Interim Results
Carr's Milling Industries PLC
08 April 2003
CARR'S MILLING INDUSTRIES PLC - INTERIM ANNOUNCEMENT
Half year performance very encouraging
• Carr's, the Cumbria-based agriculture, food and engineering business,
reports interim results well ahead of those for the first half of last year,
as predicted at the AGM in January.
• On turnover up 5.4% at £68.4m, underlying pre-tax profit increased by 62%
to £2.68m from £1.65m and underlying earnings per share improved by 71% to
20.3p from 11.9p. On a reported basis, the pre-tax profit was £2.36m
(2002: £1.96m), up 21%, and earnings per share were 17.5p (2002: 14.6p), up
20%.
• NAV per share increased to 270p from 244p, whilst gearing reduced to 39%
from 64%.
• Taking into account the overall good performance, reducing gearing levels
and relative levels of half and full year dividend payments, the interim
dividend per share is increased by 33%, to 4p from 3p.
• The feed blocks business in the USA, Animal Feed Supplement, achieved a
particularly strong performance, helped by US Government's Cattle Feed
Drought Assistance Programme, and the UK feed blocks business, Caltech,
continued to progress steadily in both the UK and Continental Europe.
• Both the retail bread flour and the bulk flour businesses progressed.
• The reorganisation of the Engineering Division should reduce divisional
operating losses by some £0.3m per annum at a one-off reorganisation cost of
£0.3m.
• David Newton, Chairman, stated 'Sales of our feed blocks, in the UK,
Continental Europe and USA, are at higher than budgeted levels and
performance from both our compound animal feed and fertiliser businesses is
encouraging, which bodes well for the second half of this financial year
despite the continuing problems in UK agriculture. We are commencing an
upgrade of our second line at our feed block plant in Oklahoma to meet the
expected increase in demand in the next financial year. Our performance to
the half year has been very encouraging and our expectation is that the full
year will again show progress.'
Enquiries:
Carr's Milling Industries plc 01228-554 600
Chris Holmes (Chief Executive)
Ron Wood (Finance Director)
Bankside Consultants Limited
Charles Ponsonby 020-7444 4166
CHAIRMAN'S INTERIM STATEMENT
At the AGM in January, I indicated that our good start to the year had been
maintained and that we expected to be well ahead of last year's interim results
and the market expectations for this half-year. This has indeed proved to be
the case.
FINANCIAL OVERVIEW
Group turnover for the half-year ended 1 March 2003 was up on that for the first
half of last year by 5.4% to £68.4m. The majority of the increase came in our
Agriculture Division and in particular from our business in the USA. The rest of
our activities produced similar sales, showing resilience in the face of stiff
competition.
Operating profit moved ahead to £2.70m from £2.09m (a 29% increase). Net
interest payable reduced to £0.33m from £0.44m, resulting in a profit before tax
of £2.36m against £1.96m in the first half of 2002 (a 21% increase). Profit
before tax excluding exceptional items increased to £2.68m from £1.65m (a 62%
increase).
Earnings per share improved to 17.5p from 14.6p (a 20% increase). On an
adjusted basis (before exceptional items), earnings per share improved to 20.3p
from 11.9p (a 71% increase).
Equity shareholders' funds increased to £21.82m (representing net assets per
share of 270p) from £19.64m (244p per share) at 2 March 2002. Gearing reduced to
39% from 64%. Interest was covered 8.1 times against 4.8 times last year.
DIVIDENDS
The Board has taken into account the overall good performance, reducing gearing
levels and relative levels of half and full year dividend payments. As a
result, the Directors have decided to increase the half-year dividend per share
by 33%, to 4p from 3p. This will be paid on 16 May 2003 to shareholders on the
register at close of business on 25 April 2003.
OPERATIONS
Agriculture sales levels, and margins especially, remain under extreme pressure
in the compound animal feed sector, due to both excess capacity in the industry
and continued delays in a return to full stocking levels in our selling areas,
notably the North West of England and South West of Scotland. Our sales team
has worked hard and together with tight cost control across our activities has
achieved improved results against this background.
Caltech, the UK feed blocks business, continued to progress steadily in both the
UK and Continental Europe. The business in the USA, Animal Feed Supplement,
achieved a particularly strong performance, due in no small part to the US
Government's Cattle Feed Drought Assistance Programme which provided direct aid
to farmers and especially benefited our plant in South Dakota. This came to an
end in December 2002 and it remains to be seen what residual level of extra
business will be maintained from an expanded customer base, but so far the signs
are encouraging.
Fertiliser sales from our five blending plants were slow in the autumn and early
in 2003, but have seen increased activity and rising prices in more recent
times, the peak season, with its drier conditions.
Machinery sales and retail operations have remained surprisingly buoyant,
considering the high levels of last year.
Within our Food activities, further progress has been made on sales of our
branded retail bread flour. Continuing developments in our bulk flour technical
areas are giving Carrs Flour Mills a well-earned increase in reputation for
quality supplies.
Makefresh yogurt (a high quality bio-yogurt that is made in the home by the
addition of just water) is gaining recognition in the market place, especially
in a national supermarket and a number of health food stores.
Following three financial years of losses in our Engineering Division and with
worsening market conditions, we announced on 28 February 2003 a proposed
reorganisation of this Division. Keytor, our mechanical and electrical
engineering business, will move the residue of its operations into Bendalls
(high integrity welding). The Keytor site will become the new single operating
base for Hinds (vehicle body building and accident repairs). This will enable
two of the three sites currently operated by Hinds to be sold and Hinds to
consolidate into one efficient unit. This reorganisation is expected to cost
£0.32m which has been provided in this half year, and is partly covered by sales
of the two Hinds sites, and should eliminate operating losses in this division.
PROSPECTS
Sales of our feed blocks, in the UK, Continental Europe and USA, are at higher
than budgeted levels and performance from both our compound animal feed and
fertiliser businesses is encouraging, which bodes well for the second half of
this financial year. We are commencing an upgrade of the second line at our
feed block plant in Oklahoma to meet the expected increase in demand in the next
financial year.
Agriculture in the UK still has a number of serious problems to confront and, as
this continues to be the major part of our activities, we will not entirely
escape the consequences of these problems but have nevertheless continued to
make progress in the period under review. However, the change in the relative
values of Sterling, the Euro and the US Dollar could provide some much needed
relief for agriculture and exporters from which Carr's would benefit.
The restructuring of our Engineering Division should mitigate the losses
experienced in previous years.
Our performance to the half-year has been very encouraging and our expectation
is that the full year will again show progress.
David Newton
Chairman 8 April 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE HALF YEAR ENDED 1 MARCH 2003
Half Year Ended Year Ended
1 March 2 March 31 August
2003 2002 2002
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Turnover
Continuing operations 68,353 64,784 143,301
Discontinued - 77 77
----------- ----------- ----------
Group turnover 68,353 64,861 143,378
====== ====== ======
Group operating profit
Continuing operations 2,228 1,879 3,748
Discontinued - 7 7
----------- ----------- ----------
Group operating profit 2,228 1,886 3,755
Share of operating profit in associate - continuing 467 204 434
operations
--------- ---------- ----------
Total operating profit: group and share of associate 2,695 2,090 4,189
Continuing operations
Profit on part disposal of subsidiary undertaking - 306 307
--------- ---------- ---------
Profit on ordinary activities before interest 2,695 2,396 4,496
Interest receivable
Group 88 21 82
Interest payable
Group (377) (413) (904)
Associate (43) (44) (80)
--------- --------- ---------
Profit on ordinary activities before taxation 2,363 1,960 3,594
Taxation (763) (693) (397)
--------- --------- ---------
Profit on ordinary activities after taxation 1,600 1,267 3,197
Minority interests - equity (185) (91) (277)
--------- --------- ---------
Profit for the period 1,415 1,176 2,920
Dividends (324) (245) (768)
--------- --------- ---------
Retained profit 1,091 931 2,152
===== ===== =====
Earnings per ordinary share
Basic 17.5p 14.6p 36.3p
Diluted 17.5p 14.6p 36.3p
Alternative basis 20.3p 11.9p 33.3p
Dividend per share 4.0p 3.0p 9.5p
CONSOLIDATED BALANCE SHEET AT 1 MARCH 2003
Half Year Ended Year Ended
1 March 2 March 31 August
2003 2002 2002
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Fixed assets
Intangible assets 80 122 96
Tangible assets 19,039 19,906 19,232
Investments
Investment in associate 1,130 276 768
Loan to associate 1,225 1,225 1,225
Other investments 153 13 153
----------- ----------- ----------
21,627 21,542 21,474
Current assets
Assets held for resale 80 99 -
Stocks 12,736 11,965 9,057
Debtors 27,340 24,655 18,697
Cash at bank and in hand 1,332 331 856
----------- ----------- ----------
41,488 37,050 28,610
Creditors
Amounts falling due within one year (34,911) (35,525) (22,937)
----------- ----------- ----------
Net current assets 6,577 1,525 5,673
Total assets less current liabilities 28,204 23,067 27,147
Creditors
Amounts falling due after more than one year (4,107) (1,211) (4,470)
Provision for liabilities and charges (1,129) (1,535) (1,129)
Deferred income (308) (211) (179)
----------- ----------- -----------
Net assets 22,660 20,110 21,369
====== ====== ======
Capital and reserves
Called-up share capital 2,018 2,013 2,013
Share premium account 4,752 4,741 4,741
Revaluation reserve 1,952 1,981 1,963
Profit and loss account 13,093 10,904 11,992
----------- ----------- ----------
Equity shareholders' funds 21,815 19,639 20,709
Minority interests - equity 845 471 660
----------- ----------- -----------
22,660 20,110 21,369
====== ====== ======
CONSOLIDATED CASH FLOW STATEMENT
FOR THE HALF YEAR ENDED 1 MARCH 2003
Half Year Ended Year Ended
1 March 2 March 31 August
2003 2002 2002
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net cash (outflow) / inflow from operating activities (342) (3,109) 5,564
----------- ----------- ----------
Returns on investments and servicing of finance
Interest received 86 24 91
Interest paid (296) (362) (815)
Interest paid on finance leases (56) (58) (119)
----------- ----------- ----------
Net cash outflow from returns on investments and servicing
of finance (266) (396) (843)
----------- ----------- ----------
Taxation (537) (315) (1,060)
----------- ----------- ----------
Capital expenditure and financial investment
Purchase of tangible fixed assets (875) (1,707) (2,521)
Sale of tangible fixed assets 137 367 850
Grants received 160 - -
Loan made to associate - (1,225) (1,225)
Purchase of investments - - (100)
Sale of investments - - 11
----------- ----------- -----------
(578) (2,565) (2,985)
----------- ----------- -----------
Acquisitions and disposals
Proceeds from part disposal of subsidiary undertaking - 400 400
Proceeds from sale of shares in joint venture - 5 -
Purchase of trade and net assets - (762) (762)
Purchase of subsidiary undertaking - (100) (100)
Bank overdraft disposed of with subsidiary undertaking - (305) 305
----------- ----------- -----------
- (762) (157)
----------- ----------- -----------
Equity dividends paid (524) (403) (645)
----------- ----------- ----------
Cash outflow before financing (2,247) (7,550) (126)
----------- ----------- ----------
Financing 253 1,570 3,306
----------- ----------- ----------
(Decrease) / increase in net cash (1,994) (5,980) 3,180
====== ====== =======
NOTES
1. The tax charges for the half year ended 1 March 2003 and 2 March 2002 are
based on the estimated tax charge for the applicable year.
2. The overseas estimated tax charge for the half year ended 1 March 2003 is
£465,000 (2002 interim: £363,000; year ended 2002: £226,000).
3. The share of the associate's estimated tax charge for the half year ended
1 March 2003 is £62,000 (2002 interim: £48,000; year ended 2002: £250,000
credit).
4. The equity dividend for the half year ended 1 March 2003 is 4.0p per share
(2002 interim: 3.0p per share; year ended 2002: 9.5p per share).
5. The calculation of basic earnings per share is based on profits
attributable to shareholders of £1,415,000 (2002 interim: £1,176,000; year ended
2002: £2,920,000) and on 8,058,554 (2002 interim: 8,053,359; year ended 2002:
8,038,576) shares, being the weighted average number of shares in issue during
the period.
The calculation of diluted earnings per share is based on profits of £1,415,000
(2002 interim: £1,176,000; year ended 2002: £2,920,000) and the weighted average
number of shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares. The weighted average number of shares is increased to
8,061,861 shares (2002 interim: 8,057,059; year ended 2002: 8,047,458).
Exceptional gains and losses do not relate to the profitability of the group on
an ongoing basis. Therefore an alternative earnings per share is presented as
follows:
Half year ended Half year ended Year ended
1 March 2003 2 March 2002 31 August 2002
Earnings Earnings Earnings
Earnings per share Earnings per share Earnings per share
£'000 p £'000 p £'000 p
Earnings per share 1,415 17.5 1,176 14.6 2,920 36.3
Exceptional items
Profit on part disposal of
subsidiary undertaking - - (306) (3.8) (307) (3.8)
Reorganisation costs in
Agricultural Division - - - - (149) (1.8)
Impairment of fixed assets
in Agricultural Division - - - - 151 1.8
Reorganisation costs in
Engineering Division 320 4.0 - - - -
Taxation arising on
exceptional items (96) (1.2) 92 1.1 63 0.8
--------- --------- -------- --------- --------- ----------
Earnings per
share-alternative 1,639 20.3 962 11.9 2,678 33.3
===== ===== ===== ===== ===== ======
6. Cash flow from operating activities
Half year ended Year ended
1 March 2003 2 March 2002 31 August 2002
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Group operating profit 2,228 1,886 3,755
Depreciation charge 1,106 1,079 2,358
(Profit)/loss on sale of tangible fixed (25) 15 (71)
assets
(Profit) on disposal of investments - - (4)
Goodwill amortisation 16 8 33
Grants amortisation (31) (23) (55)
(Increase) in stocks (3,679) (3,681) (774)
(Increase) in debtors (8,707) (10,116) (4,184)
Increase in creditors 8,750 8,150 5,082
(Decrease) in provisions - (427) (576)
---------- ------------ -----------
Net cash (outflow) / inflow from operating
activities (342) (3,109) 5,564
====== ======= ======
7. The accounts for the year ended 31 August 2002 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 1 March
2003 was approved by a duly appointed and authorised committee of the Board of
Directors on 7 April 2003. 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 31 August 2002.
8. 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.
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