|amortisation | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Non-recurring items | | | | | |
|and amortisation | (43)| (159)| -| -| (202)|
+---------------------+-----------+-------+-----------+-------+--------+
| | 2,565| 919| 586| (112)| 3,958|
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Retirement benefit | | | | | (620)|
|charge | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Net finance costs | | | | | (442)|
+---------------------+-----------+-------+-----------+-------+--------+
|Share of post-tax | | | | | |
|profit of associate | | | | | 506|
+---------------------+-----------+-------+-----------+-------+--------+
|Share of post-tax | | | | | |
|profit of joint | | | | | 163|
|ventures | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Profit before | | | | | 3,565|
|taxation | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Taxation | | | | | (902)|
+---------------------+-----------+-------+-----------+-------+--------+
|Profit for the period| | | | | 2,663|
+---------------------+-----------+-------+-----------+-------+--------+
The segment results for the 26 weeks to 4 March 2006 are as follows:
+---------------------+-----------+-------+-----------+-------+--------+
| |Agriculture| Food|Engineering| Other| Group|
| | £'000| £'000| £'000| £'000| £'000|
+---------------------+-----------+-------+-----------+-------+--------+
|Total gross segment | 80,611| 24,532| 5,366| 71| 110,580|
|revenue | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Inter-segment revenue| (147)| (1)| (44)| -| (192)|
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Revenue | 80,464| 24,531| 5,322| 71| 110,388|
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Operating profit/ | | | | | |
|(loss) before | 2,614| 1,696| 590| (179)| 4,721|
|retirement benefit | | | | | |
|charge | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Analysed as: | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Before non-recurring | | | | | |
|items and | 2,675| 2,109| 590| (179)| 5,195|
|amortisation | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Non-recurring items | | | | | |
|and amortisation | (61)| (413)| -| -| (474)|
+---------------------+-----------+-------+-----------+-------+--------+
| | 2,614| 1,696| 590| (179)| 4,721|
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Retirement benefit | | | | | (476)|
|charge | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Net finance costs | | | | | (579)|
+---------------------+-----------+-------+-----------+-------+--------+
|Share of post-tax | | | | | |
|profit of associate | | | | | 293|
+---------------------+-----------+-------+-----------+-------+--------+
|Share of post-tax | | | | | |
|profit of joint | | | | | 6|
|ventures | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Profit before | | | | | 3,965|
|taxation | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Taxation | | | | | (1,130)|
+---------------------+-----------+-------+-----------+-------+--------+
|Profit for the period| | | | | 2,835|
+---------------------+-----------+-------+-----------+-------+--------+
The segment results for the 52 weeks to 2 September 2006 are as follows:
+---------------------+-----------+-------+-----------+-------+--------+
| |Agriculture| Food|Engineering| Other| Group|
| | £'000| £'000| £'000| £'000| £'000|
+---------------------+-----------+-------+-----------+-------+--------+
|Total gross segment | 174,793| 55,703| 12,345| 213| 243,054|
|revenue | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Inter-segment revenue| (301)| (3)| (174)| -| (478)|
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Revenue | 174,492| 55,700| 12,171| 213| 242,576|
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Operating profit/ | | | | | |
|(loss) before | 4,954| 2,506| 1,055| (325)| 8,190|
|retirement benefit | | | | | |
|charge | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Analysed as: | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Before non-recurring | | | | | |
|items and | 4,998| 3,333| 1,055| (325)| 9,061|
|amortisation | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Non-recurring items | | | | | |
|and amortisation | (44)| (827)| -| -| (871)|
+---------------------+-----------+-------+-----------+-------+--------+
| | 4,954| 2,506| 1,055| (325)| 8,190|
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Retirement benefit | | | | | (1,074)|
|charge | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Net finance costs | | | | | (1,011)|
+---------------------+-----------+-------+-----------+-------+--------+
|Share of post-tax | | | | | |
|profit of associate | | | | | 393|
+---------------------+-----------+-------+-----------+-------+--------+
|Share of post-tax | | | | | |
|loss of joint | | | | | (175)|
|ventures | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
+---------------------+-----------+-------+-----------+-------+--------+
|Profit before | | | | | 6,323|
|taxation | | | | | |
+---------------------+-----------+-------+-----------+-------+--------+
|Taxation | | | | | (1,989)|
+---------------------+-----------+-------+-----------+-------+--------+
|Profit for the period| | | | | 4,334|
+---------------------+-----------+-------+-----------+-------+--------+
4. Taxation
The tax charges for the 26 weeks ended 3 March 2007 and 4 March 2006 are based
on the estimated tax charge for the applicable year.
5. Adjusted operating and pre-tax profit
+---------------------------------+-------------------------------+
| | 26 weeks ended|
+---------------------------------+-------------+-----------------+
| | 3 March 2007| 4 March 2006|
+---------------------------------+-------------+-----------------+
| | £'000| £'000|
+---------------------------------+-------------+-----------------+
|Reported group operating profit | 3,338| 4,245|
+---------------------------------+-------------+-----------------+
|Amortisation of intangible assets| 202| 474|
+---------------------------------+-------------+-----------------+
+---------------------------------+-------------+-----------------+
|Operating profit before | 3,540| 4,719|
|non-recurring | | |
|items and amortisation | | |
+---------------------------------+-------------+-----------------+
|Share of operating profit in | 1,009| 548|
|associate and joint ventures | | |
+---------------------------------+-------------+-----------------+
|Adjusted operating profit | 4,549| 5,267|
+---------------------------------+-------------+-----------------+
+---------------------------------+-------------+-----------------+
|Net finance costs - group | (442)| (579)|
+---------------------------------+-------------+-----------------+
|Net finance costs - associate and| | |
|joint ventures | (101)| (120)|
+---------------------------------+-------------+-----------------+
|Adjusted pre-tax profit | 4,006| 4,568|
+---------------------------------+-------------+-----------------+
6. Earnings per share
The calculation of earnings per ordinary share is based on earnings attributable
to shareholders and the weighted average number of ordinary shares in issue
during the period.
The adjusted earnings per share figures have been calculated in addition to the
earnings per share required by IAS33 - 'Earnings per Share' and is based on
earnings excluding the effect of non-recurring items and amortisation. It has
been calculated to allow the shareholders to gain an understanding of the
underlying performance of the Group. Details of the adjusted earnings per share
are set out below:
+-----------------------------------+-------------------------+----------------+
| |26 weeks ended |52 weeks ended |
| +------------+------------+----------------+
| |3 March 2007|4 March 2006|2 September 2006|
| |£'000 |£'000 |£'000 |
+-----------------------------------+------------+------------+----------------+
|Earnings |2,523 |2,849 |4,195 |
+-----------------------------------+------------+------------+----------------+
|Non-recurring items and intangible | | | |
|asset amortisation: | | | |
+-----------------------------------+------------+------------+----------------+
|Immediate recognition of negative | | | |
|goodwill |- |- |(77) |
+-----------------------------------+------------+------------+----------------+
|Amortisation of intangible assets |202 |474 |948 |
+-----------------------------------+------------+------------+----------------+
|Amortisation of intangible asset | | | |
|and impairment of goodwill | | | |
|recognised in joint ventures, net | | | |
|of tax |13 |- |129 |
+-----------------------------------+------------+------------+----------------+
|Taxation arising on non-recurring | | | |
|items and amortisation |(61) |(142) |(284) |
+-----------------------------------+------------+------------+----------------+
+-----------------------------------+------------+------------+----------------+
|Adjusted earnings |2,677 |3,181 |4,911 |
+-----------------------------------+------------+------------+----------------+
+-----------------------------------+------------+------------+----------------+
|Weighted average number of | | | |
|ordinary shares in issue |8,244,122 |8,221,079 |8,227,329 |
+-----------------------------------+------------+------------+----------------+
|Potentially dilutive share options |150,206 |96,172 |101,237 |
+-----------------------------------+------------+------------+----------------+
+----------------------------------+-------------+------------+----------------+
| |8,394,328 |8,317,251 |8,328,566 |
+----------------------------------+-------------+------------+----------------+
+----------------------------------+-------------+------------+----------------+
|Basic earnings per share |30.6p |34.7p |51.0p |
+----------------------------------+-------------+------------+----------------+
|Diluted earnings per share |30.1p |34.3p |50.4p |
+----------------------------------+-------------+------------+----------------+
|Adjusted earnings per share |32.5p |38.7p |59.7p |
+----------------------------------+-------------+------------+----------------+
7. Dividends
+---------------------------------------+-----------------------+--------------+
| |26 weeks ended |52 weeks ended|
| +-----------+-----------+--------------+
| |3 March |4 March |2 September |
| |2007 |2006 |2006 |
| |£'000 |£'000 |£'000 |
+---------------------------------------+-----------+-----------+--------------+
|Ordinary: Final dividend of 12.5p per | | | |
|share |1,032 |905 |905 |
|(2006: 11.0p) | | | |
+---------------------------------------+-----------+-----------+--------------+
|Ordinary: Interim dividend of 5.5p per |- |- |453 |
|share | | | |
+---------------------------------------+-----------+-----------+--------------+
+---------------------------------------+-----------+-----------+--------------+
| |1,032 |905 |1,358 |
+---------------------------------------+-----------+-----------+--------------+
The directors have approved an interim dividend of 5.5p per share (2006: 5.5p
per share), which, in line with the requirements of IAS10 - 'Events after the
Balance Sheet Date', has not been recognised within these results. This results
in an interim dividend of £454,113 (2006: £453,000), which will be paid on 31
May 2007 to shareholders whose names are on the Register of Members at the close
of business on 4 May 2007. The ordinary shares will be quoted ex-dividend on 2
May 2007.
8. Changes in shareholders' equity
+--------------+---------------------------------------------------------------------+--------+-------+
| |Attributable to Equity Holders of the Company | | |
| | | | |
| | |Minority| |
| | |Interest|Total |
| | |£'000 |£'000 |
| +-------+-------+------------+--------+--------+--------+-------------+ | |
| | |Share |Equity |Foreign | | |Total | | |
| |Share |Premium|Compensation|Exchange|Other |Retained|Shareholders'| | |
| |Capital|Account|Reserve |Reserve |Reserves|Earnings|Equity | | |
| |£'000 |£'000 |£'000 |£'000 |£'000 |£'000 |£'000 | | |
+--------------+-------+-------+------------+--------+--------+--------+-------------+--------+-------+
|At 3 September|2,058 |5,004 |22 |(230) |1,601 |11,895 |20,350 |1,931 |22,281 |
|2006 | | | | | | | | | |
+--------------+-------+-------+------------+--------+--------+--------+-------------+--------+-------+
|Total | | | | | | | | | |
|recognised |- |- |- |(38) |- |2,523 |2,485 |140 |2,625 |
|income and | | | | | | | | | |
|expense for | | | | | | | | | |
|the period | | | | | | | | | |
+--------------+-------+-------+------------+--------+--------+--------+-------------+--------+-------+
|Dividends |- |- |- |- |- |(1,032) |(1,032) |- |(1,032)|
+--------------+-------+-------+------------+--------+--------+--------+-------------+--------+-------+
|Equity-settled| | | | | | | | | |
|share-based | | | | | | | | | |
|payment |- |- |24 |- |- |- |24 |5 |29 |
|transactions, | | | | | | | | | |
|net | | | | | | | | | |
|of tax | | | | | | | | | |
+--------------+-------+-------+------------+--------+--------+--------+-------------+--------+-------+
|Share issues |6 |69 |- |- |- |- |75 |- |75 |
+--------------+-------+-------+------------+--------+--------+--------+-------------+--------+-------+
|Purchase of | | | | | | | | | |
|shares held in|(101) |- |- |- |- |- |(101) |- |(101) |
|trust | | | | | | | | | |
+--------------+-------+-------+------------+--------+--------+--------+-------------+--------+-------+
|Transfer |- |- |- |- |(15) |15 |- |- |- |
+--------------+-------+-------+------------+--------+--------+--------+-------------+--------+-------+
+--------------+-------+-------+------------+--------+--------+--------+-------------+--------+-------+
|At 3 March |1,963 |5,073 |46 |(268) |1,586 |13,401 |21,801 |2,076 |23,877 |
|2007 | | | | | | | | | |
+--------------+-------+-------+------------+--------+--------+--------+-------------+--------+-------+
9. Cash flow generated from/(used by) operating activities
+------------------------+-----------------------------+-----------------+
| | 26 weeks ended | 52 weeks ended |
| +------------+----------------+-----------------+
| |3 March 2007|4 March 2006 |2 September 2006 |
| |£'000 |£'000 | £'000 |
+------------------------+------------+----------------+-----------------+
|Net profit |2,663 |2,835 | 4,334 |
+------------------------+------------+----------------+-----------------+
|Adjustments for: | | | |
+------------------------+------------+----------------+-----------------+
|Tax |902 |1,130 | 1,989 |
+------------------------+------------+----------------+-----------------+
|Depreciation |1,807 |1,661 | 3,419 |
+------------------------+------------+----------------+-----------------+
|(Profit)/loss on | | | |
|disposal of property, |(67) |(14) |27 |
|plant and equipment | | | |
+------------------------+------------+----------------+-----------------+
|Profit on disposal of |- |- |(1) |
|investments | | | |
+------------------------+------------+----------------+-----------------+
|Immediate recognition of| | | |
|negative |- |- |(77) |
|goodwill | | | |
+------------------------+------------+----------------+-----------------+
|Intangible asset |221 |490 |986 |
|amortisation | | | |
+------------------------+------------+----------------+-----------------+
|Net fair value (gains)/ | | | |
|losses on |(26) |(80) |27 |
|derivative financial | | | |
|instruments in | | | |
|operating profit | | | |
+------------------------+------------+----------------+-----------------+
|Net fair value loss on | | | |
|share-based |29 |- |27 |
|payments | | | |
+------------------------+------------+----------------+-----------------+
|Net foreign exchange |(16) |- |14 |
|differences | | | |
+------------------------+------------+----------------+-----------------+
|Interest income |(214) |(92) |(378) |
+------------------------+------------+----------------+-----------------+
|Interest expense and | | | |
|borrowing |718 |675 |1,539 |
|costs | | | |
+------------------------+------------+----------------+-----------------+
|Net fair value gains on | | | |
|derivative |(59) |- |(143) |
|financial instruments in| | | |
|interest | | | |
+------------------------+------------+----------------+-----------------+
|Share of post-tax | | | |
|profits from |(669) |(299) |(218) |
|associate and joint | | | |
|ventures | | | |
+------------------------+------------+----------------+-----------------+
| | | | |
+------------------------+------------+----------------+-----------------+
|Changes in working | | | |
|capital | | | |
|(excluding the effects | | | |
|of acquisitions): | | | |
+------------------------+------------+----------------+-----------------+
|(Increase)/decrease in |(6,436) |(6,418) |1,003 |
|inventories | | | |
+------------------------+------------+----------------+-----------------+
|(Increase)/decrease in |(3,564) |(4,725) |1,903 |
|receivables | | | |
+------------------------+------------+----------------+-----------------+
|Increase/(decrease) in |5,296 |3,258 |(3,382) |
|payables | | | |
+------------------------+------------+----------------+-----------------+
+------------------------+------------+----------------+-----------------+
|Cash generated from/ | | | |
|(used by) | | | |
|continuing operations |585 |(1,579) |11,069 |
+------------------------+------------+----------------+-----------------+
10 Acquisition
On 8 January 2007, Carrs Billington Agriculture (Sales) Limited acquired the
entire issued share capital of Johnstone Fuels and Lubricants Limited for a
total consideration of £1,735,000. The total provisional adjustments required to
the book value of the assets and liabilities of the acquired company in order to
present the net assets at fair values and in accordance with group accounting
principles were £175,000, details of which are set out below, together with the
resultant amount of goodwill arising.
From the date of acquisition to 3 March 2007, the acquisition contributed
£2,006,000 to revenue and £53,000 to profit before interest. The acquired
company utilised £137,000 of the Group's net operating cash flows, £77,000 for
capital expenditure, and contributed £1,000 in respect of interest.
In its last financial year to 30 April 2006, Johnstone Fuels and Lubricants
Limited made an audited profit after tax of £217,000. For the period since that
date to the date of acquisition, the management accounts of Johnstone Fuels and
Lubricants Limited show:
+-----------------------------------+-------------+
| | |
| |£'000 |
+-----------------------------------+-------------+
|Revenue |8,106 |
+-----------------------------------+-------------+
|Operating profit |138 |
+-----------------------------------+-------------+
|Profit before taxation |130 |
+-----------------------------------+-------------+
|Taxation |(39) |
+-----------------------------------+-------------+
|Profit attributable to shareholders|91 |
+-----------------------------------+-------------+
+--------------------------------+---------+-----------+--------------+
| |Book |Intangible |Provisional |
| |Value |Assets |Fair value |
| |£'000 |£'000 |£'000 |
+--------------------------------+---------+-----------+--------------+
|Intangible assets |- |250 |250 |
+--------------------------------+---------+-----------+--------------+
|Property, plant and equipment |315 |- |315 |
+--------------------------------+---------+-----------+--------------+
|Inventories |171 |- |171 |
+--------------------------------+---------+-----------+--------------+
|Trade and other receivables |1,512 |- |1,512 |
+--------------------------------+---------+-----------+--------------+
|Cash and cash equivalents |686 |- |686 |
+--------------------------------+---------+-----------+--------------+
|Current borrowings |(44) |- |(44) |
+--------------------------------+---------+-----------+--------------+
|Trade and other payables |(1,467) |- |(1,467) |
+--------------------------------+---------+-----------+--------------+
|Current tax liabilities |(94) |- |(94) |
+--------------------------------+---------+-----------+--------------+
|Non-current borrowings |(96) |- |(96) |
+--------------------------------+---------+-----------+--------------+
|Deferred tax liabilities |(33) |(75) |(108) |
+--------------------------------+---------+-----------+--------------+
+--------------------------------+---------+-----------+--------------+
|Net assets acquired |950 |175 |1,125 |
+--------------------------------+---------+-----------+--------------+
|Goodwill | | |610 |
+--------------------------------+---------+-----------+--------------+
|Consideration | | |1,735 |
+--------------------------------+---------+-----------+--------------+
+--------------------------------+---------+-----------+--------------+
|Consideration satisfied by: | | | |
+--------------------------------+---------+-----------+--------------+
|Cash | | |1,700 |
+--------------------------------+---------+-----------+--------------+
|Acquisition expenses | | |35 |
+--------------------------------+---------+-----------+--------------+
| | | |1,735 |
+--------------------------------+---------+-----------+--------------+
The book values of assets and liabilities have been taken from the management
accounts of Johnstone Fuels and Lubricants Limited at 8 January 2007 (the date
of acquisition). The above fair values are provisional and will be finalised in
the full year financial statements when the detailed acquisition investigation
has been completed.
11 Analysis of net debt
+----------------------------+---------------------------+---------------+
| | At | At |
| +------------+--------------+---------------+
| |3 March 2007|4 March 2006 |2 September |
| |£'000 |£'000 |2006 |
| | | |£'000 |
+----------------------------+------------+--------------+---------------+
|Cash and cash equivalents |716 |94 | 2,292 |
+----------------------------+------------+--------------+---------------+
|Bank overdrafts |(4,431) |(3,382) | (1,208) |
+----------------------------+------------+--------------+---------------+
|Loans and other | | | |
|borrowings: current |(7,315) |(10,753) | (7,634) |
+----------------------------+------------+--------------+---------------+
|Loans and other | | | |
|borrowings: non-current |(5,394) |(5,887) | (5,640) |
+----------------------------+------------+--------------+---------------+
|Finance leases: current |(662) |(996) | (840) |
+----------------------------+------------+--------------+---------------+
|Finance leases: non-current |(967) |(754) | (872) |
+----------------------------+------------+--------------+---------------+
+----------------------------+------------+--------------+---------------+
| |(18,053) |(21,678) | (13,902) |
+----------------------------+------------+--------------+---------------+
12 This Interim Report will be sent by post to all registered shareholders.
Copies are also available to the public from the Company's registered office:
Old Croft, Stanwix, Carlisle, CA3 9BA, or at www.carrs-milling.com
This information is provided by RNS
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