REG - Carr's Group PLC - Half-year Report <Origin Href="QuoteRef">CARRC.L</Origin> - Part 2
12/04/2017 07:07
- Part 2: For the preceding part double click ID:nRSL2512Ca
Depreciation of investment property (3) - (3)
Profit/(loss) on the disposal of property, plant and equipment 34 (23) 11
Amortisation of intangible assets (4) (45) (49)
Operating profit (before exceptional items) 7,291 252 7,543
Exceptional items (634)
Operating profit 6,909
Finance income 95
Finance costs (430)
6,574
Share of post-tax profit of associate 903
Share of post-tax profit of joint ventures 805
Profit before taxation (before exceptional items) 8,916
Exceptional items (634)
Profit before taxation from continuing operations 8,282
Segment gross assets 147,908 54,929 202,837
¹ Earnings before interest, tax, depreciation and amortisation (and before
profit/(loss) on the disposal of property, plant and equipment)
Agriculture Engineering Group
£'000 £'000 £'000
26 weeks ended 27 February 2016
Total segment revenue 139,329 14,080 153,409
Inter segment revenue (17) (36) (53)
Revenue from external customers 139,312 14,044 153,356
EBITDA¹ 8,141 1,062 9,203
Depreciation of property, plant and equipment (1,218) (500) (1,718)
Depreciation of investment property (3) - (3)
Profit on the disposal of property, plant and equipment 80 - 80
Amortisation of intangible assets (50) (33) (83)
Operating profit 6,950 529 7,479
Finance income 119
Finance costs (516)
7,082
Share of post-tax profit of associate 757
Share of post-tax profit of joint ventures 666
Profit before taxation from continuing operations 8,505
Segment gross assets 125,907 44,075 169,982
Food division gross assets 45,359
215,341
Agriculture Engineering Group
£'000 £'000 £'000
53 weeks ended 3 September 2016
Total segment revenue 284,836 30,192 315,028
Inter segment revenue (63) (58) (121)
Revenue from external customers 284,773 30,134 314,907
EBITDA¹ 12,924 3,555 16,479
Depreciation of property, plant and equipment (2,539) (1,043) (3,582)
Depreciation of investment property (6) - (6)
Profit on the disposal of property, plant and equipment 12 72 84
Amortisation of intangible assets (133) (72) (205)
Operating profit 10,258 2,512 12,770
Finance income 236
Finance costs (1,009)
11,997
Share of post-tax profit of associate 1,239
Share of post-tax profit of joint ventures 842
Profit before taxation from continuing operations 14,078
Segment gross assets 149,777 52,376 202,153
7. Non-recurring exceptional items
26 weeks ended 4 March 2017 26 weeks ended 27 February 2016 53 weeksended3 September2016
£'000 £'000 £'000
Non-recurring exceptional items:
Business combination expenses 589 - -
Restructuring costs 45 - -
634 - -
Business combination expenses relate to acquisition costs incurred in the
period as well as contingent consideration in relation to the prior year
acquisition of Phoenix Feeds Limited which is explained further below.
Phoenix Feeds Limited was acquired on 1 June 2016 for cash consideration of
£1,744,000 including £490,000 of contingent consideration. The contingent
consideration is linked to the continued employment of key personnel and
therefore in accordance with IFRS 3 this was not recognised as consideration
in the acquisition accounting in the 53 weeks ended 3 September 2016 and is
instead being recognised in the income statement over a two year period.
Given the nature of the payment it has been recognised as a non-recurring
item.
Restructuring costs comprise redundancy costs.
8. 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 4 March 2017 26 weeks ended 27 February 2016 53 weeksended3 September2016
£'000 £'000 £'000
Continuing operations
Earnings 5,802 5,962 9,638
Amortisation and non-recurring items:
Amortisation of intangible assets 49 83 205
Business combination expenses 589 - 7
Restructuring costs 45 - -
Tax effect of the above (23) (20) (47)
Earnings - adjusted 6,462 6,025 9,803
Discontinued operations
Earnings - 2,028 2,817
Amortisation and non-recurring items:
Amortisation of intangible assets - 7 14
Profit on disposal of subsidiary - - (39)
Tax effect of the above - (1) -
Earnings - adjusted - 2,034 2,792
Number Number Number
Weighted average number of ordinary shares in issue 91,317,071 89,819,777 90,087,357
Potentially dilutive share options 636,760 3,468,339 1,946,798
91,953,831 93,288,116 92,034,155
Earnings per share (pence)
Continuing operations
Basic 6.4p 6.6p 10.7p
Diluted 6.3p 6.4p 10.5p
Adjusted 7.1p 6.7p 10.9p
Diluted adjusted 7.0p 6.5p 10.7p
Discontinued operations
Basic - 2.3p 3.1p
Diluted - 2.2p 3.0p
Adjusted - 2.3p 3.1p
Diluted adjusted - 2.2p 3.0p
9. Dividends
An interim dividend of £866,393 that relates to the period to 3 September 2016
was paid on 7 October 2016, and a final dividend of £1,736,169 was paid on 13
January 2017. A special dividend of £15,996,351 was paid on 7 October 2016
following the disposal of Carr's Flour Mills Limited.
In addition, an interim dividend of 0.95p per share (2016: 0.95p per share)
has been approved by the Directors. It is payable to shareholders on the
register at 21 April 2017. This interim dividend, amounting to £868,258
(2016: £854,968), has not been recognised as a liability in this interim
financial information. It will be recognised in shareholders' equity in the
52 weeks to 2 September 2017.
10. Intangible assets, property, plant and equipment and investment property
Goodwill Otherintangible assets Property,plant and equipment Investment property
£'000 £'000 £'000 £'000
26 weeks ended 4 March 2017
Opening net book amount at 4 September 2016 11,440 286 35,811 182
Exchange differences (144) 5 752 -
Subsidiary acquired 5,574 160 341 -
Additions - 67 2,373 -
Disposals - - (165) -
Depreciation and amortisation - (49) (1,977) (3)
Closing net book amount at 4 March 2017 16,870 469 37,135 179
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 as at 27 February 2016 10,931 413 60,391 626
Capital commitments contracted, but not provided for, by the Group at the
period end amounts to
£687,000 (2016: £758,000).
11. Borrowings and loans
As at4 March 2017 (Restated)1 As at 27 February 2016 As at 3 September2016
£'000 £'000 £'000
Current 19,579 14,839 21,642
Non-current 13,082 25,447 18,625
Total borrowings and loans 32,661 40,286 40,267
Cash and cash equivalents (21,176) (13,272) (48,411)
Net debt/(cash) 11,485 27,014 (8,144)
Undrawn facilities 34,494 26,805 23,014
¹ Restated by £4,553,000 for the grossing up of cash and cash equivalents and bank overdrafts with right of offset within the same banking facility.
Movements in borrowings are analysed as follows:
26 weeks ended 4 March 2017 £'000
Opening amount as at 4 September 2016 40,267
Exchange differences (132)
Subsidiary acquired 89
New finance leases 1,025
Finance lease principal repayments (394)
Repayments of borrowings (5,895)
Increase in other borrowings 743
Release of deferred borrowing costs 18
Net decrease to bank overdraft (3,060)
Closing amount as at 4 March 2017 32,661
26 weeks ended 27 February 2016 £'000
Opening amount as at 30 August 2015 (restated by £3,564,000) 44,465
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 1,160
Closing amount as at 27 February 2016 (restated by £4,553,000) 40,286
12. 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.
13. Retirement benefit asset
The amounts recognised within the Income Statement were as follows:
26 weeks ended4 March2017 26 weeks ended 27 February 2016 53 weeksended3 September2016
£'000 £'000 £'000
Service cost - including current service costs, past service costsand settlements - (427) (426)
Service cost - administrative cost - 80 139
Net interest on the net defined benefit asset (3) (46) (94)
(3) (393) (381)
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 in the 26 weeks ended 27 February 2016 and
in the 53 weeks ended 3 September 2016.
Net interest on the defined benefit retirement asset is recognised within
interest income.
The amounts recognised in the Balance Sheet were as follows:
As at4 March2017 As at 27 February 2016 As at 3 September 2016
£'000 £'000 £'000
Present value of funded defined benefit obligations (68,180) (59,040) (73,355)
Fair value of scheme assets 73,912 62,967 73,666
Surplus in funded scheme 5,732 3,927 311
Actuarial gains of £5,418,000 (2016: £879,000) have been reported in the
Statement of Comprehensive Income. The surplus has increased over the period
since 3 September 2016 mainly as a result of improving market conditions.
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.
14. 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 4 September 2016 91,192,804 2,280 9,111 11,391
Proceeds from shares issued:
- Treasury/LTIP 178,027 4 - 4
- share save scheme 24,710 1 18 19
At 4 March 2017 91,395,541 2,285 9,129 11,414
Opening balance 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
Employee share schemes: options exercised during the period to 4 March 2017
resulted in 24,710 shares being issued (2016: 26,584 shares), with exercise
proceeds of £19,177 (2016: £15,765) under the share save scheme and nil shares
being issued (2016: 60,000 shares), with exercise proceeds of £nil (2016:
£28,560) under the approved share option scheme. The related weighted average
price of the shares exercised was £0.776 (2016: £0.593) per share and £nil
(2016: £0.476) respectively.
In addition 178,027 shares were issued in the period and held initially as
Treasury shares. These shares were subsequently used to satisfy the share
awards under the LTIP scheme which were exercisable in November 2016.
15. Acquisition
On 24 October 2016 Wälischmiller Engineering GmbH ("Wälischmiller") acquired
the entire issued share capital of STABER GmbH ("STABER") for cash
consideration of E7.85m including deferred consideration of E2.0m, which is
payable by 30 June 2018 at the latest.
STABER and Wälischmiller have been working together closely for over 50 years
and STABER has most recently been a key supplier of parts for the remote
handling business. STABER has designed and developed specialised intellectual
property ("IP") which will be strategically beneficial to Wälischmiller in
both the near and long term. This IP will accelerate the ongoing strategic
development work on the Telbot and the Demo 2000 Telbot by Wälischmiller.
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.
STABER has generated intra segmental revenue of £205,000 which has been
eliminated on consolidation and incurred a loss before taxation of £9,000
since the date of acquisition.
Acquisition related costs amounted to £190,000 which have been recognised
within exceptional items in the consolidated income statement.
The assets and liabilities provisionally recognised in the acquisition
accounting are set out below:
Provisional fair value
£'000
Intangible assets 160
Property, plant and equipment 341
Inventories 543
Receivables 307
Cash and cash equivalents 506
Borrowings (89)
Payables (230)
Deferred grant income (46)
Taxation
Current tax (39)
Deferred tax (43)
Net assets acquired 1,410
Goodwill 5,574
6,984
Satisfied by:
Cash consideration 5,204
Deferred consideration 1,780
Total consideration 6,984
Intangible assets represent the fair value of know-how within the business.
Had the acquisition of STABER 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.
16. Cash generated from continuing operations
26 weeks ended 4 March2017 26 weeks ended 27 February 2016 53 weeksended3 September2016
£'000 £'000 £'000
Profit for the period from continuing operations 6,574 6,713 11,171
Adjustments for:
Tax 1,708 1,792 2,907
Tax credit in respect of R&D (63) (80) (176)
Depreciation of property, plant and equipment 1,977 1,718 3,582
Depreciation of investment property 3 3 6
Intangible asset amortisation 49 83 205
Profit on disposal of property, plant and equipment (11) (80) (84)
Loss on disposal of investment - 10 10
Amortisation of grants (27) (24) (53)
Net fair value loss/(gain) on share based payments 127 222 (99)
Net foreign exchange differences 111 (108) (383)
Net fair value losses on derivative financial instruments in operating profit 61 48 70
Finance costs:
Interest income (95) (119) (236)
Interest expense and borrowing costs 448 534 1,045
Share of profit from associate and joint ventures (1,708) (1,423) (2,081)
Pension contributions - deficit reduction - (780) (780)
- ongoing - (108) (108)
IAS19 income statement credit (excluding interest) - (347) (287)
Changes in working capital (excluding the effects of acquisitions and disposals):
Increase in inventories (3,791) (3,010) (1,620)
Increase in receivables (8,677) (9,621) (3,606)
Increase/(decrease) in payables 9,371 4,743 (3,226)
Cash generated from continuing operations 6,057 166 6,257
17. Related party transactions
The Group's significant related parties are its associate and joint ventures,
as disclosed in the Annual Report and Accounts 2016.
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 4 March 2017
Associate 485 (51,644) 10 (18) 164 (21,804)
Joint ventures 211 (529) - 90 1,889 (151)
26 weeks to 27 February 2016
Associate 327 (44,977) 9 (57) 616 (21,050)
Joint ventures 186 (661) - 84 1,952 (48)
18. Post balance sheet event
On 17 March 2017, after the period end, the Group acquired the entire issued
share capital of Horse and Pet Warehouse Limited for cash consideration of
£124,577.
The principal activity of Horse and Pet Warehouse Limited is a retailer of
animal products for the pet, equine and smallholding market.
The primary reason for the business combination was the expansion of the
existing agriculture business.
Given that this has been a recent acquisition the identifiable assets and
liabilities at completion and goodwill have yet to be finalised. The
Directors therefore consider it impracticable to be able to disclose this
information in these financial statements.
This information is provided by RNS
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