Interim Results

RNS Number : 8974B

Carr's Milling Industries PLC

24 April 2012

 



IMMEDIATE RELEASE

24 April 2012

CARR'S MILLING INDUSTRIES PLC

("Carr's" or "the Group")

Interim Results

Carr's (CRM.L), the agriculture, food and engineering group, announces interim results for the 26 weeks ended 3 March 2012.

Financial Highlights (Continuing Operations)

·     Revenue up 12% to £196.0m (2011: £175.5m)

·     Profit before taxation up 31% to £7.4m (2011: £5.7m)

·     Fully diluted EPS up 29% to 52.2p (2011: 40.4p)

·     First interim dividend up to 7.25p (2011: 6.5p)

·     Net cash £1.6m (2011 net debt: £28.2m)

Commercial Highlights

·     Agriculture revenue up 12% to £147.2m and profit before taxation up 19% to £5.2m, despite lower UK compound feed volumes resulting from the mild winter weather.  The good performance reflects strong feed block sales, particularly in the US, UK and New Zealand, and growth in retail sales and margins.

·     Food revenue up 8% to £41.4m but profit before taxation down 39% to £0.4m, reflecting the continuing pressure on margins caused by volatile wheat prices and over-capacity in the flour industry.

·     Engineering revenue up 33% to £7.4m with profit before taxation up 175% to £1.6m, reflecting strong demand, the completion of significant contracts and an expanding order pipeline. 

Chris Holmes, Chief Executive, commented:

"The Board is pleased with the first half performance, which was ahead of our forecast.  The trading environment, particularly in agriculture, is mixed due to the milder weather conditions experienced and this trend has continued into the second half. However, demand for our products, particularly animal feed blocks, remains strong.  Following the profit growth achieved in the first half the Board believes the results for the year will be ahead of the expectations that the Company had at the beginning of the year, and is well positioned for sustained profitable growth."

Enquiries:

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

INTERIM MANAGEMENT REPORT

Financial Review

The current year is the first following the disposal of the fertiliser blending business in July 2011.  During the first 26 weeks ended 3 March 2012, the Group delivered a solid set of results in which revenue increased by 12% to £196.0 million (2011: £175.5 million), reflecting higher oil and feed commodity prices, increased volume in our feed block businesses, and strong sales from our Engineering division.  Sales of animal feed and fuels were adversely impacted by milder weather but the prices for beef, lamb and milk remained firm, and our financial performance in the UK and overseas has been positive.  In Engineering, we continue to experience strong demand from the nuclear industry which is reflected in our trading performance and a growing order book.  

The combination of increased sales and a continuing focus on cost control resulted in an improvement in operating margin to 3.4% (2011: 2.9%) and Group operating profit increasing by 30% to £6.7 million (2011: £5.2 million).  Profit before taxation increased by 31% to £7.4 million (2011: £5.7 million).

Fully diluted earnings per share were up 29% to 52.2 pence (2011: 40.4 pence).

The disposal in July 2011 of our fertiliser blending business has significantly reduced the volatility in our cash flow and at 3 March 2012 net cash was £1.6 million compared to net debt of £28.2 million at 26 February 2011.

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 £10.0 million and term loan £2.5 million, are committed through to November 2014.

Shareholders' Equity

Shareholders' equity at 3 March 2012 increased by £1.6 million to £58.6 million (3 September 2011: £57.0 million) due mainly to the profit retained by the Group in the period and a small reduction in the Group's defined benefit pension obligation.

Dividend

A first interim dividend of 7.25 pence per share (2011: 6.5 pence per share) will be paid on 25 May 2012 to shareholders on the register on 4 May 2012.  The ex-dividend date will be 2 May 2012.

Business Review

Agriculture

Profit before taxation was up 19% to £5.2 million on revenue up 12% to £147.2 million.

Our global feed block sales were a significant contributor to this good performance.  In the US, following the previous year's severe winter weather which prevented delivery in key areas, low-moisture feed block sales were up 40%.  Sales volumes also benefited from supply agreements with our joint venture partner in the high moisture feed block plant in Shelbyville, Tennessee, which opened in November 2011. Demand for Crystalyx in New Zealand and Europe continues to grow.  Sales of high moisture feed blocks in the UK benefited from the investment in Scotmin Nutrition completed last year and the re-launch of Megalix, the all-year-round supplement for cattle, and Megastart, a product for pre-lambing and pre-calving.

Due to the mild autumn and winter weather sales of our dairy, beef and sheep feeds were down, in line with the market.

Delayed commissioning, as a result of engineering issues, of the new AminoMax feed supplement plant in Watertown, New York State meant that it was not possible to supply AminoMax during the early winter season.  The demand for AminoMax, the patented rumen bypass protein which improves the yield and profitability of dairy herds, is encouraging and should make a positive contribution in the next financial year.

Fuel sales volumes were maintained during the period, despite the mild autumn and winter weather, reflecting market share gains following the opening of new depots at Hexham in August 2011 and Cockermouth in February 2012, and a full period of trading from our depot at Lancaster.

Retail sales were ahead of the first half of last year with margins also increasing.  This reflects the success of the increased range of animal health products sold through the expanded retail network, including the new branch opened at Stirling in June 2011.  Safe at Work, the specialist supplier of protective clothing to the forestry and agricultural markets, was successfully integrated and made a positive contribution to profit and extended the product range across our branch network.

Farmer purchases of fertiliser reduced sales in the first half but we expect most of the sales shortfall to be recovered in the second half.

Sales of agricultural machinery continue to grow, benefiting from the larger range of franchises.

Food

The trading environment for our three flour mills remains difficult and competition remains intense.  In the period wheat prices were once again volatile, with price fluctuations of approximately £35 per tonne, and while sales volumes and sales revenue were both ahead of last year, with revenue up 8% at £41.4 million, margins were lower.  Profit before taxation was down 39% at £0.4 million.  The new wheat handling facility which re-opened last year at Kirkcaldy, is working well, with the volume of grain through the port significantly exceeding our initial projections.

In recent months there have been signs of further consolidation and rationalisation within the UK milling industry.  We are reviewing our own milling operations to ensure that we will be in a position to meet the needs of today's bakers and food manufacturers as efficiently as possible.

Engineering

Strong demand both in the UK and overseas is reflected in revenue for the period growing by 33% to £7.4 million with profit before taxation increasing by 175% to £1.6 million.

Specialist fabricators, Bendalls, completed a contract for the supply of pressure vessels to Bechtel in the US for the nuclear decommissioning plant in Handford, Washington State.  In the second half, it will complete a major vessel for the Evaporator D project at Sellafield in Cumbria which is the UK's largest nuclear project. 

Bendalls has also won a multi-million pound contract to supply pressure vessels for a floating production storage and offloading platform, being manufactured by Hyundai in South Korea, for the BP Quad 204 area west of the Shetland islands.  Work is expected to commence during summer 2012 with delivery early in 2013.  

MSM achieved sales growth as the result of increased demand largely from Sellafield where it has recently signed a 'life of plant' contract for the supply of critical parts which will make a positive contribution to this division going forward.

Wälischmiller, the remote handling technology and robotics business, has been exceptionally busy throughout the period and all contract delivery schedules were met, including the delivery of 3 Telbot specialist robots for a de-commissioning plant in Germany.  In addition, significant contracts for master slave manipulators and remote handling equipment were completed for customers in France, Japan and South Korea.

As the result of continuing high demand, and strong order book leading to an increased production requirement, Wälischmiller has expanded its design and production engineering team by 10, taking the total number of employees to 90.  Phase I (new office accommodation and some production capacity) of the new €4 million factory at Markdorf is on schedule to complete this summer, after which construction of the new production facility will begin. 

Principal Risks and Uncertainties

The Board has identified vulnerabilities specific to the Group's activities, whose converse gives rise to potential upside. The principal risks and uncertainties are set out in detail on pages 16 and 17 of the Report & Accounts for the year ended 3 September 2011 and remain the same as the prior year. 

The principal risks and uncertainties are not expected to change materially in the remainder of the year and can be summarised as follows:

·     Failure to act safely and to maintain the continued safe operation of our facilities and quality 
of products;

·     Failure to attract, develop and retain key personnel;

·     Non-compliance with legislation and regulation;

·     Fluctuations in prices, offtake and availability of raw materials, energy, freight and other 
operating inputs;

·     Failure to protect intellectual property;

·     Failure to maintain high standards of customer service and identify important customer 
trends;

·     Failure to maintain an effective system of internal financial controls;

·     Managing procurement costs.

Outlook

The Group delivered an excellent performance in the first half, with profit before taxation from continuing operations up by 31%, in mixed market conditions.  The integration of our expanded retail branch operations and the opening of two fuel depots in recent months emphasises the determination and confidence of the Group to invest and deliver growth.

The Agriculture division, the largest sector of the Group, remains well placed to continue playing an important role in the UK and US agricultural markets, due to its broad range of products and investment in technology.  The population growth is creating the need for improved farmer productivity and underlines and supports our investment in feed technology and animal health products.

The level of over-capacity in the UK flour market continues to present management with challenges and we anticipate that the Food division will, at best, sustain its first half performance in the second half.

Our Engineering business has major contracts to be completed in the second half of the year and beyond and strives to ensure that all contracts are delivered on time meeting customer expectations.

The Board continues to view the outlook for the remainder of the year positively and believes that the results for the year ending 1 September 2012 will be ahead of the expectations that the Company had at the beginning of the year.

Chris Holmes                                                                             24 April 2012

Chief Executive Officer

UNAUDITED CONSOLIDATED INCOME STATEMENT

for the 26 weeks ended 3 March 2012

	Notes	26 weeks ended 3 March 2012 £'000 (unaudited)		26 weeks ended 26 February 2011 £'000 (unaudited)		53 weeks ended 3 September 2011 £'000 (audited)
Continuing operations
Revenue	3	196,049		175,502		373,318
Cost of sales		(173,672)		(153,804)		(332,202)
Gross profit		22,377		21,698		41,116
Net operating expenses		(15,662)		(16,526)		(31,960)
Group operating profit		6,715		5,172		9,156
Profit on disposal of property and investment		321		-		-
Finance income		308		163		410
Finance costs		(668)		(590)		(1,332)
Share of post-tax profit in associate and joint ventures		768		948		1,776
Profit before taxation	3	7,444		5,693		10,010
Taxation	5	(1,857)		(1,272)		(1,973)
Profit for the period from continuing operations		5,587		4,421		8,037
Discontinued operations
(Loss)/profit for the period from discontinued operations		(202)		1,582		16,598
Profit for the period		5,385		6,003		24,635
Profit attributable to:
Equity shareholders		4,584		5,154		23,381
Minority interests		801		849		1,254
		5,385		6,003		24,635
Dividend per share (pence)
Paid	7	19.5		18.0		24.5
Proposed	7	7.25		6.5		13.0
Basic earnings per share (pence)
Profit from continuing operations	6	54.0		40.6		77.0
(Loss)/profit from discontinued operations	6	(2.3)		18.0		188.4
		51.7		58.6		265.4
Diluted earnings per share (pence)
Profit from continuing operations	6	52.2		40.4		76.3
(Loss)/profit from discontinued operations	6	(2.2)		17.9		186.6
		50.0		58.3		262.9

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the 26 weeks ended 3 March 2012

	Notes	26 weeks ended 3 March 2012 £'000 (unaudited)		26 weeks ended 26 February 2011 £'000 (unaudited)		53 weeks ended 3 September 2011 £'000 (audited)
Profit for the period		5,385		6,003		24,635
Other comprehensive income
Foreign exchange translation (losses)/gains arising on translation of overseas subsidiaries		(82)		(6)		57
Actuarial (losses)/gains on retirement benefit obligation:
- Group	4	(1,621)		2,979		726
- Share of associate		-		-		(27)
Taxation credit/(charge) on actuarial movement on retirement benefit obligation:
- Group		405		(775)		(182)
- Share of associate		-		-		7
Other comprehensive (expense)/ income for the period, net of tax		(1,298)		2,198		581
Total comprehensive income for the period		4,087		8,201		25,216
Total comprehensive income attributable to:
Equity shareholders		3,286		7,353		23,964
Minority interests		801		848		1,252
		4,087		8,201		25,216

UNAUDITED CONSOLIDATED BALANCE SHEET

as at 3 March 2012

	Notes	As at 3 March 2012 £'000 (unaudited)		As at 26 February 2011 £'000 (unaudited)		As at 3 September 2011 £'000 (audited)
Assets
Non-current assets
Goodwill		4,558		4,679		4,558
Other intangible assets	10	890		1,207		1,029
Property, plant and equipment	10	32,192		32,494		31,519
Investment property	10	705		775		764
Investment in associate		4,897		3,518		4,246
Interest in joint ventures		2,578		2,414		2,519
Other investments		71		69		67
Financial assets
- Non-current receivables		2		5		2
Deferred tax assets		2,583		2,798		2,519
		48,476		47,959		47,223
Current assets
Inventories		30,400		47,841		22,793
Trade and other receivables		59,282		68,800		56,988
Current tax assets		-		-		9
Financial assets
- Derivative financial instruments		2		139		-
- Cash at bank and in hand		28,236		11,599		33,282
		117,920		128,379		113,072
Total assets		166,396		176,338		160,295
Liabilities
Current liabilities
Financial liabilities
- Borrowings		(14,877)		(22,313)		(26,436)
- Derivative financial instruments		(47)		-		-
Trade and other payables		(59,153)		(74,348)		(53,469)
Current tax liabilities		(1,754)		(2,031)		(1,688)
		(75,831)		(98,692)		(81,593)
Non-current liabilities
Financial liabilities
- Borrowings		(11,731)		(17,478)		(2,274)
Retirement benefit obligation	4	(5,499)		(6,701)		(5,960)
Deferred tax liabilities		(3,990)		(4,749)		(4,007)
Other non-current liabilities		(4,083)		(2,743)		(3,617)
		(25,303)		(31,671)		(15,858)
Total liabilities		(101,134)		(130,363)		(97,451)
Net assets		65,262		45,975		62,844
Shareholders' equity
Called-up share capital		2,218		2,200		2,216
Share premium		8,090		7,769		8,059
Treasury share reserve		-		(101)		-
Equity compensation reserve		98		173		84
Foreign exchange reserve		278		296		360
Other reserve		907		1,462		913
Retained earnings		46,994		28,715		45,343
Total shareholders' equity		58,585		40,514		56,975
Minority interests in equity		6,677		5,461		5,869
Total equity		65,262		45,975		62,844

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the 26 weeks ended 3 March 2012

	Called- up Share Capital £'000	Share Premium Account £'000	Treasury Share Reserve £'000	Equity Compensation Reserve £'000	Foreign Exchange Reserve £'000	Other Reserves £'000	Retained Earnings £'000	Total Shareholders' Equity £'000	Minority Interest £'000	Total Equity £'000
At 4 September 2011	2,216	8,059	-	84	360	913	45,343	56,975	5,869	62,844
Profit for the period	-	-	-	-	-	-	4,584	4,584	801	5,385
Other comprehensive  income	-	-	-	-	(82)	-	(1,216)	(1,298)	-	(1,298)
Total comprehensive income	-	-	-	-	(82)	-	3,368	3,286	801	4,087
Dividends paid	-	-	-	-	-	-	(1,729)	(1,729)	-	(1,729)
Equity-settled share-based payment transactions, net of tax	-	-	-	14	-	-	6	20	7	27
Allotment of shares	2	31	-	-	-	-	-	33	-	33
Transfer	-	-	-	-	-	(6)	6	-	-	-
At 3 March 2012	2,218	8,090	-	98	278	907	46,994	58,585	6,677	65,262

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	-	-	-	-	-	-	5,154	5,154	849	6,003
Other comprehensive  Income	-	-	-	-	(5)	-	2,204	2,199	(1)	2,198
Total comprehensive Income	-	-	-	-	(5)	-	7,358	7,353	848	8,201
Dividends paid	-	-	-	-	-	-	(1,583)	(1,583)	-	(1,583)
Equity-settled share-based payment transactions, net of tax	-	-	-	3	-	-	-	3	-	3
Allotment of shares	4	31	-	-	-	-	-	35	-	35
Transfer	-	-	-	-	-	(15)	15	-	-	-
At 26 February 2011	2,200	7,769	(101)	173	296	1,462	28,715	40,514	5,461	45,975

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	-	-	-	-	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

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

for the 26 weeks ended 3 March 2012

	Notes	26 weeks ended 3 March 2012 £'000 (unaudited)		26 weeks ended 26 February 2011 £'000 (unaudited)		53 weeks ended 3 September 2011 £'000 (audited)
Cash flows from operating activities
Cash generated from continuing operations	8	4,569		4,242		14,097
Interest received		237		180		403
Interest paid		(737)		(632)		(1,378)
Tax paid		(1,409)		(711)		(1,711)
Net cash generated from operating activities in continuing operations		2,660		3,079		11,411
Net cash used in operating activities in discontinued operations		-		(11,231)		(3,202)
Net cash generated from/(used in) operating activities		2,660		(8,152)		8,209
Cash flows from investing activities
Acquisition of subsidiaries (net of cash acquired)		-		(723)		(1,833)
Disposal of subsidiary (including overdraft disposed)		(350)		-		22,074
Disposal of trade		-		160		160
Loan to joint ventures		(684)		-		(1,286)
Loan repaid by share trust		-		-		83
Purchase of intangible assets		(26)		(28)		(45)
Proceeds from sale of property, plant and equipment		450		122		287
Proceeds from sale of investment property		94		-		-
Purchase of property, plant and equipment		(2,434)		(1,866)		(5,025)
Purchase of investments		(4)		-		(1)
Disposal of investments		107		-		3
Net cash (used in)/generated from investing activities in continuing operations		(2,847)		(2,335)		14,417
Net cash used in investing activities in discontinued Operations		-		(315)		(397)
Net cash (used in)/generated from investing activities		(2,847)		(2,650)		14,020
Cash flows from financing activities
Proceeds from issue of ordinary share capital		33		35		341
Net proceeds from issue of new bank loans		2,381		-		-
Finance lease principal repayments		(469)		(388)		(868)
Repayment of borrowings		(5,661)		(801)		(3,355)
Increase in other borrowings		1,439		4,702		2,295
Dividends paid to shareholders		(1,729)		(1,583)		(2,155)
Receipt of grant income		-		-		830
Net cash (used in)/generated from financing activities in continuing operations		(4,006)		1,965		(2,912)
Net cash used in financing activities in discontinued operations		-		(117)		(207)
Net cash (used in)/generated from financing activities		(4,006)		1,848		(3,119)
Effects of exchange rate changes		(42)		30		71
Net (decrease)/increase in cash and cash equivalents		(4,235)		(8,924)		19,181
Cash and cash equivalents at beginning of the period		32,449		13,268		13,268
Cash and cash equivalents at end of the period		28,214		4,344		32,449
Cash and cash equivalents consist of:
Cash at bank and in hand per the balance sheet	9	28,236		11,599		33,282
Bank overdrafts included in borrowings	9	(22)		(7,255)		(833)
		28,214		4,344		32,449

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors confirm that to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 (an indication of important events during the first six months and a description of the principal risks and uncertainties for the remaining six months of the year) and DTR 4.2.8 (a disclosure of related party transactions and charges therein) of the Disclosure and Transparency Rules.

The Directors of Carr's Milling Industries PLC are listed in the Carr's Milling Industries PLC Annual Report and Accounts 2011.  There have been no changes to the Board of Directors in the financial period.

On behalf of the Board

Chris Holmes                                                    Ron Wood

Chief Executive                                                 Finance Director

24 April 2012                                                    24 April 2012

NOTES TO THE UNAUDITED INTERIM FINANCIAL RESULTS

1.  Basis of preparation

This interim report was approved by the Directors on 24 April 2012 and has been prepared in accordance with the Disclosure and Transparency Rules of the UK's Financial Services Authority and the requirements of IAS 34 'Interim Financial Reporting' as adopted by the European Union.  The information does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and has been neither audited nor reviewed.  No statutory accounts for the period have been delivered to the Registrar of Companies.

The interim financial information has been prepared under the historical cost convention as modified by the revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss.

The statutory accounts for the year ended 3 September 2011 prepared under IFRS as adopted by the European Union have been filed with the Registrar of Companies.  The report of the auditors was not qualified and did not contain a statement under Section 498 of the Companies Act 2006.

2.  Accounting policies

The accounting policies used in the preparation of the financial information for the 26 weeks to 3 March 2012 have been consistently applied to all the periods presented and are set out in full in the Group's financial statements for the 53 weeks ended 3 September 2011.  A copy of these financial statements is available from the Company's Registered Office at Old Croft, Stanwix, Carlisle, CA3 9BA.

The following accounting standards, amendments and interpretations are not yet effective and have not been adopted early by the Group:

International Financial Reporting Standards ("IFRS")

IFRS 9: 'Financial instruments'                                                                                       1 January 2015

IFRS 10: 'Consolidated financial statements'                                                                   1 January 2013

IFRS 11: 'Joint arrangements'                                                                                        1 January 2013

IFRS 12: 'Disclosures of interests in other entities'                                                          1 January 2013

IFRS 13: 'Fair value measurement'                                                                                1 January 2013

IAS 27 (revised 2011): 'Separate financial statements'                                                    1 January 2013

IAS 28 (revised 2011): 'Associates and joint ventures'                                                    1 January 2013

Amendments to existing standards

Amendment to IFRS 1: 'First time adoption' on government grants                                   1 July 2013

Amendment to IFRS 7 on Financial instruments asset and liability offsetting                     1 July 2013

Amendment to IAS 1: 'Presentation of financial statements' on OCI                                1 July 2012

Amendment to IAS 12: 'Income taxes' on deferred tax                                                   1 January 2012

Amendment to IAS 19 (revised 2011): 'Employee benefits'                                             1 January 2013

Amendment to IAS 32 on Financial instruments asset and liability offsetting                     1 July 2014

From 3 September 2011 the following standards, amendments and interpretations became effective and were adopted by the Group:

International Financial Reporting Standards

IAS 24 (revised): 'Related party disclosures'                                                                   1 January 2011

Amendments to existing standards

Annual improvements to IFRSs 2010                                                                             1 January 2011

Amendment to IFRS 1: 'Hyperinflation and fixed dates'                                                   1 July 2011

Amendment to IFRS 7: 'Financial instruments: Disclosures'                                             1 July 2011

Amendment to IFRIC 14: 'Pre-payments of a Minimum Funding Requirement'                 1 January 2011

The adoption of these standards, amendments and interpretations has not had a material effect on the net assets, results and disclosures of the Group.

3.  Segmental information

The chief operating decision maker (CODM) has been identified as the Board of Directors.  Management has identified the operating segments based on internal financial information reviewed by the Board.  The Board considers the business from a products/services perspective.  Operating segments have been identified as Agriculture, Food and Engineering.  After the disposal of Carrs Fertilisers, the remaining businesses in what was our Agriculture Manufacturing segment do not have the scale to be reported as a separate segment.  We have therefore combined Agriculture Manufacturing and Agriculture Trading businesses into a single segment for reporting continuing operations.  Operating segments have not been aggregated for the purpose of determining reportable segments.

Performance is assessed using profit before taxation.  For internal purposes, profit before taxation is measured in a manner consistent with that in the financial statements, with the exception of material non-recurring items, which are excluded.

Inter-segmental transactions are all undertaken on an arm's length basis.

Adjustments to segmental information represents non-reportable segments and consolidation adjustments.

The segment results for the 26 weeks to 3 March 2012 are as follows:

		Agriculture	Food	Engineering	Group
		£'000	£'000	£'000	£'000
Revenues from external customers		147,205	41,382	7,438	196,025
Other adjustments					24
					196,049
Revenues from other operating segments		25	2	30	57
Elimination of inter segment revenues					(57)
					-
Profit before taxation		5,166	404	1,575	7,145
Head office net expense					(428)
Retirement benefit charge					(298)
Other adjustments					(64)
Profit on disposal of property and investment					321
Share of post-tax profit of associate					651
Share of post-tax profit of joint ventures					117
Profit before taxation from continuing operations					7,444

Assets   

		Agriculture	Food	Engineering	Group
		£'000	£'000	£'000	£'000
Segment assets		55,569	16,901	7,390	79,860
Adjustments					(103)
Other current assets:
Other receivables					9,925
Derivative financial instruments					2
Cash and cash equivalents					28,236
Non-current assets					48,476
Total assets					166,396

The segment results for the 26 weeks to 26 February 2011 (restated) are as follows:

		Agriculture	Food	Engineering	Group
		£'000	£'000	£'000	£'000
Revenues from external customers		131,567	38,312	5,605	175,484
Other adjustments					18
					175,502
Revenues from other operating segments		238	3	30	271
Elimination of inter segment revenues					(271)
					-
Profit before taxation		4,357	662	573	5,592
Head office net expense					(419)
Retirement benefit charge					(344)
Other adjustments					(84)
Share of post-tax profit of associate					707
Share of post-tax profit of joint ventures					241
Profit before taxation from continuing operations					5,693

Assets   

		Agriculture	Food	Engineering	Group
		£'000	£'000	£'000	£'000
Segment assets		85,559	17,546	12,707	115,812
Adjustments					(5,620)
Other current assets:
Other receivables					6,449
Derivative financial instruments					139
Cash and cash equivalents					11,599
Non-current assets					47,959
Total assets					176,338

The segment results for the 53 weeks to 3 September 2011 are as follows:

		Agriculture	Food	Engineering	Group
		£'000	£'000	£'000	£'000
Revenues from external customers		272,678	82,602	18,000	373,280
Other adjustments					38
					373,318
Revenues from other operating segments		108	5	72	185
Elimination of inter segment revenues					(185)
					-
		Agriculture	Food	Engineering	Group
		£'000	£'000	£'000	£'000
Profit before taxation		6,429	1,258	1,657	9,344
Head office net expense					(394)
Retirement benefit charge					(742)
Other adjustments					26
Share of post-tax profit of associate					1,455
Share of post-tax profit of joint ventures					321
Profit before taxation from continuing operations					10,010

Assets   

		Agriculture	Food	Engineering	Group
		£'000	£'000	£'000	£'000
Segment assets		44,402	18,578	7,690	70,670
Adjustments					(64)
Other current assets:
Other receivables					9,175
Current tax assets					9
Cash and cash equivalents					33,282
Non-current assets					47,223
Total assets					160,295

Sales of agricultural products are subject to seasonal fluctuations, with higher demand for animal feed in the first six months of the period.

4.  Retirement benefit obligation

	£'000
Deficit in scheme at 3 September 2011	5,960
Actuarial loss	1,621
Contributions by employer	(2,380)
Retirement benefit charge	298
Deficit in scheme at 3 March 2012	5,499

Actuarial losses of £1,621,000 (2011: gains of £2,979,000) have been reported in the Statement of Comprehensive Income.  The loss reflects a reduction in the discount rate due to the reduction in bond yields in the six month period.

The Group's associate's defined pension scheme is closed to future service accrual and the valuation for this Scheme has not been updated for the half year as any actuarial movements are not considered to be material.

5.  Taxation

The tax charges for the 26 weeks ended 3 March 2012 and 26 February 2011 are based on the estimated tax charge for the applicable year.

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 of intangible assets net of the related tax adjustment.  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		26 weeks ended		53 weeks ended
	3 March 2012		26 February 2011		3 September 2011
	£'000		£'000		£'000
Continuing operations
Earnings	4,786		3,572		6,783
Amortisation and non-recurring items:
Amortisation of intangible assets	142		271		480
Taxation relief on amortisation	(37)		(76)		(124)
Profit on disposal of property and investment	(321)		-		-
Taxation on disposal of property and investment	42		-		-
Impairment of goodwill	-		-		325
Impairment of property, plant and equipment	-		-		324
Taxation relief on impairment	-		-		(81)
Reorganisation costs of acquired business	-		-		292
Taxation relief on reorganisation costs	-		-		(77)
Profit on disposal of trade	-		(190)		(190)
Taxation on disposal of trade	-		52		52
Earnings - adjusted	4,612		3,629		7,784
Discontinued operations
Earnings - basic and adjusted	(202)		1,582		16,598
	4,410		5,211		24,382
Weighted average number of ordinary shares in issue	8,867,226		8,793,763		8,808,156
Potentially dilutive share options	305,262		47,197		86,727
	9,172,488		8,840,960		8,894,883
Continuing operations
Basic earnings per share	54.0p		40.6p		77.0p
Diluted earnings per share	52.2p		40.4p		76.3p
Adjusted earnings per share	52.0p		41.3p		88.4p
Discontinued operations
Basic earnings per share	(2.3)p		18.0p		188.4p
Diluted earnings per share	(2.2)p		17.9p		186.6p
Adjusted earnings per share	(2.3)p		18.0p		188.4p

7.  Dividends

	26 weeks ended		26 weeks ended		53 weeks ended
	3 March 2012		26 February 2011		3 September 2011
	£'000		£'000		£'000
Second interim paid for the period ended 3 September 2011 of 6.5p per 25.0p share (2010: 6.0p)	576		527		527
Final dividend for the period ended 3 September 2011 of 13.0p per 25.0p share (2010: 12.0p)	1,153		1,056		1,056
First interim paid for the period ending 1 September 2012 of 7.25p per 25.0p share (2011: 6.5p)	-		-		572
	1,729		1,583		2,155

The Directors have approved an interim dividend of 7.25p per share (2011: 6.5p 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 £643,078 (2011: £571,986), which will be paid on 25 May 2012 to shareholders whose names are on the Register of Members at the close of business on 4 May 2012.  The ordinary shares will be quoted ex-dividend on 2 May 2012.

8.  Cash flow generated from continuing operations

	26 weeks ended		26 weeks ended		53 weeks ended
	3 March 2012		26 February 2011		3 September 2011
	£'000		£'000		£'000
Profit for the period from continuing operations	5,587		4,421		8,037
Adjustments for:
Tax	1,857		1,272		1,973
Depreciation of property, plant and equipment	2,111		1,907		3,923
Impairment of property, plant and equipment	-		-		324
Amounts written off property, plant and equipment	-		-		28
Profit on disposal of property, plant and equipment	(202)		(5)		(10)
Depreciation of investment property	10		9		20
Profit on disposal of investment property	(45)		-		-
Intangible asset amortisation	142		271		480
Intangible asset impairment	-		-		325
Profit on disposal of investment	(107)		-		(2)
Profit on disposal of trade	-		(190)		(190)
Loan forgiven in the period	-		-		(40)
Net fair value losses on derivative financial instruments in operating profit	45		-		-
Net fair value loss on share-based payments	26		3		20
Net foreign exchange differences	23		100		18
Interest income	(308)		(163)		(410)
Interest expense and borrowing costs	709		613		1,424
Share of post-tax profits from associate and joint ventures	(768)		(948)		(1,776)
IAS19 income statement credit in respect of employer contributions	(2,380)		(1,409)		(4,801)
IAS19 income statement charge	298		344		742
Changes in working capital (excluding the effects of acquisitions and disposal):
Increase in inventories	(7,607)		(10,186)		(205)
Increase in receivables	(1,511)		(14,100)		(14,591)
Increase in payables	6,689		22,303		18,808
Cash generated from continuing operations	4,569		4,242		14,097

9.  Analysis of net debt

	At		At		At
	3 March 2012		26 February 2011		3 September 2011
	£'000		£'000		£'000
Cash and cash equivalents	28,236		11,599		33,282
Bank overdrafts	(22)		(7,255)		(833)
Loans and other borrowings: current	(13,675)		(14,406)		(24,931)
Loans and other borrowings: non-current	(10,681)		(16,623)		(1,225)
Finance leases: current	(1,180)		(652)		(672)
Finance leases: non-current	(1,050)		(855)		(1,049)
	1,628		(28,192)		4,572

10.  Capital expenditure and capital commitments

During the period, the Group incurred capital expenditure on property, plant and equipment of £3,091,000 (2011: £2,114,000) and on intangible assets of £26,000 (2011: £28,000).

During the period, the Group disposed of property, plant and equipment with a net book amount of £248,000 (2011: £122,000), and investment property with a net book amount of £49,000 (2011: £nil)

Capital commitments contracted, but not provided for, by the Group at the period end amounts to £2,086,000 (2011: £94,000)

11.  Related party transactions

The Group's significant related parties are its associate and joint ventures, as disclosed in the Annual Report and Accounts 2011. 

Transactions and balances with the associate and joint ventures were all undertaken on an arm's length basis in the normal course of business and are as follows:

For the period to 3 March 2012

			Rent	Management	Amounts	Amounts
	Sales	Purchases	receivable	charges	owed	owed
	to	from	from	from	from	to
	£'000	£'000	£'000	£'000	£'000	£'000
Associate	202	(45,894)	10	8	107	(13,186)
Joint ventures	22	-	-	30	2,529	(1)

For the period to 26 February 2011

			Rent	Management	Amounts	Amounts
	Sales	Purchases	receivable	charges	owed	owed
	to	from	from	from	from	to
	£'000	£'000	£'000	£'000	£'000	£'000
Associate	283	(44,959)	9	7	94	(17,092)
Joint ventures	14	-	-	29	423	-

Transactions and balances with subsidiaries have been eliminated on consolidation and are not disclosed in this note.

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

 

END

 

 

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