REG - Carr's Group PLC - Strategic Update and Interim Results
18/04/2024 07:00
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RNS Number : 0448L Carr's Group PLC 18 April 2024
18 April 2024
CARR'S GROUP PLC
STRATEGIC UPDATE AND INTERIM RESULTS
For the 6 months ended 29 February 2024
Carr's Group plc (CARR.L), (''Carr's", the ''Company'', or the ''Group'') the
Agriculture and Engineering Group, announces a strategic update and its
un-audited interim results for the six months ended 29 February 2024.
Strategic Update
Following the review of the performance, composition and organisation of the
Group's operations highlighted at the time of the Full Year Results
announcement (''FY23'') on 21 December 2023 the Board has concluded that
continuing with two divisions (Agriculture and Engineering) is an inefficient
operating model, particularly given the lack of synergistic benefits and
resultant central overheads, both of which are dilutive to management's and
investment focus.
The Board believes that both the Engineering Division and the Agriculture
Division hold material value creation opportunities; however, the Agriculture
Division will be optimised in the medium term through transformation plans
developed and implemented by recently appointed management, whilst the
Engineering Division represents a near-term opportunity.
The Board is therefore running a process to explore options to maximise
shareholder value with regard to the Engineering Division.
Further updates will be provided when appropriate.
Interim Results for the 6 months ended 29 February 2024
Financial Highlights
Adjusted (Continuing Operations) H1 2024 H1 2023 (restated) +/-%
Revenue (£'m) 81.4 79.8 +2.0
Adjusted operating profit (£'m) 5.8 5.8 -1.4
Adjusted profit before tax (£'m) 5.6 5.6 +0.6
Adjusted earnings per share (p) 4.8 5.0 -4.0
Statutory (Continuing Operations) H1 2024 H1 2023 (restated) +/-%
Revenue (£'m) 81.4 79.8 +2.0
Operating profit (£'m) 3.5 5.2 -32.1
Profit before tax (£'m) 3.4 5.0 -31.3
Basic earnings per share (p) 3.0 4.5 -33.3
Interim dividend per share (p) 2.35 1.175 +100.0
Net cash (£'m) 8.0 8.6
Highlights
· Engineering Division
− Continued strong performance with revenues for the six
month period increased by 26.1% to £28.5m (H1 2023: £22.6m).
− Adjusted operating profit for the six month period
increased by 119.2% to £2.4m (H1 2023: £1.1m).
− Adjusted operating profit on a LTM basis of £6.6m from
revenues of £56.5m.
− Forward order book of £57.8m remains strong and
increased from £41.3m at H1 FY23.
· Agriculture Division
− Revenues for the six month period reduced by 7.5% on
prior year to £52.8m (H1 2023: £57.1m).
− Adjusted operating profit for the six month period
reduced by 17.4% to £4.9m (H1 2023 restated: £6.0m).
− UK feed block tonnage increased by 11% year on year
whilst the US feed block business volumes were down 18% year on year. The
under-performing facility in Nevada has now closed with production
requirements transferred to the two remaining sites.
− US dairy feed supplement business increased volume by
19%, however remains loss making due to unfavourable contracts ending in FY24.
New management in situ to return to profitability.
− UK market cautiously improving as input prices
stabilise, whilst US market conditions continue to be challenging due to
cyclical herd size reductions and ongoing regional drought condition.
· Central costs
− Central costs, on an adjusted basis, of £1.6m (H1 2023
restated: £1.3m).
− Ongoing cost reduction measures underway in FY24,
continuing into H1 FY25, step-changes aligned to strategic direction.
· Adjusting items
− £2.3m of adjusting items (pre-tax) comprising:
§ £1.9m of restructuring and other non-recurring cash costs
§ £0.4m in relation to amortisation of intangibles
· Net cash / debt
− Half year-end net cash of £8.0m (H1 2023: Net cash
£8.6m) - following payment of final dividend for FY23.
· Dividends
- Interim dividend of 2.35p per share (H1 2023: 1.175p).
- Reflecting previously announced policy of a single interim
dividend and final, rather than two interims and final.
Strategic Highlights
· Board and management appointments in anticipation of
the transformation of the Group: David White (Chief Executive Officer),
Gavin Manson (Chief Financial Officer), Martin Rowland (Executive Director of
Transformation), Gillian Watson (Non-Executive Director and Senior Independent
Director) and Fiona Rodford (Non-Executive Director).
· Transformation of Agriculture Division underway with
new leadership across global businesses, with Josh Hoopes joining as CEO
Agriculture in March supported by new leadership teams in the UK and US.
· Ongoing cost reduction measures underway in FY24,
continuing into H1 FY25, with step changes aligned to strategic direction.
· Group bank facilities of £25m extended to December
2026.
· Final £4.0m deferred consideration from the sale of
the Agricultural Supplies Division received in October 2023.
Outlook
Trading conditions in agriculture remain challenging, particularly in the US.
The Board expects this to continue through the current financial year, while
retaining confidence in prospects improving in the medium to long term. Our
short-term focus is on ensuring that performance is optimised during
persistently challenging conditions whilst making the changes necessary to
deliver longer term value creation. The Engineering Division delivered a
strong first half performance, building on FY23. The Board remains confident
that order book levels will enable year-on-year growth during FY24, while also
providing confidence beyond the current financial year. Board expectations
for FY24 remain unchanged.
Quote: David White (Chief Executive Officer)
"Having reviewed the position of the Group and its market valuation the Board
has concluded that the value of each of our divisions individually, when added
together, significantly outweighs our market capitalisation. The growing
profitability and future prospects of our Engineering Division make this the
optimal time to explore options to realise value for that division. The
significant opportunities to improve our market position in our Agriculture
Division point to short term focus on optimising trading through challenging
conditions and preparing that business for future growth built on the
foundation of our leading brands. We now have the team in place to deliver the
transformation necessary at divisional and central level."
Quote: Tim Jones (Chair)
''Our strategy of Focus, Improve, Deliver has highlighted the value
opportunity that is available from each of our divisions in time. We have
concluded that our Engineering Division represents a significant opportunity
to deliver incremental value to shareholders now, and that it is the right
thing to do to explore that opportunity. And we are excited by the
opportunities in the Agriculture Division. Global demand for meat and dairy
continues to grow strongly at the same time as the imperative to reduce the
climate impact of livestock. The task for Carr's Agriculture is to reduce the
carbon footprint of livestock and enhance animal welfare whilst delivering
better margins and productivity for farmers. Carr's product innovations
promote shorter calving intervals, enhance weight gain and help to lower
methane emissions. I am delighted that Carr's now has the people, the products
and the market opportunities to rapidly grow our global impact in this
space.''
Carr's Group plc +44 (0) 1228 554 600
David White, Chief Executive Officer
Gavin Manson, Chief Financial Officer
FTI Consulting +44 (0) 203 727 1340
Richard Mountain/Ariadna Peretz
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 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
Strategic Update
The Board has reviewed the structure and composition of the Group and
concluded that both the Engineering and Agriculture Divisions are quality
assets demonstrating significant value creation opportunities. Given the scale
of the businesses, the complexity resultant from operating two divisions which
display no significant synergies has created in an inefficient structure and
central organisation.
Current trading as well as the short, medium and long term growth
opportunities within the Engineering Division are likely to result in there
being a near-term opportunity to deliver attractive value to shareholders.
Following implementation of the ongoing tactical and strategic initiatives
developed by management, in combination with the anticipated macro-economic
recovery in the sector, the opportunity to develop significant incremental
value in the Agriculture Division is longer term.
The Board has, therefore, concluded that it is appropriate to explore the
opportunities to realise value for the Engineering Division. A process to
explore value is currently in its nascent stages, and further information will
be provided in due course.
Interim results
During the six months ended 29 February 2024 revenues increased 2.0% to
£81.4m (H1 2023: £79.8m) reflecting growth in Engineering of £5.9m (26.1%),
somewhat offset by a reduction in Agriculture revenue of £4.3m (7.5%).
Adjusted operating profit for the Group of £5.8m was unchanged from the prior
year (H1 2023 restated: £5.8m). Adjusted profit before tax was unchanged
from the prior year at £5.6m (H1 2023 restated: £5.6m). Adjusted earnings
per share for continuing operations decreased by 4.0% to 4.8p (H1 2023
restated: 5.0p) for the six month period.
Operational review
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 2024 H1 2023 % Change
Revenue £28.5m £22.6m 26.1%
Adjusted operating profit £2.4m £1.1m 119.2%
Adjusted operating margin 8.6% 4.9% +3.7pp
Strength in performance continued from the second half of FY23 with first half
revenue of £28.5m, up 26.1% on the prior year. Adjusted operating profit of
£2.4m was more than double the prior year, bringing LTM adjusted operating
profit to £6.6m, an adjusted operating margin of 11.7% from revenues of
£56.5m.
The order book remains strong with £57.8m recorded at the period end,
significantly ahead of the £41.3m prior half comparative. Orders since
February 2024 have returned the order book above the £59.8m in hand at the
end of FY23. This continued strength sets the Engineering Division up well for
another strong second half performance, and for further steady growth.
Fabrication and precision engineering revenues were up 23% in the period,
supported by continued high activity levels in the nuclear sector and strong
order intake from the oil and gas sector. The businesses in these sectors are
increasingly benefitting from the integration of decision making and customer
relationship management.
Revenues in the robotics business increased 60.4% from last year, benefitting
from the significant order wins last year including 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 in the
second half and beyond the current financial year. The division has confirmed
high value contracts continuing into FY25 and beyond, and a well-balanced
spread of current orders across all the business units in the division. The
pipeline of opportunities and prospects beyond confirmed orders is very
encouraging. The Engineering Division is increasingly focused on the specific
opportunities that match its market leading skills, technical strengths and
high-quality manufacturing assets and is benefitting from long term CRM
activity aligned across the division.
Agriculture
The 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 2024 H1 2023 (restated) % Change
Revenue £52.8m £57.1m (7.5%)
Adjusted operating profit £4.9m £6.0m (17.4%)
Adjusted operating margin 9.4% 10.5% -1.1pp
With challenging conditions continuing in the agriculture sector, revenues
decreased by 7.5% in the period. This was largely driven by the high
inflationary and reduced volume environment of FY23 that saw average feed
block prices increase by 21% but feed block volumes decrease by 16%. In H1
FY24 the UK has returned to volume growth (+11% year on year) whilst the US
feed blocks business has seen further year on year decline (18%) as herd sizes
continue to decrease cyclically, accentuated by continued drought in the
southern states.
Encouragingly, at Animax (the UK animal health business acquired in 2018),
transformational automation of the production process was implemented late in
the first half of FY24. The benefits of this automation on each of capacity,
cost and specification accuracy will be apparent in the second half. Prior to
these improvements being evident first half performance was broadly flat year
on year.
Our New York State based dairy cattle feed supplement business recorded volume
growth of 19% in the first half but remains loss making. Actions to raise
margins and achieve profitability are in progress.
With new management now in situ we maintain a positive longer-term outlook for
the Agriculture Division from both an internal operational effectiveness
perspective and in terms of macro-economic conditions. In the UK and Ireland,
farm input prices, particularly for feed and fertiliser, are coming down,
easing the pressure on customer spending budgets. Farm input and output price
indices have matched in early 2024 for the first time since Q2 2021, with
input prices having been over 15% higher than outputs in Q3 2022. These
increasingly positive macro-economic trends have translated to volume
increases but have yet to result in improved margins. 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 actions already underway at the UK animal health business coupled
with the progress at the other Agriculture businesses will result in improved
financial performance and increased resilience over time. The Agriculture
businesses are founded on respected brands with a track record of quality,
innovation and service, that will ultimately support sales and margins as
markets recover from recent unprecedented conditions.
Adjusted results
Revenue increased by 2.0% to £81.4m (H1 2023: £79.8m), with a year on year
increase of 26.1% in Engineering offset by a reduction of 7.5% in Agriculture.
Adjusted operating profit was unchanged at £5.8m (H1 2023 restated: £5.8m).
Engineering grew by 119.2% offset by a 17.4% reduction in Agriculture.
Central costs, on an adjusted basis, were £0.3m higher at £1.6m (H1 2023
restated: £1.3m) driven by the impact of inflationary pay increases in the
prior year and costs associated with the completion of strategic projects.
Net finance costs of £0.1m (H1 2023: £0.2m) 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 was unchanged at £5.6m (H1 2023
restated: £5.6m). Adjusted earnings per share decreased by 4.0% to 4.8p (H1
2023: restated 5.0p).
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 £2.2m (H1 2023:
£0.6m), with full details included in note 8.
Statutory results
Reported operating profit on a statutory basis was £3.5m (H1 2023 restated:
£5.2m) and reported profit before tax was £3.4m (H1 2023 restated: £5.0m).
Basic earnings per share on a statutory basis was 3.0p (H1 2023: restated
4.5p).
Balance sheet and cash flow
Net cash generated from operating activities in continuing operations in the
first half was £5.5m (H1 2023: £3.6m). Cash generated from continuing
operations in the period of £4.3m was ahead of the same period last year
(cash generated of £4.0m).
Excluding leases, the Group moved from net cash of £4.2m at the financial
year end to net cash of £8.0m at 29 February 2024. This change has been
driven by receipt of the £4.0m deferred consideration related to the sale of
the Carr's Billington Agriculture business.
The Group's defined benefit pension scheme remains in surplus, with a balance
of £5.9m compared to £5.3m at 2 September 2023. The Trustees are in
discussion with insurers regarding a potential buy-in of the scheme.
Shareholders' equity at 29 February 2024 was £107.7m (2 September 2023:
£107.9m).
An interim dividend of 2.35 pence per ordinary share will be paid on 5 June
2024 to shareholders on the register on 3 May 2024. The ex-dividend date will
be 2 May 2024. The increased dividend of 2.35p reflects the previously
announced updated policy of a single interim dividend and final rather than
two interims and final dividend.
Outlook
Trading conditions in agriculture remain challenging, particularly in the US.
The Board expects this to continue through the current financial year, while
retaining confidence in prospects improving in the medium to long term. Our
short-term focus is on ensuring that performance is optimised during
persistently challenging conditions whilst making the changes necessary to
deliver longer term value creation. The Engineering Division delivered a
strong first half performance, building on FY23. The Board remains confident
that order book levels will enable year on year growth during FY24, while also
providing confidence beyond the current financial year. Board expectations
for FY24 remain unchanged.
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 20 to 23 of the Annual
Report and Accounts 2023 (available on the Company's website at
http://investors.carrsgroup.com).
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 6 months ended 29 February 2024
6 months ended 6 months
29 February ended Year
2024 4 March ended
(unaudited) 2023 2 September
(unaudited) (restated)(2) 2023
(audited)
Notes £'000 £'000 £'000
Continuing operations
Revenue 6,7 81,372 79,754 143,214
Cost of sales (63,574) (62,032) (110,924)
Gross profit 17,798 17,722 32,290
Net operating expenses (15,627) (14,105) (31,780)
Share of post-tax results of joint ventures 6 1,369 1,596 1,441
Adjusted¹ operating profit 6 5,758 5,839 7,950
Adjusting items 8 (2,218) (626) (5,999)
Operating profit 6 3,540 5,213 1,951
Finance income 630 382 876
Finance costs (745) (609) (1,320)
Adjusted¹ profit before taxation 6 5,643 5,612 7,506
Adjusting items 8 (2,218) (626) (5,999)
Profit before taxation 6 3,425 4,986 1,507
Taxation (606) (769) (1,111)
Adjusted¹ profit for the period from continuing operations 4,508 4,695 5,836
Adjusting items 8 (1,689) (478) (5,440)
Profit for the period from continuing operations 2,819 4,217 396
Discontinued operations
Profit/(loss) for the period from discontinued operations 9 - 214 (1,157)
Profit/(loss) for the period 2,819 4,431 (761)
Profit/(loss) attributable to:
Equity shareholders 2,819 4,217 (226)
Non-controlling interests(3) - 214 (535)
2,819 4,431 (761)
Earnings per ordinary share (pence)
Basic
Profit from continuing operations 10 3.0 4.5 0.4
Loss from discontinued operations 10 - - (0.7)
10 3.0 4.5 (0.3)
Diluted
Profit from continuing operations 10 3.0 4.4 0.4
Loss from discontinued operations 10 - - (0.7)
10 3.0 4.4 (0.3)
(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) See notes 9 and 19 for an explanation of the prior period restatements to
the period ended 4 March 2023 recognised in relation to the measurement of
fair value less costs to sell of the disposal group.
(3) Non-controlling interests relate to businesses included in the disposal
group.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 29 February 2024
6 months
6 months ended ended Year
29 February 4 March 2023 ended
2024 (unaudited) (restated)² 2 September
(unaudited) 2023
(audited)
Notes £'000 £'000 £'000
Profit/(loss) for the period 2,819 4,431 (761)
Other comprehensive income/(expense)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation gains/(losses) arising on
translation of overseas subsidiaries 60 (666) (3,141)
Items that will not be reclassified subsequently to profit or loss:
Actuarial gains/(losses) on retirement benefit asset:
- Group 15 598 (1,445) (2,058)
- Share of associate (discontinued operations) - - (717)
Taxation (charge)/credit on actuarial gains/(losses) on retirement benefit
asset:
- Group (150) 361 515
- Share of associate (discontinued operations) - - 179
Other comprehensive income/(expense) for the period, net of tax 508 (1,750) (5,222)
Total comprehensive income/(expense) for the period 3,327 2,681 (5,983)
Total comprehensive income/(expense) attributable to:
Equity shareholders 3,327 2,467 (5,448)
Non-controlling interest(1) - 214 (535)
3,327 2,681 (5,983)
Total comprehensive income/(expense) attributable to:
Continuing operations 3,327 2,467 (4,288)
Discontinued operations - 214 (1,695)
3,327 2,681 (5,983)
(1) Non-controlling interests relate to businesses included in the disposal
group.
(2) See notes 9 and 19 for an explanation of the prior period restatements to
the period ended 4 March 2023 recognised in relation to the measurement of
fair value less costs to sell of the disposal group
CONDENSED CONSOLIDATED BALANCE SHEET
As at 29 February 2024
As at
As at 4 March As at
29 February 2023 2 September
2024 (unaudited) (restated) (1) 2023
(unaudited) (audited)
Notes £'000 £'000 £'000
Non-current assets
Goodwill 12 19,192 23,351 19,161
Other intangible assets 12 3,028 4,277 3,318
Property, plant and equipment 12 29,902 30,694 29,950
Right-of-use assets 12 7,112 7,891 7,323
Investment property 12 2,600 2,680 2,640
Interest in joint ventures 7,475 7,525 6,101
Other investments 27 31 27
Contract assets - 316 -
Financial assets
- Non-current receivables 21 23 21
Retirement benefit asset 15 5,884 5,874 5,316
Deferred tax asset 26 205 26
75,267 82,867 73,883
Current assets
Inventories 22,622 24,856 26,613
Contract assets 10,390 7,124 7,915
Trade and other receivables 24,186 27,479 24,592
Current tax assets 2,374 3,133 3,895
Financial assets
- Cash and cash equivalents 13 21,581 23,493 23,123
81,153 86,085 86,138
Total assets 156,420 168,952 160,021
Current liabilities
Financial liabilities
- Borrowings 13 (8,718) (9,392) (13,714)
- Leases (1,471) (1,325) (1,264)
- Derivative financial instruments - (41) (4)
Contract liabilities (4,769) (3,165) (5,194)
Trade and other payables (18,883) (19,240) (16,556)
Current tax liabilities (55) (166) (131)
(33,896) (33,329) (36,863)
Non-current liabilities
Financial liabilities
- Borrowings 13 (4,894) (5,470) (5,206)
- Leases (5,085) (5,769) (5,559)
Deferred tax liabilities (4,844) (4,648) (4,447)
Other non-current liabilities (15) (233) (71)
(14,838) (16,120) (15,283)
Total liabilities (48,734) (49,449) (52,146)
Net assets 107,686 119,503 107,875
Shareholders' equity
Share capital 16 2,359 2,351 2,354
Share premium 16 10,862 10,522 10,664
Other reserves 3,506 6,121 3,581
Retained earnings 90,959 100,509 91,276
Total shareholders' equity 107,686 119,503 107,875
(1) See notes 9 and 19 for an explanation of the prior period restatements
to the period ended 4 March 2023 recognised in relation to the measurement of
fair value less costs to sell of the disposal group.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 29 February 2024
Treasury Equity Compensation Foreign Retained Total Non-Controlling
Share Share Share Reserve Exchange Other Earnings Shareholders' Interests Total
Capital Premium Reserve Reserve Reserve Equity Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 3 September 2023 (audited) 2,354 10,664 - 264 3,127 190 91,276 107,875 - 107,875
Profit for the period - - - - - - 2,819 2,819 - 2,819
Other comprehensive income - - - - 60 - 448 508 - 508
Total comprehensive income - - - - 60 - 3,267 3,327 - 3,327
Dividends paid - - - - - - (3,788) (3,788) - (3,788)
Equity-settled share-based payment transactions - - - 143 - - - 143 - 143
Allotment of shares 5 198 - - - - - 203 - 203
Purchase of own shares held in trust - - (74) - - - - (74) - (74)
Transfer - - 49 (251) - (2) 204 - - -
At 29 February 2024 (unaudited) 2,359 10,862 (25) 156 3,187 188 90,959 107,686 - 107,686
As previously reported at 3 September 2022 (unaudited) (1) 2,350 10,500 - 528 6,268 192 99,318 119,156 14,585 133,741
Prior period adjustment² - - - - - - (1,023) (1,023) (389) (1,412)
At 4 September 2022 (audited) (restated)² 2,350 10,500 - 528 6,268 192 98,295 118,133 14,196 132,329
Profit for the period (restated)² - - - - - - 4,217 4,217 214 4,431
Other comprehensive expense - - - - (666) - (1,084) (1,750) - (1,750)
Total comprehensive (expense)/income (restated)² - - - - (666) - 3,133 2,467 214 2,681
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 - - - - - - - - (14,410) (14,410)
Transfer - - - (184) - (1) 185 - - -
At 4 March 2023 (unaudited) (restated)² 2,351 10,522 - 328 5,602 191 100,509 119,503 - 119,503
At 4 September 2022³ (audited) 2,350 10,500 - 528 6,268 192 98,295 118,133 14,196 132,329
Loss for the period - - - - - - (226) (226) (535) (761)
Other comprehensive expense - - - - (3,141) - (2,081) (5,222) - (5,222)
Total comprehensive expense - - - - (3,141) - (2,307) (5,448) (535) (5,983)
Dividends paid - - - - - - (4,889) (4,889) - (4,889)
Equity-settled share-based payment transactions - - - (85) - - - (85) (7) (92)
Excess deferred taxation on share-based payments - - - - - - (4) (4) - (4)
Allotment of shares 4 164 - - - - - 168 - 168
Sale of disposal group - - - - - - - - (13,654) (13,654)
Transfer - - - (179) - (2) 181 - - -
At 2 September 2023 (audited) 2,354 10,664 - 264 3,127 190 91,276 107,875 - 107,875
( )
( )
(1 ) As reported in the Interim Report for the half year ended 4 March
2023.
(2) See notes 9 and 19 for an explanation of the prior period restatements
to the period ended 4 March 2023 recognised in relation to the measurement of
fair value less costs to sell of the disposal group.
(3) Previously restated in the Annual Report and Accounts for the year ended 2
September 2023
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 months ended 29 February 2024
6 months ended 6 months ended
29 February 2024 4 March 2023 Year ended
(unaudited) (unaudited) 2 September 2023
(audited)
Notes £'000 £'000 £'000
Cash flows from operating activities
Cash generated from continuing operations 17 4,334 4,040 3,155
Interest received 489 225 564
Interest paid (745) (663) (1,320)
Tax received/(paid) 1,454 (38) (278)
Net cash generated from operating activities in continuing operations 5,532 3,564 2,121
Net cash used in operating activities in discontinued operations - (2,952) (3,040)
Net cash generated from/(used in) operating activities 5,532 612 (919)
Cash flows from investing activities
Sale of disposal group (net of cash disposed and costs to sell) 4,000 24,341 25,619
Dividends received from joint ventures - - 1,390
Purchase of intangible assets (5) (157) (193)
Proceeds from sale of property, plant and equipment 3 - 48
Purchase of property, plant and equipment (1,330) (1,970) (3,194)
Net cash generated from investing activities in continuing operations 2,668 22,214 23,670
Net cash used in investing activities in discontinued operations - (604) (487)
Net cash generated from investing activities 2,668 21,610 23,183
Cash flows from financing activities
Proceeds from issue of ordinary share capital 203 23 167
Purchase of own shares held in trust (74) - -
New financing and drawdowns on RCF (75) 4,741 5,574
Repayment of RCF drawdowns - (21,741) (21,741)
Lease principal repayments (684) (764) (1,545)
Repayment of borrowings (1,127) (4,011) (4,263)
Dividends paid to shareholders (3,788) (1,104) (4,889)
Net cash used in financing activities in continuing operations (5,545) (22,856) (26,697)
Net cash used in financing activities in discontinued operations - (9,599) (9,599)
Net cash used in financing activities (5,545) (32,455) (36,296)
Effects of exchange rate changes (36) 33 (54)
Net increase/(decrease) in cash and cash equivalents 2,619 (10,200) (14,086)
Cash and cash equivalents at beginning of the period 10,769 24,856 24,855
Cash and cash equivalents at end of the period 13,388 14,656 10,769
Cash and cash equivalents consist of:
Cash and cash equivalents per the balance sheet 21,581 23,493 23,123
Bank overdrafts included in borrowings (8,193) (8,837) (12,354)
13,388 14,656 10,769
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 six months 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 six months of the financial year; and
· material related party transactions in the first six months
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 2023 with the
exception of Fiona Rodford who joined the Board on 20 February 2024. The
following changes to the Board took place in the period: Gillian Watson was
appointed to the Board on 9 October 2023, John Worby stepped down from the
Board on 31 October 2023, Peter Page stepped down from the Board on 17
November 2023 and Fiona Rodford was appointed to the Board on 20 February
2024. In addition, former CFO David White became CEO from 17 November 2023,
and former Non-Executive Director Martin Rowland became Executive Director of
Transformation from 13 November 2023. A list of current Directors is
maintained on the website: www.carrsgroup.com (http://www.carrsgroup.com)
On behalf of the Board
Tim Jones David White
Chair Chief Executive Officer
18 April 2024 18 April 2024
Unaudited notes to condensed interim financial information
1. General information
The Group operates two divisions: Agriculture, previously known as 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 18
April 2024.
The comparative figures for the financial year ended 2 September 2023 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 six months ended 29
February 2024 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 31 August
2024 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 2
September 2023 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 2026.
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 reduction in customer demand and
reliance on key customers; and supply chain constraints and delays impacting
operations. 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 29 February 2024. Our
effective tax rate in respect of continuing operations was 29.5% (H1 2023:
restated 22.7%) after adjusting for results from joint ventures, which are
reported net of tax. The higher effective tax rate reflects the impact of UK
corporate tax at 25% compared to a blended rate of 21.5% in H1 2023 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 4 March
2023 have been restated to reflect the impact of the prior period restatements
recognised in the Annual Report and Accounts for the year ended 2 September
2023. The restatements were in respect of 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 year ended 2 September 2023,
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 2 September 2023.
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
Agriculture, previously known 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. Central comprises the central business
activities of the Group's head office, which earns no external revenues.
Disclosures for the period ended 4 March 2023 have been restated and 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 six months ended 29 February
2024 and the comparative periods.
6 months ended 29 February 2024
Agriculture Engineering Central Group
£'000 £'000 £'000 £'000
Revenue from external customers(3) 52,847 28,525 - 81,372
Adjusted(1) EBITDA(2) 4,364 3,662 (1,526) 6,500
Depreciation, amortisation and profit/(loss) on disposal of non-current assets
(784) (1,213) (114) (2,111)
Share of post-tax results of joint ventures 1,369 - - 1,369
Adjusted(1) operating profit/(loss) 4,949 2,449 (1,640) 5,758
Adjusting items (note 8) (988) (228) (1,002) (2,218)
Operating profit/(loss) 3,961 2,221 (2,642) 3,540
Finance income 630
Finance costs (745)
Adjusted(1) profit before taxation 5,643
Adjusting items (note 8) (2,218)
Profit before taxation 3,425
Segment gross assets 56,822 77,230 22,368 156,420
Segment gross liabilities (13,557) (27,335) (7,842) (48,734)
(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 joint ventures.
(3 ) There were no inter segment revenues in the period ended 29 February
2024
The segmental information for the six months ended 4 March 2023 has been
restated and further details of the prior period restatements can be found in
notes 9 and 19.
6 months ended 4 March 2023 (restated)
Continuing Discontinued operations
Agriculture Engineering Central Group £'000
£'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) 5,376 2,313 (1,157) 6,532 576
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) 5,994 1,117 (1,272) 5,839 1,093
Adjusting items (note 8) (546) (231) 151 (626) (584)
Operating profit/(loss) 5,448 886 (1,121) 5,213 509
Finance income 382 -
Finance costs (609) (216)
Adjusted(1) profit before taxation 5,612 877
Adjusting items (note 8) (626) (584)
Profit before taxation 4,986 293
Taxation of discontinued operations (79)
Profit for the period from discontinued operations (note 9) 214
Segment gross assets 61,789 77,199 29,964 168,952 -
Segment gross liabilities (16,243) (24,471) (8,735) (49,449) -
(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.
Year ended 2 September 2023
Continuing Discontinued operations
Agriculture Engineering Central Group £'000
£'000 £'000 £'000 £'000
Total segment revenue 93,960 50,609 - 144,569 53,212
Inter-segment revenue (1,320) (35) - (1,355) (1)
Revenue from external customers 92,640 50,574 - 143,214 53,211
Adjusted(1) EBITDA(2) 6,117 7,678 (2,850) 10,945 (1,821)
Depreciation, amortisation and profit/(loss) on disposal of non-current assets
(1,916) (2,394) (126) (4,436) -
Share of post-tax results of associate and joint ventures 1,441 - - 1,441 466
Adjusted(1) operating profit/(loss) 5,642 5,284 (2,976) 7,950 (1,355)
Adjusting items (note 8) (3,315) (2,283) (401) (5,999) 3
Operating profit/(loss) 2,327 3,001 (3,377) 1,951 (1,352)
Finance income 876 -
Finance costs (1,320) (186)
Adjusted(1) profit/(loss) before taxation 7,506 (1,541)
Adjusting items (note 8) (5,999) 3
Profit/(loss) before taxation 1,507 (1,538)
Taxation of discontinued operations 381
Loss for the period from discontinued operations (note 9) (1,157)
Segment gross assets 53,490 77,190 29,341 160,021 -
Segment gross liabilities (13,702) (29,393) (9,051) (52,146) -
( )
(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.
6 months 6 months Year
ended ended ended
29 February 4 March 2 September
2024 2023 2023
Timing of revenue recognition £'000 £'000 £'000
Over time 19,046 12,350 29,050
At a point in time 62,326 67,404 114,164
81,372 79,754 143,214
8. Adjusting items
6 months
6 months ended Year
ended 4 March ended
29 February 2023 2 September
2024 (restated) 2023
£'000 £'000 £'000
Continuing operations
Amortisation of acquired intangible assets (i) 272 476 947
Restructuring/closure costs (ii) 1,473 - 607
Strategic review costs (iii) 181 (151) -
Cloud configuration and customisation costs - Group (iv) 292 301 602
Goodwill and other intangible assets impairment (v) - - 3,843
Charge included in profit before taxation 2,218 626 5,999
Taxation effect of the above adjusting items (529) (148) (559)
Charge included in profit for the period from continuing operations 1,689 478 5,440
Discontinued operations
Loss/(profit) on fair value measurement less costs to sell (vi) - 584 (3)
Charge/(credit) included in discontinued operations - 584 (3)
(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) Restructuring/closure costs include costs incurred in
relation to the restructure of the Agriculture Division and Group functions.
(iii) Strategic review costs include external advisor fees
incurred in the development of the Group's strategy.
(iv) Costs relating to material spend in relation to the
implementation of the Group's ERP system that have now been expensed following
the adoption of the IFRIC agenda decision.
(v) Impairment of goodwill and other intangible assets in
respect of the Animax Ltd cash-generating unit and impairment of goodwill in
respect of the NW Total Engineered Solutions Ltd cash-generating unit.
(vi) The Group disposed of its interest in the Carr's Billington
Agricultural business on 26 October 2022. The loss/(profit) on fair value
measurement less costs to sell in the prior periods presented arose from the
structure of the sale and offsets the retained earnings from discontinued
operations between 3 September 2022 and completion date. Further details of
the prior period restatements to the period ended 4 March 2023 can be found in
notes 9 and 19.
9. Discontinued operations
On 26 October 2022 the Group completed the disposal of its interests in the
Carr's Billington Agricultural business to Edward Billington and Son Limited.
Full details of the disposal including proceeds received and net assets
disposed can be found in the Annual Report and Accounts for the year ended 2
September 2023.
Subsequent to the publication of the 2023 interim statement, a correction to
the measurement of fair value less costs to sell was identified, which was
required to reflect property rental terms agreed with the Billington group as
part of the sale process. This increased the loss on measurement of fair value
less costs to sell by £1.2m, with £0.8m of this being attributable to the
Group. The results of the Group for the period to 4 March 2023 and balance
sheet as at 4 March 2023 have been restated to reflect this and the subsequent
accounting for deferred rental income during that period. In addition, the
loss recognised from discontinued operations for the period ended 4 March 2023
has also been restated for amendments to the fair value less costs to sell
recognised at 3 September 2022 to align with the position reflected at that
date in the Annual Report and Accounts 2023. Further details of the prior
period restatements can be found in note 19.
The table below shows the results of the discontinued operations.
6 months
6 months ended Year
ended 4 March ended
29 February 2023 2 September
2024 (restated) 2023
£'000 £'000 £'000
Revenue - 63,797 53,211
Expenses - (63,437) (55,218)
- 360 (2,007)
Share of post-tax results of associate - 415 378
Share of post-tax results of joint venture - 102 88
Profit/(loss) before taxation of discontinued operations - 877 (1,541)
Taxation - (79) 381
Profit/(loss) after taxation of discontinued operations - 798 (1,160)
Pre-taxation (loss)/gain recognised on the measurement to fair value less - (584)
costs to sell
3
Taxation - - -
After taxation (loss)/gain recognised on the measurement to fair value less - (584)
costs to sell
3
Profit/(loss) for the period from discontinued operations - 214 (1,157)
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:
6 months
6 months ended Year
ended 4 March 2023 (restated) Ended
29 February 2024 2 September 2023
£'000
£'000 £'000
Continuing operations
Earnings 2,819 4,217 396
Adjusting items:
Amortisation of acquired intangible assets 272 476 947
Restructuring/closure costs 1,473 - 607
Strategic review costs 181 (151) -
Cloud configuration and customisation costs - Group 292 301 602
Goodwill and other intangible assets impairment - - 3,843
Taxation effect of the above (529) (148) (559)
Earnings - adjusted 4,508 4,695 5,836
Discontinued operations
Earnings - - (622)
Adjusting items:
Loss/(profit) on fair value measurement less costs to sell - 584 (3)
Earnings - adjusted - 584 (625)
Continuing operations 2,819 4,217 396
Discontinued operations - - (622)
Total earnings (basic) 2,819 4,217 (226)
Continuing operations 4,508 4,695 5,836
Discontinued operations - 584 (625)
Total earnings (adjusted) 4,508 5,279 5,211
Number Number Number
Weighted average number of ordinary shares in issue 94,164,086 94,010,254 94,058,319
Potentially dilutive share options 926,448 1,389,767 714,964
95,090,534 95,400,021 94,773,283
Earnings per share (pence) (restated)
Continuing operations
Basic 3.0p 4.5p 0.4p
Diluted 3.0p 4.4p 0.4p
Adjusted 4.8p 5.0p 6.2p
Diluted adjusted 4.7p 4.9p 6.2p
Discontinued operations
Basic - - (0.7)p
Diluted - - (0.7)p
Adjusted - 0.6p (0.7)p
Diluted adjusted - 0.6p (0.7)p
Total Group
Basic 3.0p 4.5p (0.3)p
Diluted 3.0p 4.4p (0.3)p
Adjusted 4.8p 5.6p 5.5p
Diluted adjusted 4.7p 5.5p 5.5p
11. Dividends
An interim dividend of £1,105,740 (H1 2023: £1,103,968) that related to the
period to 2 September 2023 was paid on 29 September 2023. A final dividend
of £2,682,733 (H1 2023: £2,680,121) in respect of the period to 2 September
2023 was paid on 1 March 2024.
12. Intangible assets, property, plant and equipment, right-of-use
assets and investment property
Other Property,
intangible plant and Right-of-use Investment
Goodwill assets equipment assets Property
£'000 £'000 £'000 £'000 £'000
6 months ended 29 February 2024
Opening net book amount at 3 September 2023 19,161 3,318 29,950 7,323 2,640
Exchange differences 31 3 49 3 -
Additions and lease modifications - 5 1,324 490 -
Disposals - - (2) (70) -
Depreciation and amortisation - (298) (1,419) (634) (40)
Closing net book amount at 29 February 2024 19,192 3,028 29,902 7,112 2,600
6 months 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 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
In the period ended 4 March 2023 reclassifications included property assets
leased by companies in the continuing Group to Carrs Billington Agriculture
(Sales) Ltd that were 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 amount to £1,233,000 (H1 2023: £418,000).
13. Borrowings
As at As at As at
29 February 4 March 2 September
2024 2023 2023
£'000 £'000 £'000
Current 8,718 9,392 13,714
Non-current 4,894 5,470 5,206
Total borrowings 13,612 14,862 18,920
Cash and cash equivalents as per the balance sheet (21,581) (23,493) (23,123)
Net cash (7,969) (8,631) (4,203)
Undrawn facilities 27,583 29,028 27,252
Current borrowings include bank overdrafts of £8.2m (H1 2023: £8.8m; YE
2023: £12.4m). Undrawn facilities include £7.3m (H1 2023: £8.8m; YE 2023:
£7.0m) in respect of facilities that are renewable on an annual basis.
Movements in borrowings are analysed as follows: 6 months 6 months
ended ended
29 February 2024 4 March 2023
£'000 £'000
Balance at start of period 18,920 36,539
Exchange differences 37 194
New bank loans and drawdowns on RCF (75) 4,741
Repayment of RCF drawdowns - (21,741)
Repayments of borrowings (1,127) (4,011)
Release of deferred borrowing costs 19 37
Net decrease to bank overdraft (4,162) (897)
Balance at end of period 13,612 14,862
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.
15 Retirement benefit asset
The amounts recognised in the Income Statement are as follows:
6 months 6 months Year
ended Ended ended
29 February 4 March 2 September
2024 2023 2023
£'000 £'000 £'000
Administrative expenses 171 66 166
Net interest on the net defined benefit asset (141) (157) (312)
Total expense/(income) 30 (91) (146)
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
29 February 4 March 2 September
2024 2023 2023
£'000 £'000 £'000
Present value of funded defined benefit obligations (42,928) (44,078) (42,505)
Fair value of scheme assets 48,812 49,952 47,821
Surplus in funded scheme 5,884 5,874 5,316
Actuarial gains of £598,000 (H1 2023: losses of £1,445,000) have been
reported in the Statement of Comprehensive Income. The surplus has increased
over the period since 2 September 2023 due to changes in market conditions.
Following completion of the disposal of the Carr's Billington Agricultural
business in the prior periods presented the Group made a one-off contribution
of £400,000 into the pension scheme.
16 Share capital
Number of shares Share capital Share premium £'000 Total
£'000
£'000
Allotted and fully paid ordinary shares of 2.5p each
Opening balance as at 3 September 2023 94,150,362 2,354 10,664 13,018
Proceeds from shares issued:
- Share save scheme 199,432 5 198 203
At 29 February 2024 94,349,794 2,359 10,862 13,221
Opening balance 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
199,432 shares were issued in the period to satisfy the share awards under the
share save scheme with exercise proceeds of £203,421. The related weighted
average price of the shares exercised in the period was £1.02 per share.
Since the period end the Company's issued share capital has increased to
94,378,027 shares due to the issue of 28,233 shares under the share save
scheme with exercise proceeds of £28,798 and a related weighted average
exercise price of £1.02 per share.
17 Cash generated from continuing operations
6 months
6 months ended Year
ended 4 March ended
29 February 2023 2 September
2024 (restated) 2023
£'000 £'000 £'000
Profit for the period from continuing operations 2,819 4,217 396
Adjustments for:
Tax 606 769 1,111
Tax credit in respect of R&D (380) (342) (695)
Depreciation of property, plant and equipment 1,419 1,499 3,023
Depreciation of right-of-use assets 634 654 1,308
Depreciation of investment property 40 27 67
Intangible asset amortisation 298 503 1,004
Goodwill and other intangible assets impairment - - 3,843
(Profit)/loss on disposal of property, plant and equipment (1) 82 (23)
(Profit)/loss on disposal of right-of-use assets (7) - 4
Net fair value charge/(credit) on share-based payments 143 (16) (78)
Other non-cash adjustments (186) (194) (894)
Interest income (630) (382) (876)
Interest expense and borrowing costs 764 646 1,376
Share of post-tax results of joint ventures (1,369) (1,596) (1,441)
IAS 19 income statement credit in respect of employer contributions - (400) (400)
IAS 19 income statement charge (excluding interest):
Administrative expenses 171 66 166
Changes in working capital:
Decrease/(increase) in inventories 4,050 2,101 (481)
Increase in receivables (6,050) (3,099) (3,173)
Increase/(decrease) in payables 2,013 (495) (1,082)
Cash generated from continuing operations 4,334 4,040 3,155
18 Related party transactions
The Group's significant related parties are its joint ventures, as disclosed
in the Annual Report and Accounts 2023. The Group also had an associate, Carrs
Billington Agriculture (Operations) Limited, until its disposal on 26 October
2022.
Sales to Purchases from Rent receivable from Net management charges to Amounts
owed from Amounts
owed to
£'000 £'000 £'000 £'000 £'000 £'000
6 months to
29 February 2024
Joint ventures 374 (318) - 97 122 (40)
6 months to
4 March 2023
Associate 65 - 3 18 - -
Joint ventures 84 (249) - 33 84 (76)
Amounts presented for transactions in the prior period are in respect of
continuing operations only. Transactions between the Carr's Billington
Agricultural businesses in the prior period are excluded as they are within
the same disposal group.
19 Prior period restatements
The results and financial position of the Group for the period ended 4 March
2023 have been restated to reflect the impact of the prior period restatements
recognised in the Annual Report and Accounts for the year ended 2 September
2023. The restatements were in respect of the measurement of fair value less
costs to sell of the disposal group.
Subsequent to the publication of the 2023 interim statement, a correction to
the measurement of fair value less costs to sell was identified, which was
required to reflect property rental terms agreed with the Billington group as
part of the sale process. This increased the loss on measurement of fair value
less costs to sell by £1.2m, with £0.8m of this being attributable to the
Group. The results of the Group for the period to 4 March 2023 and balance
sheet as at 4 March 2023 have been restated to reflect this and the subsequent
accounting for deferred rental income during that period. In addition, the
loss recognised from discontinued operations for the period ended 4 March 2023
has also been restated for amendments to the fair value less costs to sell
recognised at 3 September 2022 to align with the position reflected at that
date in the Annual Report and Accounts 2023.
The affected financial statement line items are as follows.
4 March 2023 (previously Restatement in respect of net assets disposed Restatement in respect of property rental terms
reported) £'000 £'000 4 March 2023 (restated)
£'000 £'000
Income Statement
Net operating expenses (14,178) - 73 (14,105)
Adjusted operating profit 5,766 - 73 5,839
Reported operating profit 5,140 - 73 5,213
Adjusted profit before taxation 5,539 - 73 5,612
Reported profit before taxation 4,913 - 73 4,986
Taxation (753) - (16) (769)
Adjusted profit for the period from continuing operations 4,638 - 57 4,695
Reported profit for the period from continuing operations 4,160 - 57 4,217
Profit/(loss) for the period from discontinued operations - 214 - 214
Profit/(loss) for the period 4,160 214 57 4,431
Profit/(loss) attributable to:
Equity shareholders 3,946 214 57 4,217
Basic EPS (pence) - continuing operations 4.4 - 0.1 4.5
Basic EPS (pence) - discontinued operations (0.2) 0.2 - -
Diluted EPS (pence) - discontinued operations (0.2) 0.2 - -
Statement of Comprehensive Income
Profit/(loss) for the period 4,160 214 57 4,431
Total comprehensive income/(expense) for the period 2,410 214 57 2,681
Total comprehensive income/(expense) attributable to:
Equity shareholders 2,196 214 57 2,467
Total comprehensive income/(expense) attributable to:
Continuing operations 2,410 - 57 2,467
Discontinued operations - 214 - 214
Restatement in respect of
4 March 2023 (previously property rental
reported) terms 4 March 2023 (restated)
£'000 £'000 £'000
Balance Sheet
Current tax assets 3,149 (16) 3,133
Total current assets 86,101 (16) 86,085
Total assets 168,968 (16) 168,952
Trade and other payables (18,717) (523) (19,240)
Total current liabilities (32,806) (523) (33,329)
Other non-current liabilities (20) (213) (233)
Total non-current liabilities (15,907) (213) (16,120)
Total liabilities (48,713) (736) (49,449)
Net assets 120,255 (752) 119,503
Retained earnings 101,261 (752) 100,509
Total shareholders' equity 120,255 (752) 119,503
The opening balance sheet of the period ended 4 March 2023 has been restated
and the affected financial statement line items are as follows.
3 September 2022 (previously restated)¹ Restatement in respect of net assets disposed Restatement in respect of property rental terms 3 September 2022
£'000 £'000 £'000 (restated)
£'000
Balance Sheet
Assets included in disposal group classified as held for sale 145,801 (214) (1,198) 144,389
Total current assets 225,751 (214) (1,198) 224,339
Total assets 308,973 (214) (1,198) 307,561
Net assets 133,741 (214) (1,198) 132,329
Retained earnings 99,318 (214) (809) 98,295
Total shareholders' equity 119,156 (214) (809) 118,133
Non-controlling interests 14,585 - (389) 14,196
Total equity 133,741 (214) (1,198) 132,329
1 Previously restated values in the Interim Report for the half year ended
4 March 2023.
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 operating margin Adjusted operating profit as defined above as a percentage of revenue.
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.
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