Interim Results

Carr's Milling Industries PLC 20 April 2004 CARR'S MILLING INDUSTRIES PLC - INTERIM ANNOUNCEMENT Carr's, the Cumbria-based agriculture, food and engineering business, announces results for the half year ended 28 February 2004 which are ahead of both budget and the corresponding period of the previous year in addition to the Directors' belief that Carr's remains on track for further progress. â€¢Turnover increased by 4.9% to Â£71.70m â€¢The pre-tax profit of Â£2.87m represented increases of 21.5% (reported) and 7.0% (underlying), whilst EPS of 22.6p represented increases of 29.1% (reported) and 11.3% (underlying) â€¢Net assets per share totalled 287.8p (2003: 270.2p), up 6.5% â€¢Considering the overall performance in the half year and the Group's healthy financial position, the interim dividend per share is increased by 12.5% to 4.5p â€¢In Agriculture, as usual the most important Division in terms of both turnover and profit, sales of animal feed increased and the resultant gain was partially offset by the under recovery of unprecedented raw material cost increases, notably in grain, in the UK and the cessation of the US Government's Drought Assistance Programme in the US, whilst fertiliser benefited from last year's rationalisation and higher sales volumes â€¢Flour registered very poor margins as a result of delays in passing on to customers increases in the UK price of wheat, which rose 60% in eight months, peaking in January 2004 â€¢Engineering reduced its loss despite a substantial reduction in turnover, reflecting in both cases the closure of Keytor in March 2003 With regard to outlook, David Newton, Chairman, stated: ' Sales in the US of our low moisture feed blocks, 'Feed in a Drum' and 'Smartlic', have started to increase, suggesting that the subsidised feed stock on farms is now depleted. Continued growth of our 'Crystalyx' speciality blocks in both the UK and Continental Europe, combined with growth in retail sales through our agricultural branches, should, with the benefits of the fertiliser reorganisation last year, positively impact the second half of this year. The flour price increases will now have a favourable effect on our food business results. With little change in the Engineering Division, the Board continues to believe that Carr's should make further progress in the current year.' 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 CHAIRMAN'S INTERIM STATEMENT At the AGM on 6 January 2004, I stated that trading in the four months to end December 2003 was ahead of both budget and the corresponding period of the previous year. That remained the position following the six months to 28 February 2004. The Directors believe that Carr's remains on track for further progress. FINANCIAL REVIEW Group turnover for the half year ended 28 February 2004 increased by 4.9% to Â£71.70m (2003: Â£68.35m). Group operating profit increased by 17.3% to Â£3.16m (2003 : Â£2.70m), profit before tax by 21.5% to Â£2.87m (2003 : Â£2.36m), and earnings per share by 29.1% to 22.6p (2003 : 17.5p). After removing the impact of last year's Â£0.32m one-off charge in respect of the reorganisation costs in the Engineering Division, the Group operating profit advanced by 4.8% to Â£3.16m (2003: Â£3.02m), whilst profit before tax was 7.0% higher at Â£2.87m (2003: Â£2.68m). On the same basis, earnings per share improved by 11.3% to 22.6p (2003: 20.3p). Period end equity shareholders' funds increased by 6.5% to Â£23.24m from Â£21.82m at 1 March 2003, representing net assets per share of 287.8p (2003: 270.2p). Net debt reduced to Â£7.21m (2003: Â£8.45m), giving gearing of 31.0% (2003: 38.7%). Net interest payable decreased to Â£0.29m (2003: Â£0.33m) and was covered 10.9 times (2003: 9.1 times) by underlying profit before interest and tax. As usual, Agriculture was the most important of the three Divisions in terms of both turnover and profit. The increased pre-tax profit was achieved despite increases, over the comparable period in 2003, of Â£0.3m and Â£0.1m in pension costs and insurance premia, respectively. INTERIM DIVIDEND Considering the overall performance in the half year and the Group's healthy financial position, the Board has declared an increased interim dividend per share of 4.5p, up 12.5% on 2003's 4.0p, to be paid on 25 May 2004 to shareholders on the register at close of business on 30 April 2004, with an ex-dividend date of 28 April 2004. BUSINESS REVIEW Agriculture Feed The composition of the Group's animal feed business is set out below, including the location and product of each site: Operation Product Location Carrs Billington Agriculture Compound feed Carlisle, Cumbria (in association with Edward Billington Penrith, Cumbria & Sons Limited) Stone, Staffordshire Caltech Low moisture feed block Silloth, Cumbria Animal Feed Supplement Low moisture feed block Belle Fourche, South Dakota, USA Poteau, Oklahoma, USA Sales of compound animal feed and blended feed volumes increased in the first six months. However, the full benefit of these increased volumes was not achieved due to the under recovery of unprecedented raw material cost increases, notably in grain. In the UK markets, 'Crystalyx' continued to grow sales of its equine brands and also benefited from the introduction of 'Easy Breather', a product formulated and produced especially for calves. In 2003, Animal Feed Supplement had benefited from the introduction of the US Government's Drought Assistance Programme last year, which subsidised feed supplement products for ranchers in certain states, thereby achieving a record sales increase for these products in the US of 29% as compared to 2002. It would appear a large amount of that subsidised feed was held in stock by ranchers and therefore reduced demand this year; consequently, the sales volume and profit has not been as great as expected. The result has been further reduced by adverse currency movements. 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. Following the rationalisation of the fertiliser business last year, the expected financial benefits have been achieved. Sales volumes were higher than last year and good progress is being made in the speciality brands range. Retail Carr's Retail comprises 15 branches, from Milnathort (Fife) in the North to Leek (Staffordshire) in the South, selling farm supplies. Benefits from the opening of the new larger branch at Cockermouth (Cumbria) and further improvements from new products being added to the portfolio gave further increases in volumes and profits. Machinery Carr's Machinery distributes new and used agricultural 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. As expected, following high sales in the last two years, both sales and profits are lower. Food Carr's principal food company is Carr's Flour Mills, a cereals processing company with a mill at Silloth, using the latest in milling technology to meet the quality and specialist requirements of bakers, food manufacturers and retailers. The performance of Carr's Flour Mills during the half year was affected by the upheaval in world grain markets. Reduced crop yields across Europe resulted in world wheat stocks declining to a 20 year low. Consequently, UK wheat prices rose by 60% in eight months, peaking in January 2004. Inevitably, there were delays in passing on these increases to our customers, so margins were very poor. The bright spot so far this year is that sales agreements for Carr's Breadmaker Flour have been signed with three major multiple retailers. Engineering Engineering comprises Bendalls and R Hind, both of which are based in Carlisle. Bendalls, whose specialism is precision welding, designs and manufactures process plant and equipment for the petrochemical, oil and gas, nuclear power, pharmaceutical, process and water industries. R Hind provides vehicle body building and accident repairs for cars and commercial vehicles. Engineering reduced its loss despite a substantial reduction in turnover, reflecting in both cases the closure of Keytor in March 2003. Bendalls' involvement in renewable energy continues, albeit at a slower pace than anticipated. The successful closure of an equity funding round, by its strategic partner, supports the launch of a programme to develop a successor to the world's first offshore tidal turbine. R Hind benefited from operating from one site, as against three in 2003. OUTLOOK Sales in the US of our low moisture feed blocks, 'Feed in a Drum' and 'Smartlic', have started to increase, suggesting that the subsidised feed stock on farms is now depleted. Continued growth of our 'Crystalyx' speciality blocks in both the UK and Continental Europe, combined with growth in retail sales through our agricultural branches, should, with the benefits of the fertiliser reorganisation last year, positively impact the second half of this year. The flour price increases will now have a favourable effect on our food business results. With little change in the Engineering Division, the Board continues to believe that Carr's should make further progress in the current year. David Newton 20 April 2004 Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT for the half year ended 28 February 2004 Half Year Ended Year Ended 28 February 1 March 30 August 2004 2003 2003 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Group turnover - continuing operations 71,699 68,353 148,688 --------- -------- ---------- Group operating profit - continuing operations 2,495 2,228 4,011 Share of operating profit in associate - continuing operations 666 467 718 --------- -------- ---------- Total operating profit: group and share of associate 3,161 2,695 4,729 --------- -------- ---------- Profit on ordinary activities before interest and taxation 3,161 2,695 4,729 Interest receivable Group 48 88 162 Interest payable Group (313) (377) (746) Associate (26) (43) (79) --------- -------- ---------- Profit on ordinary activities before taxation 2,870 2,363 4,066 Taxation (918) (763) (1,277) --------- -------- ---------- Profit on ordinary activities after taxation 1,952 1,600 2,789 Minority interests - equity (124) (185) (329) --------- -------- ---------- Profit for the period 1,828 1,415 2,460 Dividends (363) (324) (930) --------- -------- ---------- Retained profit 1,465 1,091 1,530 --------- -------- ---------- Earnings per ordinary share Basic 22.6p 17.5p 30.5p Diluted 22.6p 17.5p 30.5p Alternative basis 22.6p 20.3p 34.7p Dividend per share 4.5p 4.0p 11.5p STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES for the half year ended 28 February 2004 Half Year Ended Year Ended 28 February 1 March 30 August 2004 2003 2003 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Profit for the period 1,828 1,415 2,460 Currency translation differences on foreign currency net investments (467) (1) (16) --------- -------- ---------- Total recognised gains and losses relating to the period 1,361 1,414 2,444 --------- -------- ---------- CONSOLIDATED BALANCE SHEET at 28 February 2004 at at at 28 February 1 March 30 August 2004 2003 2003 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Fixed assets Intangible assets 210 80 63 Tangible assets 19,531 19,039 19,723 Investments Investment in associate 1,909 1,130 1,461 Loan to associate 1,225 1,225 1,225 Other investments 253 153 153 --------- -------- ---------- 23,128 21,627 22,625 Current assets Assets held for resale - 80 - Stocks 13,925 12,736 9,123 Debtors 27,740 27,340 18,694 Cash at bank and in hand 1,650 1,332 1,472 --------- -------- ---------- 43,315 41,488 29,289 Creditors Amounts falling due within one year (36,622) (34,911) (22,845) --------- -------- ---------- Net current assets 6,693 6,577 6,444 Total assets less current liabilities 29,821 28,204 29,069 Creditors Amounts falling due after more than one year (4,089) (4,107) (4,265) Provision for liabilities and charges (1,099) (1,129) (1,266) Deferred income (274) (308) (303) --------- -------- ---------- Net assets 24,359 22,660 23,235 --------- -------- ---------- Capital and reserves Called-up share capital 2,018 2,018 2,018 Share premium account 4,752 4,752 4,752 Revaluation reserve 1,678 1,952 1,742 Profit and loss account 14,789 13,093 13,727 --------- -------- ---------- Equity shareholders' funds 23,237 21,815 22,239 Minority interests - equity 1,122 845 996 --------- -------- ---------- 24,359 22,660 23,235 --------- -------- ---------- CONSOLIDATED CASH FLOW STATEMENT for the half year ended 28 February 2004 Half Year Ended Year Ended 28 February 1 March 30 August 2004 2003 2003 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Net cash inflow/(outflow) from operating activities 1,432 (342) 5,504 --------- -------- ---------- Returns on investments and servicing of finance Interest received 51 86 153 Interest paid (273) (296) (638) Interest paid on finance leases (42) (56) (101) --------- -------- ---------- Net cash outflow from returns on investments and servicing of finance (264) (266) (586) --------- -------- ---------- Taxation (594) (537) (1,303) --------- -------- ---------- Capital expenditure and financial investment Purchase of tangible fixed assets (1,153) (875) (2,829) Purchase of intangible fixed assets (160) - - Sale of tangible fixed assets 235 137 679 Grants received - 160 189 Purchase of investments (100) - (2) Sale of investments - - 2 --------- -------- ---------- (1,178) (578) (1,961) --------- -------- ---------- Equity dividends paid (606) (524) (847) --------- -------- ---------- Cash (outflow)/inflow before financing (1,210) (2,247) 807 --------- -------- ---------- Financing (746) 253 (1,486) --------- -------- ---------- Decrease in net cash (1,956) (1,994) (679) --------- -------- ---------- NOTES 1 The tax charges for the half year ended 28 February 2004 and 1 March 2003 are based on the estimated tax charge for the applicable year. The overseas estimated tax charge for the half year ended 28 February 2004 is Â£249,000 (2003 interim : Â£465,000; year ended 2003 : Â£465,000) The share of the associate's estimated tax charge for the half year ended 28 February 2004 is Â£192,000 (2003 interim : Â£62,000; year ended 2003 : Â£54,000 credit). 2 The equity dividend for the half year ended 28 February 2004 is 4.5p per share (2003 interim : 4.0p per share; year ended 2003 : 11.5p per share) 3 The calculation of basic earnings per share is based on profits attributable to shareholders of Â£1,828,000 (2003 interim : Â£1,415,000; year ended 2003 : Â£2,460,000) and on 8,073,599 (2003 interim : 8,058,554; year ended 2003 : 8,066,072) 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 Â£1,828,000 (2003 interim : Â£1,415,000; year ended 2003 : Â£2,460,000) 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 8,085,417 shares (2003 interim : 8,061,861; year ended 2003 : 8,079,179). No exceptional gains and losses are reported in the half year ended 28 February 2004. Exceptional gains and losses in the half year ended 1 March 2003 and the year ended 30 August 2003 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 28 February 2004 1 March 2003 30 August 2003 Earnings Earnings Earnings Earnings per share Earnings per share Earnings per share Â£'000 p Â£'000 p Â£'000 p Earnings/earni ngs per share 1,828 22.6 1,415 17.5 2,460 30.5 Exceptional items Reorganisation costs in Agricultural Division - - - - 261 3.2 Reorganisation costs in Engineering Division - - 320 4.0 243 3.1 Taxation arising on exceptional items - - (96) (1.2) (166) (2.1) -------- ------ --------- ------ ------- ------- Earnings/earni ngs per share - alternative 1,828 22.6 1,639 20.3 2,798 34.7 -------- ------ --------- ------ ------- ------- 4 Cash flow from operating activities Half year ended Year ended 28 February 2004 1 March 2003 30 August 2003 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Group operating profit 2,495 2,228 4,011 Depreciation charge 1,138 1,106 2,271 Profit on sale of tangible fixed assets (74) (25) (166) Goodwill amortisation 13 16 35 Grants amortisation (29) (31) (65) (Increase) in stocks (4,802) (3,679) (66) (Increase)/decrease in debtors (8,748) (8,707) 119 Increase/(decrease) in creditors 11,606 8,750 (802) (Decrease)/increase in provisions (167) - 167 ---------- ---------- ---------- Net cash inflow/(outflow) from operating activities 1,432 (342) 5,504 ---------- ---------- ---------- 5 Analysis of net debt Half year ended Year ended 28 February 2004 1 March 2003 30 August 2003 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Cash at bank and in hand 1,650 1,332 1,472 Bank overdrafts (3,879) (2,875) (1,704) Loans: amounts falling due within one year (1,366) (2,367) (1,368) Loans: amounts falling due after more than one year (2,335) (3,135) (2,735) Finance leases: amounts falling due within one year (402) (431) (555) Finance leases: amounts falling due after more than one year (880) (972) (725) ---------- ---------- ---------- (7,212) (8,448) (5,615) ---------- ---------- ---------- 6 The figures and financial information for the year ended 30 August 2003 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 28 February 2004 was approved by a duly appointed and authorised committee of the Board of Directors on 21 April 2004. The interim statement 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 30 August 2003. 7 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

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