Carrs Group Regulatory News (CARR)

7 Apr 2008 07:00

Carr's Milling Industries PLC07 April 2008 Monday 7 April 2008 CARR'S MILLING INDUSTRIES PLC - INTERIM ANNOUNCEMENT "trends positive for H2 and beyond" Carr's (CRM.L), the agriculture, food and engineering group, announces resultsfor the 26 weeks to 1 March 2008 which are both substantially ahead of thecomparable period of the 26 weeks to 3 March 2007 and appreciably ahead ofbudget. Financial Highlights • Revenue up 45.9% to £161.87m• Pre-tax profit up 45.0% to £5. 17m• Earnings per share up 45.8% to 44.6p• Interim dividend per share up 9.1% to 6.0p Commercial Highlights • Agriculture increased its operating profit by 56.9% to £4.02m on revenue up 45.1% at £118.82m and also reported a post-tax profit in associate and JVs up 46.5% at £0.98m. All four of Agriculture's related activities - animal feed manufacture, fertiliser blending, agricultural retailing and oil distribution - performed well.• Food increased its operating profit by 21.0% to £1.11m on revenue up 57.9% to £39.68m. The improved result reflected two flour price increases and a cost reduction programme. The underlying trends in profitability for Food are encouraging.• Engineering's operating profit was down 16.0% at £0.49m on revenue down 14.7% at £3.30m. The Board is confident of a satisfactory full-year outcome for Engineering. Richard Inglewood, Chairman, stated "Our positioning in speciality products,particularly in the Agricultural market, is driving increases in both marginsand sales, whilst food price inflation is enabling us to recapture much of thelost margin in our Food business. These factors combine to give us a high degreeof confidence in the full year". Richard Inglewood continued, "Improved farm incomes are benefiting our business.We are selling more products at better margins in the UK and seeing encouragingtrends in our overseas Agricultural markets. The Agriculture division willcontinue to drive the performance of the Group. A more stable backdrop in Foodwill further enhance profitability. The trends are positive for the second halfof this year and beyond". Presentation Today, there will be a presentation to brokers' analysts and private clientbrokers between 13:00 and 14:00, over lunch, at the offices of Investec, 2Gresham Street, London EC2V 7QP. Those wishing to attend are asked to contactCharles Ponsonby of Bankside Consultants. Enquiries: Carr's Milling Industries plc 01228-554 600Chris Holmes (Chief Executive Officer)Ron Wood (Finance Director) Bankside Consultants LimitedCharles Ponsonby 020-7367 8851charles.ponsonby@bankside.com CHAIRMAN'S INTERIM STATEMENT I am pleased to report the unaudited results for the Group for the 26 weeks to 1 March 2008 which are both substantially ahead of the comparable period of the 26 weeks to 3 March 2007 and appreciably ahead of budget. Our positioning in speciality products, particularly in the Agricultural market,is driving increases in both margins and sales whilst food price inflation isenabling us to recapture much of the lost margin in our Food businessexperienced in the period ended 1 September 2007. These factors combine to give us a high degree of confidence in the outlook forthe full 52 weeks ending 30 August 2008. FINANCE HIGHLIGHTS • Revenue up 45.9% to £161.87m (2007: £110.97m)• Pre-tax profit up 45.0%. to £5.17m (2007: £3.57m)*• Adjusted operating profit up 41.3% to £6.43m (2007: £4.55m)**• Earnings per share up 45.8% at 44.6p (2007: 30.6p)• Adjusted earnings per share up 35.7% to 44.1p (2007: 32.5p)** * including a £0.98m (2007: £0.67m) share of post-tax profit in associateand joint ventures ** adjusted figures exclude non-recurring items and the amortisation ofintangible assets of £0.07m credit (2007: charge £0.20m). Shareholders' equity at the period end totalled £28.6m as against £26.8m at 1September 2007 and £21.8m at 3 March 2007. Net debt was £26.7m as against £15.4mand £18.1m, respectively, with gearing of 93% as against 57% and 83%,respectively. The increase in indebtedness is a consequence of the Group'sincreased revenue and higher associated working capital requirements arisingfrom substantial rises in the cost of raw materials which have in turn led tohigher levels of inventory, receivables and payables. Net finance costs of£0.76m (2007: £0.44m) were covered a substantial 6.5 times (2007: 7.6 times) byGroup operating profit. INTERIM DIVIDEND The Board has declared an interim dividend per share of 6.0p (2007: 5.5p), up9.1%, to be paid on 9 May 2008 to shareholders on the register at close ofbusiness on 18 April 2008, with an ex-dividend date of 16 April 2008. OPERATIONS Agriculture • Revenue up 45.1% at £118.82m (£81.89m)• Operating profit up 56.9% at £4.02m (£2.57m)*• Post-tax profit in associate and joint ventures up 46.5% at £0.98m (£0.67m) * before retirement benefit charge The Group's Agriculture business comprises, in the UK (primarily in the NorthWest of England and South West of Scotland), four related activities - animalfeed manufacture, fertiliser blending, agricultural retailing, and oildistribution - and, in the USA and Germany, animal feed manufacture. Market backdrop The higher animal feed and energy costs incurred by UK farmers were reflected inthe 50% increase in the milk price evident in contracts towards the lattermonths of 2007. Our US and German low moisture feed block businesses were facedwith a higher cost of molasses, a main ingredient, but we were able to pass onmost of this cost. Animal feed In our compound and blended feed business, we gained market share in whatremains a competitive market place, due to consistently high quality of productas well as the successful take up of our niche product, AminoMax, a by-passprotein feed ingredient launched in the previous financial period by Afgritech,the Group's joint venture. Although raw material prices continue to rise, we benefited from our decision tobuy early and have recently put through a price rise to compensate for furtherraw material cost increases, which will take effect in May 2008. Sales of our low moisture feed blocks continue to rise (+18%), driven by bothproduct substitution trends and our unique niche products, now including OrganyxPlus, a new product in the Crystalyx range for organic farming systems. In the US, volumes continue to rise due to both the quality of our Smartlic andFeed in a Drum low-moisture animal feed blocks and our excellent levels ofservice. Revenue was up 14% but margins were slightly lower due to higher rawmaterial costs - the full impact of these cost pressures were not passed on. In Germany, Crystalyx Products, the joint venture with the substantial Germanagriculture group Agravis, increased revenue by the introduction of new markets,including Russia. Fertiliser Revenue was up 114% on volumes up 60% on the comparable period. We benefitedfrom farmers buying early to secure supply and to offset further priceincreases. In addition, our leading market position in Scotland and North WestEngland and the success of our niche, slow release environmentally-friendly NewChoice fertiliser further boosted profitability. Volumes of this high marginproduct increased by around 50% year on year and New Choice now representsone-sixth of our total fertiliser volumes. Retail With farmers' income improving, sales at our 14 retail branches experiencedspend up by more than 10% overall, with an acceleration in the second quarter. Fuels Our fuels business continued to gain market share and there is cross-sellingacross the Agricultural group. Revenue from fuel sales increased by 70%, whichalso reflects the acquisition of Johnstone Fuels & Lubricants in January 2007. Food • Revenue up 57.9% at £39.68m (£25.14m)• Operating profit up 21.0% at £1.11m (£0.92m)* * before retirement benefit charge The dramatic rise in revenue reflected the two price increases put through inSeptember 2007 and November 2007, which are also helping to offset the marginerosion we saw in the previous financial period. The benefits of our costreduction programme are now increasingly visible and with the prospect offurther price increases, the recovery in profit should be sustained. We havetried to protect our position by buying forward raw materials where possible,and are hopeful of a more stable environment in the second half of the period.The underlying trends in profitability are encouraging. Engineering • Revenue down 14.7% at £3.30m (£3.87m)• Operating profit down 16.0% at £0.49m (£0.59m)* * before retirement benefit charge Underlying trends across both nuclear and non-nuclear remain healthy and we areconfident of a satisfactory outcome for the full period. The decline in salesand profitability reflected the part completion of one particularly difficultcontract for the supply of vessels. This contract will be completed in the nextquarter. OUTLOOK Improved farm incomes are benefiting our business. We are selling more productat better margins in the UK and seeing encouraging trends in our overseasAgricultural markets. The Agriculture division will continue to drive theperformance of the Group. A more stable market backdrop in Food should enhanceprofitability further. The trends are positive for the second half of thisperiod and beyond. Richard Inglewood 7 April 2008Chairman Carr's Milling Industries PLC Unaudited consolidated income statement for the 26 weeks ended 1 March 2008 26 weeks ended 26 weeks ended 52 weeks ended 1 March 2008 3 March 2007 1 September 2007 £'000 £'000 £'000 Notes (unaudited) (unaudited) (audited) Continuing operations Revenue 3 161,866 110,970 252,753 Cost of sales (141,540) (99,616) (218,603) Gross profit 20,326 11,354 34,150 Net operating expenses (15,382) (8,016) (28,365) Group operating profit 4,944 3,338 5,785 Analysed as: Operating profit before non-recurring items and amortisation 4,872 3,540 6,192 Non-recurring items and amortisation 6 72 (202) (407) Group operating profit 4,944 3,338 5,785 Interest income 291 215 392 Other finance income - 59 95 Interest expense (971) (716) (1,484) Other finance costs (75) - - Share of post-tax profit in associate and joint ventures 980 669 738 Profit before taxation 3 5,169 3,565 5,526 Taxation 3,5 (1,278) (902) (1,225) Profit for the period 3 3,891 2,663 4,301 Profit attributable to minority interest 204 140 120 Profit attributable to equity shareholders 3,687 2,523 4,181 3,891 2,663 4,301 Dividend per share (pence) Paid 8 13.5 12.5 18.0 Proposed 8 6.0 5.5 13.5 Earnings per share (pence) Basic 7 44.6 30.6 50.7 Diluted 7 44.0 30.1 49.9 Unaudited consolidated statement of recognised income and expense for the 26 weeks ended 1 March 2008 26 weeks ended 26 weeks ended 52 weeks ended 1 March 2008 3 March 2007 1 September 2007 £'000 £'000 £'000 Notes (unaudited) (unaudited) (audited) Foreign exchange translation differences arising on translation of overseas subsidiaries 107 (38) (253) Actuarial (losses)/gains on retirement benefit obligation: - Group 4 (1,338) - 4,570 - Share of associate - - 1,437 Taxation credit/(charge) on actuarial movement on retirement benefit obligation: - Group 375 - (1,595) - Share of associate - - (459) Net(expense)/income recognised directly in equity (856) (38) 3,700 Profit for the period 3,891 2,663 4,301 Total recognised income and expense for the period 9 3,035 2,625 8,001 Attributable to minority interest 9 199 140 120 Attributable to equity shareholders 9 2,836 2,485 7,881 3,035 2,625 8,001 Unaudited consolidated balance sheet as at 1 March 2008 As at As at As at 1 March 2008 3 March 2007 1 September 2007 £'000 £'000 £'000 Notes (unaudited) (unaudited) (audited) Assets Non-current assets Goodwill 1,016 845 1,016 Other intangible assets 12 369 835 444 Property, plant and equipment 12 28,075 29,145 28,481 Investment property 12 746 766 756 Investment in associate 3,276 1,487 2,456 Interest in joint ventures 1,427 869 935 Other investments 251 254 251 Financial assets - Derivative financial instruments - 96 132 - Non-current receivables 50 101 100 Deferred tax assets 3,222 5,061 3,228 38,432 39,459 37,799 Current assets Inventories 24,758 18,551 14,853 Trade and other receivables 56,723 38,729 35,481 Current tax assets - 4 82 Financial assets - Derivative financial instruments 1 - - Cash at bank and in hand 467 716 1,315 81,949 58,000 51,731 Total assets 120,381 97,459 89,530 Liabilities Current liabilities Financial liabilities - Borrowings (20,509) (12,408) (10,717) - Derivative financial instruments (65) (1) (10) Trade and other payables (46,571) (32,677) (28,478) Current tax liabilities (882) (1,564) (570) (68,027) (46,650) (39,775) Non-current liabilities Financial liabilities - Borrowings (6,687) (6,361) (5,971) - Derivative financial instruments (55) - - Retirement benefit obligation 4 (9,306) (15,137) (9,807) Deferred tax liabilities 5 (3,401) (3,647) (3,418) Other non-current liabilities (2,049) (1,787) (1,705) (21,498) (26,932) (20,901) Total (89,525) (73,582) (60,676) liabilities Net assets 30,856 23,877 28,854 Shareholders' equity Ordinary shares 9 2,065 2,064 2,064 Share premium 9 5,099 5,073 5,073 Trreasury share reserve 9 (101) (101) (101) Equity compensation reserve 9 144 46 95 Foreign exchange reserve 9 (371) (268) (483) Other reserve 9 1,555 1,586 1,570 Retained earnings 9 20,198 13,401 18,574 Total shareholders' equity 9 28,589 21,801 26,792 Minority interests in equity 9 2,267 2,076 2,062 Total equity 9 30,856 23,877 28,854 Unaudited consolidated cash flow statement for the 26 weeks ended 1 March 2008 26 weeks ended 26 weeks ended 52 weeks ended 1 March 2008 3 March 2007 1 September 2007 £'000 £'000 £'000 Notes (unaudited) (unaudited) (audited) Cash flows from operating activities Cash (used by)/generated from operations 10 (7,886) 585 6,906 Interest received 282 204 389 Interest paid (930) (574) (1,407) Tax paid (509) (724) (2,053) Net cash (used by)/generated from operatin activities (9,043) (509) 3,835 Cash flows from investing activities Acquisition of subsidiaries (net of cash acquired) - (1,049) (1,141) Investment in joint ventures (294) - - Net payment of loans to joint ventures - (90) (90) Purchase of intangible assets (3) (5) (11) Proceeds from sale of property, plant and equipment 63 139 121 Purchase of property, plant and equipment (877) (1,275) (1,896) Proceeds from sale of investment property - - 96 Proceeds from sale of investments - - 1 Receipt of non-current receivables 50 100 100 Purchase of own shares held in trust - (101) (101) Net cash used by investing activities (1,061) (2,281) (2,921) Cash flows from financing activities Net proceeds from issue of ordinary share capital 27 75 75 Net proceeds from issue of new bank loans and other borrowings 3,295 1,500 - Finance lease principal repayments (454) (486) (1,005) Repayment of borrowings (144) (2,069) (83) Disposal of interest rate swap 111 - - Dividends paid to shareholders (1,115) (1,032) (1,486) Net cash generated from/(used by) financing activities 1,720 (2,012) (2,499) Effects of exchange rate changes 78 3 (97) Net decrease in cash and cash equivalents (8,306) (4,799) (1,682) Cash and cash equivalents at beginning of the period (598) 1,084 1,084 Cash and cash equivalents at end of the period (8,904) (3,715) (598) Cash and cash equivalents consists of: Cash and cash equivalents per the balance sheet 11 467 716 1,315 Bank overdrafts included in borrowings 11 (9,371) (4,431) (1,913) (8,904) (3,715) (598) STATEMENT OF DIRECTORS' RESPONSIBILITIES The Directors confirm that to the best of their knowledge this condensed set offinancial statements has been prepared in accordance with IAS 34 as adopted bythe European Union, and that the interim management report herein includes afair review of the information required by DTR 4.2.7 and DTR 4.2.8. The Directors of Carr's Milling Industries PLC are listed in the Carr's MillingIndustries PLC Annual Report and Accounts 2007. There have been no changes tothe Board of Directors in the financial period. On behalf of the Board Chris Holmes Chief Executive 7 April 2008 Ron Wood Finance Director 7 April 2008 NOTES TO THE UNAUDITED INTERIM FINANCIAL RESULTS 1 Basis of preparation The financial information for the 26 weeks to 1 March 2008 does not constitutestatutory accounts for the purposes of section 240 of the Companies Act 1985 andhas been neither audited nor reviewed. No statutory accounts for the period havebeen delivered to the Registrar of Companies. The financial information in respect of the 52 weeks ended 1 September 2007 hasbeen produced using extracts from the statutory accounts for this period.Consequently, this does not constitute the statutory information for the 52weeks ended 1 September 2007, which was audited. The statutory accounts for thisperiod have been filed with the Registrar of Companies. The auditors' report onthese accounts was unqualified and did not contain a statement under sections237(2) or (3) of the Companies Act 1985. The next annual financial statements of the Group, for the 52 weeks to 30 August2008, will be prepared in accordance with International Financial ReportingStandards as adopted for use in the EU ("IFRS"). This Interim Report has beenprepared in accordance with the Disclosure and Transparency Rules of theFinancial Services Authority and with IAS 34 'Interim Financial Reporting' asadopted by the European Union. The directors approved the Interim Report on 7 April 2008. The interim financial information has been prepared on the historical costbasis, except for certain assets, which are held at deemed cost, and derivativefinancial instruments and share-based payments, which are included at fairvalue. 2 Accounting policies The accounting policies used in the preparation of the financial information forthe 26 weeks to 1 March 2008 have been consistently applied to all the periodspresented and are set out in full in the Group's financial statements for the 52weeks ended 1 September 2007. A copy of these financial statements is availablefrom the Company's registered office at Old Croft, Stanwix, Carlisle, CA3 9BA. The following new standards, interpretations and amendments to publishedstandards are effective for the Group for the financial period ending 30 August2008: • IFRS 7 'Financial Instruments: Disclosure' • IFRIC 10 'Interim Financial Reporting and Impairment' • IFRIC 11 'IFRS 2 - Group and Treasury Share Transactions' The above new standards, interpretations and amendments to published standardshave had no material impact on the results or the financial position of theGroup for the 26 weeks to 1 March 2008. The following new standards, interpretations and amendments to publishedstandards have been issued, but are not effective for the financial periodending 30 August 2008 and have not been early adopted: • IAS 1 (Revised) 'Presentation of financial statements' • IFRS 8 'Operating Segments' • IFRIC 12 'Service Concession Arrangements' • IFRIC 13 'Customer Loyalty Programmes' • IFRIC 14 'The limit on a defined benefit asset, minimum funding requirements and their interaction' • IAS 23 'Revised - Borrowing costs' • Amendment to IAS 32 'Financial instruments: Presentation' and IAS 1 'Presentation of financial statements' • Amendment to IFRS 2 'Share based payments' • IFRS 3 (Revised) 'Business combinations' • IAS 27 (Revised) 'Consolidated and separate financial statements' 3 Segmental information The segment results for the 26 weeks to 1 March 2008 are as follows: Agriculture Food Engineering Other Group £'000 £'000 £'000 £'000 £'000 Total gross segment revenue 118,949 39,680 3,326 70 162,025 Inter-segment revenue (133) (2) (24) - (159) Revenue 118,816 39,678 3,302 70 161,866 Operating profit/(loss) beforeretirement benefit charge 4,024 1,112 492 (182) 5,446 Analysed as: Before non-recurring items andamortisation 4,045 1,150 492 (313) 5,374 Non-recurring items and amortisation (21) (38) - 131 72 4,024 1,112 492 (182) 5,446 Retirement benefit charge (502)Interest income 291Other finance costs (75)Interest expense (971)Share of post-tax profit of associate (Agriculture) 820Share of post-tax profit of joint ventures (Agriculture) 160 Profit before taxation 5,169Taxation (1,278)Profit for the period 3,891 The segment results for the 26 weeks to 3 March 2007 are as follows: Agriculture Food Engineering Other Group £'000 £'000 £'000 £'000 £'000 Total gross segment revenue 82,044 25,142 3,924 79 111,189 Inter-segment revenue (157) (7) (55) - (219) Revenue 81,887 25,135 3,869 79 110,970 Operating profit/(loss) beforeretirement benefit charge 2,565 919 586 (112) 3,958 Analysed as: Before non-recurring items andamortisation 2,608 1,078 586 (112) 4,160 Non-recurring items and amortisation (43) (159) - - (202) 2,565 919 586 (112) 3,958 Retirement benefit charge (620)Interest income 215Other finance income 59Interest expense (716)Share of post-tax profit of associate (Agriculture) 506Share of post-tax profit of joint ventures (Agriculture) 163 Profit before taxation 3,565Taxation (902)Profit for the period 2,663 The segment results for the 52 weeks to 1 September 2007 are as follows: Agriculture Food Engineering Other Group £'000 £'000 £'000 £'000 £'000 Total gross segment revenue 186,249 57,038 9,790 214 253,291 Inter-segment revenue (319) (3) (216) - (538) Revenue 185,930 57,035 9,574 214 252,753 Operating profit/(loss)before retirement benefit charge 5,145 1,102 1,018 (313) 6,952 Analysed as: Before non-recurring itemsand amortisation 5,235 1,419 1,018 (313) 7,359 Non-recurring items and amortisation (90) (317) - - (407) 5,145 1,102 1,018 (313) 6,952 Retirement benefit charge (1,167)Interest income 392Other finance income 95Interest expense (1,484)Share of post-tax profit of associate (Agriculture) 496Share of post-tax profit of joint ventures (Agriculture) 242 Profit before taxation 5,526Taxation (1,225)Profit for the period 4,301 Sales of agricultural products are subject to seasonal fluctuation with higherdemand for animal feed in the first six months of the period whereas fertiliserssales demand is high in the second six months of the period, particularly in themonths of March and April. 4 Retirement benefit obligation £'000 Deficit in scheme at 2 September 2007 9,807 Actuarial loss 1,338 Contributions by employer (1,267) Retirement benefit charge 502 Reduction in liability due to transfer values paid (1,074) Deficit in scheme at 1 March 2008 9,306 In the period, the Company and the Trustees of the Carr's Milling IndustriesPension Scheme 1993 ("Scheme") offered to deferred members, with more than fiveyears to normal retirement age, enhanced transfer values. The cost to theCompany was £943,000 and the actuarial provisions held by the Company werereduced by £1,074,000. The net gain of £131,000 (2007: £nil) has been creditedto the income statement. Actuarial losses of £1,338,000 (2007: Nil) have been reported in the Statementof Recognised Income and Expense. The reduction in liabilities due to the risein bond yields was more than offset by negative returns on investments, and theadoption of a revised mortality table. During the period the Group's associate closed its defined benefit pensionscheme to future service accrual. The valuation for this Scheme has not beenupdated as any actuarial movements are not considered to be material. 5 Taxation The tax charges for the 26 weeks ended 1 March 2008 and 3 March 2007 are basedon the estimated tax charge for the applicable year. In the 2007 budget, the Government announced its intention to propose thatParliament abolish Industrial Buildings Allowances ("IBAs"). As of 1 March 2008,this change was not substantively enacted. Had the change been substantivelyenacted as of the balance sheet date, the estimated impact on the incomestatement and balance sheet would be an increase in the deferred tax charge andliability of £1,267,000. 6 Adjusted operating and pre-tax profit 26 weeks ended 1 March 2008 3 March 2007 £'000 £'000 Reported group operating profit 4,944 3,338 Non-recurring items and amortisation (72) 202 Operating profit before non-recurring items and amortisation 4,872 3,540 Share of operating profit in associate and joint ventures 1,557 1,009 Adjusted operating profit 6,429 4,549 Net finance costs - group (755) (442) Net finance costs - associate and joint ventures (116) (101) Adjusted pre-tax profit 5,558 4,006 7 Earnings per share The calculation of earnings per ordinary share is based on earnings attributableto shareholders and the weighted average number of ordinary shares in issueduring the period. The adjusted earnings per share figures have been calculated in addition to theearnings per share required by IAS33 - 'Earnings per Share' and is based onearnings excluding the effect of non-recurring items and amortisation ofintangible assets. It has been calculated to allow the shareholders to gain anunderstanding of the underlying performance of the Group. Details of theadjusted earnings per share are set out below: 26 weeks ended 52 weeks ended 1 March 2008 3 March 2007 1 September 2007 £'000 £'000 £'000 Earnings 3,687 2,523 4,181 Non-recurring items and intangible asset amortisation: Amortisation of intangible assets 59 202 407 Net gain on transfer of deferred pensioners from Group scheme (131) - - Impairment of goodwill and property, plant and equipment recognised in associate, net of tax - - 119 Amortisation of intangible asset and impairment of goodwill recognised in joint ventures, net of tax 4 13 19 Taxation charge/(credit) on non- recurring items and amortisation 20 (61) (114) Adjusted earnings 3,639 2,677 4,612 Weighted average number of ordinary shares in issue 8,258,994 8,244,122 8,240,848 Potentially dilutive share options 128,677 150,206 144,127 8,387,671 8,394,328 8,384,975 Basic earnings per share 44.6p 30.6p 50.7p Diluted earnings per share 44.0p 30.1p 49.9p Adjusted earnings per share 44.1p 32.5p 56.0p 8 Dividends 26 weeks ended 52 weeks ended 1 March 2008 3 March 2007 1 September 2007 £'000 £'000 £'000Ordinary: Final dividend for the period ended 1 September 2007 of 13.5p per share (2006: 12.5p) 1,115 1,032 1,032 Ordinary: Interim dividend of 5.5p per share - - 454 1,115 1,032 1,486 The directors have approved an interim dividend of 6.0p per share (2007: 5.5pper share), which, in line with the requirements of IAS10 - 'Events after theBalance Sheet Date', has not been recognised within these results. This resultsin an interim dividend of £495,697 (2007: £454,113), which will be paid on 9 May2008 to shareholders whose names are on the Register of Members at the close ofbusiness on 18 April 2008. The ordinary shares will be quoted ex-dividend on 16April 2008. 9 Changes in shareholders' equity and minority interest Attributable to Equity Holders of the Company Share Share Treasury Equity Foreign Other Retained Total Minority Capital Premium Share Compensation Exchange Reserves Earnings Shareholders' Interest Account Reserve Reserve Reserve Equity Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 2 September 2007 2,064 5,073 (101) 95 (483) 1,570 18,574 26,792 2,062 28,854 Total recognisedincome and expense for the period - - - - 112 - 2,724 2,836 199 3,035 Dividends - - - - - - (1,115) (1,115) - (1,115) Equity-settled share-based payment transactions,net of tax - - - 49 - - - 49 6 55Allotment of shares 1 26 - - - - - 27 - 27 Transfer - - - - - (15) 15 - - - At 1 March 2008 2,065 5,099 (101) 144 (371) 1,555 20,198 28,589 2,267 30,856 10 Cash flow (used by)/generated from operating activities 26 weeks ended 52 weeks ended 1 March 3 March 1 September 2008 2007 2007 £'000 £'000 £'000 Net profit 3,891 2,663 4,301 Adjustments for: Tax 1,278 902 1,225 Depreciation on property, plant and equipment 1,662 1,798 3,507 (Profit)/loss on disposal of property, plant and equipment (9) 10 18 Depreciation on investment property 10 9 19 Profit on disposal of investment property - (77) (77) Loss on disposal of investments - - 3 Intangible asset amortisation 78 221 446 Net fair value losses/(gains) on derivative financial instruments in operating profit 56 (26) (17) Net fair value loss on share-based payments 55 29 84 Net foreign exchange differences (49) (16) 3 Interest income (291) (215) (392) Interest expense and borrowing costs 974 719 1,491 Net fair value losses/(gains) on derivative financial instruments in interest 75 (59) (95) Share of post-tax profits from associate and joint ventures (980) (669) (738) IAS19 income statement credit in respect of employer contributions (1,267) (1,279) (2,586) IAS19 income statement charge 502 620 1,167 Transfer values paid to deferred pension scheme members (1,074) - - Changes in working capital (excluding the effects of acquisitions): Increase in inventories (9,905) (6,436) (2,738) Increase in receivables (21,230) (3,564) (321) Increase in payables 18,338 5,955 1,606 Cash (used by)/ generated from continuing operations (7,886) 585 6,906 11 Analysis of net debt At At 1 March 2008 3 March 2007 1 September 2007 £'000 £'000 £'000 Cash and cash equivalents 467 716 1,315 Bank overdrafts (9,371) (4,431) (1,913) Loans and other (10,455) (7,315) (8,051) borrowings: current Loans and other (5,901) (5,394) (5,147) borrowings: non-current Finance leases: current (683) (662) (753) Finance leases: non-current (786) (967) (824) (26,729) (18,053) (15,373) 12 Capital expenditure and capital commitments During the period the Group incurred capital expenditure on property, plant andequipment of £1,276,000 (2007: £1,843,000) and on intangible assets of £3,000(2007: £255,000). During the period the Group disposed of property, plant and equipment with a netbook value of £53,000 (2007: £53,000) and investment property with a net bookvalue of £nil (2007: £19,000). Capital commitments contracted, but not provided for, by the Group amounted to£380,000 (2007: £51,000). 13 Related party transactions The Group's significant related parties are its associate and joint ventures asdisclosed in the Annual Report and Accounts 2007. There were no materialchanges to the level of related party transactions during the financial period. 14 Principal risks and uncertainties The principal risks and uncertainties which could impact the Group weredescribed on pages 10 and 11 of the Annual Report and Accounts 2007, a copy ofwhich is available from the Company's registered office: Old Croft,Stanwix, Carlisle, CA3 9BA, or on the Group's website www.carrs-milling.com. The primary risks and uncertainties affecting the Group for the remainder of thefinancial period comprise: Competition It is fundamental that the Group remains competitive within its sectors and tomitigate risk in this area the Group ensures it invests in innovative newprocesses and products to retain its competitive advantage and to providecustomers with quality products and service. Capital investment in production facilities is essential to maintaining theGroup's competitive edge. Market forces Increasing raw material costs will continue to place pressure on margins andprofitability. To secure the best possible price the Group has bought forwardthose materials required and will continue to negotiate with suppliers tosecure the best possible terms in an increasingly difficult market place. Inaddition, through food price inflation the Group has been able to pass on costincreases thereby reducing the impact on margins. The prospect of further priceincreases throughout the Group will help sustain recovery of profit. Foreign currency The major foreign currency risk facing the Group is in the purchasing of rawmaterials in the fertiliser and flour milling operations. The major currencyinvolved is the US dollar. The policy of the Group is, and will continue to be,to hedge using forward foreign exchange contracts with UK banks as soon ascommitment has been given to the underlying transaction. Translation of the foreign subsidiary from US dollar to sterling is subject toexchange rate movements during the period and on translation of the balancesheet at the period end. The Group does not hedge against the translation ofthe foreign subsidiary as the translation has no impact on cash flow. Gains orlosses on translation of the balance sheet are recorded in reserves. Employee retention To ensure the retention of its staff the Group invests in its employees throughattractive remuneration packages including membership in its contributoryoccupational pension scheme and share option plans. Employees are offeredsupport and training opportunities to ensure skills are kept to a levelrequired to undertake their responsibilities. 15 This Interim Report will be sent by post to all registered shareholders.Copies are also available to the public from the Company's registered office:Old Croft, Stanwix, Carlisle, CA3 9BA, or at www.carrs-milling.com. This information is provided by RNS The company news service from the London Stock Exchange