Interim Results
Carr's Milling Industries PLC
19 April 2005
CARR'S MILLING INDUSTRIES PLC - INTERIM ANNOUNCEMENT
Carr's, the Cumbria-based agriculture, food and engineering group, which has
increased adjusted earnings per share in each of the last six years, announces
that it remains on track for further progress in the current year and will
benefit substantially from the Meneba UK acquisition.
Financial Highlights
•Turnover increased by 9.4% to £78.42m.
•Pre-tax profit totalled £7.24m (2004: £2.87m) or £3.20m, up 11.6%
(despite a £0.35m reorganisation charge for the Meneba UK Holdings Limited
flour business, which was acquired on 18 November 2004), if the exceptional
£4.04m profit on the disposal of the Bendalls Engineering site in October
2004 is excluded.
•Basic earnings per share were 75.7p (2004: 22.6p) or 28.8p, up 27.4%, in
the absence of property profits.
•Reflecting the Group's progressive dividend policy, the Board has
declared an increased interim dividend per share of 5.0p, up 11.1% on 2004's
4.5p.
•Net assets per share increased by 25.8% to 360.3p (2004: 287.8p).
Commercial Highlights
•Agriculture was again the most important of the three Divisions in terms
of both turnover and profit, albeit both of these reduced. Despite industry
overcapacity in animal feeds and some adverse weather, Agriculture is still
performing well, but the full year divisional profit is now expected to be
slightly less than last year.
•Benefiting from lower wheat prices, Food made significant progress,
despite the £0.35m reorganisation charge in the acquired mills and the loss
of flour sales to McVitie's biscuit factory in Carlisle following the floods
on 8 January 2005 and to the Rathbones plant bakery following a fire on 19
February 2005. In the full year, Food is the Division which is expected to
make the greatest improvement. The newly acquired two flour mills,
Hutchison's in Kirkcaldy and Green's in Maldon, are integrating well with
Carr's in Silloth and are expected to be profit generating in the full year,
after finance and reorganisation costs.
•Engineering broke even, having made a small loss in the comparative
period. With orders strong at Bendalls and satisfactory at MSM, Engineering
is expected to move into profits in the full year, after five years of
losses.
Chris Holmes, Chief Executive, stated: 'Overall, the year to 3 September 2005 is
expected to be one of further progress.'
Presentation:
Today, there will be a presentation to brokers' analysts between 13:00 and
14.00, over a sandwich lunch, at the offices of Bankside Consultants, 123 Cannon
Street, London EC4N 5AU. Those wishing to attend are asked to contact Bankside
on 020-7444 4166 / 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 020-7444 4166
CHIEF EXECUTIVE'S INTERIM REVIEW
At the AGM on 6 January 2005, it was stated that the first four months of the
new financial year had started well and that the progress expected for the full
year should also be manifested in the interim results for the 26 weeks ending 26
February 2005. This prediction has been justified, with pre-tax profit before
exceptional gain increasing by 11.6% to £3.20m despite a £0.35m reorganisation
charge for the Meneba UK Holdings Limited flour business, which was acquired on
18 November 2004.
The Directors believe that Carr's, which has increased adjusted earnings per
share in each of the last six years, remains on track for further progress in
the current year and will benefit substantially from the Meneba UK acquisition.
FINANCIAL REVIEW
Group turnover increased by 9.4% to £78.42m (2004: £71.70m) or a small decrease
of 1.9% to £70.37m if the Meneba UK acquisition is disregarded.
Group operating profit was 15.2% higher at £3.64m (2004: £3.16m), a margin of
4.6% (2004: 4.4%). Without Meneba UK, the increase was 12.5% to £3.56m.
Pre-tax profit totalled £7.24m (2004: £2.87m) or £3.20m, up 11.6%, if the £4.04m
profit on the disposal of the Bendalls Engineering site in October 2004 is
excluded.
Basic earnings per share were 75.7p (2004: 22.6p) or 28.8p, up 27.4%, in the
absence of property profits.
Period end equity shareholders' funds increased by 25.8% to £29.23m (2004:
£23.24m), representing net assets per share of 360.3p (2004: 287.8p). Reflecting
the £8.75m of cash required to fund the Meneba UK acquisition, and adverse
timing issues in relation to working capital demands in the Agriculture
Division, net debt increased to £21.80m (2004: £7.21m), giving gearing of 74.6%
(2004: 31.0%). Net debt will reduce substantially by the 3 September 2005 year
end. Net interest payable increased to £0.44m (2004 : £0.29m) and was covered
8.3 times (2004: 10.9 times) by total group operating profit.
Agriculture was again the most important of the three Divisions in terms of both
turnover and profit, albeit both of these reduced.
INTERIM DIVIDEND
Reflecting the Group's progressive dividend policy, the Board has declared an
increased interim dividend per share of 5.0p, up 11.1% on 2004's 4.5p, to be
paid on 27 May 2005 to shareholders on the register at close of business on 29
April 2005, with an ex-dividend date of 27 April 2005.
BUSINESS REVIEW
Agriculture
Feed
The Group's animal feed business comprises:
Operation Product Location
Animal Feed Supplement Low moisture feed Belle Fourche (South
block Dakota, USA)
Poteau (Oklahoma, USA)
Caltech Low moisture feed Silloth (Cumbria)
block
Carrs Billington Agriculture Compound feed Carlisle (Cumbria)
(in association with Edward Penrith (Cumbria)
Billington & Sons Ltd)
Stone (Staffordshire)
Blended feed Askrigg (North
Yorkshire)
Kirkbride (Cumbria)
In the USA, volumes and profit of Feed in a Drum and Smartlic feed block were
similar to last year, starting slowly because of the dry, warm weather but
finishing strongly in January and February. The strength of the pound against
the US dollar adversely impacted profit by £0.1m.
Volumes and profit for UK feed blocks were similar to last year. Sales of
Calflyx Easy Breather, a product for calves successfully launched in 2003,
continued to grow. Additional production capacity was commissioned in December
to produce new products for the equine market, effectively 'horse treats',
Minilick (the Original product with mint, and the Respiratory products with
aniseed), which were launched in February 2005.
The expected impact of decoupling following the mid-term review combined with a
very mild winter with an abundance of grass, and the over-capacity in the
industry, resulted in reduced demand and profitability for compound and blended
animal feeds.
Fertiliser
Carr's Fertilisers has three manufacturing and blending sites, at Invergordon
(Easter Ross), Montrose (Angus) and Silloth (Cumbria), producing a wide range of
fertilisers.
The fertiliser business traded well in the first six months. Farmers' cash flows
have been affected by the introduction in 2004 of the single farm payment and by
the excellent growing conditions for grass. As a result, we expect fertiliser
sales to be lower this year.
Retail
Carr's Retail comprises 14 branches, from Perth in the North to Leek
(Staffordshire) in the South, selling farm supplies.
Both turnover and profit increased, partially reflecting the fully operational
effect of the opening of a larger branch in Cockermouth (Cumbria) in October
2003.
Machinery
Carr's Machinery distributes new and used agriculture and ground care machinery
from six of the retail branches, in the North of England and South West of
Scotland. These branches have modern workshops that test equipment and provide a
comprehensive stock of spare parts.
Turnover was similar to last year, but profit was ahead.
Food
Carr's principal food companies are Carr's Flour Mills, with a flour mill at
Silloth, and the two recently acquired flour mills of Meneba UK, Hutchisons at
Kirkcaldy (Fife) and Greens at Maldon (Essex).
In the prior half year ended 28 February 2004, Food barely broke even due to
inevitable delays in passing on the 60% increase in the wheat price in the eight
months to January 2004. In the period under review, significant progress was
made, despite the £0.35m reorganisation charge in the acquired mills and the
loss of flour sales to the McVitie's biscuit factory in Carlisle following the
floods on 8 January 2005, and to the Rathbones plant bakery following the fire
on 19 February 2005.
The integration of Hutchisons' and Greens' business with that of Carr's Flour
Mills is progressing well and its trading remains on budget. Not only does the
acquisition more than double the size of Carr's flour business, but the Board
remains confident that it will be earnings enhancing in the first full year of
ownership.
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.
In the period under review, Engineering broke even, having made a small loss in
the comparative period.
Bendalls remains busy. Its site at London Road, Carlisle was sold for a net
consideration now calculated at £4.9m - a profit of £4.0m - in October 2004 and
the move to a more efficient, purpose-built, 55,000 sq. ft. factory at Kingstown
Industrial Estate, Carlisle, is expected to take place in August 2005. The net
cash receivable by Bendalls of £2.4m will be used to equip the new factory and
for general working capital purposes. Bendalls' involvement in renewable energy
is ongoing, with the tidal energy project, SeaGen, expected to be commissioned
and connected to the grid in 2006.
The small R Hind business is trading steadily.
Carrs MSM, which was established in December 2003, is benefiting from a
satisfactory order book.
BOARD
After a period of illness which precluded David Newton from participating in the
Group's affairs since last September, David has decided not to continue with any
directorships following medical advice. The Board and the employees of Carr's
wish David a speedy recovery and thank him for his considerable contribution to
the Group over the last nine years. The recruitment of a non-executive Chairman
is underway.
OUTLOOK
Agriculture is still performing well despite the production over-capacity in the
industry for animal feeds and the reduced demand for fertilisers in the peak
months of March and April. Accordingly, the full year divisional profit is now
expected to be slightly less than last year.
Food is expected to make greater improvement than Engineering. Carr's Flour
Mills is expected to make good progress, despite the slow build up of business
with McVitie's following the return to production in March. The newly acquired
two flour mills, Hutchisons and Greens, are also expected to be profit
generating, after financing and reorganisation costs.
With orders strong at Bendalls and satisfactory at MSM, Engineering is expected
to move into profit, after five years of reported losses.
Overall, therefore, the year to 3 September 2005 is expected to be one of
further progress.
C N C Holmes
Chief Executive 19 April 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the half year ended 26 February 2005
Half Year Ended Year Ended
26 February 28 February 28 August
2005 2004 2004
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Group turnover - continuing operations 70,371 71,699 155,749
Group turnover - acquisition 8,049 - -
-------------------------
Total turnover 78,420 71,699 155,749
=========================
Group operating profit - continuing operations 3,235 2,495 5,036
Group operating profit - acquisition 86 - -
-------------------------
Total operating profit 3,321 2,495 5,036
Share of operating profit in associate -
continuing operations 321 666 739
-------------------------
Total operating profit: group and share of
associate 3,642 3,161 5,775
Profit on disposal of fixed assets 4,040 - -
-------------------------
Profit on ordinary activities before interest
and taxation 7,682 3,161 5,775
Interest receivable
Group 33 48 116
Interest payable
Group (447) (313) (691)
Associate (25) (26) (73)
-------------------------
Profit on ordinary activities before taxation 7,243 2,870 5,127
Taxation 1 (1,013) (918) (1,633)
--------------------------
Profit on ordinary activities after taxation 6,230 1,952 3,494
Minority interests - equity (104) (124) (275)
--------------------------
Profit for the period 6,126 1,828 3,219
Dividends (409) (363) (1,090)
--------------------------
Retained profit 5,717 1,465 2,129
=========================
Earnings per ordinary share
Basic 2 75.7p 22.6p 39.9p
Diluted 2 75.5p 22.6p 39.8p
Adjusted basis 2 28.8p 22.6p 39.9p
Dividend per share 3 5.0p 4.5p 13.5p
STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES
for the half year ended 26 February 2005
Half Year Ended Year Ended
26 February 28 February 28 August
2005 2004 2004
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Profit for the period 6,126 1,828 3,219
Currency translation differences on
foreign currency net investments (201) (467) (330)
----------------------------------
Total recognised gains and losses
relating to the period 5,925 1,361 2,889
==================================
CONSOLIDATED BALANCE SHEET
at 26 February 2005
At At At
26 February 28 February 28 August
2005 2004 2004
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Fixed assets
Intangible assets
Goodwill 158 210 184
Negative goodwill (632) - -
---------------------------------
(474) 210 184
Tangible assets 26,561 19,531 20,474
Investments
Investment in associate 2,199 1,909 1,992
Loan to associate 1,225 1,225 1,225
Other investments 255 253 253
---------------------------------
29,766 23,128 24,128
Current assets
Stocks 18,826 13,925 10,387
Debtors 36,968 27,740 19,943
Cash at bank and in hand 728 1,650 1,091
---------------------------------
56,522 43,315 31,421
Creditors
Amounts falling due within one
year (43,570) (36,622) (25,265)
----------------------------------
Net current assets 12,952 6,693 6,156
Total assets less current
liabilities 42,718 29,821 30,284
Creditors
Amounts falling due after more
than one year (10,645) (4,089) (3,779)
Provision for liabilities and
charges (1,219) (1,099) (951)
Deferred income (246) (274) (244)
---------------------------------
Net assets 30,608 24,359 25,310
=================================
Capital and reserves
Called-up share capital 2,028 2,018 2,018
Share premium account 4 4,826 4,752 4,752
Revaluation reserve 4 1,648 1,678 1,663
Profit and loss account 4 20,730 14,789 15,605
--------------------------------
Equity shareholders' funds 29,232 23,237 24,038
Minority interests - equity 4 1,376 1,122 1,272
--------------------------------
30,608 24,359 25,310
================================
CONSOLIDATED CASH FLOW STATEMENT
for the half year ended 26 February 2005
Half Year Ended Year Ended
26 February 28 February 28 August
2005 2004 2004
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Net cash (outflow)/inflow from
operating activities 5 (4,376) 1,432 6,256
---------------------------------
Returns on investments and
servicing of finance
Interest received 36 51 120
Interest paid (309) (273) (563)
Interest paid on finance
leases (37) (42) (88)
--------------------------------
Net cash outflow from returns
on investments
and servicing of finance (310) (264) (531)
--------------------------------
Taxation (865) (594) (1,330)
--------------------------------
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (1,389) (1,153) (2,997)
Purchase of intangible fixed
assets - (160) (160)
Sale of tangible fixed assets
- non-exceptional 71 235 295
Sale of tangible fixed assets
- exceptional 6 1,226 - -
Purchase of investments (2) (100) (100)
---------------------------------
Net cash outflow from capital
expenditure
and financial investment (94) (1,178) (2,962)
--------------------------------
Acquisition
Purchase of subsidiary
undertaking 6 (5,568) - -
Net cash acquired with
subsidiary undertaking 1,787 - -
Loan repaid (5,370) - -
---------------------------------
Net cash outflow from
acquisition (9,151) - -
---------------------------------
Equity dividends paid (730) (606) (969)
-----------------------------------
Cash (outflow)/inflow before
financing (15,526) (1,210) 464
----------------------------------
Financing 7,830 (746) (1,311)
----------------------------------
Decrease in net cash (7,696) (1,956) (847)
==================================
NOTES
1 The tax charges for the half year ended 26 February 2005 and 28 February 2004
are based on the estimated tax charge for the applicable year. The overseas
estimated tax charge for the half year ended 26 February 2005 is £174,000 (2004
interim : £249,000; year ended 2004 : £285,000) The share of the associate's
estimated tax charge for the half year ended 26 February 2005 is £89,000 (2004
interim : £192,000; year ended 2004 : £143,000).
In accordance with FRS19, deferred tax has not been recognised on the disposal
on 7 October 2004 of the property known as the Bendalls site in Carlisle as it
is intended that the proceeds of the sale will be reinvested. The Group is
contracted to reinvest part of the proceeds and other investment projects are
planned which will mitigate the tax that would become payable on the disposal.
2 The calculation of basic earnings per share is based on profits attributable
to shareholders of £6,126,000 (2004 interim : £1,828,000; year ended 2004 :
£3,219,000) and on 8,094,371 (2004 interim : 8,073,599; year ended 2004 :
8,073,599) shares, being the weighted average number of shares in issue during
the period. The calculation of diluted earnings per share is based on profits
attributable to shareholders of £6,126,000 (2004 interim : £1,828,000; year
ended 2004 : £3,219,000) and the weighted average number of shares in issue to
assume conversion of all dilutive potential ordinary shares. The weighted
average number of shares is increased to 8,115,988 shares (2004 interim :
8,085,417; year ended 2004 : 8,086,150). Exceptional gains and losses do not
relate to the ongoing profitability of the Group and an alternative earnings per
share is presented as follows:
Half year ended Half year ended Year ended
26 February 2005 28 February 2004 28 August 2004
Earnings Earnings Earnings
Earnings per share Earnings per share Earnings per share
£'000 p £'000 p £'000 p
Earnings/earni
ngs per share 6,126 75.7 1,828 22.6 3,219 39.9
Exceptional
items
Sale of
property (4,040) (49.9) - - - -
Reorganisation
costs in Food
Division 350 4.3
Taxation
arising on
exceptional
item (105) (1.3) - - - -
--------------------------------------------------------------
Earnings/earni
ngs per share
- adjusted 2,331 28.8 1,828 22.6 3,219 39.9
===============================================================
3 The equity dividend for the half year ended 26 February 2005 is 5.0p per share
(2004
interim : 4.5p per share; year ended 2004 : 13.5p per share).
4 Reserves
Share Premium Revaluation Profit and Loss Minority
Account Reserve Account Interest
£'000 £'000 £'000 £'000
At 29.08.04 4,752 1,663 15,605 1,272
Exchange
adjustments - - (201) -
Transfer from
revaluation reserve
to profit and loss
account - (15) 15 -
Goodwill - - (406) -
Retained profit for
the year - - 5,717 -
Shares issues 74 - - -
Minority share of
profit - - - 104
-------------------------------------------------
At 26.02.05 4,826 1,648 20,730 1,376
=================================================
5 Cash flow from operating activities
Half year ended Year ended
26 February 2005 28 February 2004 28 August 2004
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Group operating profit 3,321 2,495 5,036
Depreciation charge 1,401 1,138 2,367
Profit on sale of
tangible fixed assets (13) (74) (108)
Goodwill amortisation 16 13 38
Grants amortisation (23) (29) (59)
Increase in stocks (7,177) (4,802) (1,264)
Increase in debtors (7,534) (8,748) (1,447)
Increase in creditors 5,633 11,606 1,860
Decrease in provisions - (167) (167)
-------------------------------------------
Net cash
(outflow)/inflow from
operating activities (4,376) 1,432 6,256
===========================================
6 Acquisition and disposal
Total acquisition costs in the period totalled £5,568,000 of which £5,162,000
relates to the purchase of Meneba UK detailed in note (a) below. The balance of
£406,000 relates to a further payment for shares in Bendalls referred to in note
(b) below.
(a) Acquisition of Meneba UK Holdings Limited
The Company acquired on 18 November 2004 the entire issued share capital of
Meneba UK Holdings Limited for a total consideration of £5,162,000. The total
provisional adjustments required to the book values 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 £613,000, details of which are
set out below, together with the resultant amount of negative goodwill arising.
From the date of acquisition to 26 February 2005, the acquisition contributed
£8,049,000 to turnover, £86,000 to profit before interest and after goodwill
amortisation and reorganisation costs of £350,000. The acquired company
contributed £446,000 to the Group's net operating cash flows, and £5,000 in
respect of interest, £5,000 in respect of taxation, and it utilised £71,000 for
capital expenditure.
In its last financial year to 30 June 2004, Meneba UK Holdings Limited made a
profit after tax of £287,000. For the period since that date to the date of
acquisition, the management accounts of Meneba UK Holdings Limited show:
£'000
Turnover 12,052
Operating profit 752
Profit before taxation 637
Taxation (207)
Profit attributable to shareholders 430
Book Goodwill Provisonal
value Revaluations elimination fair value
£'000 £'000 £'000 £'000
Intangible fixed assets 1,061 - (1,061) -
Tangible fixed assets 5,298 1,674 - 6,972
Stock 1,262 - - 1,262
Debtors 5,760 - - 5,760
Creditors (4,035) - - (4,035)
Taxation
- Current (309) - - (309)
- Deferred (263) - - (263)
Cash 1,787 - - 1,787
Loans (5,370) - - (5,370)
-------------------------------------------------------------------------------
Net assets acquired 5,191 1,674 (1,061) 5,804
Negative goodwill (642)
-------------------------------------------------------------------------------
Consideration (satisfied by
cash) 5,162
------------------------------------------------------------------------------
The book value of assets and liabilities has been taken from the management
accounts of Meneba UK Holdings Limited at 18 November 2004 (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.
(b) Disposal of property at London Road, Carlisle.
Carrs Engineering Limited, a wholly owned subsidiary of the Company, entered
into a conditional agreement dated 16 July 2004 to sell the property known as
the
Bendalls site. The conditions of the agreement were satisfied on 7 October 2004.
On completion Carrs Engineering Limited received £1.2m net of expenses in cash
and a further payment in cash of £1.6m is due on Carrs Engineering giving vacant
possession of the site. As part of the agreement, the purchaser is committed to
build a new 55,000 sq. ft. factory for Bendalls at an expected cost of £2.1m.
The
profit on disposal is £4.0m. The disposal of the Bendalls site triggered a
further
payment of £0.4m for the shares acquired in 1996 of James A Bendall (Property)
Limited.
7 Analysis of net debt
At At At
26 February 2005 28 February 2004 28 August 2004
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Cash at bank and in
hand 728 1,650 1,091
Bank overdrafts (9,526) (3,879) (2,169)
Loans: amounts falling
due within one year (2,800) (1,366) (1,290)
Loans: amounts falling
due after more than one
year (8,755) (2,335) (2,165)
Finance leases: amounts
falling due within one
year (614) (402) (554)
Finance leases: amounts
falling due after more
than one year (830) (880) (671)
-------------------------------------------
(21,797) (7,212) (5,758)
============================================
8 The figures and financial information for the year ended 28 August 2004 do not
constitute the statutory financial statements for that year. Those financial
statements have been reported on by the auditors and delivered to the Registrar
of Companies. The report of the auditors was unqualified. This interim statement
for the half year ended 26 February 2005 was approved by a duly appointed and
authorised committee of the Board of Directors on 18 April 2005. The interim
statement does not constitute a set of statutory financial statements under s240
of the Companies Act 1985, and has neither been audited nor reviewed by the
auditors. This interim statement has been prepared in accordance with the
accounting policies set out in the Group's Report and Accounts for the year
ended 28 August 2004.
9 This interim report is being 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.
This information is provided by RNS
The company news service from the London Stock Exchange
Wednesday, 22nd January 2025
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