TIDMCARR

RNS Number : 0928W

Carr's Group PLC

21 April 2021

21 April 2021

CARR'S GROUP PLC ("Carr's" or the "Group")

INTERIM RESULTS

For the 26 weeks ended 27 February 2021

"An improved H1 performance in a challenging environment"

Carr's (CARR.L), the Agriculture and Engineering Group, announces its Interim Results for the 26 weeks ended 27 February 2021.

Financial highlights

 
                             Adjusted(1)   Adjusted(1)      +/- 
                                 H1 2021       H1 2020 
 
 Revenue (GBPm)                    201.4         200.0    +0.7% 
 Adjusted(1) operating 
  profit (GBPm)                     10.9          10.3    +5.3% 
 Adjusted(1) profit 
  before tax (GBPm)                 10.4           9.6    +8.1% 
 Adjusted(1) EPS (p)                 8.2           8.0    +2.5% 
 Net debt (2) (GBPm)                10.6          25.4   -58.5% 
                               Statutory     Statutory      +/- 
                                 H1 2021       H1 2020 
 
 Revenue (GBPm)                    201.4         200.0    +0.7% 
 Operating profit (GBPm)            10.7          11.2    -5.1% 
 Profit before tax (GBPm)           10.2          10.5    -3.2% 
 Basic EPS (p)                       8.2           9.3   -11.8% 
 Interim dividend (p)              1.175             -      N/A 
 

Highlights

   -- Initial business review complete following appointment of new CEO. 
 
   -- Group now structured in three divisions: Speciality Agriculture (feed blocks, minerals, and trace element boluses, 
      formerly Supplements), Agricultural Supplies (formerly UK Agriculture) and Engineering. 
 
   -- Resilient business model despite COVID-19 and Brexit uncertainty - all agricultural stores and manufacturing 
      facilities operational throughout. 
 
   -- Strong performance from Speciality Agriculture and Agricultural Supplies. 
 
   -- Engineering adversely impacted by low oil prices and travel restrictions in H1 but expected to be significantly 
      better in H2.  Order book now stands at GBP44m, increased by 19% since year end and order intake now improving. 
 
   -- Business improvement programme initiated to simplify, standardise, and generate synergies between business units 
      in each division. 
 
   -- Reportable accident frequency rate reduced compared to last year and COVID-19 controls remain effective. 

1 Adjusted results are consistent with how business performance is measured internally and are presented to aid comparability Page 1 of performance. Adjusting items are disclosed in note 8.

   2             Excluding leases. Further details of net debt can be found in note 12. 

Outlook

A continued positive performance is forecast across the Agricultural divisions together with an improved second half in the Engineering division as the impact of COVID-19 begins to recede and its order intake continues to increase. A programme of simplification and standardisation is forecast to improve performance over time. Trading since 27 February 2021 has been positive and the Board's expectations for the current financial year remain unchanged.

Hugh Pelham, Chief Executive Officer, commented:

"Despite a challenging operational environment with significant headwinds experienced in Engineering we have delivered an improved performance compared to the same period last year. Our Speciality Agriculture and Agricultural Supplies divisions have performed particularly strongly. The outlook for Engineering is for an improved performance in the second half of the financial year.

"I have been fortunate to inherit some sound foundations from my predecessor, Tim Davies. Carr's Group owns a portfolio of good businesses with strong market positions.

"Our people have responded brilliantly to the challenge of working in a COVID-19 environment. I would like to thank them for their commitment and dedication in keeping all our stores, fuel depots and manufacturing operations running in such difficult times.

"An initial operating review has been conducted and the Group is now structured in three divisions: Speciality Agriculture, Agricultural Supplies and Engineering to create greater operational efficiencies, market focus and provide greater transparency for investors. The results of our Speciality Agriculture division demonstrate the quality of our products in the feed block, minerals and animal health markets.

"Actions have been taken to strengthen reporting and governance systems within the business as part of a process to identify opportunities for improvement.

"Considerable opportunity exists to optimise the current portfolio through a process of standardisation, simplification and seeking synergies between similar businesses. Growth can be achieved through a mixture of geographic expansion, selling all our service lines to our customer base, and acquisition and potential industry consolidation.

"I am confident that the Group will continue to deliver a resilient and improving set of results over time."

Enquiries:

 
 Carr's Group plc   Tel: +44 (0) 1228 554600 
 

Hugh Pelham (Chief Executive Officer)

Neil Austin (Chief Financial Officer)

 
 Powerscourt   Tel: +44 (0) 20 7250 1446 
 

Nick Dibden / Lisa Kavanagh / Sam Austrums

About Carr's Group plc:

Carr's is an international leader in manufacturing value added products and solutions, with market leading brands and robust market positions in Agriculture and Engineering, supplying customers in over 50 countries around the world. Carr's operates a decentralised business model that empowers operating subsidiaries enabling them to be competitive, agile, and effective in their individual markets whilst setting overall standards and goals.

Its Speciality Agriculture division manufactures and supplies feed blocks, minerals and boluses containing trace metals and minerals for livestock.

Its Agricultural Supplies division manufactures compound animal feed, distributes farm machinery and runs a UK network of rural stores, providing a one-stop shop for the farming community.

Its Engineering division designs and manufactures pressure vessels, manufactures precision components from specialist steel alloys, manufactures robotic manipulators, and provides engineering design, assembly, and installation services for the nuclear, defence and oil & gas industries.

INTERIM MANAGEMENT REPORT

HSE AND COVID-19

The health, safety and wellbeing of our employees and customers is of paramount importance. We continue to follow Government guidelines and maintain rigorous social distancing controls, hygiene measures and shift-working practices across all locations.

The reportable accident frequency rate compared to last year has declined and various improvements in health, safety, and environmental management systems across the Group have been implemented.

The impact of the COVID-19 pandemic on the Group remains under close review by the Board. The Group has successfully implemented a range of measures and planned contingencies across all our businesses which are designed to minimise the impact of the pandemic, and as a result all our manufacturing facilities have remained fully operational. However, we have been impacted by delays in the progress of engineering projects and restrictions on visiting customer sites.

Given the positive trading performance during the period the Group has not utilised the Coronavirus Job Retention Scheme and currently has no plans to do so.

RESULTS

In challenging market conditions, Carr's has delivered an improved performance in the period.

During the 26 weeks ended 27 February 2021 revenues increased to GBP201.4m (H1 2020: GBP200.0m).

Adjusted operating profit of GBP10.9m (H1 2020: GBP10.3m) was 5.3% up on the prior year. Adjusted profit before tax increased by 8.1% to GBP10.4m (H1 2020: GBP9.6m). The improvement in adjusted profits is mainly attributable to improved performances in Speciality Agriculture and Agricultural Supplies.

Adjusted earnings per share increased by 2.5% to 8.2p (H1 2020: 8.0p).

STRATEGIC AND OPERATIONAL REVIEW

The Group has commenced a strategic and operational review. As a result of this, its activities are now structured into three divisions:

   1.         Speciality Agriculture 
   2.         Agricultural Supplies 
   3.         Engineering 

Our strategy is to continue to invest in established businesses with distinct value propositions or new companies with proven technology and strong growth prospects.

We will add value by:

-- Differentiating - investing in innovative technology, patented processes / products and better customer service.

-- Optimising - simplifying, standardising and seeking synergies between related companies in our portfolio.

-- Consolidating - creating scale and critical mass by consolidating similar businesses in a market sector.

-- Growing - expanding our geographic presence, cross selling to our customer base and developing new products.

Each division has developed an initial plan in these areas, and these will be further refined over the coming months. The Group will continue its strategic and operational review in the second half of this financial year.

SPECIALITY AGRICULTURE

Speciality Agriculture comprises our feed blocks, mineral supplements and trace element boluses in the UK, Europe, North America, and New Zealand.

 
                         H1 2021     H1 2020   % Change 
 
 Revenue                GBP40.2m    GBP36.6m      +9.8% 
 Adjusted operating 
  profit                 GBP8.2m     GBP6.5m     +24.7% 
 

Our businesses have performed strongly in all geographic areas driven by strong livestock prices and more seasonal weather patterns than prior years. Overall, 101,000 tonnes of feed blocks and speciality minerals were sold worldwide, an increase of 8.4% year on year. Sales revenues recovered in our animal health business, Animax. Our project to automate the production process at Animax continues with benefits expected in the next financial year.

Our strategy remains to focus on molasses based feed blocks and specialist animal health products where our patented manufacturing processes deliver differentiated products. Initiatives to improve processes, supply chain buying and upgrade our manufacturing plants are underway. Growth opportunities to expand our presence in the USA, Canada and Germany are the highest priority, as well as developing more environmentally sustainable packaging for key products lines.

AGRICULTURAL SUPPLIES

Agricultural Supplies comprises our Carr's Billington branded agricultural stores, machinery, fuel and compound feed business and our joint venture business Bibby Agriculture.

 
                          H1 2021      H1 2020   % Change 
 
 Revenue                GBP137.7m    GBP138.4m      -0.5% 
 Adjusted operating 
  profit                  GBP3.3m      GBP2.5m     +33.5% 
 

Total feed sales volumes increased to 318kt, an increase of 0.4% compared to the prior year. Machinery revenues were also strong, increasing by 29.1% year on year, and total retail sales also increased by 4.3% with like-for-like sales showing an 8.1% increase. Fuel volumes were down 2.5% versus the prior year, with the main impact being felt in the first quarter of the financial year.

Significant increases in raw material prices impacted the profitability of the feed business in the first half, however, margins were stronger in retail, fuel and machinery which helped offset the impact of higher raw material costs.

In the UK specifically, the agreement of a trade deal with the EU in December 2020 has significantly improved farmer confidence, which has been further buoyed by strong farmgate prices. The UK Agriculture Bill will also provide opportunities as farmers are incentivised by efficiency and environmental schemes.

Our strategy remains to provide all a farmer needs and differentiate ourselves through our product range, our customer and technical service levels, having a local presence, and the quality of our compound feeds. Operationally, a number of initiatives have been implemented to standardise product range and prices, improve supply chain arrangements and better manage raw material buying and pricing. Further opportunities to grow exist through the opening of new stores and industry consolidation.

ENGINEERING

Engineering comprises our fabrication and precision engineering businesses in the UK, robotics businesses in the UK and Europe and our engineering solutions businesses in the UK and USA.

 
                         H1 2021     H1 2020   % Change 
 
 Revenue                GBP23.6m    GBP24.9m      -5.4% 
 Adjusted operating 
  profit                 GBP0.9m     GBP1.2m     -24.1% 
 

The profitability of our engineering solutions business in the USA and UK has been resilient with continued work with large blue-chip customers in the nuclear and defence sectors. Additional work has recently been secured in the defence sector.

The performance of our fabrication and precision engineering businesses have been adversely affected by low oil & gas prices. More positively, our fabrication business has received a significant level of orders in the nuclear sector. A turnaround plan is in place for the precision engineering business and performance is expected to be significantly better in H2.

The performance of our robotics business has substantively improved compared to H1 last year with exports to China expected to resume in H2 2021.

Our overall Engineering order book at GBP44m (H1 2020: GBP47m) is less than at the equivalent point last year but GBP7m higher than at the end of 2020 (FY 2020: GBP37m). In the second half of the prior year a significant number of orders were subsequently cancelled following the outbreak of COVID-19.

Our strategy in the Engineering division is to provide specialist high margin services primarily to the nuclear and defence sectors. Our differentiators include patented MSIP(R), Power Fluidics(TM) processes, the range of precision engineering machinery, the product life and quality of our robotic manipulators and a direct workforce with highly specialist welding capabilities.

Opportunities to grow exist with our current customer base by providing our full range of specialist services and by selectively pursuing new customers in the nuclear and defence industries in particular.

FINANCE REVIEW

Adjusted results

Revenue increased by 0.7% to GBP201.4m (H1 2020: GBP200.0m), with an increase of 9.8% in Speciality Agriculture offset by a reduction in both Engineering and Agricultural Supplies of 5.4% and 0.5% respectively.

Adjusted operating profit increased 5.3% to GBP10.9m (H1 2020: GBP10.3m). Strong performances in Speciality Agriculture, up 24.7%, and Agricultural Supplies, up 33.5%, were partially offset by a reduction in Engineering of 24.1%. Central costs were higher at GBP1.5m (H1 2020: credit of GBP0.1m) partly due to a change in provision for a non-recoverable debt, phasing, increased costs for performance related remuneration, and CEO handover costs.

Net finance costs of GBP0.5m (H1 2020: GBP0.7m) reduced year on year due to lower borrowings. Net debt was GBP10.6m at the period end (H1 2020: 25.4m), driven by a strong operating performance with EBITDA of GBP12.6m and a reduction in working capital of GBP4.1m, offset by dividends of GBP4.4m, net capital expenditure of GBP2.3m and tax and interest of GBP1.9m. The Group's main banking facilities run to 2023.

The Group's adjusted profit before tax increased by 8.1% to GBP10.4m (H1 2020: GBP9.6m).

Adjusted earnings per share increased by 2.5% to 8.2p (H1 2020: 8.0p). The increase is proportionately lower than the increase in profit before tax because of the higher effective tax rate, due to a higher mix of overseas profits and the impact of minority interests.

Adjusting items

The Group provides the adjusted profit measures referred to above to present additional useful information on business performance consistent with how business performance is measured internally. These measures show underlying profits before certain adjusting items.

In H1 2020, adjusting items were a net credit of GBP0.9m related mainly to adjustments to contingent consideration (H1 2020: GBP2.1m compared to H1 2021: GBP0.7m) partly offset by amortisation of intangible assets. In H1 2021, they are a charge of GBP0.2m. Full details of all adjusting items are given in note 8.

Statutory results

Reported operating profit on a statutory basis was GBP10.7m (H1 2020: GBP11.2m) and reported profit before tax was GBP10.2m (H1 2020: GBP10.5m). Basic earnings per share on a statutory basis was 8.2p (H1 2020: 9.3p).

Balance sheet and cash flow

Net cash generated from operating activities in the first half was GBP14.1m (H1 2020: GBP4.9m). Net debt, excluding leases, fell to GBP10.6m from GBP18.9m at the financial year end (H1 2020: GBP25.4m). This is primarily related to strong working capital management resulting in a working capital inflow of GBP4.1m combined with improved EBITDA.

The Group's defined benefit pension scheme remains in surplus but at a slightly decreased level of GBP7.8m compared to GBP8.0m at 29 August 2020.

Shareholder's equity

Shareholders' equity at 27 February 2021 was GBP119.0m (29 August 2020: GBP117.1m), with the increase primarily due to profit retained by the Group for the period offset by foreign exchange translation losses and dividends paid.

A first interim dividend of 1.175 pence per ordinary share will be paid on 8 June 2021 to shareholders on the register on 30 April 2021. The ex-dividend date will be 29 April 2021.

GOVERNANCE

The Group announces that, with effect from today, Kristen Eshak Weldon has been appointed as the Board's Representative for Employee Engagement. Kristen was appointed to the Board in October 2020 and takes on the role from Alistair Wannop who will be standing down from the Board in January 2022. Kristen is currently Global Head of ESG and Impact Investing at Partners Capital. Prior to this she served on the Executive Committee of Louis Dreyfus Company and co-headed the London office of Blackstone's Hedge Fund Solutions business. The Board considers that Kristen's experience of stakeholder engagement places her well to ensure that wider views across the workforce are fully understood and considered by the Board in its decision-making processes.

PRINCIPAL RISKS AND UNCERTAINTIES

The Group has a process in place to identify and assess the impact of risks on its business, which is reviewed and updated quarterly. The principal risks and uncertainties for the remainder of the financial year are not considered to have changed materially from those included on pages 28 to 30 of the Annual Report and Accounts 2020 (available on the Company's website at http://investors.carrsgroup.com ), with the exception of Brexit where the risk has reduced following the UK-EU trade agreement which took effect from 31 December 2020.

OUTLOOK

A continued positive performance is forecast across the Agricultural divisions together with an improved second half in the Engineering division as the impact of COVID-19 begins to recede and its order intake continues to increase. A programme of simplification and standardisation is forecast to improve performance over time. Trading since 27 February 2021 has been positive and the Board's expectations for the current financial year remain unchanged.

CONDENSED CONSOLIDATED INCOME STATEMENT

For the 26 weeks ended 27 February 2021

 
                                                                                       26 weeks               52 weeks 
                                                            26 weeks ended                ended                  ended 
                                                               27 February          29 February              29 August 
                                                                      2021                 2020                   2020 
                                                               (unaudited)          (unaudited)              (audited) 
                                               Notes               GBP'000              GBP'000                GBP'000 
--------------------------------------------  ------  --------------------  -------------------  --------------------- 
 Continuing operations 
 
 Revenue                                         6,7               201,435              199,957                395,630 
 Cost of sales                                                   (173,412)            (172,924)              (343,381) 
 
 Gross profit                                                       28,023               27,033                 52,249 
 
 Net operating expenses                                           (19,547)             (17,685)               (41,042) 
 Share of post-tax results of associate and 
  joint ventures                                                     2,196                1,892                  2,633 
 
 Adjusted (1) operating profit                     6                10,869               10,322                 16,247 
 Adjusting items                                   8                 (197)                  918                (2,407) 
--------------------------------------------  ------  --------------------  -------------------  --------------------- 
 Operating profit                                  6                10,672               11,240                 13,840 
 
 Finance income                                                        135                  178                    313 
 Finance costs                                                       (633)                (905)                (1,656) 
 
 Adjusted (1) profit before taxation               6                10,371                9,595                 14,904 
 Adjusting items                                   8                 (197)                  918                (2,407) 
--------------------------------------------  ------  --------------------  -------------------  --------------------- 
 Profit before taxation                            6                10,174               10,513                 12,497 
 
 Taxation                                                          (1,714)              (1,382)                (1,575) 
 
 
 Profit for the period                                               8,460                9,131                 10,922 
--------------------------------------------  ------  --------------------  -------------------  --------------------- 
 
 Profit attributable to: 
 Equity shareholders                                                 7,574                8,565                  9,533 
 Non-controlling interests                                             886                  566                  1,389 
 
 
                                                                     8,460                9,131                 10,922 
--------------------------------------------  ------  --------------------  -------------------  --------------------- 
 
 
 Earnings per share (pence) 
 Basic                                             9                   8.2                  9.3                   10.3 
 Diluted                                           9                   7.9                  9.1                   10.2 
 Adjusted (1)                                      9                   8.2                  8.0                   11.9 
 Diluted adjusted (1)                              9                   8.0                  7.9                   11.8 
 
 

1 Adjusted results are consistent with how business performance is measured internally and is presented to aid comparability of performance. Adjusting items are discussed in note 8. An alternative performance measures glossary can be found in note 18.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the 26 weeks ended 27 February 2021

 
                                                                       26 weeks ended                         52 weeks 
                                                                          27 February                            Ended 
                                                                                 2021      26 weeks ended    29 August 
                                                                          (unaudited)    29 February 2020         2020 
                                                                                              (unaudited)    (audited) 
                                                              Notes           GBP'000             GBP'000      GBP'000 
-----------------------------------------------------------  ------  ----------------  ------------------  ----------- 
 
 
 
 Profit for the period                                                          8,460               9,131       10,922 
-----------------------------------------------------------  ------  ----------------  ------------------  ----------- 
 
 Other comprehensive (expense)/income 
 
 Items that may be reclassified subsequently to profit or 
 loss: 
 Foreign exchange translation losses arising on 
  translation of overseas subsidiaries                                        (1,752)             (2,778)      (2,552) 
 Net investment hedges                                                             76                 210         (54) 
 Taxation (charge)/credit on net investment hedges                               (14)                (40)           10 
 
 Items that will not be reclassified subsequently to profit 
 or loss: 
 Actuarial (losses)/gains on retirement benefit asset: 
 - Group                                                         14             (295)             (1,187)          142 
 - Share of associate                                                               -                   -          408 
 
 Taxation credit/(charge) on actuarial (losses)/gains on 
 retirement benefit asset: 
 - Group                                                                           56                 202         (27) 
 - Share of associate                                                               -                   -         (96) 
 
 Other comprehensive expense for the period, net of tax                       (1,929)             (3,593)      (2,169) 
-------------------------------------------------------------------  ----------------  ------------------  ----------- 
 
 Total comprehensive income for the period                                      6,531               5,538        8,753 
-----------------------------------------------------------  ------  ----------------  ------------------  ----------- 
 
 Total comprehensive income attributable to: 
 Equity shareholders                                                            5,645               4,972        7,364 
 Non-controlling interests                                                        886                 566        1,389 
 
                                                                                6,531               5,538        8,753 
-----------------------------------------------------------  ------  ----------------  ------------------  ----------- 
 
 

CONDENSED CONSOLIDATED BALANCE SHEET

As at 27 February 2021

 
                                                                     As at          As at                        As at 
                                                               27 February    29 February                    29 August 
                                                                      2021           2020                         2020 
                                                               (unaudited)    (unaudited)                    (audited) 
                               Notes                               GBP'000        GBP'000                      GBP'000 
----------------------------  ------  ------------------------------------  -------------  --------------------------- 
 Non-current assets 
 Goodwill                         11                                31,530         32,070                       32,041 
 Other intangible assets          11                                 9,118          9,315                        9,171 
 Property, plant and 
  equipment                       11                                35,609         36,767                       38,259 
 Right-of-use assets              11                                16,265         15,870                       14,856 
 Investment property              11                                   155            161                          158 
 Investment in associate                                            14,860         13,846                       14,307 
 Interest in joint ventures                                         11,492         10,392                       10,551 
 Other investments                                                      72             74                           73 
 Financial assets 
 - Non-current receivables                                              20             21                           20 
 Retirement benefit asset         14                                 7,807          6,643                        8,037 
 Deferred tax assets                                                     -            410                            - 
                                                                   126,928        125,569                      127,473 
----------------------------  ------  ------------------------------------  -------------  --------------------------- 
 
 Current assets 
 Inventories                                                        43,392         48,915                       40,961 
 Contract assets                                                     7,885          8,412                        8,114 
 Trade and other receivables                                        59,496         60,537                       51,686 
 Current tax assets                                                  2,058            328                        1,535 
 Financial assets 
 - Derivative financial 
  instruments                                                            -              -                            3 
 - Cash and cash equivalents      12                                24,838         29,318                       17,571 
                                                                   137,669        147,510                      119,870 
----------------------------  ------  ------------------------------------  -------------  --------------------------- 
 
 Total assets                                                      264,597        273,079                      247,343 
----------------------------  ------  ------------------------------------  -------------  --------------------------- 
 
 Current liabilities 
 Financial liabilities 
 - Borrowings                     12                               (8,580)       (26,855)                     (11,420) 
 - Leases                                                          (2,965)        (2,557)                      (2,778) 
 Contract liabilities                                              (3,019)        (2,351)                      (1,061) 
 Trade and other payables                                         (67,704)       (62,520)                     (55,522) 
 Current tax liabilities                                             (494)          (158)                         (33) 
----------------------------  ------  ------------------------------------  -------------  --------------------------- 
                                                                  (82,762)       (94,441)                     (70,814) 
----------------------------  ------  ------------------------------------  -------------  --------------------------- 
 Non-current liabilities 
 Financial liabilities 
 - Borrowings                     12                              (26,815)       (27,896)                     (25,021) 
 - Leases                                                         (12,177)       (12,666)                     (11,171) 
 Deferred tax liabilities                                          (4,830)        (4,634)                      (4,783) 
 Other non-current 
  liabilities                                                      (1,370)        (2,537)                      (1,385) 
                                                                  (45,192)       (47,733)                     (42,360) 
----------------------------  ------  ------------------------------------  -------------  --------------------------- 
 
 Total liabilities                                               (127,954)      (142,174)                    (113,174) 
----------------------------  ------  ------------------------------------  -------------  --------------------------- 
 
 Net assets                                                        136,643        130,905                      134,169 
----------------------------  ------  ------------------------------------  -------------  --------------------------- 
 
 Shareholders' equity 
 Share capital                    15                                 2,330          2,312                        2,312 
 Share premium                    15                                 9,613          9,165                        9,176 
 Other reserves                                                      2,363          4,379                        4,436 
 Retained earnings                                                 104,741         98,655                      101,202 
----------------------------  ------  ------------------------------------  -------------  --------------------------- 
 Total shareholders' equity                                        119,047        114,511                      117,126 
 Non-controlling interests                                          17,596         16,394                       17,043 
 Total equity                                                      136,643        130,905                      134,169 
----------------------------  ------  ------------------------------------  -------------  --------------------------- 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the 26 weeks ended 27 February 2021

 
                                                                                                                             Foreign Exchange 
                                                        Share Premium            Treasury                          Equity             Reserve                          Retained                        Total                     Non-       Total 
                                           Share                            Share Reserve                    Compensation                           Other Reserve      Earnings                Shareholders'              Controlling      Equity 
                                         Capital                                                                  Reserve                                                                             Equity                Interests 
                                         GBP'000              GBP'000             GBP'000                         GBP'000             GBP'000             GBP'000       GBP'000                      GBP'000                  GBP'000     GBP'000 
---------------------  -------------------------  -------------------  ------------------  ------------------------------  ------------------  ------------------  ------------  ---------------------------  -----------------------  ---------- 
 At 30 August 2020 
  (audited)                                2,312                9,176                (45)                             734               3,550                 197       101,202                      117,126                   17,043     134,169 
 Profit for the 
  period                                       -                    -                   -                               -                   -                   -         7,574                        7,574                      886       8,460 
 Other comprehensive 
  expense                                      -                    -                   -                               -             (1,690)                   -         (239)                      (1,929)                        -     (1,929) 
---------------------  -------------------------  -------------------  ------------------  ------------------------------  ------------------  ------------------  ------------  ---------------------------  -----------------------  ---------- 
 Total comprehensive 
  (expense)/income                             -                    -                   -                               -             (1,690)                   -         7,335                        5,645                      886       6,531 
 Dividends paid                                -                    -                   -                               -                   -                   -       (4,390)                      (4,390)                    (368)     (4,758) 
 Equity-settled 
  share-based payment 
  transactions                                 -                    -                   -                           (426)                   -                   -           646                          220                       35         255 
 Allotment of shares                          18                  437                   -                               -                   -                   -             -                          455                        -         455 
 Purchase of own 
  shares held in 
  trust                                        -                    -                 (9)                               -                   -                   -             -                          (9)                        -         (9) 
 Transfer                                      -                    -                  53                               -                   -                 (1)          (52)                            -                        -           - 
---------------------  -------------------------  -------------------  ------------------  ------------------------------  ------------------  ------------------  ------------  ---------------------------  -----------------------  ---------- 
 At 27 February 2021 
  (unaudited)                              2,330                9,613                 (1)                             308               1,860                 196       104,741                      119,047                   17,596     136,643 
---------------------  -------------------------  -------------------  ------------------  ------------------------------  ------------------  ------------------  ------------  ---------------------------  -----------------------  ---------- 
 
 At 1 September 2019 
  (audited)                                2,299                9,165                   -                           1,577               6,146                 199        93,771                      113,157                   16,125     129,282 
 Profit for the 
  period                                       -                    -                   -                               -                   -                   -         8,565                        8,565                      566       9,131 
 Other comprehensive 
  expense                                      -                    -                   -                               -             (2,608)                   -         (985)                      (3,593)                        -     (3,593) 
---------------------  -------------------------  -------------------  ------------------  ------------------------------  ------------------  ------------------  ------------  ---------------------------  -----------------------  ---------- 
 Total comprehensive 
  (expense)/income                             -                    -                   -                               -             (2,608)                   -         7,580                        4,972                      566       5,538 
 Dividends paid                                -                    -                   -                               -                   -                   -       (3,344)                      (3,344)                    (294)     (3,638) 
 Equity-settled 
  share-based payment 
  transactions                                 -                    -                   -                           (933)                   -                   -           659                        (274)                      (3)       (277) 
 Allotment of shares                          13                    -                   -                               -                   -                   -             -                           13                        -          13 
 Purchase of own 
  shares held in 
  trust                                        -                    -                (13)                               -                   -                   -             -                         (13)                        -        (13) 
 Transfer                                      -                    -                  12                               -                   -                 (1)          (11)                            -                        -           - 
---------------------  -------------------------  -------------------  ------------------  ------------------------------  ------------------  ------------------  ------------  ---------------------------  -----------------------  ---------- 
 At 29 February 2020 
  (unaudited)                              2,312                9,165                 (1)                             644               3,538                 198        98,655                      114,511                   16,394     130,905 
---------------------  -------------------------  -------------------  ------------------  ------------------------------  ------------------  ------------------  ------------  ---------------------------  -----------------------  ---------- 
 
 At 1 September 2019 
  (audited)                                2,299                9,165                   -                           1,577               6,146                 199        93,933                      113,319                   16,229     129,548 
 Profit for the 
  period                                       -                    -                   -                               -                   -                   -         9,533                        9,533                    1,389      10,922 
 Other comprehensive 
  (expense)/income                             -                    -                   -                               -             (2,596)                   -           427                      (2,169)                        -     (2,169) 
---------------------  -------------------------  -------------------  ------------------  ------------------------------  ------------------  ------------------  ------------  ---------------------------  -----------------------  ---------- 
 Total comprehensive 
  (expense)/income                             -                    -                   -                               -             (2,596)                   -         9,960                        7,364                    1,389       8,753 
 Dividends paid                                -                    -                   -                               -                   -                   -       (3,344)                      (3,344)                    (588)     (3,932) 
 Equity-settled 
  share-based payment 
  transactions                                 -                    -                   -                           (843)                   -                   -           691                        (152)                       15       (137) 
 Excess deferred 
  taxation on 
  share-based 
  payments                                     -                    -                   -                               -                   -                   -          (27)                         (27)                      (2)        (29) 
 Allotment of shares                          13                   11                   -                               -                   -                   -             -                           24                        -          24 
 Purchase of own 
  shares held in 
  trust                                        -                    -                (58)                               -                   -                   -             -                         (58)                        -        (58) 
 Transfer                                      -                    -                  13                               -                   -                 (2)          (11)                            -                        -           - 
---------------------  -------------------------  -------------------  ------------------  ------------------------------  ------------------  ------------------  ------------  ---------------------------  -----------------------  ---------- 
 At 29 August 2020 
  (audited)                                2,312                9,176                (45)                             734               3,550                 197       101,202                      117,126                   17,043     134,169 
---------------------  -------------------------  -------------------  ------------------  ------------------------------  ------------------  ------------------  ------------  ---------------------------  -----------------------  ---------- 
 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the 26 weeks ended 27 February 2021

 
                                                             26 weeks ended                                  26 weeks ended                                   52 weeks ended 
                                                           27 February 2021                                29 February 2020                                   29 August 2020 
                                                                (unaudited)                                     (unaudited)                                        (audited) 
                        Notes                                       GBP'000                                         GBP'000                                          GBP'000 
---------------------  ------  --------------------------------------------  ----------------------------------------------  ----------------------------------------------- 
 Cash flows from 
 operating activities 
 Cash generated from 
  continuing 
  operations               16                                        15,956                                           7,840                                           22,639 
 Interest received                                                       57                                             111                                              176 
 Interest paid                                                        (625)                                           (897)                                          (1,696) 
 Tax paid                                                           (1,300)                                         (2,139)                                          (3,059) 
---------------------  ------  --------------------------------------------  ----------------------------------------------  ----------------------------------------------- 
 Net cash generated                                                  14,088                                           4,915                                           18,060 
 from operating 
 activities 
---------------------  ------  --------------------------------------------  ----------------------------------------------  ----------------------------------------------- 
 Cash flows from 
 investing activities 
 Contingent/deferred                                                  (131)                                         (1,596)                                          (2,659) 
 consideration paid 
 Dividends received                                                     368                                             294                                              701 
 from associate and 
 joint ventures 
 Other loans                                                              -                                             382                                              718 
 Purchase of                                                          (780)                                           (845)                                          (1,459) 
 intangible assets 
 Proceeds from sale                                                     125                                             141                                              421 
 of property, plant 
 and equipment 
 Purchase of                                                        (1,645)                                         (2,569)                                          (6,569) 
 property, plant and 
 equipment 
 Purchase of own                                                        (9)                                            (13)                                             (58) 
 shares held in trust 
 Net cash used in                                                   (2,072)                                         (4,206)                                          (8,905) 
 investing activities 
---------------------  ------  --------------------------------------------  ----------------------------------------------  ----------------------------------------------- 
 Cash flows from 
 financing activities 
 Proceeds from issue                                                    455                                              13                                               24 
 of ordinary share 
 capital 
 New financing and                                                    5,609                                           2,500                                            1,889 
 movement on RCF 
 Lease principal                                                    (1,556)                                         (1,569)                                          (3,171) 
 repayments 
 Repayment of                                                       (1,200)                                         (1,247)                                          (2,459) 
 borrowings 
 (Decrease)/increase                                                  (604)                                             114                                         (14,508) 
 in other borrowings 
 Dividends paid to                                                  (4,390)                                         (3,344)                                          (3,344) 
 shareholders 
 Dividends paid to                                                    (368)                                           (294)                                            (588) 
 related party 
---------------------  ------  --------------------------------------------  ----------------------------------------------  ----------------------------------------------- 
 Net cash used in                                                   (2,054)                                         (3,827)                                         (22,157) 
 financing activities 
---------------------  ------  --------------------------------------------  ----------------------------------------------  ----------------------------------------------- 
 Effects of exchange                                                  (373)                                           (410)                                            (989) 
 rate changes 
---------------------  ------  --------------------------------------------  ----------------------------------------------  ----------------------------------------------- 
 Net                                                                  9,589                                         (3,528)                                         (13,991) 
 increase/(decrease) 
 in cash and cash 
 equivalents 
 Cash and cash 
  equivalents at 
  beginning of the 
  period                                                             10,304                                          24,295                                           24,295 
---------------------  ------  --------------------------------------------  ----------------------------------------------  ----------------------------------------------- 
 Cash and cash 
  equivalents at end 
  of the period                                                      19,893                                          20,767                                           10,304 
---------------------  ------  --------------------------------------------  ----------------------------------------------  ----------------------------------------------- 
 
 Cash and cash 
 equivalents consist 
 of: 
 Cash and cash 
  equivalents per the 
  balance sheet                                                      24,838                                          29,318                                           17,571 
 Bank overdrafts                                                    (4,945)                                         (8,551)                                          (7,267) 
 included in 
 borrowings 
---------------------  ------  --------------------------------------------  ----------------------------------------------  ----------------------------------------------- 
                                                                     19,893                                          20,767                                           10,304 
---------------------  ------  --------------------------------------------  ----------------------------------------------  ----------------------------------------------- 
 

Statement of Directors' responsibilities

We confirm that to the best of our knowledge:

   -- the condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial 
      Reporting as adopted by the European Union ("EU") pursuant to Regulation (EC) No 1606/2002 as it applies in the 
      EU and in accordance with international accounting standards in conformity with the requirements of the Companies 
      Act 2006; and 
   -- the interim management report includes a fair review of the information required by: 

(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party

transactions described in the last   Annual Report that could do so. 

The Directors are listed in the Annual Report and Accounts 2020, with the exception of the following changes in the period: Hugh Pelham was appointed on 4 January 2021, and Tim Davies resigned on 12 January 2021. Kristen Eshak Weldon was appointed on 1 October 2020 and was included in the list of Directors in the Annual Report and Accounts 2020. A list of current Directors is maintained on the website: www.carrsgroup.com

On behalf of the Board

   Hugh Pelham                                                                          Neil Austin 

Chief Executive Officer Chief Financial Officer

21 April 2021 21 April 2021

Unaudited notes to condensed interim financial information

   1.         General information 

The Group operates across three divisions of Speciality Agriculture, Agricultural Supplies and Engineering. The Company is a public limited company, which is listed on the London Stock Exchange and is incorporated and domiciled in the UK. The address of the registered office is Old Croft, Stanwix, Carlisle, Cumbria CA3 9BA.

These condensed interim financial statements were approved for issue on 21 April 2021.

The comparative figures for the financial year ended 29 August 2020 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

   2.         Basis of preparation 

These condensed interim financial statements for the 26 weeks ended 27 February 2021 have been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the EU pursuant to Regulation (EC) No 1606/2002 as it applies to the EU.

The annual financial statements of the Group for the year ending 28 August 2021 will be prepared in accordance with International Financial Reporting Standards (IFRSs) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the EU and in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, this condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 29 August 2020 which were prepared in accordance with IFRSs as adopted by the EU.

The Group is expected to have a sufficient level of financial resources available through operating cash flows and existing bank facilities for a period of at least 12 months from the signing date of these condensed consolidated interim financial statements. The Group has operated within all its banking covenants throughout the period. In addition, the Group's main banking facility is in place until November 2023 and an invoice discounting facility is in place until August 2023.

Detailed cash forecasts continue to be updated regularly for a period of at least 12 months from the reporting period end. These forecasts are sensitised for various worst case scenarios including a COVID-19 outbreak resulting in a short term closure, delays on order books, and reduced payments from customers. The results of this stress testing showed that, due to the stability of the core business, the Group would be able to withstand the impact of these severe but plausible downside scenarios occurring over the period of the forecasts.

In addition, several other mitigating measures remain available and within the control of the Directors that were not included in the scenarios. These include withholding discretionary capital expenditure and reducing or cancelling future dividend payments.

Consequently, the Directors are confident that the Group will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the signing date of these condensed consolidated interim financial statements. The Group therefore continues to adopt the going concern basis in preparing its condensed consolidated interim financial statements.

   3.         Accounting policies 

The accounting policies adopted are consistent with those of the previous financial year except for:

Taxation

Income taxes are accrued based on management's estimate of the weighted average annual income tax rate expected for the full financial year based on enacted or substantively enacted tax rates at 27 February 2021. Our effective tax rate was 21.1% (H1 2020: 19.1%) after adjusting for results from associate and joint ventures, which are reported net of tax, and adjustments to contingent consideration (note 8) which is treated as non-taxable. The higher effective tax rate is due to a higher mix of overseas profits.

   4.         Significant judgements and estimates 

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the 52 weeks ended 29 August 2020, with the exception of changes in estimates that are required in determining the provision for income taxes as explained in note 3.

   5.         Financial risk management 

The Group's activities expose it to a variety of financial risks: market risk (including currency risk and price risk), credit risk and liquidity risk.

The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 29 August 2020. The impact of COVID-19 is discussed further in the interim management report.

   6.         Operating segment information 

The Group's chief operating decision-maker ("CODM") has been identified as the Executive Directors. Management has determined the operating segments based on the information reviewed by the CODM for the purposes of allocating resources and assessing performance.

The CODM considers the business from a product/services perspective. Following a strategic and operational review reportable operating segments have been identified as Speciality Agriculture, Agricultural Supplies and Engineering. Central comprises the central business activities of the Group's head office, which earns no external revenues. Performance is assessed using operating profit. For internal purposes the CODM assesses operating profit before material adjusting items (note 8) consistent with the presentation in the financial statements. The CODM believes this measure provides a better reflection of the Group's underlying performance. Sales between segments are carried out at arm's length.

The following tables present revenue, profit, asset and liability information regarding the Group's operating segments for the 26 weeks ended 27 February 2021 and the comparative periods.

 
 26 weeks ended 
 27 February              Speciality         Agricultural 
 2021                    Agriculture             Supplies           Engineering              Central             Group 
                             GBP'000              GBP'000               GBP'000              GBP'000           GBP'000 
 
 Total segment 
  revenue                     44,075              137,687                23,565                    -           205,327 
 Inter segment 
  revenue                    (3,888)                  (3)                   (1)                    -           (3,892) 
                                      -------------------  --------------------  -------------------  ---------------- 
 Revenue from 
  external 
  customers                   40,187              137,684                23,564                    -           201,435 
                   -----------------  -------------------  --------------------  -------------------  ---------------- 
 
 Adjusted(1) 
  EBITDA(2)                    7,885                3,466                 2,205              (1,404)            12,152 
 
 Depreciation, 
  amortisation 
  and 
  profit/(loss) 
  on disposal of 
  non-current 
  assets                       (785)              (1,320)               (1,283)                 (91)           (3,479) 
 Share of 
  post-tax 
  results 
  of associate 
  and joint 
  ventures                     1,054                1,142                     -                    -             2,196 
 Adjusted(1) 
  operating 
  profit                       8,154                3,288                   922              (1,495)            10,869 
 Adjusting items 
  (note 8)                     (245)                    -                    78                 (30)             (197) 
-----------------  -----------------  -------------------  --------------------  -------------------  ---------------- 
 Operating profit              7,909                3,288                 1,000              (1,525)            10,672 
                   -----------------  -------------------  --------------------  ------------------- 
 Finance income                                                                                                    135 
 Finance costs                                                                                                   (633) 
                                                                                                      ---------------- 
 Adjusted(1) 
  profit before 
  taxation                                                                                                      10,371 
 Adjusting items 
  (note 8)                                                                                                       (197) 
-----------------  -----------------  -------------------  --------------------  -------------------  ---------------- 
 
 Profit before 
  taxation                                                                                                      10,174 
                                                                                                      ---------------- 
 
 Segment gross 
  assets                      49,348              112,686                78,421               24,142           264,597 
                   -----------------  -------------------  --------------------  -------------------  ---------------- 
 
 
 Segment gross liabilities          (11,497)         (56,126)          (28,591)         (31,740)      (127,954) 
                             ---------------  ---------------  ----------------  ---------------  ------------- 
 

1 Adjusted results are consistent with how business performance is measured internally and is presented to aid comparability of performance. Adjusting items are disclosed in note 8.

(2) Earnings before interest, tax, depreciation, amortisation, profit/(loss) on the disposal of non-current assets and before share of post-tax results of associate and joint ventures.

The following tables have been restated to present Speciality Agriculture and Agricultural Supplies separately. This is to aid comparability with the segmental information presented for the current period to 27 February 2021.

 
 26 weeks ended 
 29 February           Speciality         Agricultural 
 2020                 Agriculture             Supplies           Engineering                      Central             Group 
 (restated)               GBP'000              GBP'000               GBP'000                      GBP'000           GBP'000 
 
 Total segment 
  revenue                  39,909              138,445                24,919                            -           203,273 
 Inter segment 
  revenue                 (3,311)                  (4)                   (1)                            -           (3,316) 
                                   -------------------  --------------------  ---------------------------  ---------------- 
 Revenue from 
  external 
  customers                36,598              138,441                24,918                            -           199,957 
                 ----------------  -------------------  --------------------  ---------------------------  ---------------- 
 
 Adjusted(1) 
  EBITDA(2)                 6,211                2,840                 2,492                          195            11,738 
 
 Depreciation, 
  amortisation 
  and 
  profit/(loss) 
  on disposal 
  of 
  non-current 
  assets                    (640)              (1,302)               (1,277)                         (89)           (3,308) 
 Share of 
  post-tax 
  results of 
  associate and 
  joint 
  ventures                    967                  925                     -                            -             1,892 
 Adjusted(1) 
  operating 
  profit                    6,538                2,463                 1,215                          106            10,322 
 Adjusting 
  items (note 
  8)                        1,068                 (74)                  (76)                            -               918 
---------------  ----------------  -------------------  --------------------  ---------------------------  ---------------- 
 Operating 
  profit                    7,606                2,389                 1,139                          106            11,240 
                 ----------------  -------------------  --------------------  --------------------------- 
 Finance income                                                                                                         178 
 Finance costs                                                                                                        (905) 
                                                                                                           ---------------- 
 Adjusted(1) 
  profit before 
  taxation                                                                                                            9,595 
 Adjusting 
  items (note 
  8)                                                                                                                    918 
---------------  ----------------  -------------------  --------------------  ---------------------------  ---------------- 
 
 Profit before 
  taxation                                                                                                           10,513 
                                                                                                           ---------------- 
 
 Segment gross 
  assets                   49,098              121,952                83,786                       18,243           273,079 
                 ----------------  -------------------  --------------------  ---------------------------  ---------------- 
 
 
 Segment gross liabilities          (10,574)         (70,122)          (30,896)         (30,582)      (142,174) 
                             ---------------  ---------------  ----------------  ---------------  ------------- 
 
 
 52 weeks ended 
 29 August 2020        Speciality         Agricultural                                            Central 
 (restated)           Agriculture             Supplies           Engineering                      GBP'000            Group 
                          GBP'000              GBP'000               GBP'000                                       GBP'000 
 
 Total segment 
  revenue                  66,948              280,740                53,020                            -          400,708 
 Inter segment 
  revenue                 (5,058)                  (8)                  (12)                            -          (5,078) 
                                   -------------------  --------------------  ---------------------------  --------------- 
 Revenue from 
  external 
  customers                61,890              280,732                53,008                            -          395,630 
                 ----------------  -------------------  --------------------  ---------------------------  --------------- 
 
 Adjusted(1) 
  EBITDA(2)                 7,914                6,884                 6,754                        (781)           20,771 
 
 Depreciation, 
  amortisation 
  and 
  profit/(loss) 
  on disposal 
  of 
  non-current 
  assets                  (1,366)              (2,665)               (2,944)                        (182)          (7,157) 
 Share of 
  post-tax 
  results of 
  associate and 
  joint 
  ventures                  1,061                1,572                     -                            -            2,633 
 Adjusted(1) 
  operating 
  profit                    7,609                5,791                 3,810                        (963)           16,247 
 Adjusting 
  items (note 
  8)                          730                (688)               (2,449)                            -          (2,407) 
---------------  ----------------  -------------------  --------------------  ---------------------------  --------------- 
 Operating 
  profit                    8,339                5,103                 1,361                        (963)           13,840 
                 ----------------  -------------------  --------------------  --------------------------- 
 Finance income                                                                                                        313 
 Finance costs                                                                                                     (1,656) 
                                                                                                           --------------- 
 Adjusted(1) 
  profit before 
  taxation                                                                                                          14,904 
 Adjusting 
  items (note 
  8)                                                                                                               (2,407) 
---------------  ----------------  -------------------  --------------------  ---------------------------  --------------- 
 
 Profit before 
  taxation                                                                                                          12,497 
                                                                                                           --------------- 
 
 Segment gross 
  assets                   47,367               98,046                83,852                       18,078          247,343 
                 ----------------  -------------------  --------------------  ---------------------------  --------------- 
 
 
 Segment gross liabilities            (8,845)         (44,664)          (31,156)         (28,509)      (113,174) 
                             ----------------  ---------------  ----------------  ---------------  ------------- 
 

1 Adjusted results are consistent with how business performance is measured internally and is presented to aid comparability of performance. Adjusting items are disclosed in note 8.

(2) Earnings before interest, tax, depreciation, amortisation, profit/(loss) on the disposal of non-current assets and before share of post-tax results of associate and joint ventures.

   7.         Disaggregation of revenue 

The following table presents the Group's reported revenue disaggregated based on the timing of revenue recognition.

 
                                      26 weeks   26 weeksended     52 weeks 
                                         ended     29 February        ended 
                                   27 February            2020    29 August 
                                          2021                         2020 
 Timing of revenue recognition         GBP'000         GBP'000      GBP'000 
-------------------------------  -------------  --------------  ----------- 
 Over time                              18,464          16,054       34,790 
 At a point in time                    182,971         183,903      360,840 
                                       201,435         199,957      395,630 
-------------------------------  -------------  --------------  ----------- 
 
   8.         Adjusting items 
 
                                                                         26 weeks       26 weeks              52 weeks 
                                                                            ended          ended                 ended 
                                                                               27    29 February             29 August 
                                                                         February           2020                  2020 
                                                                             2021        GBP'000               GBP'000 
                                                                          GBP'000 
---------------------------------  ----------------------------------------------  -------------  -------------------- 
 Amortisation of acquired 
  intangible assets (i)                                                       621        687                     1,380 
 Adjustments to contingent 
  consideration (ii)                                                        (671)      (2,147)                   (937) 
 Restructuring/closure costs 
  (iii)                                                                       247        542                     1,964 
                                                                              197       (918)                    2,407 
---------------------------------  ----------------------------------------------  -------------  -------------------- 
 

(i) Amortisation of acquired intangible assets which do not relate to the underlying profitability of the Group but rather relate to costs arising on acquisition of businesses.

(ii) Adjustments to contingent consideration arise from the revaluation of contingent consideration in respect of acquisitions to fair value at the period end. Movements in fair value arise from changes to the expected payments since the previous period end based on actual results and updated forecasts. Any increase or decrease in fair value is recognised through the income statement.

(iii) Restructuring/closure costs include redundancy costs and impairments of assets to recoverable amounts.

   9.         Earnings per share 

Adjusting items disclosed in note 8 that are charged or credited to profit do not relate to the underlying profitability of the Group. The Board believes adjusted profit before these items provides a useful measure of business performance. Therefore, an adjusted earnings per share is presented as follows:

 
                                                  26 weeks                            26 weeks                              52 weeks 
                                                     ended                               ended                                 ended 
                                               27 February                         29 February                             29 August 
                                                      2021                                2020                                  2020 
                                                   GBP'000                             GBP'000                               GBP'000 
-----------------------  ---------------------------------  ----------------------------------  ------------------------------------ 
 Earnings                                            7,574                               8,565                                 9,533 
 Adjusting items: 
 Amortisation of 
  acquired intangible 
  assets                                               621                                 687                                 1,380 
 Adjustments to 
  contingent 
  consideration                                      (671)                             (2,147)                                 (937) 
 Restructuring/closure 
  costs                                                247                                 542                                 1,964 
 Taxation effect of the 
  above                                              (167)                               (225)                                 (639) 
 Non-controlling 
  interest in the above                                  -                                (29)                                 (273) 
 
 Earnings - adjusted                                 7,604                               7,393                                11,028 
-----------------------  ---------------------------------  ----------------------------------  ------------------------------------ 
 
                                                    Number                              Number                                Number 
-----------------------  ---------------------------------  ----------------------------------  ------------------------------------ 
 
 Weighted average 
  number of ordinary 
  shares in issue                               92,588,219                          92,214,566                            92,346,828 
 Potentially dilutive 
  share options                                  2,813,125                           1,669,575                             1,384,216 
 
                                                95,401,344                          93,884,141                            93,731,044 
-----------------------  ---------------------------------  ----------------------------------  ------------------------------------ 
 
 Earnings per share 
 (pence) 
 Basic                                                8.2p                                9.3p                                 10.3p 
 Diluted                                              7.9p                                9.1p                                 10.2p 
 Adjusted                                             8.2p                                8.0p                                 11.9p 
 Diluted adjusted                                     8.0p                                7.9p                                 11.8p 
 
 
   10.       Dividends 

An interim dividend of GBP2,079,551 (H1 2020: GBP1,034,348) that related to the period to 29 August 2020 was paid on 2 October 2020. This included the deferred first interim dividend that, under normal circumstances, would have been paid in May 2020. This was deferred due to the uncertainty associated with the COVID-19 pandemic. A final dividend of GBP2,310,612 (H1 2020: GBP2,310,140) in respect of the period to 29 August 2020 was paid on 15 January 2021.

11. Intangible assets, property, plant and equipment, right-of-use assets and investment property

 
 
                                                           Other         Property,     Right-of-use            Investment 
                                                      intangible         plant and           assets              property 
                            Goodwill                      assets         equipment          GBP'000               GBP'000 
                             GBP'000                     GBP'000           GBP'000 
----------------  ------------------  --------------------------  ----------------  ---------------  -------------------- 
 26 weeks ended 
 27 February 
 2021 
 Opening net 
  book amount 
  at 30 August 
  2020                        32,041                       9,171            38,259           14,856                   158 
 Exchange 
  differences                  (511)                        (52)             (570)             (17)                     - 
 Additions                         -                         780             1,628            1,818                     - 
 Disposals and 
  transfers                        -                           -           (1,748)              861                     - 
 Depreciation 
  and 
  amortisation                     -                       (781)           (1,960)          (1,253)                   (3) 
----------------  ------------------  --------------------------  ----------------  ---------------  -------------------- 
 Closing net 
  book amount 
  at 27 February 
  2021                        31,530                       9,118            35,609           16,265                   155 
----------------  ------------------  --------------------------  ----------------  ---------------  -------------------- 
 
 26 weeks ended 
 29 February 
 2020 
 Opening net 
  book amount 
  at 1 September 
  2019                        32,877                       9,318            41,917                -                   164 
 Transition to 
  IFRS 16                          -                           -           (4,409)           15,903                     - 
 Exchange 
  differences                  (807)                        (99)             (911)             (48)                     - 
 Additions                         -                         845             2,569            1,263                     - 
 Disposals                         -                           -              (90)                -                     - 
 Depreciation, 
  amortisation 
  and impairment                   -                       (749)           (2,309)          (1,248)                   (3) 
----------------  ------------------  --------------------------  ----------------  ---------------  -------------------- 
 Closing net 
  book amount 
  as at 29 
  February 2020               32,070                       9,315            36,767           15,870                   161 
----------------  ------------------  --------------------------  ----------------  ---------------  -------------------- 
 
 

Transfers include assets refinanced under a lease and finance leased assets that became owned assets on maturity of the lease term.

Capital commitments contracted, but not provided for, by the Group at the period end amounts to GBP632,000 (2020: GBP1,559,000).

   12.       Borrowings 
 
                                                  As at                          As at                           As at 
                                                     27                             29                              29 
                                               February                       February                          August 
                                                   2021                           2020                            2020 
                                                GBP'000                        GBP'000                         GBP'000 
---------------------------  --------------------------  -----------------------------  ------------------------------ 
 
 Current                                          8,580                         26,855                          11,420 
 Non-current                                     26,815                         27,896                          25,021 
---------------------------  --------------------------  -----------------------------  ------------------------------ 
 Total borrowings                                35,395                         54,751                          36,441 
 Cash and cash equivalents 
  as per the balance sheet                     (24,838)                       (29,318)                        (17,571) 
---------------------------  --------------------------  -----------------------------  ------------------------------ 
 Net debt (excluding 
  leases)                                        10,557                         25,433                          18,870 
---------------------------  --------------------------  -----------------------------  ------------------------------ 
 Undrawn facilities                              35,324                         22,412                          35,083 
---------------------------  --------------------------  -----------------------------  ------------------------------ 
  Current borrowings include bank overdrafts of GBP4.9m (2020: GBP8.6m). Undrawn facilities 
   include overdraft facilities of GBP2.5m (2020: GBP2.5m) that are renewable on an annual basis. 
 
 
                                                         26 weeks                       26 weeks 
                                                            ended                          ended 
                                                      27 February                    29 February 
 Movements in borrowings are analysed as follows:            2021                           2020 
                                                          GBP'000                        GBP'000 
--------------------------------------------------  -------------  ----------------------------- 
 
 Balance at start of period (excluding leases)             36,441                         49,519 
 Exchange differences                                       (235)                          (362) 
 New bank loans/RCF drawdown                                4,000                          2,500 
 Repayments of borrowings                                 (1,200)                        (1,247) 
 (Decrease)/increase in other borrowings                    (604)                            114 
 Loan forgiven                                              (715)                              - 
 Release of deferred borrowing costs                           30                             30 
 Net increase to bank overdraft                           (2,322)                          4,197 
--------------------------------------------------  -------------  ----------------------------- 
 Balance at end of period                                  35,395                         54,751 
--------------------------------------------------  -------------  ----------------------------- 
 

New bank loans/RCF drawdown excludes re-financing of assets under new finance lease arrangements. The balance of GBP49.5m at the start of the comparative period excludes finance leases of GBP2.9m which were previously included within borrowings as at 31 August 2019 however, on transition to IFRS 16 'Leases' on 1 September 2019, these were presented separately to borrowings on the face of the balance sheet.

   13.       Financial instruments 

IFRS 13 requires financial instruments that are measured at fair value to be classified according to the valuation technique used:

   Level 1     -    quoted prices (unadjusted) in active markets for identical assets or liabilities 

Level 2 - inputs, other than Level 1 inputs, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

   Level 3     -    unobservable inputs 

Transfers between levels are deemed to have occurred at the end of the reporting period. There were no transfers between levels in the above hierarchy in the period.

All derivative financial instruments are measured at fair value using Level 2 inputs. The Group's bankers provide the valuations for the derivative financial instruments at each reporting period end based on mark to market valuation techniques.

Contingent consideration is measured at fair value using Level 3 inputs. Fair value is determined considering the expected payment, which is discounted to present value. The expected payment is determined separately in respect of each individual earn-out agreement taking into consideration the expected level of profitability of each acquisition.

The significant unobservable inputs are the projections of future profitability, which have been based on budget and forecast information for the current year and future periods, and the discount rate, which has been based on the incremental borrowing rate. A significant amount of the contingent consideration payable is included within current liabilities and has therefore not been discounted. A reasonable change in the discount rate applied would not have a material impact on the balances recognised within non-current liabilities.

The following table presents a reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (level 3).

 
                                                    As at                            As at 
                                                       27                               29                       As at 
                                                 February                         February                   29 August 
                                                     2021                             2020                        2020 
                                                  GBP'000                          GBP'000                     GBP'000 
---------------------------  ----------------------------  -------------------------------  -------------------------- 
 Fair value at the start of 
  the period                                        3,422                            7,954                       7,954 
 Exchange differences                                (12)                            (175)                       (184) 
 Payments made to vendors 
  (including legal costs)                           (131)                          (1,473)                     (2,513) 
 Change in fair value                               (671)                          (3,027)                     (1,835) 
 Fair value at the end of 
  the period                                        2,608                            3,279                       3,422 
---------------------------  ----------------------------  -------------------------------  -------------------------- 
 
   14.       Retirement benefit asset 

The amounts recognised in the Income Statement are as follows:

 
                                                                                      26 weeks                52 weeks 
                                                    26 weeks ended                       Ended                   ended 
                                                       27 February                 29 February               29 August 
                                                              2021                        2020                    2020 
                                                           GBP'000                     GBP'000                 GBP'000 
-------------------------------------  ---------------------------  --------------------------  ---------------------- 
 
 Administrative expenses                                         9                           9                      13 
 Net interest on the net defined 
  benefit asset                                               (74)                        (70)                   (139) 
 Total income                                                 (65)                        (61)                   (126) 
-------------------------------------  ---------------------------  --------------------------  ---------------------- 
 

Net interest on the defined benefit retirement asset is recognised within interest income.

The amounts recognised in the Balance Sheet are as follows:

 
                                                      As at                         As at                        As at 
                                                         27                            29                    29 August 
                                                   February                      February                         2020 
                                                       2021                          2020 
                                                    GBP'000                       GBP'000                      GBP'000 
-----------------------------  ----------------------------  ----------------------------  --------------------------- 
 
 Present value of funded 
  defined benefit obligations                      (62,685)                      (67,203)                     (65,834) 
 Fair value of scheme assets                         70,492                        73,846                       73,871 
-----------------------------  ----------------------------  ----------------------------  --------------------------- 
 Surplus in funded scheme                             7,807                         6,643                        8,037 
-----------------------------  ----------------------------  ----------------------------  --------------------------- 
 

Actuarial losses of GBP295,000 (2020: GBP1,187,000) have been reported in the Statement of Comprehensive Income. The surplus has decreased over the period since 29 August 2020 due to changes in market conditions contributing to an overall reduction in the scheme surplus.

The Group's associate's defined benefit pension scheme is closed to future service accrual and the valuation for this scheme has not been updated for the half year as any actuarial movements are not considered to be material.

   15.       Share capital 
 
 
 
 
    Allotted and fully paid ordinary        Number   Share capital           Share premium                Total 
                 shares of 2.5p each     of shares         GBP'000                 GBP'000              GBP'000 
------------------------------------  ------------  --------------  ----------------------  ------------------- 
 
 Opening balance as at 30 
  August 2020                           92,465,833           2,312                   9,176               11,488 
 Proceeds from shares issued: 
 - LTIP                                    309,823               7                       -                    7 
 - Share save scheme                       421,744              11                     437                  448 
 At 27 February 2021                    93,197,400           2,330                   9,613               11,943 
------------------------------------  ------------  --------------  ----------------------  ------------------- 
 
 Opening balance at 1 September 
  2019                                  91,942,005           2,299                   9,165               11,464 
 Proceeds from shares issued: 
 - LTIP                                    513,604              13                       -                   13 
 At 29 February 2020                    92,455,609           2,312                   9,165               11,477 
------------------------------------  ------------  --------------  ----------------------  ------------------- 
 

309,823 shares were issued in the period to satisfy the share awards under the LTIP scheme which were exercised in December 2020.

421,744 shares were issued in the period to satisfy the share awards under the share save scheme with exercise proceeds of GBP447,611. The related weighted average price of the shares exercised in the period was GBP1.061 per share. At the period end the Company holds 50,045 of these shares in treasury.

As announced on 1 April 2021 the Company's issued share capital had increased to 93,544,724 shares of which 75,955 shares were held in treasury. The increase in issued share capital was due to the issue of 347,324 shares under the share save scheme with exercise proceeds of GBP368,511 and a related weighted average exercise price of GBP1.061 per share.

   16.       Cash generated from continuing operations 
 
                                                           26 weeks                   26 weeks                52 weeks 
                                                              ended                      ended                   ended 
                                                        27 February                29 February               29 August 
                                                               2021                       2020                    2020 
                                                            GBP'000                    GBP'000                 GBP'000 
-----------------------------------------  ------------------------  -------------------------  ---------------------- 
 
 Profit for the period from continuing 
  operations                                                  8,460                      9,131                  10,922 
 Adjustments for: 
 Tax                                                          1,714                      1,382                   1,575 
 Tax credit in respect of R&D                                 (180)                      (240)                   (250) 
 Depreciation and impairment of property, 
  plant and equipment                                         1,960                      2,309                   4,567 
 Depreciation and impairment of 
  right-of-use assets                                         1,253                      1,248                   2,462 
 Depreciation of investment property                              3                          3                       6 
 Intangible asset amortisation                                  781                        749                   1,513 
 Loss/(profit) on disposal of property, 
  plant and equipment                                           103                       (51)                     265 
 Profit on disposal of right-of-use 
  assets                                                          -                          -                    (37) 
 Adjustments to contingent consideration                      (671)                    (2,147)                   (937) 
 Net fair value charge/(credit) on share 
  based payments                                                255                      (277)                   (137) 
 Release of loan provision                                        -                          -                   (783) 
 Other non-cash adjustments                                   (157)                      (618)                   (504) 
 Interest income                                              (135)                      (178)                   (313) 
 Interest expense and borrowing costs                           663                        935                   1,716 
 Share of results of associate and joint 
  ventures                                                  (2,196)                    (1,892)                 (2,633) 
 IAS 19 income statement charge 
 (excluding interest): 
   Administrative expenses                                        9                          9                      13 
 Changes in working capital (excluding 
 the effects of 
 acquisitions): 
 (Increase)/decrease in inventories                         (2,783)                    (3,348)                   4,811 
 (Increase)/decrease in receivables                         (7,872)                    (4,976)                   3,862 
 Increase/(decrease) in payables                             14,749                      5,801                 (3,479) 
 Cash generated from continuing 
  operations                                                 15,956                      7,840                  22,639 
-----------------------------------------  ------------------------  -------------------------  ---------------------- 
 
 
   17.   Related party transactions 

The Group's significant related parties are its associate and joint ventures, as disclosed in the Annual Report and Accounts 2020.

 
                                               Rent         Net management             Dividends 
                Sales        Purchases   receivable                charges            receivable            Amounts               Amounts 
                   to             from         from              (from)/to                  from          owed from               owed to 
              GBP'000          GBP'000      GBP'000                GBP'000               GBP'000            GBP'000               GBP'000 
-----------  --------  ---------------  -----------  ---------------------  --------------------  -----------------  -------------------- 
 26 weeks to 
  27 February 2021 
 Associate        346         (60,865)           10                   (69)                   368                368              (20,539) 
 Joint 
  ventures        373            (229)            -                     82                     -              1,623                 (102) 
 
 26 weeks 
 to 
 29 
 February 
 2020 
 Associate        280         (55,183)           10                   (69)                   294                214              (24,334) 
 Joint 
  ventures        238            (143)            -                     80                     -              1,756                   (2) 
-----------  --------  ---------------  -----------  ---------------------  --------------------  -----------------  -------------------- 
 
   18.       Alternative performance measures 

The Interim Results include alternative performance measures ("APMs"), which are not defined or specified under the requirements of IFRS. These APMs are consistent with how business performance is measured internally and therefore the Directors believe that these APMs provide stakeholders with additional useful information on the Group's performance.

 
Alternative performance 
 measure                                  Definition and comments 
-----------------------  ---------------------------------------------------------- 
EBITDA                   Earnings before interest, tax, depreciation, amortisation, 
                          profit/(loss) on the disposal of non-current assets 
                          and before share of post-tax results of the associate 
                          and joint ventures. EBITDA allows the user to 
                          assess the profitability of the Group's core operations 
                          before the impact of capital structure, debt financing 
                          and non-cash items such as depreciation and amortisation. 
-----------------------  ---------------------------------------------------------- 
Adjusted EBITDA          Earnings before interest, tax, depreciation, amortisation, 
                          profit/(loss) on the disposal of non-current assets, 
                          before share of post-tax results of the associate 
                          and joint ventures and excluding items regarded 
                          by the Directors as adjusting items. This measure 
                          is reconciled to statutory operating profit and 
                          statutory profit before taxation in note 6. EBITDA 
                          allows the user to assess the profitability of 
                          the Group's core operations before the impact 
                          of capital structure, debt financing and non-cash 
                          items such as depreciation and amortisation. 
-----------------------  ---------------------------------------------------------- 
Adjusted operating       Operating profit after adding back items regarded 
 profit                   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          Profit before taxation after adding back items 
 before taxation          regarded by the Directors as adjusting items. 
                          This measure is reconciled to statutory profit 
                          before taxation in the income statement and note 
                          6. Adjusted results are presented because if included, 
                          these adjusting items could distort the understanding 
                          of the Group's performance for the period and 
                          the comparability between the periods presented. 
-----------------------  ---------------------------------------------------------- 
Adjusted earnings        Profit attributable to the equity holders of the 
 per share                Company after adding back items regarded by the 
                          Directors as adjusting items after tax divided 
                          by the weighted average number of ordinary shares 
                          in issue during the period. This is reconciled 
                          to basic earnings per share in note 9. 
-----------------------  ---------------------------------------------------------- 
Adjusted diluted         Profit attributable to the equity holders of the 
 earnings per share       Company after adding back items regarded by the 
                          Directors as adjusting items after tax divided 
                          by the weighted average number of ordinary shares 
                          in issue during the period adjusted for the effects 
                          of any potentially dilutive options. Diluted earnings 
                          per share is shown in note 9. 
-----------------------  ---------------------------------------------------------- 
Net debt                 The net position of the Group's cash at bank and 
                          borrowings. Details of the movement in borrowings 
                          is shown in note 12. 
-----------------------  ---------------------------------------------------------- 
 

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 or visit 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.

END

IR DKKBKFBKDBQB

(END) Dow Jones Newswires

April 21, 2021 02:00 ET (06:00 GMT)

Carr's (LSE:CARR)
Historical Stock Chart
From Jun 2021 to Jul 2021 Click Here for more Carr
Carr's (LSE:CARR)
Historical Stock Chart
From Jul 2020 to Jul 2021 Click Here for more Carr