Interim Results
Carr's Milling Industries PLC
07 April 2008
Monday 7 April 2008
CARR'S MILLING INDUSTRIES PLC - INTERIM ANNOUNCEMENT
'trends positive for H2 and beyond'
Carr's (CRM.L), the agriculture, food and engineering group, announces results
for the 26 weeks to 1 March 2008 which are both substantially ahead of the
comparable period of the 26 weeks to 3 March 2007 and appreciably ahead of
budget.
Financial Highlights
• Revenue up 45.9% to £161.87m
• Pre-tax profit up 45.0% to £5. 17m
• Earnings per share up 45.8% to 44.6p
• Interim dividend per share up 9.1% to 6.0p
Commercial Highlights
• Agriculture increased its operating profit by 56.9% to £4.02m on revenue up
45.1% at £118.82m and also reported a post-tax profit in associate and JVs up
46.5% at £0.98m. All four of Agriculture's related activities - animal feed
manufacture, fertiliser blending, agricultural retailing and oil distribution
- performed well.
• Food increased its operating profit by 21.0% to £1.11m on revenue up 57.9% to
£39.68m. The improved result reflected two flour price increases and a cost
reduction programme. The underlying trends in profitability for Food are
encouraging.
• Engineering's operating profit was down 16.0% at £0.49m on revenue down 14.7%
at £3.30m. The Board is confident of a satisfactory full-year outcome for
Engineering.
Richard Inglewood, Chairman, stated 'Our positioning in speciality products,
particularly in the Agricultural market, is driving increases in both margins
and sales, whilst food price inflation is enabling us to recapture much of the
lost margin in our Food business. These factors combine to give us a high degree
of confidence in the full year'.
Richard Inglewood continued, 'Improved farm incomes are benefiting our business.
We are selling more products at better margins in the UK and seeing encouraging
trends in our overseas Agricultural markets. The Agriculture division will
continue to drive the performance of the Group. A more stable backdrop in Food
will further enhance profitability. The trends are positive for the second half
of this year and beyond'.
Presentation
Today, there will be a presentation to brokers' analysts and private client
brokers between 13:00 and 14:00, over lunch, at the offices of Investec, 2
Gresham Street, London EC2V 7QP. Those wishing to attend are asked to contact
Charles Ponsonby of Bankside Consultants.
Enquiries:
Carr's Milling Industries plc 01228-554 600
Chris Holmes (Chief Executive Officer)
Ron Wood (Finance Director)
Bankside Consultants Limited
Charles Ponsonby 020-7367 8851
charles.ponsonb
y@bankside.com
CHAIRMAN'S INTERIM STATEMENT
I am pleased to report the unaudited results for the Group for the 26 weeks to
1 March 2008 which are both substantially ahead of the comparable period of the
26 weeks to 3 March 2007 and appreciably ahead of budget.
Our positioning in speciality products, particularly in the Agricultural market,
is driving increases in both margins and sales whilst food price inflation is
enabling us to recapture much of the lost margin in our Food business
experienced in the period ended 1 September 2007.
These factors combine to give us a high degree of confidence in the outlook for
the full 52 weeks ending 30 August 2008.
FINANCE HIGHLIGHTS
• Revenue up 45.9% to £161.87m (2007: £110.97m)
• Pre-tax profit up 45.0%. to £5.17m (2007: £3.57m)*
• Adjusted operating profit up 41.3% to £6.43m (2007: £4.55m)**
• Earnings per share up 45.8% at 44.6p (2007: 30.6p)
• Adjusted earnings per share up 35.7% to 44.1p (2007: 32.5p)**
* including a £0.98m (2007: £0.67m) share of post-tax profit in associate
and joint ventures
** adjusted figures exclude non-recurring items and the amortisation of
intangible assets of £0.07m credit (2007: charge £0.20m).
Shareholders' equity at the period end totalled £28.6m as against £26.8m at 1
September 2007 and £21.8m at 3 March 2007. Net debt was £26.7m as against £15.4m
and £18.1m, respectively, with gearing of 93% as against 57% and 83%,
respectively. The increase in indebtedness is a consequence of the Group's
increased revenue and higher associated working capital requirements arising
from substantial rises in the cost of raw materials which have in turn led to
higher levels of inventory, receivables and payables. Net finance costs of
£0.76m (2007: £0.44m) were covered a substantial 6.5 times (2007: 7.6 times) by
Group operating profit.
INTERIM DIVIDEND
The Board has declared an interim dividend per share of 6.0p (2007: 5.5p), up
9.1%, to be paid on 9 May 2008 to shareholders on the register at close of
business on 18 April 2008, with an ex-dividend date of 16 April 2008.
OPERATIONS
Agriculture
• Revenue up 45.1% at £118.82m (£81.89m)
• Operating profit up 56.9% at £4.02m (£2.57m)*
• Post-tax profit in associate and joint ventures up 46.5% at £0.98m
(£0.67m)
* before retirement benefit charge
The Group's Agriculture business comprises, in the UK (primarily in the North
West of England and South West of Scotland), four related activities - animal
feed manufacture, fertiliser blending, agricultural retailing, and oil
distribution - and, in the USA and Germany, animal feed manufacture.
Market backdrop
The higher animal feed and energy costs incurred by UK farmers were reflected in
the 50% increase in the milk price evident in contracts towards the latter
months of 2007. Our US and German low moisture feed block businesses were faced
with a higher cost of molasses, a main ingredient, but we were able to pass on
most of this cost.
Animal feed
In our compound and blended feed business, we gained market share in what
remains a competitive market place, due to consistently high quality of product
as well as the successful take up of our niche product, AminoMax, a by-pass
protein feed ingredient launched in the previous financial period by Afgritech,
the Group's joint venture.
Although raw material prices continue to rise, we benefited from our decision to
buy early and have recently put through a price rise to compensate for further
raw material cost increases, which will take effect in May 2008.
Sales of our low moisture feed blocks continue to rise (+18%), driven by both
product substitution trends and our unique niche products, now including Organyx
Plus, a new product in the Crystalyx range for organic farming systems.
In the US, volumes continue to rise due to both the quality of our Smartlic and
Feed in a Drum low-moisture animal feed blocks and our excellent levels of
service. Revenue was up 14% but margins were slightly lower due to higher raw
material costs - the full impact of these cost pressures were not passed on.
In Germany, Crystalyx Products, the joint venture with the substantial German
agriculture group Agravis, increased revenue by the introduction of new markets,
including Russia.
Fertiliser
Revenue was up 114% on volumes up 60% on the comparable period. We benefited
from farmers buying early to secure supply and to offset further price
increases. In addition, our leading market position in Scotland and North West
England and the success of our niche, slow release environmentally-friendly New
Choice fertiliser further boosted profitability. Volumes of this high margin
product increased by around 50% year on year and New Choice now represents
one-sixth of our total fertiliser volumes.
Retail
With farmers' income improving, sales at our 14 retail branches experienced
spend up by more than 10% overall, with an acceleration in the second quarter.
Fuels
Our fuels business continued to gain market share and there is cross-selling
across the Agricultural group. Revenue from fuel sales increased by 70%, which
also reflects the acquisition of Johnstone Fuels & Lubricants in January 2007.
Food
• Revenue up 57.9% at £39.68m (£25.14m)
• Operating profit up 21.0% at £1.11m (£0.92m)*
* before retirement benefit charge
The dramatic rise in revenue reflected the two price increases put through in
September 2007 and November 2007, which are also helping to offset the margin
erosion we saw in the previous financial period. The benefits of our cost
reduction programme are now increasingly visible and with the prospect of
further price increases, the recovery in profit should be sustained. We have
tried to protect our position by buying forward raw materials where possible,
and are hopeful of a more stable environment in the second half of the period.
The underlying trends in profitability are encouraging.
Engineering
• Revenue down 14.7% at £3.30m (£3.87m)
• Operating profit down 16.0% at £0.49m (£0.59m)*
* before retirement benefit charge
Underlying trends across both nuclear and non-nuclear remain healthy and we are
confident of a satisfactory outcome for the full period. The decline in sales
and profitability reflected the part completion of one particularly difficult
contract for the supply of vessels. This contract will be completed in the next
quarter.
OUTLOOK
Improved farm incomes are benefiting our business. We are selling more product
at better margins in the UK and seeing encouraging trends in our overseas
Agricultural markets. The Agriculture division will continue to drive the
performance of the Group. A more stable market backdrop in Food should enhance
profitability further. The trends are positive for the second half of this
period and beyond.
Richard Inglewood 7 April 2008
Chairman
Carr's Milling Industries PLC
Unaudited consolidated income statement for the 26 weeks ended 1 March 2008
26 weeks ended 26 weeks ended 52 weeks ended
1 March 2008 3 March 2007 1 September 2007
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Continuing operations
Revenue 3 161,866 110,970 252,753
Cost of sales (141,540) (99,616) (218,603)
Gross profit 20,326 11,354 34,150
Net operating
expenses (15,382) (8,016) (28,365)
Group
operating
profit 4,944 3,338 5,785
Analysed as:
Operating
profit before
non-recurring
items and
amortisation 4,872 3,540 6,192
Non-recurring
items and
amortisation 6 72 (202) (407)
Group
operating
profit 4,944 3,338 5,785
Interest income 291 215 392
Other finance
income - 59 95
Interest
expense (971) (716) (1,484)
Other finance
costs (75) - -
Share of
post-tax
profit in
associate and
joint ventures 980 669 738
Profit before
taxation 3 5,169 3,565 5,526
Taxation 3,5 (1,278) (902) (1,225)
Profit for the
period 3 3,891 2,663 4,301
Profit
attributable
to minority
interest 204 140 120
Profit
attributable
to equity
shareholders 3,687 2,523 4,181
3,891 2,663 4,301
Dividend per share (pence)
Paid 8 13.5 12.5 18.0
Proposed 8 6.0 5.5 13.5
Earnings per share (pence)
Basic 7 44.6 30.6 50.7
Diluted 7 44.0 30.1 49.9
Unaudited consolidated statement of recognised income and expense for the 26 weeks
ended 1 March 2008
26 weeks ended 26 weeks ended 52 weeks ended
1 March 2008 3 March 2007 1 September 2007
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Foreign exchange translation differences
arising on
translation of
overseas
subsidiaries 107 (38) (253)
Actuarial (losses)/gains on retirement benefit
obligation:
- Group 4 (1,338) - 4,570
- Share of
associate - - 1,437
Taxation credit/(charge) on actuarial movement
on retirement benefit obligation:
- Group 375 - (1,595)
- Share of
associate - - (459)
Net(expense)/income recognised
directly in equity (856) (38) 3,700
Profit for the
period 3,891 2,663 4,301
Total recognised income and expense
for the period 9 3,035 2,625 8,001
Attributable
to minority
interest 9 199 140 120
Attributable
to equity
shareholders 9 2,836 2,485 7,881
3,035 2,625 8,001
Unaudited consolidated balance sheet as at 1 March 2008
As at As at As at
1 March 2008 3 March 2007 1 September
2007
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Assets
Non-current assets
Goodwill 1,016 845 1,016
Other intangible
assets 12 369 835 444
Property, plant
and equipment 12 28,075 29,145 28,481
Investment
property 12 746 766 756
Investment in
associate 3,276 1,487 2,456
Interest in joint
ventures 1,427 869 935
Other investments 251 254 251
Financial assets
- Derivative
financial
instruments - 96 132
- Non-current
receivables 50 101 100
Deferred tax
assets 3,222 5,061 3,228
38,432 39,459 37,799
Current assets
Inventories 24,758 18,551 14,853
Trade and other
receivables 56,723 38,729 35,481
Current tax
assets - 4 82
Financial assets
- Derivative
financial
instruments 1 - -
Cash at bank and
in hand 467 716 1,315
81,949 58,000 51,731
Total assets 120,381 97,459 89,530
Liabilities
Current liabilities
Financial liabilities
- Borrowings (20,509) (12,408) (10,717)
- Derivative
financial
instruments (65) (1) (10)
Trade and other
payables (46,571) (32,677) (28,478)
Current tax
liabilities (882) (1,564) (570)
(68,027) (46,650) (39,775)
Non-current liabilities
Financial liabilities
- Borrowings (6,687) (6,361) (5,971)
- Derivative
financial
instruments (55) - -
Retirement
benefit obligation 4 (9,306) (15,137) (9,807)
Deferred tax
liabilities 5 (3,401) (3,647) (3,418)
Other non-current
liabilities (2,049) (1,787) (1,705)
(21,498) (26,932) (20,901)
Total (89,525) (73,582) (60,676)
liabilities
Net assets 30,856 23,877 28,854
Shareholders' equity
Ordinary shares 9 2,065 2,064 2,064
Share premium 9 5,099 5,073 5,073
Trreasury share
reserve 9 (101) (101) (101)
Equity
compensation
reserve 9 144 46 95
Foreign exchange
reserve 9 (371) (268) (483)
Other reserve 9 1,555 1,586 1,570
Retained earnings 9 20,198 13,401 18,574
Total
shareholders'
equity 9 28,589 21,801 26,792
Minority
interests in
equity 9 2,267 2,076 2,062
Total equity 9 30,856 23,877 28,854
Unaudited consolidated cash flow statement for the 26 weeks ended 1 March 2008
26 weeks ended 26 weeks ended 52 weeks ended
1 March 2008 3 March 2007 1 September 2007
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Cash flows from operating activities
Cash (used by)/generated
from operations 10 (7,886) 585 6,906
Interest received 282 204 389
Interest paid (930) (574) (1,407)
Tax paid (509) (724) (2,053)
Net cash (used by)/generated
from operatin activities (9,043) (509) 3,835
Cash flows from investing activities
Acquisition of subsidiaries
(net of cash acquired) - (1,049) (1,141)
Investment in joint ventures (294) - -
Net payment of loans to
joint ventures - (90) (90)
Purchase of
intangible assets (3) (5) (11)
Proceeds from sale of
property, plant and
equipment 63 139 121
Purchase of property,
plant and equipment (877) (1,275) (1,896)
Proceeds from sale of
investment property - - 96
Proceeds from sale of
investments - - 1
Receipt of non-current
receivables 50 100 100
Purchase of own shares
held in trust - (101) (101)
Net cash used
by investing
activities (1,061) (2,281) (2,921)
Cash flows from financing activities
Net proceeds from issue of
ordinary share capital 27 75 75
Net proceeds from issue of new bank loans
and other borrowings 3,295 1,500 -
Finance lease principal repayments (454) (486) (1,005)
Repayment of borrowings (144) (2,069) (83)
Disposal of interest rate swap 111 - -
Dividends paid to shareholders (1,115) (1,032) (1,486)
Net cash generated from/(used by)
financing activities 1,720 (2,012) (2,499)
Effects of exchange rate
changes 78 3 (97)
Net decrease
in cash and
cash equivalents (8,306) (4,799) (1,682)
Cash and cash
equivalents at
beginning of
the period (598) 1,084 1,084
Cash and cash
equivalents at
end of the period (8,904) (3,715) (598)
Cash and cash equivalents consists of:
Cash and cash
equivalents
per the
balance sheet 11 467 716 1,315
Bank
overdrafts
included in
borrowings 11 (9,371) (4,431) (1,913)
(8,904) (3,715) (598)
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 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 and DTR 4.2.8.
The Directors of Carr's Milling Industries PLC are listed in the Carr's Milling
Industries PLC Annual Report and Accounts 2007. There have been no changes to
the Board of Directors in the financial period.
On behalf of the Board
Chris Holmes
Chief Executive
7 April 2008
Ron Wood
Finance Director
7 April 2008
NOTES TO THE UNAUDITED INTERIM FINANCIAL RESULTS
1 Basis of preparation
The financial information for the 26 weeks to 1 March 2008 does not constitute
statutory accounts for the purposes of section 240 of the Companies Act 1985 and
has been neither audited nor reviewed. No statutory accounts for the period have
been delivered to the Registrar of Companies.
The financial information in respect of the 52 weeks ended 1 September 2007 has
been produced using extracts from the statutory accounts for this period.
Consequently, this does not constitute the statutory information for the 52
weeks ended 1 September 2007, which was audited. The statutory accounts for this
period have been filed with the Registrar of Companies. The auditors' report on
these accounts was unqualified and did not contain a statement under sections
237(2) or (3) of the Companies Act 1985.
The next annual financial statements of the Group, for the 52 weeks to 30 August
2008, will be prepared in accordance with International Financial Reporting
Standards as adopted for use in the EU ('IFRS'). This Interim Report has been
prepared in accordance with the Disclosure and Transparency Rules of the
Financial Services Authority and with IAS 34 'Interim Financial Reporting' as
adopted by the European Union.
The directors approved the Interim Report on 7 April 2008.
The interim financial information has been prepared on the historical cost
basis, except for certain assets, which are held at deemed cost, and derivative
financial instruments and share-based payments, which are included at fair
value.
2 Accounting policies
The accounting policies used in the preparation of the financial information for
the 26 weeks to 1 March 2008 have been consistently applied to all the periods
presented and are set out in full in the Group's financial statements for the 52
weeks ended 1 September 2007. A copy of these financial statements is available
from the Company's registered office at Old Croft, Stanwix, Carlisle, CA3 9BA.
The following new standards, interpretations and amendments to published
standards are effective for the Group for the financial period ending 30 August
2008:
• IFRS 7 'Financial Instruments: Disclosure'
• IFRIC 10 'Interim Financial Reporting and Impairment'
• IFRIC 11 'IFRS 2 - Group and Treasury Share Transactions'
The above new standards, interpretations and amendments to published standards
have had no material impact on the results or the financial position of the
Group for the 26 weeks to 1 March 2008.
The following new standards, interpretations and amendments to published
standards have been issued, but are not effective for the financial period
ending 30 August 2008 and have not been early adopted:
• IAS 1 (Revised) 'Presentation of financial statements'
• IFRS 8 'Operating Segments'
• IFRIC 12 'Service Concession Arrangements'
• IFRIC 13 'Customer Loyalty Programmes'
• IFRIC 14 'The limit on a defined benefit asset, minimum funding requirements
and their interaction'
• IAS 23 'Revised - Borrowing costs'
• Amendment to IAS 32 'Financial instruments: Presentation' and IAS 1
'Presentation of financial statements'
• Amendment to IFRS 2 'Share based payments'
• IFRS 3 (Revised) 'Business combinations'
• IAS 27 (Revised) 'Consolidated and separate financial statements'
3 Segmental information
The segment results for the 26 weeks to 1 March 2008 are as follows:
Agriculture Food Engineering Other Group
£'000 £'000 £'000 £'000 £'000
Total gross segment revenue 118,949 39,680 3,326 70 162,025
Inter-segment revenue (133) (2) (24) - (159)
Revenue 118,816 39,678 3,302 70 161,866
Operating profit/(loss) before
retirement benefit charge 4,024 1,112 492 (182) 5,446
Analysed as:
Before non-recurring items and
amortisation 4,045 1,150 492 (313) 5,374
Non-recurring items and
amortisation (21) (38) - 131 72
4,024 1,112 492 (182) 5,446
Retirement benefit charge (502)
Interest income 291
Other finance costs (75)
Interest expense (971)
Share of post-tax profit of associate (Agriculture) 820
Share of post-tax profit of joint ventures (Agriculture) 160
Profit before taxation 5,169
Taxation (1,278)
Profit for the period 3,891
The segment results for the 26 weeks to 3 March 2007 are as follows:
Agriculture Food Engineering Other Group
£'000 £'000 £'000 £'000 £'000
Total gross segment revenue 82,044 25,142 3,924 79 111,189
Inter-segment revenue (157) (7) (55) - (219)
Revenue 81,887 25,135 3,869 79 110,970
Operating profit/(loss) before
retirement benefit charge 2,565 919 586 (112) 3,958
Analysed as:
Before non-recurring items and
amortisation 2,608 1,078 586 (112) 4,160
Non-recurring items and
amortisation (43) (159) - - (202)
2,565 919 586 (112) 3,958
Retirement benefit charge (620)
Interest income 215
Other finance income 59
Interest expense (716)
Share of post-tax profit of associate (Agriculture) 506
Share of post-tax profit of joint ventures (Agriculture) 163
Profit before taxation 3,565
Taxation (902)
Profit for the period 2,663
The segment results for the 52 weeks to 1 September 2007 are as follows:
Agriculture Food Engineering Other Group
£'000 £'000 £'000 £'000 £'000
Total gross segment revenue 186,249 57,038 9,790 214 253,291
Inter-segment revenue (319) (3) (216) - (538)
Revenue 185,930 57,035 9,574 214 252,753
Operating profit/(loss)
before retirement
benefit charge 5,145 1,102 1,018 (313) 6,952
Analysed as:
Before non-recurring items
and amortisation 5,235 1,419 1,018 (313) 7,359
Non-recurring items and
amortisation (90) (317) - - (407)
5,145 1,102 1,018 (313) 6,952
Retirement benefit charge (1,167)
Interest income 392
Other finance income 95
Interest expense (1,484)
Share of post-tax profit of associate (Agriculture) 496
Share of post-tax profit of joint ventures (Agriculture) 242
Profit before taxation 5,526
Taxation (1,225)
Profit for the period 4,301
Sales of agricultural products are subject to seasonal fluctuation with higher
demand for animal feed in the first six months of the period whereas fertilisers
sales demand is high in the second six months of the period, particularly in the
months of March and April.
4 Retirement benefit obligation
£'000
Deficit in scheme at 2 September 2007 9,807
Actuarial loss 1,338
Contributions by employer (1,267)
Retirement benefit charge 502
Reduction in liability due to transfer values paid (1,074)
Deficit in scheme at 1 March 2008 9,306
In the period, the Company and the Trustees of the Carr's Milling Industries
Pension Scheme 1993 ('Scheme') offered to deferred members, with more than five
years to normal retirement age, enhanced transfer values. The cost to the
Company was £943,000 and the actuarial provisions held by the Company were
reduced by £1,074,000. The net gain of £131,000 (2007: £nil) has been credited
to the income statement.
Actuarial losses of £1,338,000 (2007: Nil) have been reported in the Statement
of Recognised Income and Expense. The reduction in liabilities due to the rise
in bond yields was more than offset by negative returns on investments, and the
adoption of a revised mortality table.
During the period the Group's associate closed its defined benefit pension
scheme to future service accrual. The valuation for this Scheme has not been
updated as any actuarial movements are not considered to be material.
5 Taxation
The tax charges for the 26 weeks ended 1 March 2008 and 3 March 2007 are based
on the estimated tax charge for the applicable year.
In the 2007 budget, the Government announced its intention to propose that
Parliament abolish Industrial Buildings Allowances ('IBAs'). As of 1 March 2008,
this change was not substantively enacted. Had the change been substantively
enacted as of the balance sheet date, the estimated impact on the income
statement and balance sheet would be an increase in the deferred tax charge and
liability of £1,267,000.
6 Adjusted operating and pre-tax profit
26 weeks ended
1 March 2008 3 March 2007
£'000 £'000
Reported group operating profit 4,944 3,338
Non-recurring items and amortisation (72) 202
Operating profit before non-recurring
items and amortisation 4,872 3,540
Share of operating profit in associate and joint
ventures 1,557 1,009
Adjusted operating profit 6,429 4,549
Net finance costs - group (755) (442)
Net finance costs - associate and joint ventures (116) (101)
Adjusted pre-tax profit 5,558 4,006
7 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. 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 52 weeks ended
1 March 2008 3 March 2007 1 September 2007
£'000 £'000 £'000
Earnings 3,687 2,523 4,181
Non-recurring items and
intangible asset amortisation:
Amortisation of intangible assets 59 202 407
Net gain on transfer of
deferred pensioners from Group scheme (131) - -
Impairment of goodwill and
property, plant and equipment
recognised in associate, net of tax - - 119
Amortisation of intangible
asset and impairment of goodwill
recognised in joint ventures,
net of tax 4 13 19
Taxation charge/(credit) on non-
recurring items and amortisation 20 (61) (114)
Adjusted earnings 3,639 2,677 4,612
Weighted average number of
ordinary shares in issue 8,258,994 8,244,122 8,240,848
Potentially dilutive share
options 128,677 150,206 144,127
8,387,671 8,394,328 8,384,975
Basic earnings per share 44.6p 30.6p 50.7p
Diluted earnings per share 44.0p 30.1p 49.9p
Adjusted earnings per share 44.1p 32.5p 56.0p
8 Dividends
26 weeks ended 52 weeks ended
1 March 2008 3 March 2007 1 September 2007
£'000 £'000 £'000
Ordinary: Final dividend for
the period
ended 1 September 2007 of
13.5p per share (2006: 12.5p) 1,115 1,032 1,032
Ordinary: Interim dividend of
5.5p per share - - 454
1,115 1,032 1,486
The directors have approved an interim dividend of 6.0p per share (2007: 5.5p
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 £495,697 (2007: £454,113), which will be paid on 9 May
2008 to shareholders whose names are on the Register of Members at the close of
business on 18 April 2008. The ordinary shares will be quoted ex-dividend on 16
April 2008.
9 Changes in shareholders' equity and minority interest
Attributable to Equity Holders of the Company
Share Share Treasury Equity Foreign Other Retained Total Minority
Capital Premium Share Compensation Exchange Reserves Earnings Shareholders' Interest
Account Reserve Reserve Reserve Equity Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 2 September 2007 2,064 5,073 (101) 95 (483) 1,570 18,574 26,792 2,062 28,854
Total recognised
income and expense
for the period - - - - 112 - 2,724 2,836 199 3,035
Dividends - - - - - - (1,115) (1,115) - (1,115)
Equity-settled
share-based
payment transactions,
net of tax - - - 49 - - - 49 6 55
Allotment of shares 1 26 - - - - - 27 - 27
Transfer - - - - - (15) 15 - - -
At 1 March 2008 2,065 5,099 (101) 144 (371) 1,555 20,198 28,589 2,267 30,856
10 Cash flow (used by)/generated from operating activities
26 weeks ended 52 weeks ended
1 March 3 March 1 September
2008 2007 2007
£'000 £'000 £'000
Net profit 3,891 2,663 4,301
Adjustments for:
Tax 1,278 902 1,225
Depreciation on property,
plant and equipment 1,662 1,798 3,507
(Profit)/loss on disposal of
property, plant and equipment (9) 10 18
Depreciation on investment property 10 9 19
Profit on disposal of
investment property - (77) (77)
Loss on disposal of investments - - 3
Intangible asset amortisation 78 221 446
Net fair value losses/(gains) on
derivative financial instruments
in operating profit 56 (26) (17)
Net fair value loss on share-based
payments 55 29 84
Net foreign exchange differences (49) (16) 3
Interest income (291) (215) (392)
Interest expense and borrowing
costs 974 719 1,491
Net fair value losses/(gains)
on derivative financial instruments
in interest 75 (59) (95)
Share of post-tax profits
from associate and joint ventures (980) (669) (738)
IAS19 income statement credit
in respect of employer
contributions (1,267) (1,279) (2,586)
IAS19 income statement charge 502 620 1,167
Transfer values paid to
deferred pension scheme members (1,074) - -
Changes in working capital
(excluding the effects of
acquisitions):
Increase in inventories (9,905) (6,436) (2,738)
Increase in receivables (21,230) (3,564) (321)
Increase in payables 18,338 5,955 1,606
Cash (used by)/ generated from
continuing operations (7,886) 585 6,906
11 Analysis of net debt
At At
1 March 2008 3 March 2007 1 September 2007
£'000 £'000 £'000
Cash and cash equivalents 467 716 1,315
Bank overdrafts (9,371) (4,431) (1,913)
Loans and other (10,455) (7,315) (8,051)
borrowings: current
Loans and other (5,901) (5,394) (5,147)
borrowings: non-current
Finance leases: current (683) (662) (753)
Finance leases: non-current (786) (967) (824)
(26,729) (18,053) (15,373)
12 Capital expenditure and capital commitments
During the period the Group incurred capital expenditure on property, plant and
equipment of £1,276,000 (2007: £1,843,000) and on intangible assets of £3,000
(2007: £255,000).
During the period the Group disposed of property, plant and equipment with a net
book value of £53,000 (2007: £53,000) and investment property with a net book
value of £nil (2007: £19,000).
Capital commitments contracted, but not provided for, by the Group amounted to
£380,000 (2007: £51,000).
13 Related party transactions
The Group's significant related parties are its associate and joint ventures as
disclosed in the Annual Report and Accounts 2007. There were no material
changes to the level of related party transactions during the financial period.
14 Principal risks and uncertainties
The principal risks and uncertainties which could impact the Group were
described on pages 10 and 11 of the Annual Report and Accounts 2007, a copy of
which is available from the Company's registered office: Old Croft,
Stanwix, Carlisle, CA3 9BA, or on the Group's website www.carrs-milling.com.
The primary risks and uncertainties affecting the Group for the remainder of the
financial period comprise:
Competition
It is fundamental that the Group remains competitive within its sectors and to
mitigate risk in this area the Group ensures it invests in innovative new
processes and products to retain its competitive advantage and to provide
customers with quality products and service.
Capital investment in production facilities is essential to maintaining the
Group's competitive edge.
Market forces
Increasing raw material costs will continue to place pressure on margins and
profitability. To secure the best possible price the Group has bought forward
those materials required and will continue to negotiate with suppliers to
secure the best possible terms in an increasingly difficult market place. In
addition, through food price inflation the Group has been able to pass on cost
increases thereby reducing the impact on margins. The prospect of further price
increases throughout the Group will help sustain recovery of profit.
Foreign currency
The major foreign currency risk facing the Group is in the purchasing of raw
materials in the fertiliser and flour milling operations. The major currency
involved is the US dollar. The policy of the Group is, and will continue to be,
to hedge using forward foreign exchange contracts with UK banks as soon as
commitment has been given to the underlying transaction.
Translation of the foreign subsidiary from US dollar to sterling is subject to
exchange rate movements during the period and on translation of the balance
sheet at the period end. The Group does not hedge against the translation of
the foreign subsidiary as the translation has no impact on cash flow. Gains or
losses on translation of the balance sheet are recorded in reserves.
Employee retention
To ensure the retention of its staff the Group invests in its employees through
attractive remuneration packages including membership in its contributory
occupational pension scheme and share option plans. Employees are offered
support and training opportunities to ensure skills are kept to a level
required to undertake their responsibilities.
15 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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