REG - Carr's Group PLC - Interim Results
02/05/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230502:nRSB9766Xa&default-theme=true
RNS Number : 9766X Carr's Group PLC 02 May 2023
2 May 2023
CARR'S GROUP PLC ("Carr's" or the "Group")
INTERIM RESULTS
For the 26 weeks ended 4 March 2023
Carr's (CARR.L), the Speciality Agriculture and Engineering Group, announces
its Interim Results for the 26 weeks ended 4 March 2023.
Financial highlights
Adjusted(1)
Adjusted(1) H1 2022
H1 2023 (restated)(2,3) +/-
Revenue (£m) 79.8 64.5 +23.6%
Adjusted(1) operating profit (£m) 5.8 7.5 -23.4%
Adjusted(1) profit before tax (£m) 5.5 7.2 -23.3%
Adjusted(1) EPS (p) 4.9 6.1 -19.7%
Net (cash)/debt(4) (£m) (8.6) 29.9
Statutory
Statutory H1 2022
H1 2023 (restated)(2,3) +/-
Revenue (£m) 79.8 64.5 +23.6%
Operating profit (£m) 5.1 8.0 -35.8%
Profit before tax (£m) 4.9 7.7 -36.2%
Basic EPS (p) 4.4 6.8 -35.3%
Interim dividend (p) 1.175 1.175
(1) Adjusted results are consistent with how business performance is
measured internally and are presented to aid comparability of performance.
Adjusting items are disclosed in note 8.
(2) Prior period restated to provide comparable information for continuing
and discontinued operations following the classification of the Carr's
Billington Agricultural business as a disposal group. Further details of
results from discontinued operations and net assets relating to the disposal
group can be found in note 9.
(3 ) See note 19 for an explanation of the prior period restatements
recognised in relation to the recognition of revenue from customer contracts
within the Engineering division.
(4 ) Excluding leases. Further details of net (cash)/debt can be found in
note 13.
Highlights
· Revenue increased 24% on prior year, reflecting raw material cost
recovery in Speciality Agriculture division
· H1 profits impacted by volumes in Speciality Agriculture and contract
timing in Engineering
· Record Engineering order book of £57 million at 28 April, up by 30%
from start of the period
· Phasing in engineering work will be favourable in H2, with strong
profit generation in the division expected
· Net cash position following receipt of £24 million on completion of
disposal of Agricultural Supplies division
Outlook
The outlook for Engineering in the second half of FY2023 is positive. The
division has several key contracts coming through in fabrication and robotics,
allied to an improved position for the precision engineering business buoyed
by activity in oil and gas. These factors will offset the low summer season
for Speciality Agriculture which also continues to manage historically high
input costs. Acknowledging the challenges ahead, the Board anticipates full
year adjusted profit before tax of c.£10m and remains confident in the
prospects of both divisions in the medium term.
Peter Page, Chief Executive Officer, commented:
"A strong order book in robotics, fabrication and precision engineering,
alongside completion of a long-running defence contract in H1, provides the
prospect of a considerable step up in profits from the Engineering division
for H2. This will offset the quieter summer months for the Speciality
Agriculture division, which is managing a period of unprecedented input costs.
The outlook for 2024 and 2025 is encouraging in both divisions."
Enquiries:
Carr's Group plc Tel: +44 (0) 1228 554 600
Peter Page (Chief Executive Officer)
David White (Chief Financial Officer)
FTI Consulting Tel: +44 (0) 20 3727 1340
Richard Mountain/Ariadna Peretz
Investec Bank plc Tel: +44 (0) 20 7597 4000
Carlton Nelson/David Anderson/William Brinkley
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 around the world. Carr's
operates a business model that empowers operating subsidiaries enabling them
to be competitive, agile, and effective in their individual markets whilst
setting overall standards and goals.
The Speciality Agriculture division manufactures and supplies feed blocks,
minerals and boluses containing trace elements and minerals for livestock.
The Engineering division manufactures vessels, precision components and remote
handling systems, and provides specialist engineering services, for the
nuclear, defence and oil & gas industries.
Interim Management Report
Results (continuing operations only)
During the 26 weeks ended 4 March 2023 revenues increased 24% to £79.8m (H1
2022 restated: £64.5m) reflecting the pass through of unprecedented cost
increases in the Speciality Agriculture division. Adjusted operating profit
for the Group of £5.8m (H1 2022 restated: £7.5m) was 23% down on the prior
year period. Adjusted profit before tax reduced by 23% to £5.5m (H1 2022
restated: £7.2m). Adjusted earnings per share for continuing operations
decreased by 20% to 4.9p (H1 2022 restated: 6.1p) for the six month period.
Operational review
Speciality Agriculture
The Speciality Agriculture division manufactures livestock supplements
including branded feed blocks, essential minerals, and precision dose trace
element boluses, sold to farmers in the UK, Europe, North America, and New
Zealand through a long-established distribution network.
H1 2023 H1 2022 % Change
Revenue £57.1m £42.7m 34%
Adjusted operating profit £6.0m £6.5m (9%)
Adjusted operating margin 10.4% 15.3%
The increase in revenue in the period follows an increase of 35% in average
feed block selling prices to pass through substantial raw material cost
increases, impacting total volumes by 13% (excluding joint ventures) compared
to prior year.
In the UK, costs of the principal ingredient of feed blocks, sugar cane
molasses, have increased by 70% over the past three years, which, with
increases in other ingredients along with energy and labour, has necessitated
a 45% increase in selling prices over the past two years. When combined with
45% increases in other feed costs, a 180% uplift in fertiliser prices and 60%
on diesel, livestock customers have inevitably limited expenditure,
particularly impacting UK sales volumes during a mild autumn and winter that
supported continued grazing for longer than usual. Feed block volumes in the
UK were down by a quarter on the first half of FY2022, a situation that was
consistent across the majority of distributors.
In the USA, molasses costs have increased 50% since 2019, and non-molasses
ingredient costs are up by 65%, resulting in a 47% year on year increase in
the selling price for feed blocks. At the same time, the USA has been severely
impacted by three years of drought, with the US Department of Agriculture
Drought Mitigation Center reporting 41% of the national cattle herd being in
areas experiencing drought. In key market areas for feed blocks, ranch-based
cow calf herd headcount has reduced by up to 40%, in part reflecting the
drought impact, but also occurring as the US beef industry reaches the low
point of a 10-year production cycle. As a result of all these factors, volumes
sold (excluding joint ventures) were 10% down on last year, limiting scope to
recover fixed costs in the business.
At the UK animal health business acquired in 2018, revenues were down 11%
compared to the prior year, principally related to lower sheep bolus volumes
in one market where favourable weather and general market conditions limited
demand.
Management maintains a positive longer-term outlook for the Speciality
Agriculture division from FY2024 onwards, whilst recognising that H2 for the
current year will remain challenging. In the UK and Ireland, farm input
prices, particularly for feed and fertiliser, are coming down, easing the
pressure on customer spending budgets. At the same time, farmgate prices for
dairy, beef and lamb are strong, particularly when compared to 10-year
historic averages, such that investment in the quality of inputs will be
repaid by the marginal gain in revenue-related traits of daily liveweight gain
and milk yield. In the USA, the area affected by drought is markedly reduced
from 12 months previously, whilst the cyclical outlook specifically for beef
will improve as herds rebuild over the next five years. Management action at
the UK animal health business and at the US speciality protein business lays
the foundations for improved profitability. Each of the Speciality Agriculture
businesses is founded on respected brands with a track record of quality,
innovation and service, that will support sales as markets recover from recent
extraordinary conditions.
Engineering
The Engineering division comprises specialist fabrication and precision
engineering businesses in the UK, robotics businesses in the UK, Europe and
USA, and engineering solutions businesses in the UK and USA.
H1 2023 H1 2022 (restated) % Change
Revenue £22.6m £21.8m 4%
Adjusted operating profit £1.1m £2.0m (44%)
Adjusted operating margin 4.9% 9.2%
Performance in the division was below the prior year in H1 due to phasing of
contracts and completion of a long-running defence contract that has impacted
margins.
The order book has strengthened during the first half, with £41.3m recorded
at the period end, ahead of the year end position of £40.6m. Significant
contract wins since the end of February 2023 leave the order book standing at
£57m at the end of April. This improved position will support performance
during the second half of the year and into FY2024.
Fabrication and precision engineering revenues were up 27% in the period,
supported by continued high activity levels in the nuclear sector and strong
order intake from the oil and gas sector.
Revenues in the robotics business were down on last year, a reflection of
temporary lower order receipts in this business during prior year, FY2022.
With a significant uplift in order intake year to date, this part of the
division's order book now stands at record levels, including a £1.5m contract
in the emerging nuclear medicine sector and a prestigious £10m contract for
the UK's National Nuclear Laboratory, the largest single contract signed by
Wälischmiller.
Management is confident in the outlook for the Engineering division beyond the
current financial year, with confirmed high value contracts continuing into
FY2024 and FY2025, a well-balanced spread of current orders across all the
business units in the division, and a stronger market for precision
engineering. The pipeline of opportunities and prospects beyond confirmed
orders is very encouraging. The division is increasingly focused on the
specific opportunities that match its market leading skills, technical
strengths and high-quality manufacturing assets.
Disposal of Agricultural Supplies
The sale of the Agricultural Supplies division was completed on 26 October
2022, with receipt of £24.7 million in cash. Trading continued in the
division until the completion date, during which period trading profit after
tax was £0.8m.
The Agricultural Supplies division was treated as a discontinued operation in
the accounts for the year ended 3 September 2022, with trading disclosed
separately and the net assets of that business categorised as held for resale.
An assessment of the fair value of the net assets was undertaken at the year
end, resulting in a loss on measurement to fair value less costs to sell of
£6.2m. Subsequent to the year end, during the process to complete the
accounting treatment of the disposal, an adjustment related to the book cost
of assets sold was identified, increasing the loss on disposal by £2.7m. Of
this, £1.3m is attributable to the Group with the remainder allocated to the
non-controlling interest's share of the loss on disposal. There is no impact
on the cash proceeds received to date nor on future consideration receivable
as a result of this.
The results and financial position of the Group's discontinued operations for
the year ended 3 September 2022 have been restated to reflect the impact of
this adjustment and full details are provided in note 9.
The process to close the completion accounts for the sale is underway and will
be finished during the current financial year. Unconditional deferred
consideration of £4m is due for payment in October 2023, in line with the
sale agreement, leading to full receipt of the anticipated net proceeds of
£29m, excluding any benefits from potential property related transactions
over the next 2-3 years.
Financial review (Continuing Operations)
Adjusted results
Revenue increased by 24% to £79.8m (H1 2022 restated: £64.5m), with year on
year increases of 34% in Speciality Agriculture and 4% in Engineering.
Adjusted operating profit fell 23.4% to £5.8m (H1 2022 restated: £7.5m).
Both divisions were below last year with Engineering down 44% and Speciality
Agriculture below 2022 by 9%.
Central costs were 32% higher at £1.3m (H1 2022: £1.0m) driven by the impact
of inflationary pay increases and the costs of early settlement of borrowings,
with the benefit of the latter expected in reduced financing costs in the
balance of the financial year.
Net finance costs of £0.2m (H1 2022: £0.3m) were slightly lower than the
prior period. Higher interest rates were offset by lower borrowings across the
period after existing facilities were reduced using consideration received
from the sale of the Carr's Billington business.
The Group's adjusted profit before tax decreased by 23% to £5.5m (H1 2022
restated: £7.2m). Adjusted earnings per share decreased by 19.7% to 4.9p (H1
2022: restated 6.1p).
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. Adjusting items related to continuing
operations during the period were a net charge before tax of £0.6m (H1 2022:
credit of £0.5m), with full details included in note 8.
Statutory results
Reported operating profit on a statutory basis was £5.1m (H1 2022 restated:
£8.0m) and reported profit before tax was £4.9m (H1 2022 restated: £7.7m).
Basic earnings per share on a statutory basis was 4.4p (H1 2022: restated
6.8p).
Balance sheet and cash flow
Net cash generated from operating activities in the first half was £0.6m (H1
2022: cash consumed of £15.2m). Cash generated from continuing operations in
the period of £3.6m was ahead of the same period last year (cash generated of
£1.0m), while discontinued operations consumed cash of £3.0m (H1 2022: cash
consumed of £16.1m).
Excluding leases, the Group moved from net debt of £14.0m at the financial
year end to a net cash position of £8.6m at 4 March 2023. This change has
been driven by proceeds received (net of professional fees paid and cash
disposed) of £24.3m related to the sale of the Carr's Billington Agriculture
business, which has supported a reduction in borrowings during the period of
£19.4m. The working capital outflow in the period was £1.6m (H1 2022:
£5.6m) driven by a reduction in inventory levels since year end, offset by an
increase in accounts receivable, due in part to the continued high selling
prices in Speciality Agriculture.
The Group's defined benefit pension scheme remains in surplus, with a balance
of £5.9m compared to £6.8m at 3 September 2022. The process towards a
potential full buy-out of the scheme is progressing.
Shareholders' equity at 4 March 2023 was £120.3m (3 September 2022 restated:
£119.2m).
A first interim dividend of 1.175 pence per ordinary share will be paid on 19
June 2023 to shareholders on the register on 12 May 2023. The ex-dividend date
will be 11 May 2023.
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 regularly. The principal risks and
uncertainties for the remainder of the financial year are not considered to
have changed materially from those included on pages 24 to 26 of the Annual
Report and Accounts 2022 (available on the Company's website at
http://investors.carrsgroup.com).
Outlook
The outlook for Engineering in the second half of FY2023 is positive. The
division has several key contracts coming through in fabrication and robotics,
allied to an improved position for the precision engineering business buoyed
by activity in oil and gas. These factors will offset the low summer season
for Speciality Agriculture which also continues to manage historically high
input costs. Acknowledging the challenges ahead, the Board anticipates full
year adjusted profit before tax of c.£10m and remains confident in the
prospects of both divisions in the medium term.
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 26 weeks ended 4 March 2023
26 weeks 26 weeks
ended ended 53 weeks
4 March 26 February ended
2023 2022 3 September
(unaudited) (unaudited) (restated)(2,3) 2022
(audited) (restated)(3)
Notes £'000 £'000 £'000
Continuing operations
Revenue 6,7 79,754 64,533 124,240
Cost of sales (62,032) (47,396) (94,632)
Gross profit 17,722 17,137 29,608
Net operating expenses (14,178) (9,928) (22,216)
Share of post-tax results of joint ventures 6 1,596 793 840
Adjusted¹ operating profit 6 5,766 7,525 11,906
Adjusting items 8 (626) 477 (3,674)
Operating profit 6 5,140 8,002 8,232
Finance income 382 161 351
Finance costs (609) (460) (1,017)
Adjusted¹ profit before taxation 6 5,539 7,226 11,240
Adjusting items 8 (626) 477 (3,674)
Profit before taxation 6 4,913 7,703 7,566
Taxation (753) (1,366) (1,524)
Adjusted(1) profit for the period from continuing operations 4,638 5,674 9,374
Adjusting items 8 (478) 663 (3,332)
Profit for the period from continuing operations 4,160 6,337 6,042
Discontinued operations
Profit/(loss) for the period from discontinued operations (including held for
sale)
9 - 2,005 (4,923)
Profit for the period 4,160 8,342 1,119
Profit attributable to:
Equity shareholders 3,946 7,558 3,733
Non-controlling interests⁴ 214 784 (2,614)
4,160 8,342 1,119
Earnings per ordinary share (pence)
Basic
Profit from continuing operations 10 4.4 6.8 6.4
(Loss)/profit from discontinued operations 10 (0.2) 1.3 (2.4)
10 4.2 8.1 4.0
Diluted
Profit from continuing operations 10 4.4 6.7 6.4
(Loss)/profit from discontinued operations 10 (0.2) 1.3 (2.4)
10 4.2 8.0 4.0
(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 20.
(2) Restated to provide comparable information for continuing and discontinued
operations following the classification of the Carr's Billington Agricultural
business as a disposal group. Further details of results from
discontinued operations and net assets relating to the disposal group can be
found in note 9.
(3) See note 19 for an explanation of the prior period restatements to the
period ended 26 February 2022 recognised in relation to the recognition of
revenue from customer contracts within the Engineering division and notes 9
and 19 in respect of the prior year restatement to the year ended 3 September
2022 to discontinued operations.
(4) Non-controlling interests relate to businesses in the disposal group.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 26 weeks ended 4 March 2023
26 weeks ended
26 February 2022 53 weeks
26 weeks ended (unaudited) (restated)² Ended
4 March 3 September
2023 2022
(unaudited) (audited) (restated)²
Notes £'000 £'000 £'000
Profit for the period 4,160 8,342 1,119
Other comprehensive (expense)/income
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation (losses)/gains arising on
translation of overseas subsidiaries (666) 111 4,288
Net investment hedges - 133 60
Taxation charge on net investment hedges - (25) (11)
Items that will not be reclassified subsequently to profit or loss:
Actuarial (losses)/gains on retirement benefit asset:
- Group 15 (1,445) 530 (2,576)
- Share of associate (YE 2022: included in disposal group held for sale) - - (287)
Taxation credit/(charge) on actuarial (losses)/gains on retirement benefit
asset:
- Group 361 (133) 644
- Share of associate (YE 2022: included in disposal group held for sale) - - 72
Other comprehensive (expense)/income for the period, net of tax (1,750) 616 2,190
Total comprehensive income for the period 2,410 8,958 3,309
Total comprehensive income attributable to:
Equity shareholders 2,196 8,174 5,923
Non-controlling interests(1) 214 784 (2,614)
2,410 8,958 3,309
Total comprehensive income attributable to:
Continuing operations 2,410 6,953 8,447
Discontinued operations - 2,005 (5,138)
2,410 8,958 3,309
(1) Non-controlling interests relate to businesses included in the disposal
group.
(2) See note 19 for an explanation of the prior period restatements to the
period ended 26 February 2022 recognised in relation to the recognition of
revenue from customer contracts within the Engineering division and notes 9
and 19 in respect of the prior year restatement to the year ended 3 September
2022 to discontinued operations.
CONDENSED CONSOLIDATED BALANCE SHEET
As at 4 March 2023
As at As at
As at 26 February 3 September
4 March 2022 2022
2023 (unaudited) (restated) 1 (audited)
(unaudited) (restated) (1)
Notes £'000 £'000 £'000
Non-current assets
Goodwill 12 23,351 31,634 23,609
Other intangible assets 12 4,277 4,656 4,635
Property, plant and equipment 12 30,694 37,155 33,204
Right-of-use assets 12 7,891 15,816 8,223
Investment property 12 2,680 149 74
Investment in associate - 14,687 -
Interest in joint ventures 7,525 8,445 6,065
Other investments 31 72 32
Contract assets 316 310 316
Financial assets
- Non-current receivables 23 20 23
Retirement benefit asset 15 5,874 9,964 6,828
Deferred tax asset 205 70 213
82,867 122,978 83,222
Current assets
Inventories 24,856 51,926 26,990
Contract assets 7,124 6,623 7,564
Trade and other receivables 27,479 82,356 19,015
Current tax assets 3,149 3,216 3,866
Financial assets
- Cash and cash equivalents 13 23,493 28,457 22,515
Assets included in disposal group classified as held for sale 9 - - 145,801
86,101 172,578 225,751
Total assets 168,968 295,556 308,973
Current liabilities
Financial liabilities
- Borrowings 13 (9,392) (37,069) (12,734)
- Leases (1,325) (3,301) (1,416)
- Derivative financial instruments (41) - (62)
Contract liabilities (3,165) (1,706) (2,426)
Trade and other payables (18,717) (74,054) (21,000)
Current tax liabilities (166) (254) (711)
Liabilities included in disposal group classified as held for sale 9 - - (101,566)
(32,806) (116,384) (139,915)
Non-current liabilities
Financial liabilities
- Borrowings 13 (5,470) (21,246) (23,805)
- Leases (5,769) (11,982) (6,128)
Deferred tax liabilities (4,648) (5,560) (5,048)
Other non-current liabilities (20) (28) (336)
(15,907) (38,816) (35,317)
Total liabilities (48,713) (155,200) (175,232)
Net assets 120,255 140,356 133,741
Shareholders' equity
Share capital 16 2,351 2,349 2,350
Share premium 16 10,522 10,465 10,500
Other reserves 6,121 2,841 6,988
Retained earnings 101,261 106,737 99,318
Total shareholders' equity 120,255 122,392 119,156
Non-controlling interests - 17,964 14,585
Total equity 120,255 140,356 133,741
(1)See note 19 for an explanation of the prior period restatements to the
period ended 26 February 2022 recognised in relation to the recognition of
revenue from customer contracts within the Engineering division and notes 9
and 19 in respect of the prior year restatement to the year ended 3 September
2022 to discontinued operations and non-current assets held for sale.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 26 weeks ended 4 March 2023
Equity Compensation Foreign Total Non-Controlling
Share Share Reserve Exchange Other Retained Shareholders' Interests Total
Capital Premium Reserve Reserve Earnings Equity Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As previously reported at 3 September 2022 (audited)
2,350 10,500 528 6,268 192 100,657 120,495 15,976 136,471
Prior period adjustment¹ - - - - - (1,339) (1,339) (1,391) (2,730)
At 4 September 2022 (restated) (1) 2,350 10,500 528 6,268 192 99,318 119,156 14,585 133,741
Profit for the period - - - - - 3,946 3,946 214 4,160
Other comprehensive expense - - - (666) - (1,084) (1,750) - (1,750)
Total comprehensive (expense)/income - - - (666) - 2,862 2,196 214 2,410
Dividends paid - - - - - (1,104) (1,104) - (1,104)
Equity-settled share-based payment transactions - - (16) - - - (16) - (16)
Allotment of shares 1 22 - - - - 23 - 23
Sale of disposal group - - - - - - - (14,799) (14,799)
Transfer - - (184) - (1) 185 - - -
At 4 March 2023 (unaudited) 2,351 10,522 328 5,602 191 101,261 120,255 - 120,255
As previously reported at 28 August 2021 (audited) 2,343 10,155 480 1,903 195 103,006 118,082 17,152 135,234
Prior period adjustment¹ - - - 28 - (711) (683) - (683)
At 29 August 2021 (restated)¹ 2,343 10,155 480 1,931 195 102,295 117,399 17,152 134,551
Profit for the period (restated)¹ - - - - - 7,558 7,558 784 8,342
Other comprehensive income - - - 219 - 397 616 - 616
Total comprehensive income (restated)¹ - - - 219 - 7,955 8,174 784 8,958
Dividends paid - - - - - (3,583) (3,583) - (3,583)
Equity-settled share-based payment transactions - - 86 - - - 86 28 114
Allotment of shares 6 310 - - - - 316 - 316
Transfer - - (68) - (2) 70 - - -
At 26 February 2022 (unaudited) (restated)¹ 2,349 10,465 498 2,150 193 106,737 122,392 17,964 140,356
As previously reported at 28 August 2021 (audited) 2,343 10,155 480 1,903 195 103,006 118,082 17,152 135,234
Prior period adjustment¹ - - - 28 - (711) (683) - (683)
At 29 August 2021 (restated)¹ 2,343 10,155 480 1,931 195 102,295 117,399 17,152 134,551
Profit/(loss) for the period (restated)¹ - - - - - 3,733 3,733 (2,614) 1,119
Other comprehensive income/(expense) - - - 4,337 - (2,147) 2,190 - 2,190
Total comprehensive income/(expense) (restated)¹ - - - 4,337 - 1,586 5,923 (2,614) 3,309
Dividends paid - - - - - (4,687) (4,687) - (4,687)
Equity-settled share-based payment transactions - - 199 - - - 199 50 249
Excess deferred taxation on share-based payments - - - - - (30) (30) (3) (33)
Allotment of shares 7 345 - - - - 352 - 352
Transfer - - (151) - (3) 154 - - -
At 3 September 2022 (audited) (restated)¹ 2,350 10,500 528 6,268 192 99,318 119,156 14,585 133,741
( )
( )
(1) See note 19 for an explanation of the prior period restatements to the
period ended 26 February 2022 recognised in relation to the recognition of
revenue from customer contracts within the Engineering division and
notes 9 and 19 in respect of the prior year restatement to the year ended 3
September 2022 to discontinued operations.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 26 weeks ended 4 March 2023
26 weeks ended 26 weeks ended
4 March 2023 26 February 2022 53 weeks ended
(unaudited) (unaudited) 3 September 2022
(audited)
Notes £'000 £'000 £'000
Cash flows from operating activities
Cash generated from continuing operations 17 4,040 1,948 4,473
Interest received 225 74 179
Interest paid (663) (471) (986)
Tax paid (38) (579) (805)
Net cash generated from operating activities in continuing operations 3,564 972 2,861
Net cash used in operating activities in discontinued operations (2,952) (16,144) (6,901)
Net cash generated from/(used in) operating activities 612 (15,172) (4,040)
Cash flows from investing activities
Sale of disposal group (net of cash disposed and costs to sell) 24,341 - -
Acquisition of subsidiaries (net of cash acquired) - - (426)
Dividends received from joint ventures - 1,626 2,250
Purchase of intangible assets (157) (1) (342)
Proceeds from sale of property, plant and equipment - 17 31
Purchase of property, plant and equipment (1,970) (1,531) (3,696)
Proceeds from sale of investment property - - 149
Net cash generated from/(used in) investing activities in continuing
operations
22,214 111 (2,034)
Net cash used in investing activities in discontinued operations (604) (479) (2,749)
Net cash generated from/(used in) investing activities 21,610 (368) (4,783)
Cash flows from financing activities
Proceeds from issue of ordinary share capital 23 316 352
New financing and drawdowns on RCF 4,741 5,311 10,051
Repayment of RCF drawdowns (21,741) (6,000) (8,000)
Lease principal repayments (764) (770) (1,550)
Repayment of borrowings (4,011) (1,406) (2,840)
Dividends paid to shareholders (1,104) (3,583) (4,687)
Net cash used in financing activities in continuing operations (22,856) (6,132) (6,674)
Net cash (used in)/generated from financing activities in discontinued (9,599) 22,405 20,324
operations
Net cash (used in)/generated from financing activities (32,455) 16,273 13,650
Effects of exchange rate changes 33 39 332
Net (decrease)/increase in cash and cash equivalents (10,200) 772 5,159
Cash and cash equivalents at beginning of the period 24,856 19,696 19,696
Cash and cash equivalents at end of the period 14,656 20,468 24,855
Cash and cash equivalents consist of:
Cash and cash equivalents per the balance sheet 23,493 28,457 22,515
Cash and cash equivalents of disposal group classified as held for sale 9 - - 12,074
Bank overdrafts included in borrowings (8,837) (7,989) (9,734)
14,656 20,468 24,855
Statement of Directors' responsibilities
The Directors confirm that these condensed consolidated interim financial
statements have been prepared in accordance with UK-adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority 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
26 weeks of the year and their impact on the condensed set of interim
financial statements, and a description of the principal risks and
uncertainties for the remaining 26 weeks of the financial year; and
· material related party transactions in the first 26 weeks of the year
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 2022. A list of
current Directors is maintained on the website: www.carrsgroup.com
(http://www.carrsgroup.com)
On behalf of the Board
Peter Page David White
Chief Executive Officer Chief Financial Officer
2 May 2023 2 May 2023
Unaudited notes to condensed interim financial information
1. General information
The Group operates two divisions: Speciality Agriculture and Engineering. The
previously reported division of Agricultural Supplies was disposed on 26
October 2022 and is disclosed as a discontinued operation throughout the
condensed consolidated interim financial statements. 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 2 May
2023.
The comparative figures for the financial year ended 3 September 2022 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 4 March
2023 have been prepared in accordance with UK-adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The annual financial statements of the Group for the year ending 2 September
2023 will be prepared in accordance with UK-adopted International Accounting
Standards and 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 3
September 2022 which were prepared in accordance with UK-adopted International
Accounting Standards and the requirements of the Companies Act 2006 applicable
to companies reporting under those standards.
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 December 2024.
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 increases in costs, reduction in
revenues, increases to customer payment terms and delays on securing orders.
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 and prior period restatements
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 as at 4 March 2023. Our effective
tax rate in respect of continuing operations was 22.7% (H1 2022: restated
19.8%) after adjusting for results from joint ventures, which are reported net
of tax. The higher effective tax rate reflects the non-taxable adjustments to
contingent consideration (note 8) in the prior period together with changes in
the mix of overseas profits compared to the prior period.
Prior period restatements
The results and financial position of the Group for the period ended 26
February 2022 have been restated to reflect the impact of the prior period
restatements recognised in the Annual Report and Accounts for the year ended 3
September 2022. The restatements were in respect of revenue recognised under
IFRS15 (Revenue from Contracts with Customers) within the Engineering division
and discontinued operations. A further prior period restatement, impacting the
year to 3 September 2022, has been made in these interim financial statements
in relation to the measurement to fair value less costs to sell of the
disposal group. Further details of these restatements can be found in notes 9
and 19.
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 53 weeks ended 3 September
2022, 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 3 September 2022.
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.
Reportable operating segments of continuing operations have been identified as
Speciality Agriculture and Engineering. The previously reported operating
segment of Agricultural Supplies, which was disposed of on 26 October 2022, is
disclosed as a discontinued operation in the segmental reporting tables below.
Prior period disclosures have been restated to aid comparability. Central
comprises the central business activities of the Group's head office, which
earns no external revenues. Prior period disclosures have also been restated
in respect of the recognition of revenue from customer contracts within the
Engineering division and discontinued operations, and the restatement of the
loss for the period from discontinued operations. Further details of the prior
period restatements can be found in notes 9 and 19.
Performance is assessed using adjusted 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 4 March 2023
and the comparative periods.
26 weeks ended 4 March 2023 Speciality Agriculture Continuing Discontinued operations
£'000 Engineering Central Group £'000
£'000 £'000 £'000
Total segment revenue 58,461 22,646 - 81,107 63,799
Inter segment revenue (1,320) (33) - (1,353) (2)
Revenue from external customers 57,141 22,613 - 79,754 63,797
Adjusted(1) EBITDA(2) 5,346 2,313 (1,200) 6,459 576
Depreciation, amortisation and profit/(loss) on disposal of non-current assets
(978) (1,196) (115) (2,289) -
Share of post-tax results of associate and joint ventures 1,596 - - 1,596 517
Adjusted(1) operating profit/(loss) 5,964 1,117 (1,315) 5,766 1,093
Adjusting items (note 8) (546) (231) 151 (626) (798)
Operating profit/(loss) 5,418 886 (1,164) 5,140 295
Finance income 382 -
Finance costs (609) (216)
Adjusted(1) profit before taxation 5,539 877
Adjusting items (note 8) (626) (798)
Profit before taxation 4,913 79
Taxation of discontinued operations (79)
Result for the period from discontinued operations (note 9) -
Segment gross assets 61,795 77,199 29,974 168,968 -
Segment gross liabilities (16,093) (24,471) (8,149) (48,713) -
(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 segmental information for the 26 weeks ended 26 February 2022 has been
restated to present continuing operations and discontinued operations
separately. This is to aid comparability with the segmental information for
the other periods presented. Prior period disclosures have also been restated
in respect of the recognition of revenue from customer contracts within the
Engineering division and discontinued operations. Further details of the prior
period restatements can be found in notes 9 and 19.
26 weeks ended 26 February 2022 (restated)
Speciality Agriculture Continuing Discontinued operations
£'000 Engineering Central Group £'000
£'000 £'000 £'000
Total segment revenue 46,953 21,897 - 68,850 152,546
Inter segment revenue (4,267) (50) - (4,317) (2)
Revenue from external customers 42,686 21,847 - 64,533 152,544
Adjusted(1) EBITDA(2) 6,463 3,133 (890) 8,706 4,229
Depreciation, amortisation and profit/(loss) on disposal of non-current assets
(738) (1,128) (108) (1,974) (1,310)
Share of post-tax results of associate (adjusted(1)) and joint ventures
793 - - 793 883
Adjusted(1) operating profit/(loss) 6,518 2,005 (998) 7,525 3,802
Adjusting items (note 8) (244) 1,096 (375) 477 (1,244)
Operating profit/(loss) 6,274 3,101 (1,373) 8,002 2,558
Finance income 161 -
Finance costs (460) (231)
Adjusted(1) profit before taxation 7,226 3,571
Adjusting items (note 8) 477 (1,244)
Profit before taxation 7,703 2,327
Taxation of discontinued operations (322)
Profit for the period from discontinued operations (note 9) 2,005
Segment gross assets 49,940 75,164 22,794 147,898 147,658
Segment gross liabilities (13,803) (23,490) (26,606) (63,899) (91,301)
(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 segmental information for the 53 weeks ended 3 September 2022 has been
restated in respect of the measurement to fair value less costs to sell of the
disposal group. Further details of the prior period restatement can be found
in notes 9 and 19.
53 weeks ended 3 September 2022 (restated)
Speciality Agriculture Continuing Discontinued operations
£'000 Engineering Central Group £'000
£'000 £'000 £'000
Total segment revenue 84,321 46,347 - 130,668 343,844
Inter segment revenue (6,244) (184) - (6,428) (6)
Revenue from external customers 78,077 46,163 - 124,240 343,838
Adjusted(1) EBITDA(2) 9,869 7,693 (2,487) 15,075 7,586
Depreciation, amortisation and profit/(loss) on disposal of non-current assets
(1,532) (2,326) (151) (4,009) (2,693)
Share of post-tax results of associate (adjusted(1)) and joint ventures
840 - - 840 2,016
Adjusted(1) operating profit/(loss) 9,177 5,367 (2,638) 11,906 6,909
Adjusting items (note 8) 131 (3,351) (454) (3,674) (10,465)
Operating profit/(loss) 9,308 2,016 (3,092) 8,232 (3,556)
Finance income 351 -
Finance costs (1,017) (756)
Adjusted(1) profit before taxation 11,240 6,153
Adjusting items (note 8) (3,674) (10,465)
Profit/(loss) before taxation 7,566 (4,312)
Taxation of discontinued operations (611)
Loss for the period from discontinued operations (note 9) (4,923)
Segment gross assets 58,972 79,821 24,379 163,172 145,801
Segment gross liabilities (15,739) (28,383) (29,544) (73,666) (101,566)
( )
(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 continuing Group's reported revenue
disaggregated based on the timing of revenue recognition.
26 weeks
26 weeks ended 53 weeks
ended 26 February ended
4 March 2022 3 September
2023 (restated) 2022
Timing of revenue recognition £'000 £'000 £'000
Over time 12,350 13,592 28,919
At a point in time 67,404 50,941 95,321
79,754 64,533 124,240
All revenue in respect of discontinued operations is recognised at a point in
time.
8. Adjusting items
53 weeks
26 weeks 26 weeks ended
ended ended 3 September
4 March 26 February 2022
2023 2022 (restated)
£'000 £'000 £'000
Continuing operations
Amortisation of acquired intangible assets (i) 476 468 940
Adjustments to contingent consideration (ii) - (1,320) (1,320)
Strategic review costs (iii) (151) 375 455
Gain on acquisition of Afgritech (iv) - - (733)
Cloud configuration and customisation costs - Group (v) 301 - 113
Goodwill impairment (vi) - - 4,219
Charge/(credit) included in profit before taxation 626 (477) 3,674
Taxation effect of the above adjusting items (148) (186) (342)
Charge/(credit) included in profit for the period from continuing 478 (663) 3,332
operations
Discontinued operations
Loss on fair value measurement less costs to sell (vii) 798 - 9,106
Cloud configuration and customisation costs - Group (v) - 983 974
Cloud configuration and customisation costs - share of associate (v) - 261 365
Acquisition-related costs (viii) - - 20
Charge pre-tax included in discontinued operations 798 1,244 10,465
Taxation effect of the above adjusting items - (187) (186)
Charge post-tax included in discontinued operations 798 1,057 10,279
(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 year end. Movements in fair value arise from changes to the
expected payments since the previous year end based on actual results and
updated forecasts. Any increase or decrease in fair value is recognised
through the income statement.
(iii) Strategic review costs include external advisor fees
incurred in the development of the Group's strategy.
(iv) In the prior year the Group acquired the remaining 50%
shareholding in Afgritech Ltd and the financial position and performance of
the business, together with that of its 100% owned subsidiary Afgritech LLC,
was fully consolidated from the date of acquisition. The Group's joint venture
interest was effectively disposed of at this acquisition date with a gain of
£197,000, being the difference between the carrying value and the fair value
of the joint venture interest, recognised. Also included in the amount in the
table above are foreign exchange gains of £559,000 that were recycled from
the foreign exchange reserve to the income statement on disposal,
acquisition-related costs of £27,000 and negative goodwill of £4,000.
(v) Costs relating to material spend previously capitalised in
relation to the implementation of the Group's, and associate's, ERP system
that have now been expensed following the adoption of the IFRIC agenda
decision.
(vi) Impairment in the prior year of goodwill in respect of the
Chirton profit centre and Wälischmiller Engineering GmbH cash-generating
units.
(vii) The Group disposed of its interest in the Carr's Billington
Agricultural business on 26 October 2022. The loss on fair value measurement
less costs to sell in this period arises from the structure of the sale and
offsets the retained profits from discontinued operations between 3 September
2022 and completion date. The consideration receivable remains subject to any
final adjustments once the completion accounts mechanism is finalised. At the
date of signing these condensed interim financial statements the completion
accounts have not yet been finalised and therefore the loss presented remains
subject to change.
At the prior year end the carrying value of the assets and liabilities
included in the disposal group classified as held for sale exceeded the fair
value less costs to sell. As a result the net assets of the disposal group
were reduced to the fair value less costs to sell resulting in a loss of
£9,106,000 being recognised. This included a loss attributable to the
non-controlling interests of £3,994,000 together with costs to sell of
£175,000 recognised within the accounts of Carrs Billington Agriculture
(Sales) Ltd.
(viii) Acquisition-related costs relate to legal fees incurred in
respect of an aborted acquisition in the prior year.
9. Discontinued operations and non-current assets held for
sale
On 31 August 2022, the Group entered into a conditional agreement to dispose
of its interests in the Carr's Billington Agricultural business to Edward
Billington & Son Limited. In accordance with IFRS 5 'Non-current assets
held for sale and discontinued operations', the assets and liabilities related
to the business were classified as a disposal group held for sale at 3
September 2022. The sale was conditional on approval by the Group's
shareholders which was given at a General Meeting held on 19 September 2022.
The disposal completed on 26 October 2022.
On completion, the Company received £24.7m initial cash proceeds (before
costs to sell) following certain working capital adjustments since the
announcement on 31 August 2022. The consideration receivable remains subject
to any final adjustments once the completion accounts mechanism is finalised.
At the date of signing these condensed interim financial statements the
completion accounts have not yet been finalised and therefore the loss
presented remains subject to change.
The tables below show the results of the discontinued operations together with
the classes of assets and liabilities comprising the operations held for sale
in the Group balance sheet as at 3 September 2022.
26 weeks 26 weeks 53 weeks
ended ended ended
4 March 26 February 3 September
2023 2022 2022 (restated)
£'000 £'000 £'000
Revenue (H1 2022: restated) 63,797 152,544 343,838
Expenses (H1 2022: restated) (63,437) (150,839) (340,870)
360 1,705 2,968
Share of post-tax results of associate 415 417 1,165
Share of post-tax results of joint venture 102 205 486
Profit before taxation of discontinued operations 877 2,327 4,619
Taxation (79) (322) (611)
Profit after taxation of discontinued operations 798 2,005 4,008
Pre-taxation loss recognised on the measurement to fair value less costs to (798) - (8,931)
sell
Taxation - - -
After taxation loss recognised on the measurement to fair value less costs to (798) - (8,931)
sell
Profit/(loss) for the period from discontinued operations - 2,005 (4,923)
Revenue and expenses in the table above in respect of the period ended 26
February 2022 have been reduced by £6,340,000 to remove revenues where Carrs
Billington Agriculture (Sales) Ltd acts as agent rather than principal and
have been increased by £165,000 due to credit notes in excess of invoices in
respect of intra-company transactions which had not been netted off in prior
years. There is no impact on profit in respect of either of these.
In the year ended 3 September 2022 the pre-taxation loss recognised on the
measurement to fair value less costs to sell included £3,994,000 in respect
of the non-controlling interest's share of the measurement impairment.
The prior year loss recognised on the measurement to fair value less costs to
sell had previously been determined based on the difference between estimated
proceeds receivable and net assets of the two businesses where the direct
shareholding was being sold. This has been corrected, by a prior period
restatement, to also include the Group's interest in the joint venture, Bibby
Agriculture Ltd, indirectly held by the Company through its ownership of Carrs
Billington Agriculture (Sales) Ltd, together with consolidation adjustments to
the assets and liabilities included in the overall Group net assets being
disposed.
The net assets relating to the disposal group that were classified as held for
sale at 3 September 2022 in the Group balance sheet are shown below:
(restated) £'000
Assets of the disposal group
Goodwill 5,285
Property, plant and equipment 8,539
Right-of-use assets 8,267
investment in associate 15,218
Interest in joint ventures 2,870
Other investments 45
Deferred tax asset 177
Inventories 34,442
Trade and other receivables 65,946
Current tax assets 101
Cash and cash equivalents 12,074
Loss on fair value measurement before costs to sell* (7,163)
Total assets 145,801
Liabilities of the disposal group
Borrowings (24,415)
Leases (8,196)
Trade and other payables (68,955)
Total liabilities (101,566)
Net assets 44,235
* Costs to sell of £1,768,000 were incurred by the parent Company at 3
September 2022 and were therefore excluded from the loss on fair value
measurement shown above.
The loss on fair value measurement before costs to sell included £3,994,000
in respect of the non-controlling interest's share of the measurement
impairment.
10. 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 53 weeks
ended ended Ended
4 March 2023 26 February 2022 3 September 2022
£'000 (restated) (restated)
£'000 £'000
Continuing operations
Earnings 4,160 6,337 6,042
Adjusting items:
Amortisation of acquired intangible assets 476 468 940
Adjustments to contingent consideration - (1,320) (1,320)
Strategic review costs (151) 375 455
Gain on acquisition of Afgritech - - (733)
Cloud configuration and customisation costs - Group 301 - 113
Goodwill impairment - - 4,219
Taxation effect of the above (148) (186) (342)
Earnings - adjusted 4,638 5,674 9,374
Discontinued operations
Earnings (214) 1,221 (2,309)
Adjusting items:
Loss on fair value measurement less costs to sell 798 - 9,106
Cloud configuration and customisation costs - Group - 983 974
Cloud configuration and customisation costs - share of associate - 261 365
Acquisition-related costs - - 20
Taxation effect of the above - (187) (186)
Non-controlling interest in the above - (390) (4,476)
Earnings - adjusted 584 1,888 3,494
Continuing operations 4,160 6,337 6,042
Discontinued operations (214) 1,221 (2,309)
Total earnings (basic) 3,946 7,558 3,733
Continuing operations 4,638 5,674 9,374
Discontinued operations 584 1,888 3,494
Total earnings (adjusted) 5,222 7,562 12,868
Number Number Number
Weighted average number of ordinary shares in issue 94,010,254 93,759,322 93,873,465
Potentially dilutive share options 1,389,767 1,069,129 1,260,197
95,400,021 94,828,451 95,133,662
Earnings per share (pence) (restated)
Continuing operations
Basic 4.4p 6.8p 6.4p
Diluted 4.4p 6.7p 6.4p
Adjusted 4.9p 6.1p 10.0p
Diluted adjusted 4.9p 6.0p 9.9p
Discontinued operations
Basic (0.2)p 1.3p (2.4)p
Diluted (0.2)p 1.3p (2.4)p
Adjusted 0.6p 2.0p 3.7p
Diluted adjusted 0.6p 2.0p 3.7p
Total Group
Basic 4.2p 8.1p 4.0p
Diluted 4.2p 8.0p 4.0p
Adjusted 5.5p 8.1p 13.7p
Diluted adjusted 5.5p 8.0p 13.6p
11. Dividends
An interim dividend of £1,103,968 (H1 2022: £1,100,423) that related to the
period to 3 September 2022 was paid on 30 September 2022. A final dividend
of £2,680,121 (H1 2022: £2,482,959) in respect of the period to 3 September
2022 will be paid on 12 May 2023.
12. Intangible assets, property, plant and equipment, right-of-use
assets and investment property
Other Property,
Intangible plant and equipment Right-of-use Investment
Goodwill assets £'000 assets Property
£'000 £'000 £'000 £'000
26 weeks ended 4 March 2023
Opening net book amount at 4 September 2022 23,609 4,635 33,204 8,223 74
Exchange differences (258) (12) (216) 2 -
Additions and lease modifications - 157 1,916 325 -
Disposals, transfers and reclassifications - - (2,711) (5) 2,633
Depreciation and amortisation - (503) (1,499) (654) (27)
Closing net book amount at 4 March 2023 23,351 4,277 30,694 7,891 2,680
26 weeks ended 26 February 2022
Opening net book amount at 29 August 2021 31,560 5,151 36,198 16,777 152
Exchange differences 74 9 9 11 -
Additions and lease modifications - 1 2,041 1,124 -
Disposals, transfers and reclassifications - - 779 (701) -
Depreciation and amortisation - (505) (1,872) (1,395) (3)
Closing net book amount at 26 February 2022 31,634 4,656 37,155 15,816 149
Transfers include assets refinanced under a lease and finance leased assets
that became owned assets on maturity of the lease term. In the period ended 4
March 2023 it also includes property assets leased by companies in the
continuing Group to Carrs Billington Agriculture (Sales) Ltd that have been
reclassified as investment property when the company was sold on 26 October
2022.
Capital commitments contracted, but not provided for, by the Group at the
period end amounts to £418,000 (2022: £659,000).
13. Borrowings
As at As at As at
4 March 26 February 3 September
2023 2022 2022
£'000 £'000 £'000
Current 9,392 37,069 12,734
Non-current 5,470 21,246 23,805
Total borrowings 14,862 58,315 36,539
Cash and cash equivalents as per the balance sheet (23,493) (28,457) (22,515)
Net (cash)/debt (8,631) 29,858 14,024
Undrawn facilities 29,028 20,381 26,111
The table above includes undrawn facilities in respect of discontinued
operations at 26 February 2022 and at 3 September 2022 of £7.7m and £15.1m
respectively. Current borrowings include bank overdrafts of £8.8m (H1 2022:
£8.0m; YE 2022: £9.7m). Undrawn facilities include £8.8m (H1 2022: £6.1m;
YE 2022: £7.7m) in respect of facilities that are renewable on an annual
basis.
Movements in borrowings are analysed as follows: 26 weeks 26 weeks
ended ended
4 March 2023 26 February 2022
£'000 £'000
Balance at start of period 36,539 34,272
Exchange differences 194 (168)
New bank loans and drawdowns on RCF 4,741 5,222
Repayment of RCF drawdowns (21,741) (6,000)
Repayments of borrowings (4,011) (1,406)
Increase in other borrowings - 22,989
Release of deferred borrowing costs 37 30
Net (decrease)/increase to bank overdraft (897) 3,376
Balance at end of period 14,862 58,315
New bank loans and drawdowns on RCF in the prior period excludes re-financing
of assets under new finance lease arrangements.
14. 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 and the discount rate. At
the end of all periods presented there was no remaining contingent
consideration payable.
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
4 March 26 February 3 September
2023 2022 2022
£'000 £'000 £'000
Fair value at the start of the period - 1,320 1,320
Change in fair value - (1,320) (1,320)
Fair value at the end of the period - - -
15. Retirement benefit asset
The amounts recognised in the Income Statement are as follows:
26 weeks 26 weeks 53 weeks
ended Ended ended
4 March 26 February 3 September
2023 2022 2022
£'000 £'000 £'000
Administrative expenses 66 16 126
Net interest on the net defined benefit asset (157) (79) (159)
Total income (91) (63) (33)
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
4 March 26 February 3 September
2023 2022 2022
£'000 £'000 £'000
Present value of funded defined benefit obligations (44,078) (59,500) (48,578)
Fair value of scheme assets 49,952 69,464 55,406
Surplus in funded scheme 5,874 9,964 6,828
Actuarial losses of £1,445,000 (2022: gains of £530,000) have been reported
in the Statement of Comprehensive Income. The surplus has decreased over the
period since 3 September 2022 due to changes in market conditions. Following
completion of the disposal of the Carr's Billington Agricultural business the
Group made a one-off contribution of £400,000 into the pension scheme.
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. The
associate is included in the Carr's Billington Agricultural business sold on
26 October 2022.
16. Share capital
Number of shares Share capital Share premium £'000 Total
Allotted and fully paid ordinary shares of 2.5p each £'000 £'000
Opening balance as at 4 September 2022 93,999,596 2,350 10,500 12,850
Proceeds from shares issued:
- Share save scheme 21,937 1 22 23
At 4 March 2023 94,021,533 2,351 10,522 12,873
Opening balance at 29 August 2021 93,720,125 2,343 10,155 12,498
Proceeds from shares issued:
- Share save scheme 250,415 6 310 316
At 26 February 2022 93,970,540 2,349 10,465 12,814
21,937 shares were issued in the period to satisfy the share awards under the
share save scheme with exercise proceeds of £23,335. The related weighted
average price of the shares exercised in the period was £1.064 per share.
Since the period end the Company's issued share capital has increased to
94,105,241 shares due to the issue of 83,708 shares under the share save
scheme with exercise proceeds of £89,859 and a related weighted average
exercise price of £1.073 per share.
17. Cash generated from continuing operations
26 weeks 26 weeks 53 weeks
ended ended ended
4 March 26 February 3 September
2023 2022 2022
£'000 £'000 £'000
Profit for the period from continuing operations 4,160 6,337 6,042
Adjustments for:
Tax 753 1,366 1,524
Tax credit in respect of R&D (342) (900) (1,553)
Depreciation of property, plant and equipment 1,499 1,318 2,778
Depreciation of right-of-use assets 654 647 1,276
Depreciation of investment property 27 3 5
Intangible asset amortisation 503 491 988
Goodwill impairment - - 4,219
Loss/(profit) on disposal of property, plant and equipment 82 (15) (17)
Profit on disposal of right-of-use assets - (2) (5)
Profit on disposal of investment property - - (76)
Gain on acquisition of Afgritech - - (764)
Adjustments to contingent consideration - (1,320) (1,320)
Net fair value (credit)/charge on share-based payments (16) 58 148
Other non-cash adjustments (31) (35) (119)
Interest income (382) (161) (351)
Interest expense and borrowing costs 646 490 1,077
Share of post-tax results of joint ventures (1,596) (793) (840)
IAS 19 income statement credit in respect of employer contributions (400) - -
IAS 19 income statement charge (excluding interest):
Administrative expenses 66 16 126
Changes in working capital:
Decrease/(increase) in inventories 2,101 (104) (6,153)
(Increase)/decrease in receivables (3,099) 425 (218)
Decrease in payables (585) (5,873) (2,294)
Cash generated from continuing operations 4,040 1,948 4,473
18. Related party transactions
The Group's significant related parties are its associate and joint ventures,
as disclosed in the Annual Report and Accounts 2022.
Sales Purchases Rent Net management Dividends received Amounts Amounts
to from receivable charges from owed from owed to
from to
£'000 £'000 £'000 £'000 £'000 £'000 £'000
26 weeks to 4 March 2023
Associate 65 - 3 18 - - -
Joint ventures 84 (249) - 33 - 84 (76)
26 weeks to
26 February 2022
Associate 261 - 10 11 - 902 (31,707)
Joint ventures 135 (631) - 54 1,626 985 (87)
Amounts presented for transactions in the period are in respect of continuing
operations only. Transactions between the Carr's Billington Agricultural
businesses are excluded as they are within the same disposal group. The prior
period amounts presented for transactions in the period have been restated to
aid comparability.
19. Prior period restatements
The results and financial position of the continuing Group for the period
ended 26 February 2022 have been restated to reflect the impact of the prior
period restatements recognised in the Annual Report and Accounts for the year
ended 3 September 2022. The restatements were in respect of revenue recognised
under IFRS15 (Revenue from Contracts with Customers) within the Engineering
division.
The prior period restatement recognised in these condensed interim financial
statements for the period ended 26 February 2022 relates to contracts directly
related to Mechanical Stress Improvement Process technology and specifically
whether these contracts contained two performance obligations or one. This is
an area which requires significant judgement and after careful consideration,
the Board decided to account for the contracts as having one rather than two
performance obligations. Shareholders' equity at 26 February 2022 was reduced
by £264,000 as a result of this change. For the period to 26 February 2022,
revenue was increased by £546,000 and adjusted profit after tax increased by
£431,000 as a result of this change.
The Board also made two prior year restatements to discontinued operations in
the Annual Report and Accounts 2022, both related to revenue recognition.
Firstly, in prior years the Group had incorrectly identified itself as acting
as a principal when recognising revenue related to fertiliser sales, made
through one specific supplier. A review of this transaction highlighted that
the Group was acting as an agent, rather than principal, under IFRS 15
guidance, which means the net proceeds from the transaction, rather than gross
sales, should be recognised as revenue. A correction to reduce both revenue
and cost of sales in the period to 26 February 2022 by £6,340,000 has been
made. There is no impact on profit. A further correction to increase both
revenue and cost of sales by £165,000 has also been made due to credit notes
in excess of invoices in respect of intra-company transactions which had not
been netted off in prior years. There is no impact on profit. The prior year
restatements to discontinued operations are reflected in note 9.
A further prior period restatement, impacting the year to 3 September 2022,
has been made in these interim financial statements in relation to the
measurement to fair value less costs to sell of the disposal group. The prior
year loss recognised had previously been determined based on the difference
between estimated proceeds receivable and net assets of the two businesses
where the direct shareholding was being sold. This has been corrected to also
include the Group's interest in the joint venture, Bibby Agriculture Ltd,
indirectly held by the Company through its ownership of Carrs Billington
Agriculture (Sales) Ltd, together with consolidation adjustments to the assets
and liabilities included in the overall Group net assets being disposed.
The affected financial statement line items for the continuing operations of
the Group are as follows.
26 February 2022 (previously reported - continuing operations only)
£'000 Restatement in respect of performance obligations
26 February 2022 (previously £'000 26 February 2022 (restated -continuing operations only)
reported - Group) £'000
£'000
Income Statement
Revenue 222,706 63,987 546 64,533
Gross profit 23,734 16,591 546 17,137
Adjusted operating profit 10,781 6,979 546 7,525
Reported operating profit 10,014 7,456 546 8,002
Adjusted profit before taxation 10,251 6,680 546 7,226
Reported profit before taxation 9,484 7,157 546 7,703
Taxation (1,573) (1,251) (115) (1,366)
Adjusted profit for the period 8,305 5,243 431 5,674
Reported profit for the period 7,911 5,906 431 6,337
Basic EPS (pence) 7.6 6.3 0.5 6.8
Diluted EPS (pence) 7.5 6.2 0.5 6.7
26 February 2022 (previously reported) Restatement in respect of performance obligations 26 February 2022
£'000 £'000 (restated)
£'000
Balance Sheet
Deferred tax asset - 70 70
Total non-current assets 122,908 70 122,978
Total assets 295,486 70 295,556
Contract liabilities (1,372) (334) (1,706)
Total current liabilities (116,050) (334) (116,384)
Total liabilities (154,866) (334) (155,200)
Net assets 140,620 (264) 140,356
Other reserves 2,825 16 2,841
Retained earnings 107,017 (280) 106,737
Total shareholders' equity 122,656 (264) 122,392
Total equity 140,620 (264) 140,356
The opening balance sheet of the prior periods presented has been restated and
the affected financial statement line items are as follows.
28 August 2021 (previously reported) Restatement in respect of performance obligations 28 August 2021
£'000 £'000 (restated)
£'000
Balance Sheet
Deferred tax asset - 182 182
Total non-current assets 123,363 182 123,545
Total assets 262,504 182 262,686
Contract liabilities (2,447) (865) (3,312)
Total current liabilities (86,095) (865) (86,960)
Total liabilities (127,270) (865) (128,135)
Net assets 135,234 (683) 134,551
Other reserves 2,578 28 2,606
Retained earnings 103,006 (711) 102,295
Total shareholders' equity 118,082 (683) 117,399
Total equity 135,234 (683) 134,551
The affected financial statement line items for the discontinued operations of
the Group are as follows.
3 September 2022 (previously reported) Restatement in respect of measurement 3 September 2022 (restated)
£'000 to fair value less costs to sell £'000
£'000
Income Statement
Loss for the period from discontinued operations (including held for (2,193) (2,730) (4,923)
sale)
Profit for the period 3,849 (2,730) 1,119
Profit for the period 3,849 (2,730) 1,119
Profit attributable to equity shareholders 5,072 (1,339) 3,733
Profit attributable to non-controlling interests (1,223) (1,391) (2,614)
Basic EPS (pence) (discontinued operations) (1.0) (1.4) (2.4)
Diluted EPS (pence) (discontinued operations) (1.0) (1.4) (2.4)
3 September 2022 (previously reported) Restatement in respect of measurement 3 September 2022 (restated)
£'000 to fair value less costs to sell £'000
£'000
Balance Sheet
Assets included in disposal group classified as held for sale 148,531 (2,730) 145,801
Total current assets 228,481 (2,730) 225,751
Total assets 311,703 (2,730) 308,973
Net assets 136,471 (2,730) 133,741
Retained earnings 100,657 (1,339) 99,318
Total shareholders' equity 120,495 (1,339) 119,156
Non-controlling interests 15,976 (1,391) 14,585
Total equity 136,471 (2,730) 133,741
20. 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 are also
used in assessing performance under the Group's incentive plans. 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 profit for the period Profit after taxation after adding back items regarded by the Directors as
adjusting items. This measure is reconciled to statutory profit after taxation
in the income statement. 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 10.
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 10.
Net (cash)/debt The net position of the Group's cash at bank and borrowings excluding leases.
Details of the movement in borrowings is shown in note 13.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR UASUROBUVRARRecent news on Carr's
See all newsREG - Carr's Group PLC - Strategic Update and Interim Results
AnnouncementREG - Carr's Group PLC - Appointment of Joint Corporate Broker
AnnouncementREG - Carr's Group PLC - Total Voting Rights
AnnouncementREG - Carr's Group PLC - Total Voting Rights
AnnouncementREG - Carr's Group PLC - Total Voting Rights
Announcement