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RNS Number : 0928W Carr's Group PLC 21 April 2021
21 April 2021
CARR'S GROUP PLC ("Carr's" or the "Group")
INTERIM RESULTS
For the 26 weeks ended 27 February 2021
"An improved H1 performance in a challenging environment"
Carr's (CARR.L), the Agriculture and Engineering Group, announces its Interim
Results for the 26 weeks ended 27 February 2021.
Financial highlights
Adjusted(1) Adjusted(1)
H1 2021 H1 2020 +/-
Revenue (£m) 201.4 200.0 +0.7%
Adjusted(1) operating profit (£m) 10.9 10.3 +5.3%
Adjusted(1) profit before tax (£m) 10.4 9.6 +8.1%
Adjusted(1) EPS (p) 8.2 8.0 +2.5%
Net debt(2 )(£m) 10.6 25.4 -58.5%
Statutory Statutory
H1 2021 H1 2020 +/-
Revenue (£m) 201.4 200.0 +0.7%
Operating profit (£m) 10.7 11.2 -5.1%
Profit before tax (£m) 10.2 10.5 -3.2%
Basic EPS (p) 8.2 9.3 -11.8%
Interim dividend (p) 1.175 - N/A
Highlights
* Initial business review complete following appointment of new CEO.
* Group now structured in three divisions: Speciality Agriculture (feed blocks,
minerals, and trace element boluses, formerly Supplements), Agricultural
Supplies (formerly UK Agriculture) and Engineering.
* Resilient business model despite COVID-19 and Brexit uncertainty - all
agricultural stores and manufacturing facilities operational throughout.
* Strong performance from Speciality Agriculture and Agricultural Supplies.
* Engineering adversely impacted by low oil prices and travel restrictions in H1
but expected to be significantly better in H2. Order book now stands at
£44m, increased by 19% since year end and order intake now improving.
* Business improvement programme initiated to simplify, standardise, and
generate synergies between business units in each division.
* Reportable accident frequency rate reduced compared to last year and COVID-19
controls remain effective.
1 Adjusted results are consistent with how business
performance is measured internally and are presented to aid comparability Page
1 of performance. Adjusting items are disclosed in note 8.
2 Excluding leases. Further details of net debt can be
found in note 12.
Outlook
A continued positive performance is forecast across the Agricultural divisions
together with an improved second half in the Engineering division as the
impact of COVID-19 begins to recede and its order intake continues to
increase. A programme of simplification and standardisation is forecast to
improve performance over time. Trading since 27 February 2021 has been
positive and the Board's expectations for the current financial year remain
unchanged.
Hugh Pelham, Chief Executive Officer, commented:
"Despite a challenging operational environment with significant headwinds
experienced in Engineering we have delivered an improved performance compared
to the same period last year. Our Speciality Agriculture and Agricultural
Supplies divisions have performed particularly strongly. The outlook for
Engineering is for an improved performance in the second half of the financial
year.
"I have been fortunate to inherit some sound foundations from my predecessor,
Tim Davies. Carr's Group owns a portfolio of good businesses with strong
market positions.
"Our people have responded brilliantly to the challenge of working in a
COVID-19 environment. I would like to thank them for their commitment and
dedication in keeping all our stores, fuel depots and manufacturing operations
running in such difficult times.
"An initial operating review has been conducted and the Group is now
structured in three divisions: Speciality Agriculture, Agricultural Supplies
and Engineering to create greater operational efficiencies, market focus and
provide greater transparency for investors. The results of our Speciality
Agriculture division demonstrate the quality of our products in the feed
block, minerals and animal health markets.
"Actions have been taken to strengthen reporting and governance systems within
the business as part of a process to identify opportunities for improvement.
"Considerable opportunity exists to optimise the current portfolio through a
process of standardisation, simplification and seeking synergies between
similar businesses. Growth can be achieved through a mixture of geographic
expansion, selling all our service lines to our customer base, and acquisition
and potential industry consolidation.
"I am confident that the Group will continue to deliver a resilient and
improving set of results over time."
Enquiries:
Carr's Group plc Tel: +44 (0) 1228 554600
Hugh Pelham (Chief Executive Officer)
Neil Austin (Chief Financial Officer)
Powerscourt Tel: +44 (0) 20 7250 1446
Nick Dibden / Lisa Kavanagh / Sam Austrums
About Carr's Group plc:
Carr's is an international leader in manufacturing value added products and
solutions, with market leading brands and robust market positions in
Agriculture and Engineering, supplying customers in over 50 countries around
the world. Carr's operates a decentralised business model that empowers
operating subsidiaries enabling them to be competitive, agile, and effective
in their individual markets whilst setting overall standards and goals.
Its Speciality Agriculture division manufactures and supplies feed blocks,
minerals and boluses containing trace metals and minerals for livestock.
Its Agricultural Supplies division manufactures compound animal feed,
distributes farm machinery and runs a UK network of rural stores, providing a
one-stop shop for the farming community.
Its Engineering division designs and manufactures pressure vessels,
manufactures precision components from specialist steel alloys, manufactures
robotic manipulators, and provides engineering design, assembly, and
installation services for the nuclear, defence and oil & gas industries.
INTERIM MANAGEMENT REPORT
HSE AND COVID-19
The health, safety and wellbeing of our employees and customers is of
paramount importance. We continue to follow Government guidelines and
maintain rigorous social distancing controls, hygiene measures and
shift-working practices across all locations.
The reportable accident frequency rate compared to last year has declined and
various improvements in health, safety, and environmental management systems
across the Group have been implemented.
The impact of the COVID-19 pandemic on the Group remains under close review by
the Board. The Group has successfully implemented a range of measures and
planned contingencies across all our businesses which are designed to minimise
the impact of the pandemic, and as a result all our manufacturing facilities
have remained fully operational. However, we have been impacted by delays in
the progress of engineering projects and restrictions on visiting customer
sites.
Given the positive trading performance during the period the Group has not
utilised the Coronavirus Job Retention Scheme and currently has no plans to do
so.
RESULTS
In challenging market conditions, Carr's has delivered an improved performance
in the period.
During the 26 weeks ended 27 February 2021 revenues increased to £201.4m (H1
2020: £200.0m).
Adjusted operating profit of £10.9m (H1 2020: £10.3m) was 5.3% up on the
prior year. Adjusted profit before tax increased by 8.1% to £10.4m (H1
2020: £9.6m). The improvement in adjusted profits is mainly attributable to
improved performances in Speciality Agriculture and Agricultural Supplies.
Adjusted earnings per share increased by 2.5% to 8.2p (H1 2020: 8.0p).
STRATEGIC AND OPERATIONAL REVIEW
The Group has commenced a strategic and operational review. As a result of
this, its activities are now structured into three divisions:
1. Speciality Agriculture
2. Agricultural Supplies
3. Engineering
Our strategy is to continue to invest in established businesses with distinct
value propositions or new companies with proven technology and strong growth
prospects.
We will add value by:
· Differentiating - investing in innovative technology,
patented processes / products and better customer service.
· Optimising - simplifying, standardising and seeking synergies
between related companies in our portfolio.
· Consolidating - creating scale and critical mass by
consolidating similar businesses in a market sector.
· Growing - expanding our geographic presence, cross selling to
our customer base and developing new products.
Each division has developed an initial plan in these areas, and these will be
further refined over the coming months. The Group will continue its
strategic and operational review in the second half of this financial year.
SPECIALITY AGRICULTURE
Speciality Agriculture comprises our feed blocks, mineral supplements and
trace element boluses in the UK, Europe, North America, and New Zealand.
H1 2021 H1 2020 % Change
Revenue £40.2m £36.6m +9.8%
Adjusted operating profit £8.2m £6.5m +24.7%
Our businesses have performed strongly in all geographic areas driven by
strong livestock prices and more seasonal weather patterns than prior years.
Overall, 101,000 tonnes of feed blocks and speciality minerals were sold
worldwide, an increase of 8.4% year on year. Sales revenues recovered in our
animal health business, Animax. Our project to automate the production
process at Animax continues with benefits expected in the next financial year.
Our strategy remains to focus on molasses based feed blocks and specialist
animal health products where our patented manufacturing processes deliver
differentiated products. Initiatives to improve processes, supply chain buying
and upgrade our manufacturing plants are underway. Growth opportunities to
expand our presence in the USA, Canada and Germany are the highest priority,
as well as developing more environmentally sustainable packaging for key
products lines.
AGRICULTURAL SUPPLIES
Agricultural Supplies comprises our Carr's Billington branded agricultural
stores, machinery, fuel and compound feed business and our joint venture
business Bibby Agriculture.
H1 2021 H1 2020 % Change
Revenue £137.7m £138.4m -0.5%
Adjusted operating profit £3.3m £2.5m +33.5%
Total feed sales volumes increased to 318kt, an increase of 0.4% compared to
the prior year. Machinery revenues were also strong, increasing by 29.1% year
on year, and total retail sales also increased by 4.3% with like-for-like
sales showing an 8.1% increase. Fuel volumes were down 2.5% versus the prior
year, with the main impact being felt in the first quarter of the financial
year.
Significant increases in raw material prices impacted the profitability of the
feed business in the first half, however, margins were stronger in retail,
fuel and machinery which helped offset the impact of higher raw material
costs.
In the UK specifically, the agreement of a trade deal with the EU in December
2020 has significantly improved farmer confidence, which has been further
buoyed by strong farmgate prices. The UK Agriculture Bill will also provide
opportunities as farmers are incentivised by efficiency and environmental
schemes.
Our strategy remains to provide all a farmer needs and differentiate ourselves
through our product range, our customer and technical service levels, having a
local presence, and the quality of our compound feeds. Operationally, a number
of initiatives have been implemented to standardise product range and prices,
improve supply chain arrangements and better manage raw material buying and
pricing. Further opportunities to grow exist through the opening of new stores
and industry consolidation.
ENGINEERING
Engineering comprises our fabrication and precision engineering businesses in
the UK, robotics businesses in the UK and Europe and our engineering solutions
businesses in the UK and USA.
H1 2021 H1 2020 % Change
Revenue £23.6m £24.9m -5.4%
Adjusted operating profit £0.9m £1.2m -24.1%
The profitability of our engineering solutions business in the USA and UK has
been resilient with continued work with large blue-chip customers in the
nuclear and defence sectors. Additional work has recently been secured in the
defence sector.
The performance of our fabrication and precision engineering businesses have
been adversely affected by low oil & gas prices. More positively, our
fabrication business has received a significant level of orders in the nuclear
sector. A turnaround plan is in place for the precision engineering business
and performance is expected to be significantly better in H2.
The performance of our robotics business has substantively improved compared
to H1 last year with exports to China expected to resume in H2 2021.
Our overall Engineering order book at £44m (H1 2020: £47m) is less than at
the equivalent point last year but £7m higher than at the end of 2020 (FY
2020: £37m). In the second half of the prior year a significant number of
orders were subsequently cancelled following the outbreak of COVID-19.
Our strategy in the Engineering division is to provide specialist high margin
services primarily to the nuclear and defence sectors. Our differentiators
include patented MSIP®, Power Fluidics™ processes, the range of precision
engineering machinery, the product life and quality of our robotic
manipulators and a direct workforce with highly specialist welding
capabilities.
Opportunities to grow exist with our current customer base by providing our
full range of specialist services and by selectively pursuing new customers in
the nuclear and defence industries in particular.
FINANCE REVIEW
Adjusted results
Revenue increased by 0.7% to £201.4m (H1 2020: £200.0m), with an increase of
9.8% in Speciality Agriculture offset by a reduction in both Engineering and
Agricultural Supplies of 5.4% and 0.5% respectively.
Adjusted operating profit increased 5.3% to £10.9m (H1 2020: £10.3m).
Strong performances in Speciality Agriculture, up 24.7%, and Agricultural
Supplies, up 33.5%, were partially offset by a reduction in Engineering of
24.1%. Central costs were higher at £1.5m (H1 2020: credit of £0.1m)
partly due to a change in provision for a non-recoverable debt, phasing,
increased costs for performance related remuneration, and CEO handover costs.
Net finance costs of £0.5m (H1 2020: £0.7m) reduced year on year due to
lower borrowings. Net debt was £10.6m at the period end (H1 2020: 25.4m),
driven by a strong operating performance with EBITDA of £12.6m and a
reduction in working capital of £4.1m, offset by dividends of £4.4m, net
capital expenditure of £2.3m and tax and interest of £1.9m. The Group's
main banking facilities run to 2023.
The Group's adjusted profit before tax increased by 8.1% to £10.4m (H1 2020:
£9.6m).
Adjusted earnings per share increased by 2.5% to 8.2p (H1 2020: 8.0p). The
increase is proportionately lower than the increase in profit before tax
because of the higher effective tax rate, due to a higher mix of overseas
profits and the impact of minority interests.
Adjusting items
The Group provides the adjusted profit measures referred to above to present
additional useful information on business performance consistent with how
business performance is measured internally. These measures show underlying
profits before certain adjusting items.
In H1 2020, adjusting items were a net credit of £0.9m related mainly to
adjustments to contingent consideration (H1 2020: £2.1m compared to H1 2021:
£0.7m) partly offset by amortisation of intangible assets. In H1 2021, they
are a charge of £0.2m. Full details of all adjusting items are given in
note 8.
Statutory results
Reported operating profit on a statutory basis was £10.7m (H1 2020: £11.2m)
and reported profit before tax was £10.2m (H1 2020: £10.5m). Basic
earnings per share on a statutory basis was 8.2p (H1 2020: 9.3p).
Balance sheet and cash flow
Net cash generated from operating activities in the first half was £14.1m (H1
2020: £4.9m). Net debt, excluding leases, fell to £10.6m from £18.9m at the
financial year end (H1 2020: £25.4m). This is primarily related to strong
working capital management resulting in a working capital inflow of £4.1m
combined with improved EBITDA.
The Group's defined benefit pension scheme remains in surplus but at a
slightly decreased level of £7.8m compared to £8.0m at 29 August 2020.
Shareholder's equity
Shareholders' equity at 27 February 2021 was £119.0m (29 August 2020:
£117.1m), with the increase primarily due to profit retained by the Group for
the period offset by foreign exchange translation losses and dividends paid.
A first interim dividend of 1.175 pence per ordinary share will be paid on 8
June 2021 to shareholders on the register on 30 April 2021. The ex-dividend
date will be 29 April 2021.
GOVERNANCE
The Group announces that, with effect from today, Kristen Eshak Weldon has
been appointed as the Board's Representative for Employee Engagement.
Kristen was appointed to the Board in October 2020 and takes on the role from
Alistair Wannop who will be standing down from the Board in January 2022.
Kristen is currently Global Head of ESG and Impact Investing at Partners
Capital. Prior to this she served on the Executive Committee of Louis
Dreyfus Company and co-headed the London office of Blackstone's Hedge Fund
Solutions business. The Board considers that Kristen's experience of
stakeholder engagement places her well to ensure that wider views across the
workforce are fully understood and considered by the Board in its
decision-making processes.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group has a process in place to identify and assess the impact of risks on
its business, which is reviewed and updated quarterly. The principal risks and
uncertainties for the remainder of the financial year are not considered to
have changed materially from those included on pages 28 to 30 of the Annual
Report and Accounts 2020 (available on the Company's website at
http://investors.carrsgroup.com (http://investors.carrsgroup.com) ), with the
exception of Brexit where the risk has reduced following the UK-EU trade
agreement which took effect from 31 December 2020.
OUTLOOK
A continued positive performance is forecast across the Agricultural divisions
together with an improved second half in the Engineering division as the
impact of COVID-19 begins to recede and its order intake continues to
increase. A programme of simplification and standardisation is forecast to
improve performance over time. Trading since 27 February 2021 has been
positive and the Board's expectations for the current financial year remain
unchanged.
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 26 weeks ended 27 February 2021
26 weeks ended 26 weeks 52 weeks
27 February ended ended
2021 29 February 29 August
(unaudited) 2020 2020
(unaudited) (audited)
Notes £'000 £'000 £'000
Continuing operations
Revenue 6,7 201,435 199,957 395,630
Cost of sales (173,412) (172,924) (343,381)
Gross profit 28,023 27,033 52,249
Net operating expenses (19,547) (17,685) (41,042)
Share of post-tax results of associate and joint ventures 2,196 1,892 2,633
Adjusted¹ operating profit 6 10,869 10,322 16,247
Adjusting items 8 (197) 918 (2,407)
Operating profit 6 10,672 11,240 13,840
Finance income 135 178 313
Finance costs (633) (905) (1,656)
Adjusted¹( )profit before taxation 6 10,371 9,595 14,904
Adjusting items 8 (197) 918 (2,407)
Profit before taxation 6 10,174 10,513 12,497
Taxation (1,714) (1,382) (1,575)
Profit for the period 8,460 9,131 10,922
Profit attributable to:
Equity shareholders 7,574 8,565 9,533
Non-controlling interests 886 566 1,389
8,460 9,131 10,922
Earnings per share (pence)
Basic 9 8.2 9.3 10.3
Diluted 9 7.9 9.1 10.2
Adjusted¹ 9 8.2 8.0 11.9
Diluted adjusted¹ 9 8.0 7.9 11.8
1 Adjusted results are consistent with how business performance is measured
internally and is presented to aid comparability of performance. Adjusting
items are discussed in note 8. An alternative performance measures
glossary can be found in note 18.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 26 weeks ended 27 February 2021
26 weeks ended 52 weeks
26 weeks ended 29 February 2020 Ended
27 February (unaudited) 29 August
2021 2020
(unaudited) (audited)
Notes £'000 £'000 £'000
Profit for the period 8,460 9,131 10,922
Other comprehensive (expense)/income
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation losses arising on
translation of overseas subsidiaries (1,752) (2,778) (2,552)
Net investment hedges 76 210 (54)
Taxation (charge)/credit on net investment hedges (14) (40) 10
Items that will not be reclassified subsequently to profit or loss:
Actuarial (losses)/gains on retirement benefit asset:
- Group 14 (295) (1,187) 142
- Share of associate - - 408
Taxation credit/(charge) on actuarial (losses)/gains on retirement benefit
asset:
- Group 56 202 (27)
- Share of associate - - (96)
Other comprehensive expense for the period, net of tax (1,929) (3,593) (2,169)
Total comprehensive income for the period 6,531 5,538 8,753
Total comprehensive income attributable to:
Equity shareholders 5,645 4,972 7,364
Non-controlling interests 886 566 1,389
6,531 5,538 8,753
CONDENSED CONSOLIDATED BALANCE SHEET
As at 27 February 2021
As at As at As at
27 February 29 February 29 August
2021 2020 2020
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Non-current assets
Goodwill 11 31,530 32,070 32,041
Other intangible assets 11 9,118 9,315 9,171
Property, plant and equipment 11 35,609 36,767 38,259
Right-of-use assets 11 16,265 15,870 14,856
Investment property 11 155 161 158
Investment in associate 14,860 13,846 14,307
Interest in joint ventures 11,492 10,392 10,551
Other investments 72 74 73
Financial assets
- Non-current receivables 20 21 20
Retirement benefit asset 14 7,807 6,643 8,037
Deferred tax assets - 410 -
126,928 125,569 127,473
Current assets
Inventories 43,392 48,915 40,961
Contract assets 7,885 8,412 8,114
Trade and other receivables 59,496 60,537 51,686
Current tax assets 2,058 328 1,535
Financial assets
- Derivative financial instruments - - 3
- Cash and cash equivalents 12 24,838 29,318 17,571
137,669 147,510 119,870
Total assets 264,597 273,079 247,343
Current liabilities
Financial liabilities
- Borrowings 12 (8,580) (26,855) (11,420)
- Leases (2,965) (2,557) (2,778)
Contract liabilities (3,019) (2,351) (1,061)
Trade and other payables (67,704) (62,520) (55,522)
Current tax liabilities (494) (158) (33)
(82,762) (94,441) (70,814)
Non-current liabilities
Financial liabilities
- Borrowings 12 (26,815) (27,896) (25,021)
- Leases (12,177) (12,666) (11,171)
Deferred tax liabilities (4,830) (4,634) (4,783)
Other non-current liabilities (1,370) (2,537) (1,385)
(45,192) (47,733) (42,360)
Total liabilities (127,954) (142,174) (113,174)
Net assets 136,643 130,905 134,169
Shareholders' equity
Share capital 15 2,330 2,312 2,312
Share premium 15 9,613 9,165 9,176
Other reserves 2,363 4,379 4,436
Retained earnings 104,741 98,655 101,202
Total shareholders' equity 119,047 114,511 117,126
Non-controlling interests 17,596 16,394 17,043
Total equity 136,643 130,905 134,169
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 26 weeks ended 27 February 2021
Foreign Exchange Reserve
Equity Total Shareholders' Equity
Share Share Premium Treasury Compensation Reserve Other Reserve Retained Non- Controlling Interests
Capital Share Reserve Earnings Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 August 2020
(audited) 2,312 9,176 (45) 734 3,550 197 101,202 117,126 17,043 134,169
Profit for the period - - - - - - 7,574 7,574 886 8,460
Other comprehensive expense
- - - - (1,690) - (239) (1,929) - (1,929)
Total comprehensive (expense)/income
- - - - (1,690) - 7,335 5,645 886 6,531
Dividends paid - - - - - - (4,390) (4,390) (368) (4,758)
Equity-settled share-based payment transactions
- - - (426) - - 646 220 35 255
Allotment of shares 18 437 - - - - - 455 - 455
Purchase of own shares held in trust - - (9) - - - - (9) - (9)
Transfer - - 53 - - (1) (52) - - -
At 27 February 2021 (unaudited)
2,330 9,613 (1) 308 1,860 196 104,741 119,047 17,596 136,643
At 1 September 2019 (audited)
2,299 9,165 - 1,577 6,146 199 93,771 113,157 16,125 129,282
Profit for the period - - - - - - 8,565 8,565 566 9,131
Other comprehensive expense - - - - (2,608) - (985) (3,593) - (3,593)
Total comprehensive (expense)/income - - - - (2,608) - 7,580 4,972 566 5,538
Dividends paid - - - - - - (3,344) (3,344) (294) (3,638)
Equity-settled share-based payment transactions - - - (933) - - 659 (274) (3) (277)
Allotment of shares 13 - - - - - - 13 - 13
Purchase of own shares held in trust - - (13) - - - - (13) - (13)
Transfer - - 12 - - (1) (11) - - -
At 29 February 2020 (unaudited) 2,312 9,165 (1) 644 3,538 198 98,655 114,511 16,394 130,905
At 1 September 2019
(audited) 2,299 9,165 - 1,577 6,146 199 93,933 113,319 16,229 129,548
Profit for the period - - - - - - 9,533 9,533 1,389 10,922
Other comprehensive (expense)/income - - - - (2,596) - 427 (2,169) - (2,169)
Total comprehensive (expense)/income - - - - (2,596) - 9,960 7,364 1,389 8,753
Dividends paid - - - - - - (3,344) (3,344) (588) (3,932)
Equity-settled share-based payment transactions - - - (843) - - 691 (152) 15 (137)
Excess deferred taxation on share-based payments - - - - - - (27) (27) (2) (29)
Allotment of shares 13 11 - - - - - 24 - 24
Purchase of own shares held in trust - - (58) - - - - (58) - (58)
Transfer - - 13 - - (2) (11) - - -
At 29 August 2020 (audited) 2,312 9,176 (45) 734 3,550 197 101,202 117,126 17,043 134,169
( )
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 26 weeks ended 27 February 2021
26 weeks ended 26 weeks ended 52 weeks ended
27 February 2021 29 February 2020 29 August 2020
(unaudited) (unaudited) (audited)
Notes
£'000 £'000 £'000
Cash flows from operating activities
Cash generated from continuing operations 16 15,956 7,840 22,639
Interest received 57 176
111
Interest paid (625) (1,696)
(897)
Tax paid (1,300) (2,139) (3,059)
Net cash generated from operating activities 14,088 4,915 18,060
Cash flows from investing activities
Contingent/deferred consideration paid (131) (1,596) (2,659)
Dividends received from associate and joint ventures 368 701
294
Other loans - 718
382
Purchase of intangible assets (780) (1,459)
(845)
Proceeds from sale of property, plant and equipment 125 421
141
Purchase of property, plant and equipment (1,645) (2,569) (6,569)
Purchase of own shares held in trust (9) (58)
(13)
Net cash used in investing activities (2,072) (4,206) (8,905)
Cash flows from financing activities
Proceeds from issue of ordinary share capital 455 24
13
New financing and movement on RCF 5,609 2,500 1,889
Lease principal repayments (1,556) (1,569) (3,171)
Repayment of borrowings (1,200) (1,247) (2,459)
(Decrease)/increase in other borrowings (604) (14,508)
114
Dividends paid to shareholders (4,390) (3,344) (3,344)
Dividends paid to related party (368) (588)
(294)
Net cash used in financing activities (2,054) (3,827) (22,157)
Effects of exchange rate changes (373) (989)
(410)
Net increase/(decrease) in cash and cash equivalents 9,589 (3,528) (13,991)
Cash and cash equivalents at beginning of the period 10,304 24,295 24,295
Cash and cash equivalents at end of the period 19,893 20,767 10,304
Cash and cash equivalents consist of:
Cash and cash equivalents per the balance sheet 24,838 29,318 17,571
Bank overdrafts included in borrowings (4,945) (8,551) (7,267)
19,893 20,767 10,304
Statement of Directors' responsibilities
We confirm that to the best of our knowledge:
* the condensed consolidated financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the European
Union ("EU") pursuant to Regulation (EC) No 1606/2002 as it applies in the EU
and in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006; and
* the interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during the
first six months of the financial year and their impact on the condensed
consolidated financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months
of the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes
in the related party transactions described in the last Annual Report that
could do so.
The Directors are listed in the Annual Report and Accounts 2020, with the
exception of the following changes in the period: Hugh Pelham was appointed on
4 January 2021, and Tim Davies resigned on 12 January 2021. Kristen Eshak
Weldon was appointed on 1 October 2020 and was included in the list of
Directors in the Annual Report and Accounts 2020. A list of current Directors
is maintained on the website: www.carrsgroup.com (http://www.carrsgroup.com)
On behalf of the Board
Hugh
Pelham
Neil Austin
Chief Executive
Officer
Chief Financial Officer
21 April
2021
21 April 2021
Unaudited notes to condensed interim financial information
1. General information
The Group operates across three divisions of Speciality Agriculture,
Agricultural Supplies and Engineering. The Company is a public limited
company, which is listed on the London Stock Exchange and is incorporated and
domiciled in the UK. The address of the registered office is Old Croft,
Stanwix, Carlisle, Cumbria CA3 9BA.
These condensed interim financial statements were approved for issue on 21
April 2021.
The comparative figures for the financial year ended 29 August 2020 are not
the Company's statutory accounts for that financial year. Those accounts
have been reported on by the Company's auditor and delivered to the Registrar
of Companies. The report of the auditor was (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
2. Basis of preparation
These condensed interim financial statements for the 26 weeks ended 27
February 2021 have been prepared in accordance with IAS 34, 'Interim financial
reporting' as adopted by the EU pursuant to Regulation (EC) No 1606/2002 as it
applies to the EU.
The annual financial statements of the Group for the year ending 28 August
2021 will be prepared in accordance with International Financial Reporting
Standards (IFRSs) adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the EU and in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006. As required by the
Disclosure Guidance and Transparency Rules of the Financial Conduct Authority,
this condensed set of financial statements has been prepared applying the
accounting policies and presentation that were applied in the preparation of
the Company's published consolidated financial statements for the year ended
29 August 2020 which were prepared in accordance with IFRSs as adopted by the
EU.
The Group is expected to have a sufficient level of financial resources
available through operating cash flows and existing bank facilities for a
period of at least 12 months from the signing date of these condensed
consolidated interim financial statements. The Group has operated within all
its banking covenants throughout the period. In addition, the Group's main
banking facility is in place until November 2023 and an invoice discounting
facility is in place until August 2023.
Detailed cash forecasts continue to be updated regularly for a period of at
least 12 months from the reporting period end. These forecasts are sensitised
for various worst case scenarios including a COVID-19 outbreak resulting in a
short term closure, delays on order books, and reduced payments from
customers. The results of this stress testing showed that, due to the
stability of the core business, the Group would be able to withstand the
impact of these severe but plausible downside scenarios occurring over the
period of the forecasts.
In addition, several other mitigating measures remain available and within the
control of the Directors that were not included in the scenarios. These
include withholding discretionary capital expenditure and reducing or
cancelling future dividend payments.
Consequently, the Directors are confident that the Group will have sufficient
funds to continue to meet its liabilities as they fall due for at least 12
months from the signing date of these condensed consolidated interim financial
statements. The Group therefore continues to adopt the going concern basis in
preparing its condensed consolidated interim financial statements.
3. Accounting policies
The accounting policies adopted are consistent with those of the previous
financial year except for:
Taxation
Income taxes are accrued based on management's estimate of the weighted
average annual income tax rate expected for the full financial year based on
enacted or substantively enacted tax rates at 27 February 2021. Our effective
tax rate was 21.1% (H1 2020: 19.1%) after adjusting for results from associate
and joint ventures, which are reported net of tax, and adjustments to
contingent consideration (note 8) which is treated as non-taxable. The higher
effective tax rate is due to a higher mix of overseas profits.
4. Significant judgements and estimates
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these condensed interim financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those that applied
to the consolidated financial statements for the 52 weeks ended 29 August
2020, with the exception of changes in estimates that are required in
determining the provision for income taxes as explained in note 3.
5. Financial risk management
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk and price risk), credit risk and liquidity risk.
The condensed interim financial statements do not include all financial risk
management information and disclosures required in the annual financial
statements; they should be read in conjunction with the Group's annual
financial statements as at 29 August 2020. The impact of COVID-19 is
discussed further in the interim management report.
6. Operating segment information
The Group's chief operating decision-maker ("CODM") has been identified as the
Executive Directors. Management has determined the operating segments based
on the information reviewed by the CODM for the purposes of allocating
resources and assessing performance.
The CODM considers the business from a product/services perspective.
Following a strategic and operational review reportable operating segments
have been identified as Speciality Agriculture, Agricultural Supplies and
Engineering. Central comprises the central business activities of the
Group's head office, which earns no external revenues. Performance is assessed
using operating profit. For internal purposes the CODM assesses operating
profit before material adjusting items (note 8) consistent with the
presentation in the financial statements. The CODM believes this measure
provides a better reflection of the Group's underlying performance. Sales
between segments are carried out at arm's length.
The following tables present revenue, profit, asset and liability information
regarding the Group's operating segments for the 26 weeks ended 27 February
2021 and the comparative periods.
26 weeks ended 27 February 2021
Speciality Agriculture Agricultural Supplies
£'000 £'000 Engineering Central Group
£'000 £'000 £'000
Total segment revenue 44,075 137,687 23,565 - 205,327
Inter segment revenue (3,888) (3) (1) - (3,892)
Revenue from external customers 40,187 137,684 23,564 - 201,435
Adjusted¹ EBITDA² 7,885 3,466 2,205 (1,404) 12,152
Depreciation, amortisation and profit/(loss)
on disposal of non-current assets (785) (1,320) (1,283) (91) (3,479)
Share of post-tax results of associate and joint ventures 1,054 1,142 - - 2,196
Adjusted(¹) operating profit 8,154 3,288 922 (1,495) 10,869
Adjusting items (note 8) (245) - 78 (30) (197)
Operating profit 7,909 3,288 1,000 (1,525) 10,672
Finance income 135
Finance costs (633)
Adjusted(¹) profit before taxation 10,371
Adjusting items (note 8) (197)
Profit before taxation 10,174
Segment gross assets 49,348 112,686 78,421 24,142 264,597
Segment gross liabilities (11,497) (56,126) (28,591) (31,740) (127,954)
1 Adjusted results are consistent with how business performance is measured
internally and is presented to aid comparability of performance. Adjusting
items are disclosed in note 8.
(2 )Earnings before interest, tax, depreciation, amortisation,
profit/(loss) on the disposal of non-current assets and before share of
post-tax results of associate and joint ventures.
The following tables have been restated to present Speciality Agriculture and
Agricultural Supplies separately. This is to aid comparability with the
segmental information presented for the current period to 27 February 2021.
26 weeks ended 29 February 2020 (restated)
Speciality Agriculture Agricultural Supplies
£'000 £'000 Engineering Central Group
£'000 £'000 £'000
Total segment revenue 39,909 138,445 24,919 - 203,273
Inter segment revenue (3,311) (4) (1) - (3,316)
Revenue from external customers 36,598 138,441 24,918 - 199,957
Adjusted¹ EBITDA² 6,211 2,840 2,492 195 11,738
Depreciation, amortisation and profit/(loss)
on disposal of non-current assets (640) (1,302) (1,277) (89) (3,308)
Share of post-tax results of associate and joint ventures 967 925 - - 1,892
Adjusted¹ operating profit 6,538 2,463 1,215 106 10,322
Adjusting items (note 8) 1,068 (74) (76) - 918
Operating profit 7,606 2,389 1,139 106 11,240
Finance income 178
Finance costs (905)
Adjusted¹ profit before taxation 9,595
Adjusting items (note 8) 918
Profit before taxation 10,513
Segment gross assets 49,098 121,952 83,786 18,243 273,079
Segment gross liabilities (10,574) (70,122) (30,896) (30,582) (142,174)
( )
52 weeks ended 29 August 2020 (restated)
Speciality Agriculture Agricultural Supplies Central
£'000 £'000 Engineering £'000 Group
£'000 £'000
Total segment revenue 66,948 280,740 53,020 - 400,708
Inter segment revenue (5,058) (8) (12) - (5,078)
Revenue from external customers 61,890 280,732 53,008 - 395,630
Adjusted¹ EBITDA² 7,914 6,884 6,754 (781) 20,771
Depreciation, amortisation and profit/(loss)
on disposal of non-current assets (1,366) (2,665) (2,944) (182) (7,157)
Share of post-tax results of associate and joint ventures 1,061 1,572 - - 2,633
Adjusted¹ operating profit 7,609 5,791 3,810 (963) 16,247
Adjusting items (note 8) 730 (688) (2,449) - (2,407)
Operating profit 8,339 5,103 1,361 (963) 13,840
Finance income 313
Finance costs (1,656)
Adjusted¹ profit before taxation 14,904
Adjusting items (note 8) (2,407)
Profit before taxation 12,497
Segment gross assets 47,367 98,046 83,852 18,078 247,343
( )
Segment gross liabilities (8,845) (44,664) (31,156) (28,509) (113,174)
( )
1 Adjusted results are consistent with how business performance is measured
internally and is presented to aid comparability of performance. Adjusting
items are disclosed in note 8.
(2 )Earnings before interest, tax, depreciation, amortisation,
profit/(loss) on the disposal of non-current assets and before share of
post-tax results of associate and joint ventures.
7. Disaggregation of revenue
The following table presents the Group's reported revenue disaggregated based
on the timing of revenue recognition.
26 weeks 26 weeksended 52 weeks
ended 29 February ended
27 February 2020 29 August
2021 2020
Timing of revenue recognition £'000 £'000 £'000
Over time 18,464 16,054 34,790
At a point in time 182,971 183,903 360,840
201,435 199,957 395,630
8. Adjusting items
26 26 weeks 52 weeks
weeks
ended ended
ended 29 February 29 August
27 February 2020 2020
£'000 £'000
2021
£'000
Amortisation of acquired intangible assets (i) 621 687 1,380
Adjustments to contingent consideration (ii) (671) (2,147) (937)
Restructuring/closure costs (iii) 247 542 1,964
197 (918) 2,407
(i) Amortisation of acquired intangible assets which do not relate
to the underlying profitability of the Group but rather relate to costs
arising on acquisition of businesses.
(ii) Adjustments to contingent consideration arise from the
revaluation of contingent consideration in respect of acquisitions to fair
value at the period end. Movements in fair value arise from changes to the
expected payments since the previous period end based on actual results and
updated forecasts. Any increase or decrease in fair value is recognised
through the income statement.
(iii) Restructuring/closure costs include redundancy costs and
impairments of assets to recoverable amounts.
9. Earnings per share
Adjusting items disclosed in note 8 that are charged or credited to profit do
not relate to the underlying profitability of the Group. The Board believes
adjusted profit before these items provides a useful measure of business
performance. Therefore, an adjusted earnings per share is presented as
follows:
26 weeks 26 weeks 52 weeks
ended ended ended
27 February 2021 29 February 2020 29 August 2020
£'000 £'000 £'000
Earnings 7,574 8,565 9,533
Adjusting items:
Amortisation of acquired intangible assets 621 687 1,380
Adjustments to contingent consideration (671) (2,147) (937)
Restructuring/closure costs 247 542 1,964
Taxation effect of the above (167) (225) (639)
Non-controlling interest in the above - (29) (273)
Earnings - adjusted 7,604 7,393 11,028
Number Number Number
Weighted average number of ordinary shares in issue 92,588,219 92,214,566 92,346,828
Potentially dilutive share options 2,813,125 1,669,575 1,384,216
95,401,344 93,884,141 93,731,044
Earnings per share (pence)
Basic 8.2p 9.3p 10.3p
Diluted 7.9p 9.1p 10.2p
Adjusted 8.2p 8.0p 11.9p
Diluted adjusted 8.0p 7.9p 11.8p
10. Dividends
An interim dividend of £2,079,551 (H1 2020: £1,034,348) that related to the
period to 29 August 2020 was paid on 2 October 2020. This included the
deferred first interim dividend that, under normal circumstances, would have
been paid in May 2020. This was deferred due to the uncertainty associated
with the COVID-19 pandemic. A final dividend of £2,310,612 (H1 2020:
£2,310,140) in respect of the period to 29 August 2020 was paid on 15 January
2021.
11. Intangible assets, property, plant and equipment, right-of-use
assets and investment property
Property,
Other intangible assets plant and equipment Right-of-use Investment
Goodwill £'000 £'000 assets property
£'000 £'000 £'000
26 weeks ended 27 February 2021
Opening net book amount at 30 August 2020 32,041 9,171 38,259 14,856 158
Exchange differences (511) (52) (570) (17) -
Additions - 780 1,628 1,818 -
Disposals and transfers - - (1,748) 861 -
Depreciation and amortisation - (781) (1,960) (1,253) (3)
Closing net book amount at 27 February 2021 31,530 9,118 35,609 16,265 155
26 weeks ended 29 February 2020
Opening net book amount at 1 September 2019 32,877 9,318 41,917 - 164
Transition to IFRS 16 - - (4,409) 15,903 -
Exchange differences (807) (99) (911) (48) -
Additions - 845 2,569 1,263 -
Disposals - - (90) - -
Depreciation, amortisation and impairment - (749) (2,309) (1,248) (3)
Closing net book amount as at 29 February 2020 32,070 9,315 36,767 15,870 161
Transfers include assets refinanced under a lease and finance leased assets
that became owned assets on maturity of the lease term.
Capital commitments contracted, but not provided for, by the Group at the
period end amounts to £632,000 (2020: £1,559,000).
12. Borrowings
As at As at As at
27 February 29 February 29 August
2021 2020 2020
£'000 £'000 £'000
Current 8,580 26,855 11,420
Non-current 26,815 27,896 25,021
Total borrowings 35,395 54,751 36,441
Cash and cash equivalents as per the balance sheet (24,838) (29,318) (17,571)
Net debt (excluding leases) 10,557 25,433 18,870
Undrawn facilities 35,324 22,412 35,083
Current borrowings include bank overdrafts of £4.9m (2020: £8.6m). Undrawn
facilities include overdraft facilities of £2.5m (2020: £2.5m) that are
renewable on an annual basis.
Movements in borrowings are analysed as follows: 26 weeks 26 weeks
ended ended
27 February 29 February
2021 2020
£'000 £'000
Balance at start of period (excluding leases) 36,441 49,519
Exchange differences (235) (362)
New bank loans/RCF drawdown 4,000 2,500
Repayments of borrowings (1,200) (1,247)
(Decrease)/increase in other borrowings (604) 114
Loan forgiven (715) -
Release of deferred borrowing costs 30 30
Net increase to bank overdraft (2,322) 4,197
Balance at end of period 35,395 54,751
New bank loans/RCF drawdown excludes re-financing of assets under new finance
lease arrangements. The balance of £49.5m at the start of the comparative
period excludes finance leases of £2.9m which were previously included within
borrowings as at 31 August 2019 however, on transition to IFRS 16 'Leases' on
1 September 2019, these were presented separately to borrowings on the face of
the balance sheet.
13. Financial instruments
IFRS 13 requires financial instruments that are measured at fair value to be
classified according to the valuation technique used:
Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities
Level 2 - inputs, other than Level 1 inputs, that are observable
for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e.
derived from prices)
Level 3 - unobservable inputs
Transfers between levels are deemed to have occurred at the end of the
reporting period. There were no transfers between levels in the above
hierarchy in the period.
All derivative financial instruments are measured at fair value using Level 2
inputs. The Group's bankers provide the valuations for the derivative
financial instruments at each reporting period end based on mark to market
valuation techniques.
Contingent consideration is measured at fair value using Level 3 inputs. Fair
value is determined considering the expected payment, which is discounted to
present value. The expected payment is determined separately in respect of
each individual earn-out agreement taking into consideration the expected
level of profitability of each acquisition.
The significant unobservable inputs are the projections of future
profitability, which have been based on budget and forecast information for
the current year and future periods, and the discount rate, which has been
based on the incremental borrowing rate. A significant amount of the
contingent consideration payable is included within current liabilities and
has therefore not been discounted. A reasonable change in the discount rate
applied would not have a material impact on the balances recognised within
non-current liabilities.
The following table presents a reconciliation of the contingent consideration
liability measured at fair value on a recurring basis using significant
unobservable inputs (level 3).
As at As at As at
27 February 29 February 29 August 2020
2021 2020
£'000 £'000 £'000
Fair value at the start of the period 3,422 7,954 7,954
Exchange differences (12) (175) (184)
Payments made to vendors (including legal costs) (131) (1,473) (2,513)
Change in fair value (671) (3,027) (1,835)
Fair value at the end of the period 2,608 3,279 3,422
14. Retirement benefit asset
The amounts recognised in the Income Statement are as follows:
26 weeks ended 26 weeks 52 weeks
27 February Ended ended
2021 29 February 29 August
2020 2020
£'000 £'000 £'000
Administrative expenses 9 9 13
Net interest on the net defined benefit asset (74) (70) (139)
Total income (65) (61) (126)
Net interest on the defined benefit retirement asset is recognised within
interest income.
The amounts recognised in the Balance Sheet are as follows:
As at As at As at
27 February 29 February 29 August
2021 2020 2020
£'000 £'000 £'000
Present value of funded defined benefit obligations (62,685) (67,203) (65,834)
Fair value of scheme assets 70,492 73,846 73,871
Surplus in funded scheme 7,807 6,643 8,037
Actuarial losses of £295,000 (2020: £1,187,000) have been reported in the
Statement of Comprehensive Income. The surplus has decreased over the period
since 29 August 2020 due to changes in market conditions contributing to an
overall reduction in the scheme surplus.
The Group's associate's defined benefit 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.
15. Share capital
Number of shares Share capital Share premium £'000 Total
£'000
£'000
Allotted and fully paid ordinary shares of 2.5p each
Opening balance as at 30 August 2020 92,465,833 2,312 9,176 11,488
Proceeds from shares issued:
- LTIP 309,823 7 - 7
- Share save scheme 421,744 11 437 448
At 27 February 2021 93,197,400 2,330 9,613 11,943
Opening balance at 1 September 2019 91,942,005 2,299 9,165 11,464
Proceeds from shares issued:
- LTIP 513,604 13 - 13
At 29 February 2020 92,455,609 2,312 9,165 11,477
309,823 shares were issued in the period to satisfy the share awards under the
LTIP scheme which were exercised in December 2020.
421,744 shares were issued in the period to satisfy the share awards under the
share save scheme with exercise proceeds of £447,611. The related weighted
average price of the shares exercised in the period was £1.061 per share. At
the period end the Company holds 50,045 of these shares in treasury.
As announced on 1 April 2021 the Company's issued share capital had increased
to 93,544,724 shares of which 75,955 shares were held in treasury. The
increase in issued share capital was due to the issue of 347,324 shares under
the share save scheme with exercise proceeds of £368,511 and a related
weighted average exercise price of £1.061 per share.
16. Cash generated from continuing operations
26 weeks 26 weeks 52 weeks
ended ended ended
27 February 29 February 29 August
2021 2020 2020
£'000 £'000 £'000
Profit for the period from continuing operations 8,460 9,131 10,922
Adjustments for:
Tax 1,714 1,382 1,575
Tax credit in respect of R&D (180) (240) (250)
Depreciation and impairment of property, plant and equipment 1,960 2,309 4,567
Depreciation and impairment of right-of-use assets 1,253 1,248 2,462
Depreciation of investment property 3 3 6
Intangible asset amortisation 781 749 1,513
Loss/(profit) on disposal of property, plant and equipment 103 (51) 265
Profit on disposal of right-of-use assets - - (37)
Adjustments to contingent consideration (671) (2,147) (937)
Net fair value charge/(credit) on share based payments 255 (277) (137)
Release of loan provision - - (783)
Other non-cash adjustments (157) (618) (504)
Interest income (135) (178) (313)
Interest expense and borrowing costs 663 935 1,716
Share of results of associate and joint ventures (2,196) (1,892) (2,633)
IAS 19 income statement charge (excluding interest):
Administrative expenses 9 9 13
Changes in working capital (excluding the effects of
acquisitions):
(Increase)/decrease in inventories (2,783) (3,348) 4,811
(Increase)/decrease in receivables (7,872) (4,976) 3,862
Increase/(decrease) in payables 14,749 5,801 (3,479)
Cash generated from continuing operations 15,956 7,840 22,639
17. Related party transactions
The Group's significant related parties are its associate and joint ventures,
as disclosed in the Annual Report and Accounts 2020.
Sales to Purchases from Rent receivable from Net management charges Dividends receivable Amounts Amounts
(from)/to from owed from owed to
£'000 £'000 £'000 £'000 £'000 £'000 £'000
26 weeks to
27 February 2021
Associate 346 (60,865) 10 (69) 368 368 (20,539)
Joint ventures 373 (229) - 82 - 1,623 (102)
26 weeks to
29 February 2020
Associate 280 (55,183) 10 (69) 294 214 (24,334)
Joint ventures 238 (143) - 80 - 1,756 (2)
18. Alternative performance measures
The Interim Results include alternative performance measures ("APMs"), which
are not defined or specified under the requirements of IFRS. These APMs are
consistent with how business performance is measured internally and therefore
the Directors believe that these APMs provide stakeholders with additional
useful information on the Group's performance.
Alternative performance measure Definition and comments
EBITDA Earnings before interest, tax, depreciation, amortisation, profit/(loss) on
the disposal of non-current assets and before share of post-tax results of the
associate and joint ventures. EBITDA allows the user to assess the
profitability of the Group's core operations before the impact of capital
structure, debt financing and non-cash items such as depreciation and
amortisation.
Adjusted EBITDA Earnings before interest, tax, depreciation, amortisation, profit/(loss) on
the disposal of non-current assets, before share of post-tax results of the
associate and joint ventures and excluding items regarded by the Directors as
adjusting items. This measure is reconciled to statutory operating profit and
statutory profit before taxation in note 6. EBITDA allows the user to assess
the profitability of the Group's core operations before the impact of capital
structure, debt financing and non-cash items such as depreciation and
amortisation.
Adjusted operating profit Operating profit after adding back items regarded by the Directors as
adjusting items. This measure is reconciled to statutory operating profit in
the income statement and note 6. Adjusted results are presented because if
included, these adjusting items could distort the understanding of the Group's
performance for the period and the comparability between the periods
presented.
Adjusted profit before taxation Profit before taxation after adding back items regarded by the Directors as
adjusting items. This measure is reconciled to statutory profit before
taxation in the income statement and note 6. Adjusted results are presented
because if included, these adjusting items could distort the understanding of
the Group's performance for the period and the comparability between the
periods presented.
Adjusted earnings per share Profit attributable to the equity holders of the Company after adding back
items regarded by the Directors as adjusting items after tax divided by the
weighted average number of ordinary shares in issue during the period. This is
reconciled to basic earnings per share in note 9.
Adjusted diluted earnings per share Profit attributable to the equity holders of the Company after adding back
items regarded by the Directors as adjusting items after tax divided by the
weighted average number of ordinary shares in issue during the period adjusted
for the effects of any potentially dilutive options. Diluted earnings per
share is shown in note 9.
Net debt The net position of the Group's cash at bank and borrowings. Details of the
movement in borrowings is shown in note 12.
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