REG - Carr's Group PLC - Half-year Report <Origin Href="QuoteRef">CARRC.L</Origin> - Part 1

Carr'sAnnouncement

11/04/2016 07:05

RNS Number : 6935U
Carr's Group PLC
11 April 2016
Carr's Group plc
11 April 2016
CARR'S GROUP plc ("Carr's" or the "Group")
INTERIM RESULTS
"Diversity drives a resilient half year performance despite challenging market conditions"
Carr's (CARR.L), the Agriculture, Food and Engineering Group, announces results for the six months ended 27 February 2016.
Financial highlights
 Revenue down 9.4% to 189.1m (H1 2015: 208.6m)
 Operating profit up 0.5% to 9.6m (H1 2015: 9.6m)
 Profit before tax down 0.9% to 10.5m (H1 2015: 10.6m)
 Basic EPS up 4.7% to 8.9p (H1 2015: 8.5p)
 Adjusted EPS1 up 3.4% to 9.0p (H1 2015: 8.7p)
 First interim dividend up 2.7% to 0.95p (H1 2015: 0.925p)
 Net debt of 27.0m (24.4m as at 29 August 2015)
Commercial highlights
 On track first half performance demonstrating the strength of the Group's operational and geographic diversity
 Outstanding performance by the USA feed block business
 Strengthened retail network and product offering drives retail sales growth in UK Country Stores
 UK agricultural market conditions continue to deteriorate
 Strategy of focusing on the UK nuclear sector proving successful with new contracts awarded from Sellafield - as expected performance will be second half weighted
 Growth maintained in the Food division
Tim Davies, Chief Executive Officer, commented:
"The Group is operating in challenging markets, however our international presence and diversity has provided a robust H1 performance. Trading in the second half is as anticipated and we remain on track to meet the full year expectations of the Board.
The UK agricultural market has suffered from the depressed farm gate milk and livestock prices and we expect this to continue through 2016 and 2017, which will directly adversely impact our UK farm customers."
1Adjusted EPS is after adding back amortisation of intangibles and non-recurring items, e.g. acquisition related costs
Enquiries:
Carr's Group plc
Tim Davies (Chief Executive Officer)
Neil Austin (Group Finance Director)
01228 554 600
Powerscourt 
Nick Dibden
Sophie Moate
020 7250 1446
carrs@powerscourt-group.com
Notes to Editors
Carr's Group (CARR.L) is an international leader in the provision of essential industrial services focused on the Agriculture, Food and Engineering sectors. The Group offers a range of services including the manufacturing and supply of flour, robotic and remote handling equipment, farm machinery, feed blocks for livestock, and a UK network of rural stores, with a facility footprint spanning the UK, Europe and North America, supplying customers in 35 countries around the world.
Diversity Drives Resilient Performance 
Introduction
Carr's has delivered results in line with expectations despite operating in tough market conditions across all three divisions. This result demonstrates the resilience of the Group driven by its operational and geographic diversity. 
During December, the floods in the North of England affected a number of our sites and had a significant operational impact on the Lancaster feed mill and a major customer of our Cumbrian flour mill. Carr's has suffered no adverse financial impact as a result of the floods due to appropriate and comprehensive insurance cover, and because of the outstanding efforts of our employees the Group's affected sites returned to operation faster than expected.
The depressed farm gate milk price, challenging broader agricultural market and the mild weather conditions in the UK have resulted in the tough market conditions of H1 continuing into H2. The impact of this has been mitigated by the strong performance of our agriculture businesses in the USA. The Board remains confident that the Group will meet its expectations for the full year, however significant challenges are anticipated in the next financial year.
Business Review
During the 26 weeks ended 27 February 2016 the Group delivered a resilient performance and a satisfactory set of results. Group revenues were 189.1m, down 9.4% from the prior year (2015: 208.6m) primarily due to commodity price movements. Profit before tax decreased by 0.9% to 10.5m (2015: 10.6m). 
Group operating margins increased to 5.1% (2015: 4.6%), with Group operating profit of 9.6m (2015: 9.6m). The Group's share of profit after tax from associate and joint venture companies was 1.4m (2015: 1.6m). 
Basic earnings per share increased by 4.7% from 8.5p to 8.9p as a result of reductions to the UK rate of tax used to calculate deferred tax. 
Agriculture
The Agriculture division has reported profit in line with expectations for the half year. This is a resilient performance, which demonstrates the value of our geographic and business diversity, with a strong USA performance offsetting lower profit delivery in the UK and Europe. 
International
An outstanding performance from branded feed blocks, Smartlic and Feed in a Drum in the USA, resulted in sales volume growth of 11.7% (excluding joint ventures) year on year. This has been driven by favourable weather conditions, the ongoing increase in the size of the beef herds and continuing investment in operations. The new plant at Silver Springs, Nevada, is now fully commissioned and operational. It is assisting with meeting the increased demand on volume at the plant in Belle Fourche, South Dakota, whilst sales continue to build organically. The full benefit will be realised in the next financial year. 
Sales of our feed block, Crystalyx, into mainland Europe have fallen due to the continuing low farm gate milk price, with sales volumes down 5.4% year on year, and this is set to continue through H2. 
Following the launch of the new innovative product, Piglyx, which reduces stress levels in pigs, international export opportunities are being pursued, particularly into the Asian market. 
UK
Against a challenging backdrop of continuing mild winter weather and low farm gate milk and livestock prices, sales volumes of feed blocks are down 2.8% year on year. Manufactured animal feed has seen a very slight decline of 0.3% on last year, outperforming the sector which has seen a national decline of circa 4.3% on average. This outperformance has been driven by our ability to support farmers with technical advice, at a time when key strategic nutrition decisions have to be taken. Animal feed margins continue to be under pressure, due to the on-going competitive landscape. 
Declining farm incomes has resulted in considerable weakness in the machinery market, with sales down 11.7% year on year. This is expected to continue through the rest of this year and into the next financial year. 
Retail has performed well with the Country Store network across Northern England and Southern Scotland seeing an increase in like for like sales of 2% year on year. The business of Reid & Robertson based in Balloch, Ayr and Oban, acquired in June 2015, has been fully integrated and is making a positive contribution. During the period Green (Agriculture) Co, an agriculture merchant business based at Morpeth, was acquired, which strengthens the retail network and offering in Northumberland. 
Despite the mild autumn and winter, the fuel distribution business has performed well, with sales volumes up 6.2% year on year due to the increase in the size of the fleet operating out of two depots, Langwathby, Cumbria, and Hexham, Northumberland. 
The challenging UK farming environment is expected to have a continued impact on the Agriculture division during H2 and into the next financial year as farm incomes continue to be under pressure and farmers look to reduce input costs and delay replacing machinery. However, the diversification of the Agriculture division's product offering and geographic spread is expected to partially mitigate the impact, with the strength of the USA operations and the anticipated ongoing expansion of the beef herds through 2016 and into 2017 expected to continue to benefit the division. 
Food
The floods in Cumbria directly affected one of our major customers, which had a consequential impact on our sales volumes in the period, however underlying sales volumes have increased 0.4%. We do not anticipate any notable financial impact due to our business interruption insurance cover.
The underlying sales growth during H1 is in spite of the on-going changes in the consumer market, notably the decline in consumption of the traditional sliced loaf and the concurrent increase in bake-off products. The division's performance has also been assisted by the efficient and technologically advanced mill at Kirkcaldy and excellent long term relationships with customers. 
The 2015 UK wheat harvest was in excess of 16 million tonnes, although the quality was variable. The wheat price volatility in the market has continued, with significant price falls experienced in early 2016. The strategic port-side mill locations and the strength of our customer relationships mean that the division is well placed to respond to the changing market conditions. 
1After adjusting for volumes attributable to the affected customer, which are covered by insurance
Engineering
As previously reported, the Engineering division had a slow start to the year, partly due to the phasing of contracts and as the refocusing of the UK manufacturing business on nuclear started to gain traction. As a result H1 operating profit is down 58.2% year on year, but the full year expectations remain unchanged. Overall, revenues generated by the UK manufacturing businesses from the nuclear sector represented 55.4% of the total in the period against 20.5% in the corresponding period last year. 
The UK manufacturing businesses have been awarded several new contracts from Sellafield, with the new design business assisting in driving these opportunities. While H1 has been slower than forecast, work has now commenced on some of the newly won contracts and this is set to accelerate through H2. The challenge for the rest of the year is to minimise any contract delays, ensuring that the anticipated level of completion is achieved by the year end. The manufacturing businesses are benefitting from a strong contract pipeline, with orders through 2017. 
The remote handling businesses have performed well and in line with expectations, and this is set to continue in H2. Completion of the contract for two highly specialised A1000 robotic arms for the nuclear facility at Dounreay in Scotland was completed in the period. The final step of the three year long R&D project, Demo 2000, was successfully completed in December 2015. This project developed a robotic system for vessel inspection and cleaning, the first in the world to be certified for use in the most highly explosive environments. It has successfully undergone a live test in Statoils own test facility in Norway under explosive conditions. The customer will now undertake a live test in-situ at one of their operational facilities.
A product development programme has commenced, to ensure our remote handling technology remains at the forefront of the industry. 
Finance
Net debt has risen by 10.7% from 24.4m at 29 August 2015 to 27.0m, driven predominantly by working capital movements, both seasonal within Agriculture and also within the Engineering division. 
The Group's defined benefit pension scheme remains in surplus and this increased from 1.8m at 29 August 2015 to 3.9m. On 31 December 2015, the scheme was closed to future accrual. Deficit reduction contributions, which were ongoing for a number of years at 2.3m per annum, have now ceased as the scheme was fully funded at the last full actuarial valuation. 
Shareholders' Equity
Shareholders' equity at 27 February 2016 increased by 9.8% to 95.6m (29 August 2015: 87.1m), primarily due to the profit retained by the Group in the period. 
Dividend
A first interim dividend of 0.95 pence per ordinary share (2015: 0.925 pence per ordinary share), an increase of 2.7%, will be paid on 13 May 2016 to shareholders on the register on 22 April 2016. The ex-dividend date will be 21 April 2016. 
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 expected to change materially from those included on pages 15 to 17 of the Annual Report and Accounts 2015. 
The principal risks and uncertainties are as follows: 
 Health and safety
 People 
 Business continuity
 Commodity costs
 Product innovation
 Strategic partners
 Treasury
 Non-compliance with legislation and regulation
 Acquisitions
 Customer demand
 Reliance on key customers
 Political instability
 Reliance on key ingredients
 Defined benefit pension scheme 
Board Changes
On 1 October 2015 Ian Wood was appointed to the Board as a Non-Executive Director. He was previously the Commercial Director, International Business Development in Centrica (formerly British Gas) and has held a number of positions within Centrica covering engineering, customer services, industrial and commercial marketing, and energy trading within Europe and North America. 
Outlook
The Group is operating in difficult and challenging markets, which show no signs of abating in the short term. However, the Group's geographic and operational diversity offers resilience, which combined with the continued investment in our assets ensures that the Group is well placed to respond to these challenges. Carr's remains on track to meet the full year expectations of the Board. The Board recognises that the difficult agriculture market will continue through 2017, which it anticipates will impact the Group's performance in the next financial year. 
The Group is focused on generating organic growth and is committed to driving innovation through research and development to ensure it remains at the forefront of all the markets in which it operates. In conjunction with this, Carr's continues to review acquisition opportunities which will support future growth. 
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the 26 weeks ended 27 February 2016
 
(Restated)
(Restated)
26 weeks ended
27 February
2016
26 weeks ended
28 February 2015
52 weeks ended
29 August
2015
Notes
'000
'000
'000
Continuing operations
Revenue
6
189,073
208,638
411,565
Cost of sales
(161,228)
(179,535)
(356,708)
Gross profit
27,845
29,103
54,857
Net operating expenses
(18,206)
(19,515)
(38,623)
Group operating profit
6
9,639
9,588
16,234
Finance income
119
154
338
Finance costs
(662)
(717)
(1,412)
Share of post-tax profit in associate and joint ventures
1,423
1,586
2,307
Profit before taxation
6
10,519
10,611
17,467
Taxation
(1,778)
(2,208)
(3,774)
Profit for the period
8,741
8,403
13,693
Profit attributable to:
Equity shareholders
7,990
7,626
11,989
Non-controlling interests
751
777
1,704
8,741
8,403
13,693
Earnings per share (pence)
Basic
7
8.9
 8.5
13.4
Diluted 
7
 8.6
 8.2
12.9
Adjusted
7
9.0
 8.7
13.6
Diluted adjusted
7
8.6
 8.3
13.2
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 26 weeks ended 27 February 2016
26 weeks ended
27 February
2016
26 weeks ended
28 February 2015
52 weeks ended
29 August
2015
Notes
'000
'000
'000
Profit for the period
8,741
8,403
13,693
Other comprehensive income/(expense)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation gains/(losses) arising on
 translation of overseas subsidiaries
2,019
(157)
20
Items that will not be reclassified subsequently to profit or loss:
Actuarial gains/(losses) on retirement benefit asset:
- Group
12
879
(1,959)
(2,848)
- Share of associate
-
-
70
Taxation (charge)/credit on actuarial movement on 
 retirement benefit asset:
- Group
(158)
392
570
- Share of associate
-
-
(14)
Other comprehensive income/(expense) for the period, 
 net of tax
2,740
(1,724)
(2,202)
Total comprehensive income for the period
11,481
6,679
11,491
Total comprehensive income attributable to:
Equity shareholders
10,730
5,902
9,787
Non-controlling interests
751
777
1,704
11,481
6,679
11,491
UNAUDITED CONSOLIDATED BALANCE SHEET
As at 27 February 2016
As at
27 February
2016
As at
28 February
 2015
As at
29 August
2015
Notes
'000
'000
'000
Non-current assets
Goodwill
9
10,931
10,040
10,849
Other intangible assets
9
413
454
448
Property, plant and equipment
9
60,391
56,629
58,385
Investment property
9
626
646
636
Investment in associate
9,196
7,788
8,439
Interest in joint ventures
6,082
5,493
5,012
Other investments
72
88
79
Financial assets
- Non-current receivables
150
501
50
Retirement benefit asset
12
3,927
1,198
1,767
Deferred tax assets
29
1,085
861
91,817
83,922
86,526
Current assets
Inventories
39,113
36,872
35,031
Trade and other receivables
70,736
68,482
64,454
Current tax assets
401
330
839
Financial assets
- Derivative financial instruments
2
108
50
- Cash and cash equivalents
10
8,719
17,943
16,488
118,971
123,735
116,862
Total assets
210,788
207,657
203,388
Current liabilities
Financial liabilities
- Borrowings
10
(10,286)
(16,079)
(15,157)
- Derivative financial instruments
(132)
(73)
(72)
Trade and other payables
(57,302)
(56,958)
(54,496)
Current tax liabilities
(980)
(1,132)
(472)
(68,700)
(74,242)
(70,197)
Non-current liabilities
Financial liabilities
- Borrowings
10
(25,447)
(27,876)
(25,744)
Deferred tax liabilities
(4,173)
(4,123)
(4,184)
Other non-current liabilities
(4,226)
(6,848)
(4,300)
(33,846)
(38,847)
(34,228)
Total liabilities
(102,546)
(113,089)
(104,425)
Net assets
108,242
94,568
98,963
Shareholders' equity
Share capital
13
2,246
2,237
2,244
Share premium
13
8,657
8,498
8,615
Equity compensation reserve
1,351
904
1,138
Foreign exchange reserve
1,504
(692)
(515)
Other reserve
856
869
862
Retained earnings
80,946
71,789
74,706
Total shareholders' equity
95,560
83,605
87,050
Non-controlling interests
12,682
10,963
11,913
Total equity
108,242
94,568
98,963
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 26 weeks ended 27 February 2016
 
 Share
 Capital
Share Premium
Equity Compensation Reserve
 Foreign Exchange
Reserve
 Other
Reserve
Retained Earnings
Total Shareholders' Equity
Non-Controlling Interests
Total Equity
 '000
'000
'000
 '000
 '000
'000
'000
'000
'000
At 30 August 2015
2,244
 8,615
1,138
(515)
862
74,706
87,050
11,913
98,963
Profit for the period
-
 -
 -
-
-
7,990
7,990
751
8,741
Other comprehensive income
 -
 -
 -
2,019
-
721
2,740
-
2,740
Total comprehensive income
 -
 -
 -
2,019
-
8,711
10,730
751
11,481
Dividends paid
-
 -
 -
-
-
(2,492)
(2,492)
-
(2,492)
Equity-settled share based payment transactions, net of tax
 -
 -
 213
-
-
15
228
18
246
Allotment of shares
2
 42
 -
-
-
-
44
-
44
Transfer
-
 -
 -
-
(6)
6
-
-
-
At 27 February 2016
2,246
 8,657
 1,351
1,504
856
80,946
95,560
12,682
108,242
At 31 August 2014
2,235
 8,453
 640
(535)
875
67,996
79,664
10,163
89,827
Profit for the period
-
 -
 -
-
-
7,626
7,626
777
8,403
Other comprehensive expense
 -
 -
 -
(157)
-
(1,567)
(1,724)
-
(1,724)
Total comprehensive (expense)/
 Income
 -
 -
 -
(157)
-
6,059
5,902
777
6,679
Dividends paid
-
 -
 -
-
-
(2,280)
(2,280)
-
(2,280)
Equity-settled share based payment transactions, net of tax
 -
 -
 264
-
-
8
272
23
295
Allotment of shares
2
 45
 -
-
-
-
47
-
47
Transfer
-
 -
 -
-
(6)
6
-
-
-
At 28 February 2015
2,237
 8,498
 904
(692)
869
71,789
83,605
10,963
94,568
At 31 August 2014
2,235
 8,453
 640
(535)
875
67,996
79,664
10,163
89,827
Profit for the period
-
 -
 -
-
-
11,989
11,989
1,704
13,693
Other comprehensive income/(expense)
-
 -
 -
20
-
(2,222)
(2,202)
-
(2,202)
Total comprehensive income 
 -
 -
 -
20
-
9,767
9,787
1,704
11,491
Dividends paid
-
 -
 -
-
-
(3,110)
(3,110)
-
(3,110)
Equity-settled share based payment transactions, net of tax
 -
 -
 498
-
-
40
538
46
584
Allotment of shares
9
 162
 -
-
-
-
171
-
171
Transfer
-
 - 
 -
-
(13)
13
-
-
-
At 29 August 2015
2,244
 8,615
1,138
(515)
862
74,706
87,050
11,913
98,963
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 26 weeks ended 27 February 2016
26 weeks ended
27 February 2016
26 weeks
ended
28 February
2015
52 weeks
ended
29 August
2015
Notes
'000
'000
'000
Cash flows from operating activities
Cash generated from operations
15
1,956
6,368
15,127
Interest received
77
96
194
Interest paid
(642)
(687)
(1,380)
Tax paid
(117)
(1,571)
(3,965)
Net cash generated from operating activities
1,274
4,206
9,976
Cash flows from investing activities
Acquisition of subsidiaries/businesses (net of cash 
 acquired)
(265)
(1,246)
(1,749)
Return of investment in joint venture
-
-
488
Loan repaid by joint ventures
2,055
76
129
Loan repaid by associate
-
-
500
Other loans
(70)
270
220
Purchase of intangible assets
(37)
(3)
(15)
Proceeds from sale of property, plant and equipment
178
313
462
Purchase of property, plant and equipment
(3,348)
(2,517)
(5,970)
Purchase of investments
-
(10)
-
Redemption of preference shares in joint venture
-
-
150
Net cash used in investing activities
(1,487)
(3,117)
(5,785)
Cash flows from financing activities
Proceeds from issue of ordinary share capital
44
48
171
Net proceeds from issue of new bank loans
143
8,104
9,061
Finance lease principal repayments
(1,160)
(1,171)
(2,395)
Repayment of loan from related party
-
-
(500)
Repayment of borrowings
(544)
(4,198)
(4,880)
Decrease in other borrowings
(4,438)
(1,171)
(3,638)
Dividends paid to shareholders
(2,492)
(2,280)
(3,110)
Receipt of grant income
-
300
500
Net cash used in financing activities
(8,447)
(368)
(4,791)
Effects of exchange rate changes
720
(107)
(150)
Net (decrease)/increase in cash and cash equivalents
(7,940)
614
(750)
Cash and cash equivalents at beginning of the period
16,275
17,025
17,025
Cash and cash equivalents at end of the period
8,335
17,639
16,275
Cash and cash equivalents consist of:
Cash and cash equivalents per the balance sheet
8,719
17,943
16,488
Bank overdrafts included in borrowings
(384)
(304)
(213)
8,335
17,639
16,275
Statement of Directors' responsibilities
The Directors confirm that these condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
 an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
 material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The Directors are listed in the Annual Report and Accounts 2015, including Ian Wood who was appointed to the Board on 1 October 2015. A list of current Directors is maintained on the website: www.carrsgroup.com
On behalf of the Board
Tim Davies Neil Austin
Chief ExecutiveGroup Finance Director
11 April 2016 11 April 2016
Unaudited notes to condensed interim financial information
1. General information
The Group operates across three divisions of Agriculture, Food, 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 11 April 2016.
These condensed interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the 52 weeks ended 29 August 2015 were approved by the Board of Directors on 11 November 2015 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
2. Basis of preparation
These condensed interim financial statements for the 26 weeks ended 27 February 2016 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. The condensed interim financial statements should be read in conjunction with the annual financial statements for the 52 weeks ended 29 August 2015, which have been prepared in accordance with IFRSs as adopted by the European Union.
The Directors have made suitable enquiries, and based on financial performance to date and available banking facilities they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its condensed interim financial statements.
3. Accounting policies
The accounting policies adopted are consistent with those of the previous financial year with the exception that the net interest on the net defined benefit retirement asset has been reclassified from operating profit to interest income in the consolidated income statement. This has had no impact on the profit before tax reported for each period presented.
Taxes on income in the interim periods are accrued based on management's estimate of the weighted average annual income tax rate expected for the full financial year.
4. 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 2015, with the exception of changes in estimates that are required in determining the provision for income taxes.
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 2015. There have been no changes in risk management practices since the year end.
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. Operating segments have been identified as Agriculture, Food and Engineering. Performance is assessed using operating profit, which is measured in a manner consistent with the financial statements. Sales between segments are carried out at arm's length. 
The following tables present revenue, profit and asset information regarding the Group's operating segments for the 26 weeks ended 27 February 2016 and the comparative periods.
Agriculture
Food
Engineering
Group
'000
'000
'000
'000
26 weeks ended 27 February 2016
Total segment revenue 
139,329
35,717
14,080
189,126
Inter segment revenue
(17)
-
(36)
(53)
Revenue from external customers
139,312
35,717
14,044
189,073
EBITDA
8,621
2,588
1,098
12,307
Depreciation of property, plant and equipment
(1,218)
(930)
(500)
(2,648)
Depreciation of investment property
(3)
(7)
-
(10)
Profit on the disposal of property, plant and equipment
80
-
-
80
Amortisation of intangible assets
(50)
(7)
(33)
(90)
Operating profit
7,430
1,644
565
9,639
Finance income
119
Finance costs
(662)
9,096
Share of post-tax profit of associate
757
Share of post-tax profit of joint ventures
666
Profit before taxation
10,519
Segment gross assets
107,760
47,277
42,240
197,277
Other and consolidation adjustments
13,511
Total gross assets
210,788
 Earnings before interest, tax, depreciation and amortisation (and before profit/(loss) on the disposal of property, plant and equipment)
6. Operating segment information (continued)
Agriculture
Food
Engineering
Group
'000
'000
'000
'000
26 weeks ended 28 February 2015 (restated)
Total segment revenue 
149,793
41,698
17,216
208,707
Inter segment revenue
(43)
-
(26)
(69)
Revenue from external customers
149,750
41,698
17,190
208,638
EBITDA
7,892
2,476
1,828
12,196
Depreciation of property, plant and equipment
(1,134)
(952)
(440)
(2,526)
Depreciation of investment property
(3)
(7)
-
(10)
Profit on the disposal of property, plant and equipment
19
-
16
35
Amortisation of intangible assets
(47)
(8)
(52)
(107)
Operating profit
6,727
1,509
1,352
9,588
Finance income
154
Finance costs
(717)
9,025
Share of post-tax profit of associate
904
Share of post-tax profit of joint ventures
682
Profit before taxation
10,611
Segment gross assets
114,462
48,703
33,829
196,994
Other and consolidation adjustments
10,663
Total gross assets
207,657
 Net interest on the net defined benefit retirement asset previously included within the IAS19 income statement (credit)/charge in operating profit has been reclassified to interest income.
Agriculture
Food
Engineering
Group
'000
'000
'000
'000
52 weeks ended 29 August 2015 (restated)
Total segment revenue 
297,858
80,280
33,588
411,726
Inter segment revenue
(115)
-
(46)
(161)
Revenue from external customers
297,743
80,280
33,542
411,565
EBITDA
12,907
4,713
3,875
21,495
Depreciation of property, plant and equipment
(2,384)
(1,860)
(815)
(5,059)
Depreciation of investment property
(6)
(14)
-
(20)
Profit/(loss) on the disposal of property, plant and
 equipment
38
12
(24)
26
Amortisation of intangible assets
(100)
(15)
(93)
(208)
Operating profit
10,455
2,836
2,943
16,234
Finance income
338
Finance costs
(1,412)
15,160
Share of post-tax profit of associate
1,500
Share of post-tax profit of joint ventures
807
Profit before taxation
17,467
Segment gross assets
112,038
48,412
33,991
194,441
Other and consolidation adjustments
8,947
Total gross assets
203,388
7. Earnings per share
Non-recurring items and amortisation that are charged or credited to profit do not relate to the profitability of the Group on an ongoing basis. Therefore an adjusted earnings per share is presented as follows:
26 weeks
ended
27 February 2016
26 weeks ended
28 February 2015
52 weeks
ended
29 August
2015
'000
'000
'000
Earnings
7,990
7,626
11,989
Amortisation and non-recurring items:
Amortisation of intangible assets
90
107
208
Tax relief on amortisation
(21)
(26)
(52)
Acquisition related costs
-
35
58
Earnings - adjusted
8,059
7,742
12,203
 Disallowable for tax purposes
Number
Number
Number
Weighted average number of ordinary shares in issue
89,819,777
89,433,051
89,574,461
Potentially dilutive share options
3,468,339
3,306,934
3,098,077
93,288,116
92,739,985
92,672,538
Earnings per share (pence)
Basic 
8.9p
8.5p
13.4p
Diluted 
8.6p
8.2p
12.9p
Adjusted 
9.0p
8.7p
13.6p
Diluted adjusted 
8.6p
8.3p
13.2p
8. Dividends
An interim dividend of 830,281 that relates to the period to 29 August 2015 was paid on 9 October 2015, and a final dividend of 1,662,111 was paid on 15 January 2016.
In addition, an interim dividend of 0.95p per share (2015: 0.925p per share) has been approved by the Directors. It is payable to shareholders on the register at 22 April 2016. This interim dividend, amounting to 854,968 (2015: 829,726), has not been recognised as a liability in this interim financial information. It will be recognised in shareholders' equity in the 53 weeks to 3 September 2016.
9. Intangible assets, property, plant and equipment and investment property
Goodwill
Other
Intangible assets
Property,
plant and equipment
Investment property
'000
'000
'000
'000
26 weeks ended 27 February 2016
Opening net book amount at 30 August 2015
10,849
448
58,385
636
Exchange differences
2
18
862
-
Business acquired
80
-
23
-
Additions
-
37
3,867
-
Disposals
-
-
(98)
-
Depreciation and amortisation
-
(90)
(2,648)
(10)
Closing net book amount at 27 February 2016
10,931
413
60,391
626
26 weeks ended 28 February 2015
Opening net book amount at 31 August 2014
9,798
499
56,626
656
Exchange differences
2
(22)
(322)
-
Subsidiaries acquired
240
81
139
-
Additions
-
3
2,941
-
Disposals
-
-
(229)
-
Depreciation and amortisation
-
(107)
(2,526)
(10)
Closing net book amount as at 28 February 2015
10,040
454
56,629
646
Capital commitments contracted, but not provided for, by the Group at the period end amounts to 758,000 (2015: 1,412,000).
10. Borrowings and loans 
As at
27 February
2016
As at 
28 February 2015
As at 
29 August
2015
'000
'000
'000
Current 
10,286
16,079
15,157
Non-current
25,447
27,876
25,744
Total borrowings and loans
35,733
43,955
40,901
Cash and cash equivalents 
(8,719)
(17,943)
(16,488)
Net debt
27,014
26,012
24,413
Undrawn facilities
26,805
19,386
19,007
Movements in borrowings are analysed as follows:
26 weeks ended 27 February 2016
'000
Opening amount as at 30 August 2015
40,901
Exchange differences
67
New bank loans and finance leases
718
Finance lease principal repayments
(1,160)
Repayments of borrowings
(544)
Decrease in other borrowings
(4,438)
Release of deferred borrowing costs
18
Net increase to bank overdraft
171
Closing amount as at 27 February 2016
35,733
10. Borrowings and loans (continued)
26 weeks ended 28 February 2015
'000
Opening amount as at 31 August 2014
41,877
New bank loans and finance leases
8,541
Finance lease principal repayments
(1,171)
Repayments of borrowings
(4,198)
Decrease in other borrowings
(1,171)
Release of deferred borrowing costs
16
Net increase to bank overdraft
61
Closing amount as at 28 February 2015
43,955
11. Financial instruments
IFRS13 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
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. 
The Group holds shares in several private limited companies. These have been classified as unquoted investments for which fair value cannot be reliably measured and are held at cost less accumulated impairment. Had fair value been applied this financial asset would have been Level 3.
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.
With the exception of those detailed above, the Group's financial instruments are measured at amortised cost.
12. Retirement benefit asset
The amounts recognised within the Income Statement were as follows:
26 weeks ended
27 February 2016
26 weeks ended
28 February 2015
52 weeks
ended
29 August
2015
'000
'000
'000
Service cost - including current service costs, past service costs and 
 settlements
(427)
149
31
Service cost - administrative cost
80
153
230
Net interest on the net defined benefit asset
(46)
(54)
(141)
(393)
248
120
As a result of the closure to future accrual on 31 December 2015 a negative past service cost, net of associated costs, of approximately 350,000 has been recognised in the income statement. 
12. Retirement benefit asset (continued)
Net interest on the defined benefit retirement asset is recognised within interest income.
The amounts recognised in the Balance Sheet were as follows:
As at
27 February
2016
 As at 
 28 February
 2015
 As at
 29 August 
 2015
'000
 '000
 '000
Present value of funded defined benefit obligations
(59,040)
(66,136)
(60,352)
Fair value of scheme assets
62,967
67,334
62,119
Surplus in the balance sheet
3,927
1,198
1,767
Actuarial gains of 879,000 (2015: losses of 1,959,000) have been reported in the Statement of Comprehensive Income. The surplus has increased over the period since 29 August 2015. The main reasons for this include the contributions paid by the employer to meet the funding deficit and the cessation to future accrual from 31 December 2015. 
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.
13. Share capital
Allotted and fully paid ordinary shares of 2.5p each
 Number of  shares 
Share capital 
'000
 Share
premium  '000
 Total
 '000
Opening balance as at 30 August 2015
89,760,090
2,244
8,615
10,859
Proceeds from shares issued:
- share option scheme
60,000
1
27
28
- share save scheme
26,584
1
15
16
At 27 February 2016
89,846,674
2,246
8,657
10,903
Opening balance at 31 August 2014
89,401,900
2,235
8,453
10,688
Proceeds from shares issued:
- share option scheme
90,000
2
41
43
- share save scheme
8,190
-
4
4
At 28 February 2015
89,500,090
2,237
8,498
10,735
Employee share schemes: options exercised during the period to 27 February 2016 resulted in 26,584 shares being issued (2015: 8,190 shares), with exercise proceeds of 15,765 (2015: 4,685) under the share save scheme and 60,000 shares being issued (2015: 90,000 shares), with exercise proceeds of 28,560 (2015: 42,840) under the approved share option scheme. The related weighted average price of the shares exercised was 0.593 (2015: 0.572) per share and 0.476 (2015: 0.476) respectively.
Since the period end there was a further allotment of 150,000 shares with a nominal value of 3,750 due to the exercise of share options.
14. Acquisition
On 4 September 2015 Carrs Billington Agriculture (Sales) Limited acquired the business and certain assets of Green (Agriculture) Co, an agricultural merchant, for net cash consideration of 0.3m.
The primary reason for the business combination was the expansion of the existing Agriculture business.
Goodwill represented the excess of the consideration paid over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities acquired.
Following a review of the acquisition for separately identifiable intangible assets where fair value can be reliably measured the Directors do not consider there to be any material intangible assets requiring recognition. 
Revenue of 428,000 and profit before taxation of 4,000 has been generated since the date of acquisition.
There were no external acquisition related costs to be recognised in the consolidated income statement.
The assets recognised in the acquisition accounting are set out below:
Fair value 
'000
Property, plant and equipment
23
Inventories
112
Receivables
50
Assets acquired
185
Goodwill
80
265
Satisfied by:
Cash consideration 
265
Had the acquisition of Green (Agriculture) Co occurred at the beginning of the accounting period the Group's revenue and profit before taxation for the period would not be materially different to the amounts actually recognised in the consolidated income statement.
15. Cash generated from operations
(Restated)
(Restated)
26 weeks ended
27 February 2016
26 weeks ended
28 February 2015
52 weeks
ended
29 August
2015
'000
'000
'000
Profit for the period from operations
8,741
8,403
13,693
Adjustments for:
Tax
1,778
2,208
3,774
Tax credit in respect of R&D
(96)
(489)
(623)
Depreciation of property, plant and equipment
2,648
2,526
5,059
Depreciation of investment property
10
10
20
Intangible asset amortisation
90
107
208
Profit on disposal of property, plant and equipment
(80)
(35)
(26)
Loss on disposal of investment
10
-
-
Amortisation of grants
(74)
(130)
(120)
Net fair value loss on share based payments
247
295
584
Net foreign exchange differences
(180)
(54)
53
Net fair value losses/(gains) on derivative financial instruments in operating profit
108
(50)
7
Finance costs:
Interest income
(119)
(154)
(338)
Interest expense and borrowing costs
680
733
1,445
Share of profit from associate and joint ventures
(1,423)
(1,586)
(2,307)
Pension contributions - deficit reduction
(780)
(1,170)
(2,340)
 - ongoing
(108)
(179)
(339)
IAS19 income statement (credit)/charge (excluding interest)
(347)
302
261
Changes in working capital (excluding the effects of 
 acquisitions):
Increase in inventories
(3,970)
(3,418)
(967)
(Increase)/decrease in receivables
(8,015)
(4,168)
320
Increase/(decrease) in payables
2,836
3,217
(3,237)
Cash generated from operations
1,956
6,368
15,127
 Net interest on the net defined benefit retirement asset previously included within the IAS19 income statement (credit)/charge has been reclassified to interest income. 
16. Related party transactions
The Group's significant related parties are its associate and joint ventures, as disclosed in the Annual Report and Accounts 2015.
Transactions and balances with the associate and joint ventures were all undertaken on an arm's length basis in the normal course of business and are as follows:
Sales to
Purchases from
Rent receivable from
Net management charges (to)/from
Amounts owed from
Amounts owed to
'000
'000
'000
'000
'000
'000
26 weeks to 27 February 2016
Associate
327
(44,977)
9
(57)
616
(21,050)
Joint ventures
186
(661)
-
84
1,952
(48)
26 weeks to 28 February 2015
Associate
550
(48,279)
9
(14)
1,221
(17,369)
Joint ventures
72
(592)
-
63
3,668
(39)

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IR AKFDPQBKDNQK