Final Results

RNS Number : 8176Q

Carr's Milling Industries PLC

12 November 2012

 



IMMEDIATE RELEASE

12 November 2012

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

FULL YEAR RESULTS

"Building on our success"

Carr's (CRM.L), the fully-listed agriculture, food and engineering group, announces results for the 52 weeks ended 1 September 2012.

Financial highlights (continuing operations)

·     Revenue up 8.2% to £404.1m (2011: £373.3m)

·     Profit before taxation up 30.5% to £13.1m (2011: £10.0m)

·     EBITDA up 19.6% to £18.4m (2011: £15.4m)

·     Adjusted EPS up 14.8% to 101.5p (2011: 88.4p)

·     Declared final dividend of 14.5p up 11.5% with a total for the period of 29.0p (2011: 26.0p)

·     Investment of £8.9m during the period with net debt of £2.5m at the period end

Commercial highlights

·     Agriculture revenue up 7.7% with profit before tax (including contribution from associate and JVs) up 15.6%.  Performance reflects high demand for low moisture feed blocks, particularly the USA, impact of acquisitions, and strong organic growth from retail and machinery.

·     Food revenue was down 2.6%, but the continuing over-capacity in the flour milling industry and volatile wheat costs resulted in profit before tax down 64.9%.

·     Engineering revenue up 65.2% and profit before tax up 183.8% reflects a strong order book.  It was an exceptionally busy period with businesses operating to capacity during the period.

Richard Inglewood, Chairman, said:

"The challenge for Carr's after the strong period of financial performance experienced is how to build on it and grow further.  We view 2013 with optimism, boosted by the likely benefits of the considerable investments we have made and are making across all three divisions."

Chris Holmes, Chief Executive Officer, said:

"Our agriculture businesses are likely to be the main source of growth in 2013.  The drivers of growth are the demand for Carr's proprietary products for livestock across all markets as well as the expansion of the retail, machinery franchise, and fuel depot networks in the UK."

Enquiries:

Carr's Milling Industries PLC Chris Holmes (Chief Executive Officer) Ron Wood (Finance Director)	01228-554 600
Bankside Consultants Limited Simon Bloomfield James Irvine-Fortescue	020-7367 8888

Carr's Milling Industries PLC - Announcement of Unaudited Annual Results

Chairman's Statement

The strong financial performance achieved by Carr's for the 52 weeks ended 1 September 2012 reflects organic growth in Agriculture and Engineering as well as successful expansion in selected overseas markets in both divisions.  A particular feature of this period's results was a doubling of the contribution to Group profit before taxation from overseas businesses to just over 48 per cent.

In Agriculture, the business is increasingly focused on proprietary products developed to improve livestock performance and profitability.  Following significant investment and research in this area, we are experiencing strong demand for our products in North America, Europe and New Zealand, as well as in the UK, and expect this trend to continue.

Strong demand from the nuclear industry in China, France, Germany, Japan, Russia, the UK and USA is reflected in the increasing contribution of Engineering, which accounted for 36 per cent (2011: 17 per cent) of total Group profit before tax for the period.  Overall, the growth in the value of the Engineering order book is providing significant visibility of revenues for the next two years.

The performance of the Food division continues to be depressed by long-term over-capacity in the flour industry.  Following a detailed review of the options for improving the financial performance of the flour milling business, the Board has approved the construction of a state-of-the-art flour mill adjacent to the Port of Kirkcaldy for a total investment of £17 million.  This new flour mill, which will replace the existing mill, will be at the forefront of mill design, innovation and technology, with commissioning expected in September 2013. This mill, alongside the re-opened port in Kirkcaldy, will continue to produce the high quality product associated with the Carr's name for decades.  The Board believes that this investment, once completed, should result in significant financial benefits to be derived from new sales, operational efficiencies, input cost savings and margin improvements.

Investment has been crucial to the success of Carr's and forms a central part of our plans for future profitable growth.  During the period, a total of £2.0 million was invested in acquisitions (Clive Walton Engineering and the asset purchases of agricultural chemists Laycocks and animal feed business Afgritech, a joint venture of the Group).  In addition, a total of £7.0 million was invested in Phase I of the new Wälischmiller factory in Germany, a new high moisture feedblock plant in Tennessee, expansion of our agriculture branches, and initial expenditure on the new flour mill at Kirkcaldy.

Financial Review

Revenue for the period increased by 8.2 per cent to £404.1 million (2011: £373.3 million).  Profit before taxation was up 30.5 per cent to £13.1 million (2011: £10.0 million).

Basic earnings per share for the period were up by 27.5 per cent to 98.2 pence (2011: 77.0 pence) with fully diluted earnings per share of 97.5 pence (2011: 76.3 pence) and adjusted earnings per share of 101.5 pence (2011: 88.4 pence).

The net cash generated from continuing operations was £8.3 million (2011: £11.4 million).  At the end of the period, the Group had net debt of £2.5 million compared to net cash of £4.6 million at 3 September 2011.  This reflected total investment and capital expenditure during the period of £8.9 million, an increase in working capital of £2.0 million, and a contribution to the deficit in the pension scheme of £3.3 million.

On 11 November 2011, the Group restructured part of its bank facilities with the Clydesdale Bank and with the exception of the bank overdraft of £5.0 million, which is renewed annually, the other facilities, revolving credit of £10.0 million and term loan of £2.5 million, are committed through to November 2014.

As a result of planned investments, we expect net debt to increase during the current period.  On the basis that overall trading continues to be favourable, with maintained margins and strong operational cash flow, we expect gearing and interest cover to remain well within our conservative levels.  This sound financial position means that Carr's is well placed to continue to fund its existing investment plans.

Dividend

The Board is proposing an 11.5 per cent increase in the final dividend to 14.5 pence per ordinary share which, together with the two interim dividends of 7.25 pence per share each, paid in May and October 2012, makes a total of 29.0 pence per share for the year (2011: 26.0 pence per share).  The final dividend, if approved by shareholders, will be paid on 18 January 2013 to shareholders on the register at the close of business on 21 December 2012 and the shares will go ex-dividend on 19 December 2012.  

Business Review

Agriculture

The trading environment for Agriculture during the period was broadly favourable, and although input prices were volatile, growth was primarily driven by feed block both in the UK and overseas, and retail and machinery sales in the UK.

Revenue for the period grew by 7.7 per cent to £293.8 million (2011: £272.7 million) with profit before tax increasing by 26.1 per cent to £8.1 million (2011: £6.4 million). 

Profit before tax, including contribution from associate and joint ventures, increased by 15.6 per cent to £9.5 million (2011: £8.2 million).

Feed block sales increased by 24 per cent, reflecting market share gains in the UK and overseas, and remain a prime source of growth in this division.

In the USA, the northern states had a very dry, mild winter with little snow, a complete contrast to the previous period; whilst the southern states experienced heavy rain in the summer followed by a prolonged drought.  These weather conditions generated the demand for low moisture feed blocks and this, combined with new business won, resulted in a 37 per cent increase in Smartlic and Feed in the Drum sales.

In Tennessee, Gold-Bar Feed Supplements LLC, our 50 per cent joint venture, is now in full production of high moisture feed blocks and is expected to contribute positively to revenues and profits for 2012/13.  In April 2012, full production of AminoMax, the patented rumen bypass protein, started at the 50 per cent joint venture plant at Watertown, New York State, after early engineering issues were resolved.  The high quality of the product has been well received by US dairy farmers and the plant is on track to achieving profitable sales for the current period.  Investment is being made in a new by-pass amino acid product, Aminogreen, and once trials are concluded it is planned that production will commence alongside AminoMax.

Sales of low and high moisture feed blocks from our UK and German operations grew by 12 per cent with continued growth of our branded product, Crystalyx, continuing throughout Europe and New Zealand.  Scotmin, based in Ayr, increased profitability through a combination of production efficiencies, increased sales of Megalix, and the introduction of the Megastart range marketed through the enlarged distribution network.

By contrast dairy feed sales remained static during the period, but overall compound feed sales were down 7 per cent. Reduced margins for the period were affected by substantial increases in raw material prices, which are now showing some signs of easing.

 

Retail sales continued to achieve growth on last year's excellent result with a 13 per cent increase. This is the result of an enlarged product range being sold through an extended branch network in Scotland and the North of England, and the successful integration of Safe at Work, acquired in April 2011.  Machinery sales are a continuing success with a 23 per cent increase following the 12 per cent growth of last period. This is attributable to new franchises increasing the product selection for our increasing number of customers.

In July 2012, the £0.8 million acquisition of Laycocks, of which £0.7 million was paid on completion, added branches in Malton, Settle and Skipton and further increased the veterinary product range available to our customers.  It is expected to make a profitable contribution in 2012/13.  A new branch, to be opened at the new auction mart at Kendal in December 2012, will take the total number of retail branches to 26.

Despite the relatively mild winter, fuel sale volumes were maintained, reflecting market share gains and positive contributions from new depots at Hexham (opened in August 2011) and Cockermouth (opened in February 2012).

Food

Revenue for the period from our three flour mills, at Kirkcaldy in Fife, Silloth in Cumbria and Maldon in Essex, was down by 2.6 per cent to £80.5 million (2011: £82.6 million) with profit before tax falling by 64.9 per cent to £0.4 million (2011: £1.3 million) mainly as a result of significant industry-imposed selling price reductions and rising wheat prices.

The continuing over-capacity in the flour milling industry had a negative impact during the period when volumes were down by 1 per cent and the wheat price was volatile with a price range of £180 per tonne to £250 per tonne experienced in the last twelve months.  The financial impact on this was partly mitigated by the performance of our wheat handling facility at Kirkcaldy, which exceeded our expectations, and the continued growth of speciality flour sales, in particular the expansion of our products sold to the ethnic food market.

The decision to invest £17 million in a new replacement flour mill at Kirkcaldy followed a comprehensive review by the Board of the options available to improve financial performance, and increase the competitiveness of Carr's in a difficult market. The Board took into account the fact that the current mill is near the end of its natural life, the ever increasing importance of food safety, Carr's market position, and potential operational efficiencies to be achieved.

Carr's has a strong customer base in Scotland and the North of England.  Kirkcaldy is the ideal location for the new mill, given the success of the re-opened port, and the logistics of the customers the mill serves. The new mill will provide significant and immediate efficiencies in the areas of operations, energy consumption and raw material costs.  Even with the less favourable market backdrop persisting, the profitability of the Food division is expected to be very positively impacted by the commissioning of this new mill. 

Construction of the new mill commenced in July 2012 with commissioning scheduled for September 2013.

Engineering

Profit before tax for the period increased by 183.8 per cent to £4.7 million (2011: £1.7 million) on revenue up by 65.2 per cent to £29.7 million (2011: £18.0 million).

The 18 per cent revenue growth seen in the UK reflects steady demand, mainly from the nuclear industry.  Specialist fabricators, Bendalls, completed a contract for the supply of pressure vessels to Bechtel in the US for the river protection project-water treatment plant in Handford, Washington State.  Post-delivery issues arose which we are working with Bechtel to resolve.  It also delivered, in the second half, a major vessel for the UK's largest nuclear project, Evaporator D, at Sellafield in Cumbria.  Outside the nuclear industry, Bendalls commenced work on a £4 million project to supply pressure vessels for a floating production, storage and offloading platform being built by Hyundai for the BP Quad 204 area, west of the Shetland Islands. This is scheduled for delivery in early 2013.

In May 2012, Bendalls acquired Clive Walton Engineering Limited for £0.8 million, a precision machining business which is expected to make a positive contribution to revenue and profit in 2012/13. The acquisition complements the Bendalls business, enabling a wider set of skills to be offered to customers. 

In the second half of the 2012 financial period, the performance of Carrs MSM benefited from the "life of plant" contract, signed in the first half of the period, for the supply of critical parts to Sellafield.

Wälischmiller, the remote handling and robotics business based in Germany, has been exceptionally busy and operating to capacity during the year.  In order to fulfil existing contracts and support future growth, it has expanded its design and production engineering teams.  Significant contracts for remote handling equipment were completed for customers in France, Japan and South Korea as well as delivery of the specialist Telbot ® robots for a decommissioning plant in Germany. 

Following the successful conclusion of the tests in Norway for our designed Telbot ® for inspecting gas tanks for Shell, discussions are on-going to progress the project on a commercial basis.

Wälischmiller is currently working with the nuclear division of Mitsui to design specialist remote handling equipment for use at the tsunami destroyed Fukushima plant in Japan.

Phase I (new office accommodation and some production capacity) of the new €5.5 million factory at Markdorf was completed in October 2012, with construction of the main production facility now underway and scheduled for completion in October 2013.

Board Changes

On 23 October 2012, it was announced that I will retire as Chairman and non-executive Director on 28 February 2013.  Chris Holmes will retire as Chief Executive Officer at the same time to become Chairman, with Tim Davies being appointed as Chief Executive Officer with effect from 1 March 2013. 

It was announced on 6 July 2012 that Ron Wood is retiring as Finance Director on 30 April 2013 to be succeeded by Neil Austin.  The current Assistant Company Secretary, Katie Sinclair, will take over Ron Wood's position as Company Secretary with effect from 1 January 2013.  In addition to being an outstanding Board colleague and Finance Director, Ron Wood has held Board responsibility for the Engineering division which he will continue to support in a consultancy role for approximately 18 months from the date of his retirement.

These changes to the Board represent the implementation of a succession plan under consideration for some time and will result in a top quality management team best placed to take Carr's to the next stage of its existing development.

I would like to take this opportunity to thank my Board colleagues for their enthusiasm and support during my time at Carr's.  It has been a privilege to serve as Chairman for the last seven successful years and I am certain that the Group will continue to grow and prosper in the future.

Outlook

The challenge for Carr's after the strong period of financial performance experienced in 2012 is how to build on it and grow further.  We view 2013 with optimism, boosted by the likely benefits of the considerable investments we have made and are making across all three divisions of the Group.

The considerable advance in Engineering revenues and profit before tax marks a step change in the size, breadth and capability of that division.  The order book, particularly overseas, is strong and the visibility of revenues gives us confidence that the period's outturn can be matched.

The Food division, by contrast, continues to suffer from the well-rehearsed issues of over-capacity and pressure from customers but remains profitable.  Wheat prices remain high as a consequence of the poor UK harvest with lower yields and poorer quality, although the position of our mills near ports equipped to take wheat from mainland Europe gives us some competitive advantage.  However, we do not expect any significant improvement in profitability until our new state of the art plant at Kirkcaldy is commissioned at the end of the current financial period.

Against that background, the Agriculture businesses are likely to be the main source of growth in 2013.  The current period has started well, benefiting from strong sales of animal feed in the UK and particularly in the USA where forage quality is poor, caused by the drought conditions in many states.  We also expect good growth from a full year's production of AminoMax, the patented rumen bypass protein at the plant at Watertown, New York State.  As before, the drivers of growth in the division are the demand for Carr's proprietary products for livestock across all markets as well as the expansion of the retail, machinery franchise and fuel depot networks in the UK.

In pursuit of our objectives, the Group continues to evaluate acquisition and other investment opportunities with vigour, assisted by our strong balance sheet and cash flow.

Richard Inglewood

Chairman                                                                                                                                              12 November 2012

UNAUDITED CONSOLIDATED INCOME STATEMENT

for the period ended 1 September 2012

	Note	Unaudited 52 week period 2012	Audited 53 week period 2011
		£'000	£'000
Continuing operations
Revenue	2	404,058	373,318
Cost of sales		(360,124)	(332,202)
Gross profit		43,934	41,116
Net operating expenses		(31,863)	(31,960)
Group operating profit		12,071	9,156
Profit on disposal of property and investment		282	-
Finance income		673	410
Finance costs		(1,348)	(1,332)
Share of post-tax profit in associate and joint ventures		1,381	1,776
Profit before taxation	2	13,059	10,010
Taxation	4	(2,954)	(1,973)
Profit for the period from continuing operations		10,105	8,037
Discontinued operations
(Loss)/profit for the period from discontinued operations	5	(202)	16,598
Profit for the period		9,903	24,635
Profit attributable to:
Equity shareholders		8,510	23,381
Minority interests		1,393	1,254
		9,903	24,635
Basic earnings per ordinary share
Profit from continuing operations		98.2p	77.0p
(Loss)/profit from discontinued operations		(2.3)p	188.4p
	6	95.9p	265.4p
Diluted earnings per ordinary share
Profit from continuing operations		97.5p	76.3p
(Loss)/profit from discontinued operations		(2.3)p	186.6p
		95.2p	262.9p
Adjusted basic earnings per ordinary share
Profit from continuing operations		101.5p	88.4p
(Loss)/profit from discontinued operations		(2.3)p	188.4p
	6	99.2p	276.8p

 

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the period ended 1 September 2012

		Unaudited 52 week period 2012	Audited        53 week         period          2011
		£'000	£'000
Profit for the period		9,903	24,635
Other comprehensive (expense)/income
Foreign exchange translation (losses)/gains arising on translation of overseas subsidiaries		(235)	57
Actuarial (losses)/gains on retirement benefit obligation:      -Group      -Share of associate		(2,686) (419)	726 (27)
Taxation credit/(charge) on actuarial movement on retirement benefit obligation:      -Group      -Share of associate		618 96	(182) 7
Other comprehensive (expense)/income for the period, net of tax		(2,626)	581
Total comprehensive income for the period		7,277	25,216
Total comprehensive income attributable to:
Equity shareholders		5,884	23,964
Minority interests		1,393	1,252
		7,277	25,216

UNAUDITED CONSOLIDATED BALANCE SHEET

as at 1 September 2012

		Unaudited 2012	Audited            2011
		£'000	£'000
Assets
Non-current assets
Goodwill		5,199	4,558
Other intangible assets		728	1,029
Property, plant and equipment		37,158	31,519
Investment property		1,005	764
Investment in associate		5,103	4,246
Interest in joint ventures		2,907	2,519
Other investments		71	67
Financial assets
- Non-current receivables		2	2
Deferred tax assets		2,480	2,519
		54,653	47,223
Current assets
Inventories		27,128	22,793
Trade and other receivables		59,651	56,988
Current tax assets		-	9
Financial assets
- Cash and cash equivalents		23,294	33,282
		110,073	113,072
Total assets		164,726	160,295
Liabilities
Current liabilities
Financial liabilities
- Borrowings		(14,176)	(26,436)
- Derivative financial instruments		(309)	-
Trade and other payables		(56,108)	(53,469)
Current tax liabilities		(1,552)	(1,688)
		(72,145)	(81,593)
Non-current liabilities
Financial liabilities
- Borrowings		(11,573)	(2,274)
Retirement benefit obligation		(5,351)	(5,960)
Deferred tax liabilities		(3,733)	(4,007)
Other non-current liabilities		(4,064)	(3,617)
		(24,721)	(15,858)
Total liabilities		(96,866)	(97,451)
Net assets		67,860	62,844

UNAUDITED CONSOLIDATED BALANCE SHEET

as at 1 September 2012 (continued)

		Unaudited 2012	Audited          2011
		£'000	£'000
Shareholders' equity
Ordinary shares		2,219	2,216
Share premium		8,118	8,059
Equity compensation reserve		113	84
Foreign exchange reserve		160	360
Other reserve		901	913
Retained earnings		49,075	45,343
Total shareholders' equity		60,586	56,975
Minority interests in equity		7,274	5,869
Total equity		67,860	62,844

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the period ended 1 September 2012

Share Capital £'000

Share Premium £'000

Treasury Share Reserve £'000

Equity Compen-sation Reserve £'000

Foreign Ex-change Reserve £'000

Other Reserve £'000

Retained Earnings £'000

Total Shareholders' Equity £'000

Minority Interests £'000

Total £'000

At 29 August 2010	2,196	7,738	(101)	170	301	1,477	22,925	34,706	4,613	39,319
Profit for the period	-	-	-	-	-	-	23,381	23,381	1,254	24,635
Other comprehensive income/(expense)	-	-	-	-	59	-	524	583	(2)	581
Total comprehensive income	-	-	-	-	59	-	23,905	23,964	1,252	25,216
Dividends paid	-	-	-	-	-	-	(2,155)	(2,155)	-	(2,155)
Equity-settled share-based payment transactions, net of tax	-	-	-	(86)	-	-	104	18	4	22
Allotment of shares	20	321	-	-	-	-	-	341	-	341
Utilisation of shares	-	-	101	-	-	-	-	101	-	101
Transfer	-	-	-	-	-	(564)	564	-	-	-
At 3 September 2011	2,216	8,059	-	84	360	913	45,343	56,975	5,869	62,844

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

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

for the period ended 1 September 2012

	Note	Unaudited 52 week period 2012	Audited 53 week  period 2011
		£'000	£'000
Cash flows from operating activities
Cash generated from operations	7	11,974	14,097
Interest received		434	403
Interest paid		(1,385)	(1,378)
Tax paid		(2,710)	(1,711)
Net cash generated from operating activities in continuing operations		8,313	11,411
Net cash used in operating activities in discontinued operations		-	(3,202)
Net cash generated from operating activities		8,313	8,209
Cash flows from investing activities
Acquisition of subsidiaries (net of overdraft acquired)		(2,063)	(1,833)
Disposal of subsidiary (including overdraft disposed)		(350)	22,074
Disposal of trade		-	160
Loan to joint ventures		(881)	(1,286)
Loan repaid by share trust		-	83
Purchase of intangible assets		(54)	(45)
Proceeds from sale of property, plant and equipment		643	287
Purchase of property, plant and equipment		(8,855)	(5,025)
Proceeds from sale of investment property		94	-
Purchase of investment property		(300)	-
Purchase of investments		(4)	(1)
Disposal of investment		107	3
Redemption of preference shares		100	-
Net cash (used in)/generated from investing activities in continuing operations		(11,563)	14,417
Net cash used in investing activities in discontinued operations		-	(397)
Net cash (used in)/generated from investing activities		(11,563)	14,020
Cash flows from financing activities
Proceeds from issue of ordinary share capital Net proceeds from issue of new bank loans		62 2,381	341 -
Finance lease principal repayments		(940)	(868)
Repayment of borrowings		(5,911)	(3,355)
Increase in other borrowings		628	2,295
Dividends paid to shareholders		(2,372)	(2,155)
Receipt of grant income		-	830
Net cash used in financing activities in continuing operations		(6,152)	(2,912)
Net cash used in financing activities in discontinued operations		-	(207)
Net cash used in financing activities		(6,152)	(3,119)
Effect of exchange rate changes		(171)	71
Net (decrease)/increase in cash and cash equivalents		(9,573)	19,181
Cash and cash equivalents at beginning of the period		32,449	13,268
Cash and cash equivalents at end of the period		22,876	32,449

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 1 September 2012 or the 53 week period ended 3 September 2011, which will be filed with the Registrar of Companies for the 52 week period ended 1 September 2012, following the Company's annual general meeting.

     The financial statements for the 53 week period ended 3 September 2011 were unqualified and have been delivered to the Registrar of Companies.

2. Segmental information

	Revenue		Profit/(loss) before taxation
	2012	2011	2012	2011
	£'000	£'000	£'000	£'000
Agriculture	293,796	272,678	8,108	6,429
Food	80,472	82,602	442	1,258
Engineering	29,743	18,000	4,702	1,657
	404,011	373,280	13,252	9,344
Adjustments	47	38
	404,058	373,318
Head office net expense			(1,034)	(394)
Retirement benefit charge			(477)	(742)
Adjustments related to derivative financial instruments			(236)	-
Adjustments related to intangible assets			(122)	-
Other adjustments			13	26
Profit on disposal of property and investment			282	-
Share of post-tax profit in associate			1,180	1,455
Share of post-tax profit in joint ventures			201	321
Profit before taxation from continuing operations			13,059	10,010

3.  Non-recurring items

		2012		2011
		Amount	Tax credit/ (charge)	Amount	Tax credit/ (charge)
		£'000	£'000	£'000	£'000
Continuing operations
Group operating profit:
Impairment of goodwill		-	-	(325)	-
Impairment of property, plant and equipment		-	-	(324)	81
Profit on disposal of trade		-	-	190	(52)
Reorganisation costs of acquired business		-	-	(292)	77
Derivative financial instrument loss in respect of property, plant and equipment		(236)	54	-	-
Group profit before tax:
Profit on disposal of property		175	(44)	-	-
Profit on disposal of investment		107	23	-	-
Non-recurring items		46	33	(751)	106
Profit before taxation and non-recurring items		13,013		10,761
Non-recurring items		46		(751)
Profit before taxation		13,059		10,010
Group operating profit before non-recurring items		12,307		9,907
Non-recurring items		(236)		(751)
Group operating profit		12,071		9,156

4. Taxation

		2012	2011
		£'000	£'000
Continuing operations (a) Analysis of the charge in the period Current tax: UK corporation tax   Current period   Prior period Foreign tax		827 (160) 1,931	1,016 (15) 782
Group current tax		2,598	1,783
Deferred tax: Origination and reversal of timing differences   Current period   Prior period		275 81	513 (323)
Group deferred tax		356	190
Tax on profit from ordinary activities		2,954	1,973
(b) Factors affecting tax charge for the period The tax assessed for the period is lower (2011: lower) than the rate of corporation tax in the UK of 25.16% (2011: 27.16%).  The differences are explained below:
Continuing operations		2012 £'000	2011 £'000
Profit before taxation		13,059	10,010
Tax at 25.16% (2011: 27.16%) 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 Non-taxable income Effects of different tax rates of foreign subsidiaries Effects of changes in tax rates Over-provision in prior years Utilisation of unrecognised tax losses Unrecognised deferred tax on losses Other		3,286 (347) 65 - 269 (262) (79) - - 22	2,719 (482) 108 (3) 68 (201) (338) (1) 97 6
Total tax charge for the period		2,954	1,973

5. Discontinued operations

In the prior period Carrs Agriculture Limited hived down its fertiliser trade, assets and liabilities (save for certain assets and liabilities) to Origin Fertilisers 2011 Limited (formerly CM Fertilisers Limited), a newly incorporated, wholly owned subsidiary of Carrs Agriculture Limited.

Subsequently, in the prior period, Carrs Agriculture Limited disposed of its entire shareholding in Origin Fertilisers 2011 Limited for a cash consideration of £19m, less costs to sell.

An analysis of the result of discontinued operations, and the gain recognised on the re-measurement to fair value less costs to sell, is as follows:

	2012	2011
	£'000	£'000
Revenue	-	78,416
Expenses	-	(75,355)
Profit before taxation of discontinued operations	-	3,061
Taxation	-	(1,363)
Profit after taxation of discontinued operations	-	1,698
Pre-taxation (loss)/gain recognised on the measurement to fair value less costs to sell	(202)	14,900
Taxation	-	-
After taxation (loss)/gain recognised on the measurement to fair value less costs to sell	(202)	14,900
(Loss)/profit for the period from discontinued operations	(202)	16,598

6. 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 8,869,438 (2011: 8,808,156).  The calculation of diluted earnings per share is based on 8,935,696 shares (2011: 8,894,883).

	2012		2011
	Earnings £'000	Earnings per share pence	Earnings £'000	Earnings  per share pence
Continuing operations
Earnings per share - basic	8,712	98.2	6,783	77.0
Intangible asset amortisation:
Amortisation of intangible assets	492	5.5	480	5.5
Taxation relief on amortisation	(120)	(1.3)	(124)	(1.4)
Impairment of goodwill	-	-	325	3.7
Impairment of property, plant and equipment	-	-	324	3.7
Taxation relief on impairment	-	-	(81)	(0.9)
Reorganisation costs of acquired business	-	-	292	3.3
Taxation relief on reorganisation	-	-	(77)	(0.9)
Profit on disposal of trade	-	-	(190)	(2.2)
Taxation on disposal of trade	-	-	52	0.6
Derivative financial instrument loss	236	2.7	-	-
Taxation relief on derivative loss	(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	9,005	101.5	7,784	88.4
Discontinued operations
Earnings per share - basic and adjusted	(202)	(2.3)	16,598	188.4
	8,803	99.2	24,382	276.8

7. Cash generated from continuing operations

	2012	2011
	£'000	£'000
Profit for the period from continuing operations	10,105	8,037
Adjustments for:
Tax	2,954	1,973
Depreciation of property, plant and equipment	4,165	3,923
Impairment of property, plant and equipment	-	324
Amounts written off property, plant and equipment	1	28
Profit on disposal of property, plant and equipment	(153)	(10)
Depreciation of investment property	20	20
Profit on disposal of investment property	(45)	-
Intangible asset amortisation	492	480
Intangible asset impairment	-	325
Profit on disposal of investments	(107)	(2)
Profit on disposal of trade	-	(190)
Loan forgiven in the period	-	(40)
Amortisation of grants	(50)	-
Net fair value loss on share based payments	49	20
Net foreign exchange differences	138	18
Net fair value loss on derivative financial instruments in operating profit	309	-
Interest income	(673)	(410)
Interest expense and borrowing costs	1,403	1,424
Share of profit from associate and joint ventures	(1,381)	(1,776)
IAS19 income statement credit in respect of employer contributions	(3,772)	(4,801)
IAS19 income statement charge	477	742
Changes in working capital (excluding the effects of acquisitions and disposal):
Increase in inventories	(3,868)	(205)
Increase in receivables	(896)	(14,591)
Increase in payables	2,806	18,808
Cash generated from continuing operations	11,974	14,097

8. 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 1 September 2012 of £4.1m (3 September 2011: £4.5m).

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 1 September 2012 of £3.6m (2011: £3.3m). 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 £477,000 (2011: £742,000).

9. Analysis of changes in net cash/(net debt)

	At 4 September	Cash	Other Non-Cash	Exchange	At 1   September
	2011	Flow	Changes	Movements	2012
	£'000	£'000	£'000	£'000	£'000
Cash and cash equivalents	33,282	(9,988)	-	-	23,294
Bank overdrafts	(833)	587	-	(172)	(418)
	32,449	(9,401)	-	(172)	22,876
Loans and other borrowings: - current - non-current	(24,931) (1,225)	4,652 (1,750)	7,415(7,470)	- -	(12,864) (10,445)
Finance leases:
- current	(672)	940	(1,162)	-	(894)
- non-current	(1,049)	-	(79)	-	(1,128)
Net cash/(Net debt)	4,572	(5,559)	(1,296)	(172)	(2,455)

10.       The Board of Directors approved the preliminary announcement on 12 November 2012.

11.       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 1 September 2012 and 3 September 2011.  The statutory accounts for the period ended 1 September 2012 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.

12.       The Company intends to post the Report and Accounts to shareholders by 6 December 2012.  Further copies 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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