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Carr's Milling Inds (CARR)

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Tuesday 24 April, 2012

Carr's Milling Inds

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


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