We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Carr's Group Plc | LSE:CARR | London | Ordinary Share | GB00BRK01058 | ORD 2.5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-2.00 | -1.60% | 123.00 | 121.50 | 123.00 | 122.50 | 119.00 | 121.50 | 368,244 | 16:35:05 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Animal Specialties, Nec | 196.43M | -226k | -0.0024 | -510.42 | 115.33M |
TIDMCARR
RNS Number : 6697I
Carr's Group PLC
20 April 2022
20 April 2022
CARR'S GROUP PLC ("Carr's" or the "Group")
INTERIM RESULTS
For the 26 weeks ended 26 February 2022
"A robust performance in the period with full year expectations unchanged"
Carr's (CARR.L), the Agriculture and Engineering Group, announces its Interim Results for the 26 weeks ended 26 February 2022.
Financial highlights
Adjusted Adjusted (1) +/- (1) H1 2022 H1 2021 (restated) (2) Revenue (GBPm) 222.7 201.4 +10.6% Adjusted (1) operating profit (GBPm) 10.8 11.0 -1.9% Adjusted (1) profit before tax (GBPm) 10.3 10.5 -2.3% Adjusted (1) EPS (p) 7.6 8.3 -8.4% Net debt (3) (GBPm) 29.9 10.6 +182.8% Statutory Statutory +/- H1 2022 H1 2021 (restated) (2) Revenue (GBPm) 222.7 201.4 +10.6% Operating profit (GBPm) 10.0 10.0 +0.2% Profit before tax (GBPm) 9.5 9.5 -0.1% Basic EPS (p) 7.6 7.8 -2.6% Interim dividend (p) 1.175 1.175 -
(1) Adjusted results are consistent with how business performance is measured internally and are presented to aid comparability of performance. Adjusting items are disclosed in note 8
(2) Prior period restatement recognised in relation to the adoption of the IFRIC agenda decision on cloud configuration and customisation costs in April 2021. Further details can be found in note 18
(3) Excluding leases. Further details of net debt can be found in note 12
Highlights
-- Strong performance in Agricultural Supplies despite significant raw material cost increases
-- Engineering order book value increased 14% during H1 with improved utilisation and stronger margins
-- Speciality Agriculture margins impacted by timing difference between input cost increases and sale price movements
-- Full year outlook in line with Board's expectations
Outlook
During the second half, an improved performance in Engineering, where order books stand at record levels, together with continued positive trading in Agricultural Supplies are expected to offset volume and pricing challenges in Speciality Agriculture. The Board is confident in the prospects of all three divisions in the medium term and its full year expectations are unchanged.
Peter Page, Executive Chairman, commented:
"Carr's Group has performed well in the first half, with a strong performance in Agricultural Supplies at a time of extraordinary raw material cost increases and a marked recovery in Engineering offsetting input cost impact on margins in Speciality Agriculture. The outlook for the second half remains positive with the group on track to meet the Board's expectations for the full year."
Enquiries:
Carr's Group plc Tel: +44 (0) 1228 Peter Page (Executive Chairman) 554 600 Neil Austin (Chief Financial Officer) Powerscourt Tel: +44 (0) 20 7250 Nick Dibden / Nick Hayns 1446 / 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 elements and minerals for livestock.
Its Agricultural Supplies division manufactures compound animal feed, distributes farm machinery and fuels, and runs a UK network of rural stores, providing a one-stop shop for the farming community.
Its Engineering division designs and manufactures bespoke equipment, including robotic and remote handling equipment, and provides technical services primarily into nuclear, oil and gas, and defence industries.
INTERIM MANAGEMENT REPORT
RESULTS
The Group has delivered a half year result broadly in line with the prior year, but behind the Board's expectations for the period. With a stronger performance anticipated in Engineering in H2, full year expectations are unchanged.
During the 26 weeks ended 26 February 2022 revenues increased to GBP222.7m (H1 2021: GBP201.4m). Adjusted operating profit of GBP10.8m (H1 2021: restated GBP11.0m) was 1.9% down on the prior year. Adjusted profit before tax reduced by 2.3% to GBP10.3m (H1 2021: restated GBP10.5m).
Adjusted earnings per share decreased by 8.4% to 7.6p (H1 2021: restated 8.3p).
MARKET INFORMATION
During the period, significant raw material cost inflation has affected all parts of the business.
The Engineering division successfully managed the impact of steel and component cost increases through existing contract arrangements.
Management is confident that pricing in all parts of the UK-based Agricultural Supplies division correctly reflects the rapidly changing raw material cost base, so far with limited impact on volumes.
In Speciality Agriculture changes to selling prices lagged cost increases in the early part of the year due to the time gap between orders received and delivery in a period of rapid cost movement, but costs and prices have since been brought into line and the situation has stabilised at higher levels. Volume demand has been relatively strong in the first half. Second half volumes may be adversely impacted by higher prices and drought in some parts of the USA. Management will closely monitor UK volumes through the summer months when customers may decide to limit outgoings by more intensive use of grazing and pasture.
SPECIALITY AGRICULTURE
The Speciality Agriculture division manufactures livestock supplements including feed blocks, minerals, and trace element boluses, which are distributed to farmers across the UK, Europe, North America, and New Zealand.
H1 2022 H1 2021 (restated) % Change Revenue GBP42.7m GBP40.2m +6.2% Adjusted operating profit GBP6.5m GBP8.3m -21.1% Adjusted operating margin 15.3% 20.5%
In the UK and Ireland, feed blocks sales remained strong where volumes increased on the prior year by 2.5%. Feed block volumes in Europe also increased by 4.5% and continued to grow in New Zealand. Performance in the USA, where volumes (excluding JVs) were 5.9% down on the prior year, was impacted by lower livestock numbers in certain areas due to a reduction in forage availability resulting from drought, reducing demand for feed blocks.
Animal health revenues were down compared to the prior year, which had benefitted from increased sales in advance of the UK:EU trade deal in December 2020.
As reported in the Group's January trading update, margin erosion was seen across the division due to a lag in passing through increases in raw material prices. Inflationary costs have now been fully passed through into selling prices.
AGRICULTURAL SUPPLIES
The Agricultural Supplies division includes our UK network of country stores, fuel depots, machinery franchises, and compound feed business.
H1 2022 H1 2021 % Change Revenue GBP158.7m GBP137.7m +15.3% Adjusted operating profit GBP3.9m GBP3.3m +19.1% Adjusted operating margin 2.5% 2.4%
The division performed well overall in the period. Livestock and milk prices remain high, although rising input costs continue to present a significant challenge for farmers.
Total feed sales volumes were 2.5% lower compared to the prior year, although selling prices were 26.3% higher in the period primarily due to the pass through of rising input costs.
Machinery revenues remained strong and 0.4% ahead of the prior year. In the period a new machinery branch opened in Stranraer, and another will be opening in Thirsk later this financial year.
Total retail sales were up 4.1%, with like-for-like sales showing the same level of increase. In the period an e-commerce site was launched in part of the business, which is expected to be rolled out more broadly in this calendar year.
As previously reported, milder weather seen over the winter period led to fuel volumes being down 8.5% versus the prior year.
ENGINEERING
The Engineering division includes fabrication and precision engineering businesses in the UK, robotics businesses in the UK, Europe and USA, and engineering solutions businesses in the UK and USA.
H1 2022 H1 2021 % Change Revenue GBP21.3m GBP23.6m -9.6% Adjusted operating profit GBP1.5m GBP0.9m +58.2% Adjusted operating margin 6.8% 3.9%
Performance across the division improved significantly against the prior year but remained behind the Board's expectations for the period. The order book continues to be strong with GBP44.2m recorded at the period end, being 8.6% higher than at the half year in the prior year and 13.8% higher than the year end position of GBP38.8m.
The fabrication and precision engineering business performed well in the period, benefitting from high activity levels and a recovery in the oil and gas market. Work continues to progress well through the Cumbrian Manufacturing Alliance, which was formed in 2021 to secure larger projects in the UK nuclear sector.
The robotics business performed as expected. During the period the business achieved a significant milestone, securing its first contract to supply a power manipulator in the USA to an internationally renowned research institution. The business also completed development of the A150, which is a new, small-scale telescopic manipulator for the growing nuclear medicine market.
The engineering solutions business experienced challenges in the period, largely due to delays and higher costs than anticipated on one defence project, where installation work is complete and commissioning is expected this calendar year, and technical faults on a service contract where work will be completed at a later date.
REVIEW OF STRATEGIC OPTIONS
In January the Board announced it would undertake a review of the strategic options for each of the three divisions to evaluate potential to grow shareholder value. This work has progressed well with an assessment of internal and external market information nearing completion. The Board will provide an update during the second half of the financial year.
FINANCE REVIEW
Adjusted results
Revenue increased by 10.6% to GBP222.7m (H1 2021: GBP201.4m), with increases of 6.2% in Speciality Agriculture and 15.3% in Agricultural Supplies offset by a reduction in Engineering of 9.6%.
Adjusted operating profit fell 1.9% to GBP10.8m (H1 2021: restated GBP11.0m). Strong performances in Agricultural Supplies, up 19.1%, and Engineering, up 58.2%, offsetting a reduction in Speciality Agriculture of 21.1%.
Central costs were 24.6% lower at GBP1.1m (H1 2021: restated GBP1.5m), primarily due to lower performance-based remuneration under current interim executive arrangements.
Net finance costs of GBP0.5m (H1 2021: GBP0.5m) were slightly higher due to a higher level of borrowings compared to the same period in the prior year.
The Group's adjusted profit before tax decreased by 2.3% to GBP10.3m (H1 2021: restated GBP10.5m). Adjusted earnings per share, which was impacted by a higher non-controlling interest from Agricultural Supplies, decreased by 8.4% to 7.6p (H1 2021: restated 8.3p).
Adjusting items
The Group provides the adjusted profit measures referred to above to present additional useful information on business performance consistent with how business performance is measured internally. These measures show underlying profits before certain adjusting items. Adjusting items during the period were a net charge of GBP0.8m (H1 2021: restated GBP1.0m), consisting of cloud computing costs of GBP1.2m (H1 2021: restated GBP0.8m), amortisation of acquired intangible assets of GBP0.5m (H1 2021: GBP0.6m), and strategic review costs of GBP0.4m (H1 2021: nil), offset by the release of contingent consideration of GBP1.3m (H1 2021: GBP0.7m). The prior period also included restructuring costs of GBP0.2m.
Statutory results
Reported operating profit on a statutory basis was GBP10.0m (H1 2021: restated GBP10.0m) and reported profit before tax was GBP9.5m (H1 2021: restated GBP9.5m). Basic earnings per share on a statutory basis was 7.6p (H1 2021: restated 7.8p).
Balance sheet and cash flow
Net cash used in operating activities in the first half was GBP15.2m (H1 2021: restated: cash generated of GBP13.4m).
Net debt, excluding leases, increased to GBP29.9m from GBP10.0m at the financial year end (H1 2021: GBP10.6m). This is primarily related to cash absorbed into working capital, particularly receivables and inventories of GBP19.7m and GBP8.9m respectively. The majority of this relates to Agricultural Supplies, where receivables are higher due to a combination of higher selling prices and some slower collections. Inventories are higher due to a combination of higher prices and a decision to hold more machinery inventory. This is expected to reverse in the second half.
The Group's defined benefit pension scheme remains in surplus, with a balance of GBP10.0m compared to GBP9.4m at 28 August 2021.
Shareholder's equity
Shareholders' equity at 26 February 2022 was GBP122.7m (28 August 2021: GBP118.1m).
A first interim dividend of 1.175 pence per ordinary share will be paid on 7 June 2022 to shareholders on the register on 29 April 2022. The ex-dividend date will be 28 April 2022.
BOARD SUCCESSION
The Board has recruitment processes running for a CEO and an additional Non-Executive Director. These are progressing to plan and the Board will update shareholders in due course.
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 33 to 36 of the Annual Report and Accounts 2021 (available on the Company's website at http://investors.carrsgroup.com).
OUTLOOK
During the second half, an improved performance in Engineering, where order books stand at record levels, together with continued positive trading in Agricultural Supplies are expected to offset volume and pricing challenges in Speciality Agriculture. The Board is confident in the prospects of all three divisions in the medium term, and its full year expectations are unchanged.
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 26 weeks ended 26 February 2022
26 weeks 52 weeks 26 weeks ended ended ended 26 February 27 February 28 August 2022 2021 2021 (unaudited) (unaudited) (restated) (2) (audited) Notes GBP'000 GBP'000 GBP'000 Continuing operations Revenue 6,7 222,706 201,435 417,254 Cost of sales (198,972) (173,412) (365,174) Gross profit 23,734 28,023 52,080 Net operating expenses (15,135) (20,154) (39,218) Adjusted (1) share of post-tax results of associate 678 920 1,525 Adjusting items 8 (261) (73) (694) Share of post-tax results of associate 417 847 831 Share of post-tax results of joint ventures 998 1,276 1,421 Impairment of joint venture (adjusting item) 8 - - (2,090) Adjusted (1) operating profit 6 10,781 10,993 17,585 Adjusting items 8 (767) (1,001) (4,561) Operating profit 6 10,014 9,992 13,024 Finance income 161 135 260 Finance costs (691) (633) (1,232) Adjusted (1) profit before taxation 6 10,251 10,495 16,613 Adjusting items 8 (767) (1,001) (4,561) Profit before taxation 6 9,484 9,494 12,052 Taxation (1,573) (1,600) (2,400) Adjusted (1) profit for the period 6 8,305 8,589 14,675 Adjusting items 8 (394) (695) (5,023) Profit for the period 7,911 7,894 9,652 Profit attributable to: Equity shareholders 7,127 7,199 7,712 Non-controlling interests 784 695 1,940 7,911 7,894 9,652 Earnings per share (pence) Basic 9 7.6 7.8 8.3 Diluted 9 7.5 7.5 8.1 Adjusted (1) 9 7.6 8.3 13.2 Diluted adjusted (1) 9 7.5 8.1 13.0
1 Adjusted results are consistent with how business performance is measured internally and is presented to aid comparability of performance. Adjusting items are discussed in note 8. Adjustments made to calculate adjusted earnings per share can be found in note 9. An alternative performance measures glossary can be found in note 19.
(2) See note 18 for an explanation of the prior period restatement recognised in relation to the adoption of the IFRIC agenda decision on cloud configuration and customisation costs.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 26 weeks ended 26 February 2022
26 weeks) ended 52 weeks 26 February) Ended 2022 26 weeks ended 28 August (unaudited) 27 February 2021 2021 (unaudited) (restated) [1] (audited) Notes GBP'000 GBP'000 GBP'000 Profit for the period 7,911 7,894 9,652 Other comprehensive income/(expense) Items that may be reclassified subsequently to profit or loss: Foreign exchange translation gains/(losses) arising on translation of overseas subsidiaries 123 (1,752) (1,781) Net investment hedges 133 76 165 Taxation charge on net investment hedges (25) (14) (31) Items that will not be reclassified subsequently to profit or loss: Actuarial gains/(losses) on retirement benefit asset: - Group 14 530 (295) 1,205 - Share of associate - - 578 Taxation (charge)/credit on actuarial gains/(losses) on retirement benefit asset: - Group (133) 56 (301) - Share of associate - - (144) Other comprehensive income/(expense) for the period, net of tax 628 (1,929) (309) Total comprehensive income for the period 8,539 5,965 9,343 Total comprehensive income attributable to: Equity shareholders 7,755 5,270 7,403 Non-controlling interests 784 695 1,940 8,539 5,965 9,343
1 See note 18 for an explanation of the prior period restatement recognised in relation to the adoption of the IFRIC agenda decision on cloud configuration and customisation costs.
CONDENSED CONSOLIDATED BALANCE SHEET
As at 26 February 2022
As at As at 27 February As at 26 February 2021 28 August 2022 (unaudited) (restated) [1] 2021 (unaudited) (audited) Notes GBP'000 GBP'000 GBP'000 Non-current assets Goodwill 11 31,634 31,530 31,560 Other intangible assets 11 4,656 5,705 5,151 Property, plant and equipment 11 37,155 35,609 36,198 Right-of-use assets 11 15,816 16,265 16,777 Investment property 11 149 155 152 Investment in associate 14,687 14,522 14,268 Interest in joint ventures 8,445 11,492 9,482 Other investments 72 72 72 Contract assets 310 - 312 Financial assets - Non-current receivables 20 20 20 Retirement benefit asset 14 9,964 7,807 9,371 122,908 123,177 123,363 Current assets Inventories 51,926 43,392 43,226 Contract assets 6,623 7,885 7,202 Trade and other receivables 82,356 59,496 61,735 Current tax assets 3,216 2,705 2,669 Financial assets - Cash and cash equivalents 12 28,457 24,838 24,309 172,578 138,316 139,141 Total assets 295,486 261,493 262,504 Current liabilities Financial liabilities - Borrowings 12 (37,069) (8,580) (11,113) - Leases (3,301) (2,965) (2,967) Contract liabilities (1,372) (3,019) (2,447) Trade and other payables (74,054) (67,704) (69,526) Current tax liabilities (254) (494) (42) (116,050) (82,762) (86,095) Non-current liabilities Financial liabilities - Borrowings 12 (21,246) (26,815) (23,159) - Leases (11,982) (12,177) (12,458) Deferred tax liabilities (5,560) (4,830) (5,503) Other non-current liabilities (28) (1,370) (55) (38,816) (45,192) (41,175) Total liabilities (154,866) (127,954) (127,270) Net assets 140,620 133,539 135,234 Shareholders' equity Share capital 15 2,349 2,330 2,343 Share premium 15 10,465 9,613 10,155 Other reserves 2,825 2,363 2,578 Retained earnings 107,017 102,071 103,006 Total shareholders' equity 122,656 116,377 118,082 Non-controlling interests 17,964 17,162 17,152 Total equity 140,620 133,539 135,234
1 See note 18 for an explanation of the prior period restatement recognised in relation to the adoption of the IFRIC agenda decision on cloud configuration and customisation costs.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 26 weeks ended 26 February 2022
Treasury Equity Foreign Total Non- Share Share Share Compensation Exchange Other Reserve Retained Shareholders' Controlling Total Capital Premium Reserve Reserve Reserve Earnings Equity Interests Equity GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 At 29 August 2021 (audited) 2,343 10,155 - 480 1,903 195 103,006 118,082 17,152 135,234 Profit for the period - - - - - - 7,127 7,127 784 7,911 Other comprehensive income - - - - 231 - 397 628 - 628 Total comprehensive income - - - - 231 - 7,524 7,755 784 8,539 Dividends paid - - - - - - (3,583) (3,583) - (3,583) Equity-settled share-based payment transactions - - - 18 - - 68 86 28 114 Allotment of shares 6 310 - - - - - 316 - 316 Transfer - - - - - (2) 2 - - - At 26 February 2022 (unaudited) 2,349 10,465 - 498 2,134 193 107,017 122,656 17,964 140,620 As previously reported at 29 August 2020 (audited) 2,312 9,176 (45) 734 3,550 197 101,202 117,126 17,043 134,169 Prior period adjustment(1) - - - - - - (2,295) (2,295) (243) (2,538) At 30 August 2020 (restated)(1) 2,312 9,176 (45) 734 3,550 197 98,907 114,831 16,800 131,631 Profit for the period - - - - - - 7,199 7,199 695 7,894 Other comprehensive expense - - - - (1,690) - (239) (1,929) - (1,929) Total comprehensive (expense)/income - - - - (1,690) - 6,960 5,270 695 5,965 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 1,860 196 102,071 116,377 17,162 133,539 As previously reported at 29 August 2020 (audited) 2,312 9,176 (45) 734 3,550 197 101,202 117,126 17,043 134,169 Prior period adjustment(1) - - - - - - (2,295) (2,295) (243) (2,538) At 30 August 2020 (restated)(1) 2,312 9,176 (45) 734 3,550 197 98,907 114,831 16,800 131,631 Profit for the period - - - - - - 7,712 7,712 1,940 9,652 Other comprehensive (expense)/income - - - - (1,647) - 1,338 (309) - (309) Total comprehensive (expense)/income - - - - (1,647) - 9,050 7,403 1,940 9,343 Dividends paid - - - - - - (5,490) (5,490) (1,647) (7,137) Equity-settled share-based payment transactions - - - (254) - - 660 406 58 464 Excess deferred taxation on share-based payments - - - - - - 32 32 1 33 Allotment of shares 31 979 - - - - - 1,010 - 1,010 Purchase of own shares held in trust - - (110) - - - - (110) - (110) Transfer - - 155 - - (2) (153) - - - At 28 August 2021 (audited) 2,343 10,155 - 480 1,903 195 103,006 118,082 17,152 135,234
1 See note 18 for an explanation of the prior period restatement recognised in relation to the adoption of the IFRIC agenda decision on cloud configuration and customisation costs.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 26 weeks ended 26 February 2022
26 weeks ended 26 weeks ended 52 weeks ended 26 February 2022 27 February 2021 28 August 2021 (unaudited) (unaudited) (restated) [1] (audited) Notes GBP'000 GBP'000 GBP'000 Cash flows from operating activities Cash (used in)/generated from continuing operations 16 (13,965) 15,225 22,163 Interest received 74 57 109 Interest paid (702) (625) (1,244) Tax paid (579) (1,300) (2,131) Net cash (used in)/generated from operating activities (15,172) 13,357 18,897 Cash flows from investing activities Contingent consideration paid - (131) (1,077) Dividends received 1,626 368 1,898 from associate and joint ventures Purchase of (1) (49) (107) intangible assets Proceeds from sale 41 125 396 of property, plant and equipment Purchase of (2,034) (1,645) (3,850) property, plant and equipment and right-of-use assets Purchase of own shares held in trust - (9) - Net cash used in (368) (1,341) (2,740) investing activities Cash flows from financing activities Proceeds from issue 316 455 1,010 of ordinary share capital Purchase of own shares held in trust - - (110) New financing and draw downs on RCF 5,311 5,609 11,526 Repayment of RCF (6,000) - (8,500) draw downs Lease principal (1,354) (1,556) (3,252) repayments Repayment of (1,406) (1,200) (2,400) borrowings Increase/(decrease) 22,989 (604) 2,394 in other borrowings Dividends paid to (3,583) (4,390) (5,490) shareholders Dividends paid to related party - (368) (1,647) Net cash generated 16,273 (2,054) (6,469) from/(used in) financing activities Effects of exchange 39 (373) (296) rate changes Net increase in cash and cash equivalents 772 9,589 9,392 Cash and cash equivalents at beginning of the period 19,696 10,304 10,304 Cash and cash equivalents at end of the period 20,468 19,893 19,696 Cash and cash equivalents consist of: Cash and cash equivalents per the balance sheet 28,457 24,838 24,309 Bank overdrafts (7,989) (4,945) (4,613) included in borrowings 20,468 19,893 19,696
1 See note 18 for an explanation of the prior period restatement recognised in relation to the adoption of the IFRIC agenda decision on cloud configuration and customisation costs.
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 2021, with the exception of the following changes in the period: Alistair Wannop and Kristen Eshak Weldon both resigned on 18 January 2022. As previously disclosed in the Annual Report and Accounts 2021, Hugh Pelham resigned on 11 October 2021. A list of current Directors is maintained on the website: www.carrsgroup.com
On behalf of the Board
Peter Page Neil Austin
Chairman Chief Financial Officer
20 April 2022 20 April 2022
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 20 April 2022.
The comparative figures for the financial year ended 28 August 2021 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 26 February 2022 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 3 September 2022 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 28 August 2021 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. It is the intention to renew these facilities in advance of the approval of the Report & Accounts for the year ending 3 September 2022.
Detailed cash forecasts continue to be updated regularly for a period of at least 12 months from the reporting period end. These forecasts are sensitised for various worst case scenarios including increases in costs, reduction in revenues, increases to customer payment terms and delays on order books. The results of this stress testing showed that, due to the stability of the core business, the Group would be able to withstand the impact of these severe but plausible downside scenarios occurring over the period of the forecasts.
In addition, several other mitigating measures remain available and within the control of the Directors that were not included in the scenarios. These include withholding discretionary capital expenditure and reducing or cancelling future dividend payments.
Consequently, the Directors are confident that the Group will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the signing date of these condensed consolidated interim financial statements. The Group therefore continues to adopt the going concern basis in preparing its condensed consolidated interim financial statements.
3. Accounting policies and prior period restatement
The accounting policies adopted are consistent with those of the previous financial year except for:
Taxation
Income taxes are accrued based on management's estimate of the weighted average annual income tax rate expected for the full financial year based on enacted or substantively enacted tax rates as at 26 February 2022. Our effective tax rate was 20.7% (H1 2021: restated 21.3%) after adjusting for results from associate and joint ventures, which are reported net of tax, adjustments to contingent consideration (note 8) which is treated as non-taxable, and for irrecoverable withholding tax on dividends received from overseas joint ventures. The lower effective tax rate is due to a lower mix of overseas profits.
Prior period restatement
In April 2021, the IFRS Interpretations Committee (IFRIC) published an agenda decision of the clarification of accounting in relation to the configuration and customisation costs incurred in implementing Software-as-a-Service (SaaS) as follows:
-- Amounts paid to the cloud vendor for configuration and customisation that are not distinct from access to the cloud software are expensed over the SaaS contract term.
-- In limited circumstances, other configuration and customisation costs incurred in implementing SaaS arrangements may give rise to an identifiable intangible asset, for example, where code is created that is controlled by the entity.
-- In all other instances, configuration and customisation costs will be expensed as the customisation and configuration services are received.
Following the publication of this agenda decision the Group reviewed and changed its accounting policy for the capitalisation of costs incurred in respect of the configuration and customisation of its cloud hosted ERP system to align with the IFRIC guidance. This revision has been accounted for retrospectively resulting in a prior period restatement.
This change in accounting policy has also been reflected in these condensed interim financial statements resulting in a restatement of the primary financial statements for the comparative period ended 27 February 2021.
See notes 8, 11 and 18 for further details.
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 28 August 2021, 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 28 August 2021.
6. Operating segment information
The Group's chief operating decision-maker ("CODM") has been identified as the Executive Directors. Management has determined the operating segments based on the information reviewed by the CODM for the purposes of allocating resources and assessing performance.
The CODM considers the business from a product/services perspective. Reportable operating segments 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 26 February 2022 and the comparative periods.
26 weeks ended 26 February Speciality Agricultural 2022 Agriculture Supplies Engineering Central Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Total segment revenue 46,953 158,721 21,351 - 227,025 Inter segment revenue (4,267) (2) (50) - (4,319) Revenue from external customers 42,686 158,719 21,301 - 222,706 Adjusted(1) EBITDA(2) 6,463 4,387 2,587 (1,048) 12,389 Depreciation, amortisation and profit/(loss) on disposal of non-current assets (738) (1,355) (1,128) (63) (3,284) Share of post-tax results of associate (adjusted(1)) and joint ventures 793 883 - - 1,676 Adjusted(1) operating profit 6,518 3,915 1,459 (1,111) 10,781 Adjusting items (note 8) (244) (1,244) 1,096 (375) (767) Operating profit 6,274 2,671 2,555 (1,486) 10,014 Finance income 161 Finance costs (691) Adjusted(1) profit before taxation 10,251 Adjusting items (note 8) (767) Profit before taxation 9,484 Segment gross assets 49,940 151,764 75,094 18,688 295,486 Segment gross liabilities (13,803) (91,537) (23,156) (26,370) (154,866)
1 Adjusted results are consistent with how business performance is measured internally and is presented to aid comparability of performance. Adjusting items are disclosed in note 8.
(2) Earnings before interest, tax, depreciation, amortisation, profit/(loss) on the disposal of non-current assets and before share of post-tax results of associate and joint ventures.
The segmental information for the 26 weeks ended 27 February 2021 has been restated following the change in accounting policy for cloud configuration and customisation costs.
26 weeks ended 27 February Speciality Agricultural 2021 Agriculture Supplies Engineering Central Group (restated) 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 (682) (1,320) (1,283) (70) (3,355) Share of post-tax results of associate (adjusted(1)) and joint ventures 1,054 1,142 - - 2,196 Adjusted(1) operating profit 8,257 3,288 922 (1,474) 10,993 Adjusting items (note 8) (482) (554) 78 (43) (1,001) Operating profit 7,775 2,734 1,000 (1,517) 9,992 Finance income 135 Finance costs (633) Adjusted(1) profit before taxation 10,495 Adjusting items (note 8) (1,001) Profit before taxation 9,494 Segment gross assets 47,731 111,464 78,421 23,877 261,493 Segment gross liabilities (11,497) (56,126) (28,591) (31,740) (127,954) 52 weeks ended 28 August 2021 Speciality Agricultural Central Agriculture Supplies Engineering GBP'000 Group GBP'000 GBP'000 GBP'000 GBP'000 Total segment revenue 74,395 297,506 51,299 - 423,200 Inter segment revenue (5,934) (6) (6) - (5,946) Revenue from external customers 68,461 297,500 51,293 - 417,254 Adjusted(1) EBITDA(2) 9,858 7,348 6,133 (2,417) 20,922 Depreciation, amortisation and profit/(loss) on disposal of non-current assets (1,335) (2,602) (2,208) (138) (6,283) Share of post-tax results of associate (adjusted(1)) and joint ventures 991 1,955 - - 2,946 Adjusted(1) operating profit 9,514 6,701 3,925 (2,555) 17,585 Adjusting items (note 8) (2,847) (1,684) 97 (127) (4,561) Operating profit 6,667 5,017 4,022 (2,682) 13,024 Finance income 260 Finance costs (1,232) Adjusted(1) profit before taxation 16,613 Adjusting items (note 8) (4,561) Profit before taxation 12,052 Segment gross assets 48,558 110,716 79,994 23,236 262,504 Segment gross liabilities (12,251) (58,056) (27,783) (29,180) (127,270)
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 weeks ended 52 weeks ended 27 February ended 26 February 2021 28 August 2022 2021 Timing of revenue recognition GBP'000 GBP'000 GBP'000 Over time 13,046 18,464 36,435 At a point in time 209,660 182,971 380,819 222,706 201,435 417,254 8. Adjusting items 26 weeks 26 weeks ended 52 ended 27 weeks 26 February ended February 2021 28 2022 (restated) August GBP'000 GBP'000 2021 GBP'000 Amortisation of acquired intangible assets (i) 468 621 1,186 Adjustments to contingent consideration (ii) (1,320) (671) (1,013) Restructuring/closure costs (iii) - 247 248 Strategic review costs (iv) 375 - - Cloud configuration and customisation costs - Group (v) 983 731 1,356 Cloud configuration and customisation costs - share of associate (v) 261 73 515 Impairment of joint venture (vi) - - 2,090 Effect of deferred tax rate change - share of associate (vii) - - 179 Charge included in profit before taxation 767 1,001 4,561 Effect of deferred tax rate change - Group (vii) - - 990 Taxation effect of the above adjusting items (373) (306) (528) Charge included in profit for the period 394 695 5,023
(i) Amortisation of acquired intangible assets which do not relate to the underlying profitability of the Group but rather relate to costs arising on acquisition of businesses.
(ii) Adjustments to contingent consideration arise from the revaluation of contingent consideration in respect of acquisitions to fair value at the year end. Movements in fair value arise from changes to the expected payments since the previous year end based on actual results and updated forecasts. Any increase or decrease in fair value is recognised through the income statement.
(iii) Restructuring/closure costs include redundancy costs.
(iv) Strategic review costs include external advisor fees incurred in the development of the Group's strategy.
(v) Costs relating to material spend previously capitalised in relation to the implementation of the Group's, and associate's, ERP system that have now been expensed following the adoption of the IFRIC agenda decision. See note 18 for further details of the prior period restatement.
(vi) During the prior year the joint venture Afgritech LLC reported a loss and was expected to continue to underperform against budgeted information in the short to medium term. An impairment review was undertaken which resulted in an impairment charge of GBP1,314,000 against the carrying amount of interest in joint venture and an impairment charge of GBP776,000 against the carrying amount of a loan receivable .
(vii) During the prior year legislation was substantively enacted in the UK to increase the corporate tax rate to 25% with effect from 1 April 2023. As a result of the change, a tax charge of GBP179,000 was recognised in the prior year in the Group's share of associate results and GBP990,000 was recognised in the Group's tax charge in relation to the remeasurement of deferred assets and liabilities. This did not relate to the underlying performance of the associate or Group and was therefore included as an adjusting item.
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 ended 52 27 February weeks 2021 ended (restated) 28 August 2021 26 weeks GBP'000 GBP'000 ended 26 February 2022 GBP'000 Earnings 7,127 7,199 7,712 Adjusting items: Amortisation of acquired intangible assets 468 621 1,186 Adjustments to contingent consideration (1,320) (671) (1,013) Restructuring/closure costs - 247 248 Strategic review costs 375 - - Cloud configuration and customisation costs - Group 983 731 1,356 Cloud configuration and customisation costs - share of associate 261 73 515 Impairment of joint venture - - 2,090 Taxation effect of the above (373) (306) (528) Effect of increase to UK deferred tax rate - Group - - 990 Effect of increase to UK deferred tax rate - share of associate - - 179 Non-controlling interest in the above (390) (191) (433) Earnings - adjusted 7,131 7,703 12,302 Number Number Number Weighted average number of ordinary shares in issue 93,759,322 92,588,219 93,123,043 Potentially dilutive share options 1,069,129 2,813,125 1,567,139 94,828,451 95,401,344 94,690,182 Earnings per share (pence) (restated) Basic 7.6p 7.8p 8.3p Diluted 7.5p 7.5p 8.1p Adjusted 7.6p 8.3p 13.2p Diluted adjusted 7.5p 8.1p 13.0p 10. Dividends
An interim dividend of GBP1,100,423 (H1 2021: GBP2,079,551) that related to the period to 28 August 2021 was paid on 1 October 2021. A final dividend of GBP2,482,959 (H1 2021: GBP2,310,612) in respect of the period to 28 August 2021 was paid on 26 January 2022.
11. Intangible assets, property, plant and equipment, right-of-use assets and investment property
Other Property, intangible plant and Right-of-use Investment Goodwill assets equipment assets property GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 26 weeks ended 26 February 2022 Opening net book amount at 29 August 2021 31,560 5,151 36,198 16,777 152 Exchange differences 74 9 9 11 - Additions and lease modifications - 1 2,041 1,124 - Disposals, transfers and reclassifications - - 779 (701) - Depreciation and amortisation - (505) (1,872) (1,395) (3) Closing net book amount at 26 February 2022 31,634 4,656 37,155 15,816 149 26 weeks ended 27 February 2021 (restated) Opening net book amount at 30 August 2020 32,041 6,365 38,259 14,856 158 Exchange differences (511) (52) (570) (17) - Additions - 49 1,628 1,818 - Disposals and transfers - - (1,748) 861 - Depreciation and amortisation - (657) (1,960) (1,253) (3) Closing net book amount as at 27 February 2021 31,530 5,705 35,609 16,265 155
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 GBP659,000 (2021: GBP632,000).
The Group reviewed its accounting policy following the IFRIC agenda decision in April 2021 in respect of the configuration and customisation costs previously capitalised in relation to the Group's cloud hosted ERP system. Following this review, costs previously capitalised as additions for the 6 months ended 27 February 2021 of GBP731,000 have now been expensed and amortisation of GBP124,000 charged on those assets in that period has been reversed. See note 18 for further details of this prior period restatement.
12. Borrowings As at As at As at 26 27 28 February February August 2022 2021 2021 GBP'000 GBP'000 GBP'000 Current 37,069 8,580 11,113 Non-current 21,246 26,815 23,159 Total borrowings 58,315 35,395 34,272 Cash and cash equivalents as per the balance sheet (28,457) (24,838) (24,309) Net debt 29,858 10,557 9,963 Undrawn facilities 20,381 35,324 35,996 Current borrowings include bank overdrafts of GBP8.0m (2021: GBP4.9m). Undrawn facilities include GBP6.1m (2021: GBP5.7m) in respect of facilities that are renewable on an annual basis. 26 weeks 26 weeks ended ended 26 February 27 February Movements in borrowings are analysed as follows: 2022 2021 GBP'000 GBP'000 Balance at start of period 34,272 36,441 Exchange differences (168) (235) New bank loans and draw downs on RCF 5,222 4,000 Repayment of RCF draw downs (6,000) - Repayments of borrowings (1,406) (1,200) Increase/(decrease) in other borrowings 22,989 (604) Loan forgiven - (715) Release of deferred borrowing costs 30 30 Net increase/(decrease) to bank overdraft 3,376 (2,322) Balance at end of period 58,315 35,395
New bank loans and draw downs on RCF excludes re-financing of assets under new finance lease arrangements.
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 information, and the discount rate, which has been based on the incremental borrowing rate. At 26 February 2022 there is no remaining contingent consideration payable. At 28 August 2021, all of the remaining contingent consideration payable is included within current liabilities and has therefore not been discounted. In respect of the period ended 27 February 2021 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 26 27 As at February February 28 August 2022 2021 2021 GBP'000 GBP'000 GBP'000 Fair value at the start of the period 1,320 3,422 3,422 Exchange differences - (12) (12) Payments made to vendors - (131) (1,077) Change in fair value (1,320) (671) (1,013) Fair value at the end of the period - 2,608 1,320 14. Retirement benefit asset
The amounts recognised in the Income Statement are as follows:
26 weeks 52 weeks 26 weeks ended Ended ended 26 February 27 February 28 August 2022 2021 2021 GBP'000 GBP'000 GBP'000 Administrative expenses 16 9 18 Net interest on the net defined benefit asset (79) (74) (147) Total income (63) (65) (129)
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 26 February 27 February 28 August 2022 2021 2021 GBP'000 GBP'000 GBP'000 Present value of funded defined benefit obligations (59,500) (62,685) (66,254) Fair value of scheme assets 69,464 70,492 75,625 Surplus in funded scheme 9,964 7,807 9,371
Actuarial gains of GBP530,000 (2021: losses of GBP295,000) have been reported in the Statement of Comprehensive Income. The surplus has increased over the period since 28 August 2021 due to changes in market conditions.
The Group's associate's defined benefit pension scheme is closed to future service accrual and the valuation for this scheme has not been updated for the half year as any actuarial movements are not considered to be material.
15. Share capital Share Allotted and fully paid ordinary Number Share capital premium Total shares of 2.5p each of shares GBP'000 GBP'000 GBP'000 Opening balance as at 29 August 2021 93,720,125 2,343 10,155 12,498 Proceeds from shares issued: - Share save scheme 250,415 6 310 316 At 26 February 2022 93,970,540 2,349 10,465 12,814 Opening balance 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
250,415 shares were issued in the period to satisfy the share awards under the share save scheme with exercise proceeds of GBP315,774. The related weighted average price of the shares exercised in the period was GBP1.261 per share.
Since the period end the Company's issued share capital has increased to 93,977,598 shares due to the issue of 7,058 shares under the share save scheme with exercise proceeds of GBP8,999 and a related weighted average exercise price of GBP1.275 per share.
16. Cash (used in)/generated from continuing operations 26 weeks 26 weeks ended 52 weeks ended 27 February ended 26 February 2021 28 August 2022 (restated) 2021 GBP'000 GBP'000 GBP'000 Profit for the period from continuing operations 7,911 7,894 9,652 Adjustments for: Tax 1,573 1,600 2,400 Tax credit in respect of R&D (1,352) (180) (260) Depreciation of property, plant and equipment 1,872 1,960 3,822 Depreciation of right-of-use assets 1,395 1,253 2,529 Depreciation of investment property 3 3 6 Intangible asset amortisation 505 657 1,256 (Profit)/loss on disposal of property, plant and equipment (21) 103 (144) Profit on disposal of right-of-use assets (2) - - Adjustments to contingent consideration (1,320) (671) (1,013) Net fair value charge on share based payments 114 255 464 Other non-cash adjustments (20) (157) (600) Interest income (161) (135) (260) Interest expense and borrowing costs 721 663 1,292 Share of post-tax results of associate and joint ventures (1,415) (2,123) (2,252) Impairment of joint venture - - 2,090 IAS 19 income statement charge (excluding interest): Administrative expenses 16 9 18 Changes in working capital: Increase in inventories (8,863) (2,783) (2,679) Increase in receivables (19,658) (7,872) (10,606) Increase in payables 4,737 14,749 16,448 Cash (used in)/generated from continuing operations (13,965) 15,225 22,163
The majority of the increases in receivables and inventories relates to Agricultural Supplies, where receivables are higher due to a combination of higher selling prices and some slower collections. Inventories are higher due to a combination of higher prices and a decision to hold more machinery inventory. This is expected to reverse in the second half.
17. Related party transactions
The Group's significant related parties are its associate and joint ventures, as disclosed in the Annual Report and Accounts 2021.
Rent Net management Dividends Sales Purchases receivable charges received 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 26 February 2022 Associate 1,268 (69,154) 10 (65) - 902 (31,707) Joint ventures 135 (631) - 118 1,626 985 (87) 26 weeks to 27 February 2021 Associate 346 (60,865) 10 (69) 368 368 (20,539) Joint ventures 373 (229) - 82 - 1,623 (102) 18. Prior period restatement
In April 2021, the IFRS Interpretations Committee (IFRIC) published an agenda decision on the clarification of accounting in relation to the configuration and customisation costs incurred in implementing Software-as-a-Service (SaaS) as follows:
-- Amounts paid to the cloud vendor for configuration and customisation that are not distinct from access to the cloud software are expensed over the SaaS contract term.
-- In limited circumstances, other configuration and customisation costs incurred in implementing SaaS arrangements may give rise to an identifiable intangible asset, for example, where code is created that is controlled by the entity.
-- In all other instances, configuration and customisation costs will be expensed as the customisation and configuration services are received.
Following the publication of this agenda decision the Group reviewed and changed its accounting policy for the capitalisation of costs incurred in respect of the configuration and customisation of its cloud hosted ERP system
to align with the IFRIC guidance. This revision has been accounted for retrospectively resulting in a prior period restatement.
This change in accounting policy has also been reflected in these condensed interim financial statements. The consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity and the consolidated statement of cash flows have been restated for the comparative period ended 27 February 2021.
The Group identified GBP2,894,000 of capitalised costs incurred by the parent Company and its subsidiaries in the years up to and including 29 August 2020 that has been expensed with a further GBP667,000 in its associate's balance sheet, of which the Group recognises 49%. Cumulative amortisation on these costs as at 29 August 2020 of GBP88,000 has been reversed.
In relation to the comparative period ended 27 February 2021, costs of GBP731,000 incurred by the parent Company and its subsidiaries have been expensed and amortisation charged of GBP124,000 has been reversed. A tax credit of GBP114,000 has been recognised in the consolidated income statement with a corresponding increase to the current tax asset in the consolidated balance sheet. In addition, the associate incurred costs of GBP183,000 during the period ended 27 February 2021, of which the Group recognises 49%, that have been expensed and recognised, net of an associated tax credit, through the Group's share of post-tax results of associate.
The affected financial statement line items for the Group are as follows.
27 February 2021 27 February 2021 (previously reported) Restatement (restated) GBP'000 GBP'000 GBP'000 Income Statement Net operating expenses (19,547) (607) (20,154) Adjusted share of post-tax results of associate 920 - 920 Reported share of post-tax results of associate 920 (73) 847 Adjusted operating profit 10,869 124 10,993 Reported operating profit 10,672 (680) 9,992 Adjusted profit before taxation 10,371 124 10,495 Reported profit before taxation 10,174 (680) 9,494 Taxation (1,714) 114 (1,600) Adjusted profit for the period 8,490 99 8,589 Reported profit for the period 8,460 (566) 7,894 Basic EPS (pence) 8.2 (0.4) 7.8 Diluted EPS (pence) 7.9 (0.4) 7.5 Adjusted EPS (pence) 8.2 0.1 8.3
Diluted adjusted EPS (pence) 8.0 0.1 8.1 Balance Sheet Other intangible assets 9,118 (3,413) 5,705 Investment in associate 14,860 (338) 14,522 Total non-current assets 126,928 (3,751) 123,177 Current tax assets 2,058 647 2,705 Total current assets 137,669 647 138,316 Total assets 264,597 (3,104) 261,493 Net assets 136,643 (3,104) 133,539 Retained earnings 104,741 (2,670) 102,071 Total shareholders' equity 119,047 (2,670) 116,377 Non-controlling interests 17,596 (434) 17,162 Total equity 136,643 (3,104) 133,539 Cash Flow Statement Cash generated from continuing operations 15,956 (731) 15,225 Net cash generated from operating activities 14,088 (731) 13,357 Purchase of intangible assets (780) 731 (49) Net cash used in investing activities (2,072) 731 (1,341)
The opening balance sheet of the prior period has been restated and the affected financial statement line items are as follows.
30 August 2020 30 August 2020 (previously Restatement (restated) reported) GBP'000 GBP'000 GBP'000 Balance Sheet Other intangible assets 9,171 (2,806) 6,365 Investment in associate 14,307 (265) 14,042 Total non-current assets 127,473 (3,071) 124,402 Current tax assets 1,535 533 2,068 Total current assets 119,870 533 120,403 Total assets 247,343 (2,538) 244,805 Net assets 134,169 (2,538) 131,631 Retained earnings 101,202 (2,295) 98,907 Total shareholders' equity 117,126 (2,295) 114,831 Non-controlling interests 17,043 (243) 16,800 Total equity 134,169 (2,538) 131,631 19. Alternative performance measures
The Interim Results include alternative performance measures ("APMs"), which are not defined or specified under the requirements of IFRS. These APMs are consistent with how business performance is measured internally and are also used in assessing performance under the Group's incentive plans. Therefore, the Directors believe that these APMs provide stakeholders with additional useful information on the Group's performance.
Alternative performance measure Definition and comments EBITDA Earnings before interest, tax, depreciation, amortisation, profit/(loss) on the disposal of non-current assets and before share of post-tax results of the associate and joint ventures. EBITDA allows the user to assess the profitability of the Group's core operations before the impact of capital structure, debt financing and non-cash items such as depreciation and amortisation. Adjusted EBITDA Earnings before interest, tax, depreciation, amortisation, profit/(loss) on the disposal of non-current assets, before share of post-tax results of the associate and joint ventures and excluding items regarded by the Directors as adjusting items. This measure is reconciled to statutory operating profit and statutory profit before taxation in note 6. EBITDA allows the user to assess the profitability of the Group's core operations before the impact of capital structure, debt financing and non-cash items such as depreciation and amortisation. Adjusted operating 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 profit Profit after taxation after adding back items for the period regarded by the Directors as adjusting items. This measure is reconciled to statutory profit after taxation in the income statement. Adjusted results are presented because if included, these adjusting items could distort the understanding of the Group's performance for the period and the comparability between the periods presented. Adjusted earnings 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 excluding leases. 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 BKCBNKBKBQQD
(END) Dow Jones Newswires
April 20, 2022 02:10 ET (06:10 GMT)
1 Year Carr's Chart |
1 Month Carr's Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions