CARR Carr's Group Plc

 

12 December 2024

CARR'S GROUP PLC

FULL YEAR RESULTS

For the year ended 31 August 2024

and

FUTURE STRATEGY

 

Carr's Group plc (CARR.L), (''Carr's, the ''Company'', or the ''Group'') the Agriculture and Engineering Group, announces its audited results for the year ended 31 August 2024.

 

Financial Results

 

Results for the year are presented on two bases: Table 1 below shows Like for Like ('LFL') results reflecting the Group as it traded throughout FY24 and is presented on a basis consistent with that disclosed as Continuing Operations in the Group's FY23 reporting. Table 2 below shows FY24 Continuing Operations reflecting Continuing Operations as disclosed in the Group's FY24 statutory reporting (which categorises the Engineering Division and the Afgritech agriculture business as Discontinued).

 

Table 1
LFL (Statutory and Adjusted)	FY24	FY23	+/-%
Revenue (£'m) (FY23 restated)	148.0	144.1	+2.7
Adjusted operating profit (£'m)	8.9	8.0	+11.5
Adjusted profit before tax (£'m)	8.5	7.5	+13.7
Adjusting items (£'m)	(14.6)	(6.0)	+143.8
Statutory operating (loss)/profit (£'m)	(5.8)	2.0	-395.2
Statutory (loss)/profit before tax (£'m)	(6.1)	1.5	-504.1
Net cash (£'m)	4.5	4.2	+7.4

 

LFL Highlights

 

·           Engineering Division sale process is ongoing and progressing positively

·           LFL Revenue growth of £3.9m (+2.7%): Agriculture £88.0m, (-6.0%), Engineering £60.1m, (+18.8%)

·           Adjusted Operating Profit of £8.9m, (+12%); Agriculture £4.7m, (-17.1%), Engineering £7.2m, (+36.5%)

·           Significant Adjusting Items of £14.6m, (of which £7.4m non-cash) reflecting transformation of the Group

·           Net Cash of £4.5m (FY23: £4.2m) reflects continued cash generation of both divisions

·           Final dividend of 2.85 pence per share bringing full year dividends to 5.2p per share (FY23: 5.2p per share)

 

Table 2
Continuing Operations - Statutory and Adjusted	FY24	FY23 (restated)	+/-%
Revenue (£'m)	75.7	81.8	-7.5
Adjusted operating profit (£'m)	2.2	2.8	-23.8
Adjusted profit before tax (£'m)	2.5	2.9	-15.1
Adjusted earnings per share (p)	2.6	2.5	+4.0
Adjusting items (£'m)	(9.0)	(3.7)	+141.0
Statutory operating loss (£'m)	(6.8)	(0.9)	-680.1
Statutory loss before tax (£'m)	(6.5)	(0.8)	-737.2
Statutory basic loss per share (p)	(4.8)	(1.0)	-380.0
Net cash (£'m)	8.0	4.2	+91.2

 

1.         Focused Strategy for specialist Agriculture

                                                                                                                                    

The Group will manufacture and sell research proven supplements for extensive grazing markets globally and deliver future value through:

 

·           Improving operating margins through existing operations

·           Deliver profitable growth in core existing business

·           Expand into new and growing extensive grazing markets

 

2.         Market Recovery

 

Gradual recovery from economic and climatic factors evident in existing core markets:

 

·           UK: volume increased progressively to 12% growth from FY23 as input prices fell from recent highs

·           US: gradually improving conditions particularly in northern states

·           Positive momentum has continued into FY25

 

3.         FY24 Trading: Agriculture

 

UK	·        Trading conditions improved in seasonally lower volume H2 after difficult H1 ·        FY24 revenue growth of 6% as volume growth of 12% offset by reduced pricing as input prices reduced ·        Adjusted operating profit of £1.1m (FY23: £2.6m) impacted by Animax trading, energy costs and establishment of integrated management team in H2 FY24
US	·        Trading conditions in northern states improved in H2 after difficult H1, southern states remain challenging ·        Revenue reduction of 18% reflects volume reduction of 15% as 1 (of 3) sites closed in Q2 FY24 ·        Adjusted operating of £2.7m (FY23: £1.8m) reflects improved performance in northern states from H2 and benefit of closure of loss-making site.
Joint Ventures	·        Share of post-tax results from joint ventures in US and Germany unchanged at £1.4m

 

4.         Business Improvements

 

Decisive action to address underperforming businesses:

 

·          NGS: loss-making plant in Nevada, US (FY24: £0.3m operating loss) closed in December 2023

·          Afgritech: Non-core and loss-making New York, US business (FY24: £0.5m operating loss) closed in October 2024 and assets sold

·          New Zealand: sub scale loss making New Zealand business (FY24: £0.3m operating loss) closed post year end and trade switched to distributor on profitable basis

·          Animax: Implementation of turnaround plan for loss making (FY24: £0.8m operating loss) business underway

 

5.         Central Costs

 

·         Central costs of £3.0m (FY23: £3.0m), increase in H1 offset by YOY reduction of 19% in H2

·         Simplification of non-core activities, including investment property disposals and pension scheme de-risking, underway

·          Significant reduction in central costs expected in FY25 with Engineering Division disposals and completion of the actions noted above

 

6.         Adjusting Items

 

·          £6.0m of (current and future) cash costs driven by restructuring costs and historical pension liabilities

·          Non-cash charge of £3.0m driven by asset impairments at Animax

 

7.         Net Cash

 

·         Net cash (total Group) of £4.5m held at year end (FY23: £4.2m). Net cash (continuing operations) of £8.0m at year end with cash generated from operating activities in continuing operations of £4.2m (FY23: £(2.9)m) generated in the year

 

8.         Dividends

 

·         Dividends of £6.0m paid in the year (FY23: £4.9m)

·         Final dividend proposed of 2.85p per share bringing total for year to 5.20p per share (FY23: 5.20p per share)

 

Outlook

 

The immediate prospects for the Agriculture Division have been enhanced by the arrival of a new leadership team and remedial actions taken on under-performing businesses during FY24. The long-term outlook for the division remains attractive with our focus now on our range of existing products, further development of that portfolio and entrance into new geographies. Any benefit from reduced drought areas and the US beef cycle turning will further complement these opportunities.

 

Management is confident that the sale of the Engineering Division will drive optimal shareholder value and expect strong trading in recent years to continue up to sale completion.

 

Quote: David White (Chief Executive Officer)

 

"I am confident that the transformative changes initiated during the year, including the process to realise value for the Engineering Division and the refreshed Agriculture strategy, will deliver value for shareholders in both the immediate and long-term. Our focus is now on our core Agriculture businesses, where our product portfolio provides a foundation from which to grow our share in existing and new markets."

 

Quote: Tim Jones (Non-Executive Chairman)

 

"With the process to realise value for the Engineering Division proceeding well, the Group remains committed to optimising value for our shareholders in the short and longer term. We are now fully focussed on leveraging our market-leading products, increasing efficiencies across our operations, advancing our positive impact on the environment and delivering exceptional value to our customers across the Agriculture Division."

 

 

Carr's Group plc	+44 (0) 1228 554 600
David White, Chief Executive Officer
Gavin Manson, Chief Financial Officer
FTI Consulting	+44 (0) 203 727 1340
Richard Mountain/Ariadna Peretz

 

 

About Carr's Group plc:

 

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

 

The Agriculture Division manufactures and supplies feed blocks, minerals and boluses containing trace elements and minerals for livestock.

 

The Engineering Division manufactures vessels, precision components and remote handling systems, and provides specialist engineering services, for the nuclear, defence and oil & gas industries.

 

 

Chair's Statement

 

Review of the year

 

In last year's review, I wrote about the sense of renewed purpose and optimism I felt at that time and I'm pleased that this positive outlook seems to have been well founded.

 

I can report good progress in advancing the Company's strategy (on which more details are provided below) and we have a refreshed leadership team which is overseeing the development of the Company that our shareholders should expect, notably with an audit completed on time and dividend levels maintained and paid as expected. At the same time, trading has not been without challenge in the Agriculture Division with weather and the USA beef cycle both still forming headwinds. This is balanced against actions we have taken with new leadership teams in the UK and USA reducing our operating costs and reinvigorating our marketing machine, all of which provides a foundation for growth for that business.

 

I have visited our Agricultural manufacturing sites in Ayrshire, Cumbria and Suffolk in the UK and in South Dakota and Tennessee in the USA and I have been pleased to see the professionalism and enthusiasm of our staff alongside the production of products which are clearly meeting market demand.

 

I have also visited each of our Engineering businesses in the UK, Germany and the USA, all of which impressed me with their own market-leading products, technical capabilities and excellent people. There are longer-term opportunities in the nuclear engineering sector in particular and I expect continued success for these teams under new ownership.

 

Strategic Progress

 

At our interim results update in April, we announced that we would explore options to maximise the value of our Engineering Division. It had become clear to the Board that managing two distinct divisions, both containing multiple business strands, is a costly and time-consuming exercise for the central management team and that this operating model was not optimal for the Group in its existing state. The future prospects of the Engineering Division made this the right time to consider a disposal of that business, and our focus is to ensure that this delivers optimal value for shareholders.

 

Our immediate focus in Agriculture has been to prepare that business for future growth in our core markets. Our strategy of Focus, Improve, Deliver has led to significant changes in both the divisional leadership team (some of whom you can read more about in the full FY24 Annual Report and Accounts) and in the businesses which will form part of the Group going forward. These changes bring renewed focus on our market-leading brands, climate and animal welfare, and our outstanding people, all of which will continue to be key to the Group's success.

 

These changes have allowed us to genuinely integrate our businesses across the Agriculture Division - sharing best practices, developing customer relationships, innovating products, effectively managing costs, optimising productivity and developing our people - and provide the foundation for growth in existing and new markets as demand for sustainable meat and dairy continues to grow across the globe.

 

Dividend

 

The Board is proposing a final dividend of 2.85 pence per share which, together with the interim dividend paid, makes a total dividend of 5.20 pence per share for the full year, in line with the prior year (2023: 5.20 pence).

 

Subject to approval by shareholders at the AGM of the Company expected to take place in February 2025, the final dividend will be paid on 10 March 2025 to shareholders on the register at close of business on 24  January 2025 and the shares will go ex-dividend on 23 January 2025.

 

Board

 

As noted in last year's Annual Report and Accounts, Gillian Watson joined the Board as Non-Executive Director on 9 October 2023 and subsequently succeeded John Worby as Senior Independent Director. John retired from the Board on 31 October 2023 after nearly nine years of service for which we are grateful. On 8 October 2024, Ian Wood retired from the Board after nine years of service, for which he is also warmly thanked. Ian had been Chair of the Remuneration Committee until stepping down in the summer to ensure an orderly handover prior to his retirement from the Board. Fiona Rodford has taken on this role with effect from 31 July 2024 having joined the Board as a Non- Executive Director on 20 February 2024.

 

David White was appointed by the Board as Chief Executive Officer with effect from 17 November 2023, succeeding Peter Page who stepped down from the Board at that date. We thank Peter for his efforts during his time with the Group. David joined the Group in January 2023 and joined the Board as Chief Financial Officer on 21 February 2023.

 

Company Secretary and Legal Director Matthew Ratcliffe left the Group on 22 September 2023 to take up a new role and was succeeded by Justin Richards who joined us on 25 September 2023.

 

Martin Rowland's 12-month tenure as Executive Director of Transformation ended, as planned, on 12 November 2024, following which Martin was re-appointed as a Non-Executive Director as a representative of Harwood Capital Management Limited ("Harwood") pursuant to a relationship agreement between the Company and Harwood.

 

Following the year end, Shelagh Hancock also intimated her desire to step down from her role as Non- Executive Director to allow her to focus on her role as Chief Executive Officer at First Milk. Shelagh has brought expansive knowledge of the UK agriculture sector to the Board and her input into our Agriculture Division strategy was especially welcome. Shelagh will step down from the Board on 31 December 2024. We thank Shelagh for her commitment and wish her well in her future endeavours.

 

Further details of Board and Committee membership during FY24 can be found in the Nomination Committee Report in the full FY24 Annual Report and Accounts.

 

Stakeholder Engagement and Statement on Section 172 of the Companies Act 2006

 

Stakeholder engagement is an important aspect of our business. Section 172 of the Companies Act 2006 requires the Directors to promote the success of the Company for the benefit of all members, having regard to the interests of stakeholders in their decision-making. Directors understand the importance of considering the views of stakeholders and the impact of the Company's activities on local communities, the environment, including climate change, and the Group's reputation. To find out more about how stakeholders were taken into account in decision-making please see below and pages the Corporate Governance Report in the full FY24 Annual Report and Accounts, which includes our Section 172 statement.

 

On 20 February 2024 we held our AGM to, amongst other matters, approve the FY23 Annual Report and Accounts. Details of the voting at the AGM can be found on our website www.carrsgroup-ir.com. We remain committed to shareholders having access to the Chair and other Directors, so we can benefit from the challenges and exchange of views that constructive dialogue brings. The Board is happy to engage with shareholders at any time on a one to one level and proactively engage with shareholders to keep them up to date when appropriate to do so.

 

Sustainability and Impact

 

The Group's governance structure helps to ensure that the Board is well informed on environmental, social and governance matters. The Green Teams at our sites have taken actions to help reduce our impact on the environment and our emissions data capture has taken some small steps into Scope 3 (as noted in our SECR reporting in the full FY24 Annual Report and Accounts).

 

Through our operations in different sectors we positively contribute to global efforts to reduce the impact on the environment. Our involvement in the nuclear industry contributes to the global demand for sustainable power businesses, and our Agriculture product range not only enhances animals' welfare and the conversion by those animals of protein which is inedible to humans - grass - into meat and dairy proteins but complements forage-based nutrition systems which play such a crucial role in carbon sequestration, soil's ability to retain water and biodiversity.

 

On the social front, we have continued to support local communities, not just financially but also through training and development through our apprenticeship programmes. By highlighting our positive impacts, improving employee engagement, promoting our responsible business policies and practices and bolstering our social initiatives, we can further solidify our position as a responsible and forward-thinking Group.

 

Further details can be found in the full FY24 Annual Report and Accounts.

 

People

 

The Board recognises that the Group's strategic intent has created uncertainty for some colleagues and we are extremely grateful for the continuing commitment shown by everyone during the year. The future success of the Group relies, as ever, on the support and talents of our people and the Board is committed to nurturing the talent we have across the business.

 

Outlook

 

The Group remains committed to optimising value for our shareholders, and completion of a successful sale of the Engineering Division will be an important step in doing so. In the Agriculture Division, we are now fully focused on leveraging our market-leading products, increasing efficiencies across our operations, advancing our positive impact on the environment and delivering exceptional value for our customers.

 

 

Chief Executive's Review 

 

In April 2024 we announced that the Board, to deliver optimal shareholder value, intended to explore options for the sale of the Engineering Division.

 

The sale process has been ongoing since then and continues to progress positively. On 1 November 2024, the Group disposed of the assets of its wholly owned subsidiary Afgritech LLC. As a result of the position at the balance sheet date, the assets of the Engineering Division and of Afgritech LLC have been classified as held for sale and trading activities presented as discontinued operations throughout this report.

 

During the financial year ended 31 August 2024 Agriculture revenues from continuing operations decreased 7.5% to £75.7m (FY23 restated: £81.8m), while revenues from discontinued Agricultural activities of the Afgritech business were £12.2m, up 4.4% on last year (FY23 restated: £11.7m). This year's Engineering Division revenues of £60.1m were up 18.8% on the prior year (FY23 restated: £50.6m). Adjusted operating profit for continuing operations was £2.2m, a decrease of 23.8% on the equivalent for FY23 (restated: £2.8m). Discontinued operations saw adjusted operating profit increase to £6.7m up 78.6% on the previous year (FY23 restated: £3.8m). Group adjusted operating profit (combining both continuing and discontinued operations) of £8.9m was 34.5% up on the equivalent figure last year (FY23 restated: £6.6m).

 

Health and Safety

 

Health and Safety remains a priority across the business and we have continued to focus on meeting the standards prescribed by our internal audits throughout FY24. The starting point for these audits is to ensure that fundamental safety standards are in place and understood at all locations. With those standards established, we are addressing behaviours, both at an individual and organisational level, with the aim that all colleagues instinctively consider how to perform their jobs in a way that ensures their colleagues, customers, suppliers and they are safe.

 

In FY24, there was one reportable incident, down from two in the prior year. While this reduction is pleasing, we are addressing the fact that our overall incident rate increased against the prior year, albeit driven by lower severity incidents. Near miss reporting and hazard observations continued to increase, allowing local teams to promptly address potentially unsafe conditions before accidents happen. This is a further positive development in our safety culture. A more detailed review of the Group's Health and Safety performance is included in the full FY24 Annual Report and Accounts.

 

Sustainability and Impact

 

The progress made on environmental issues last year, with Green Teams established across the business, has continued during FY24 with a widening range of initiatives undertaken across the Group. Further details on these are contained in the Sustainability and Impact Report in the full FY24 Annual Report and Accounts.). It was also pleasing to see many colleagues place emphasis on the need for more focus on environmental sustainability during our Ideas Workshops (see the full FY24 Annual Report and Accounts for further details).

 

During the year, we have established a Sustainability and Impact Steering Committee, consisting of senior leaders across the business, to support our commitment to improvements in all environmental, social and governance aspects of the business. Further details can be found on in the full FY24 Annual Report and Accounts.

 

Continuing Operations

 

Divisional Review: Agriculture

 

The Agriculture Division manufactures specialist livestock supplements including branded feed blocks, essential minerals, and precision dose trace element boluses, sold to farmers in the UK, Europe, North America, and Australasia through a well-established distribution network.

 

Continuing Operations	2024	2023 restated	% Change
Revenue (£m)	75.7	81.8	-7.5%
Adjusted operating profit (£m)	5.2	5.8	-10.8%
Adjusted operating margin (%)	6.9%	7.1%

 

The decrease in revenue was primarily driven by the US feed block business which saw volumes drop by 15% against FY23, with the downturn in the US beef cycle and drought conditions in the southern US states continuing for longer than envisaged. Some volumes were also lost as a result of the closure of our plant in Silver Springs, Nevada, although the costs saved from exiting this under-performing facility meant that adjusted operating margins in the US feed block business improved by 3.2pp against the prior year.

 

The UK feed block business saw volumes rise by around 12%, as prices settled following the extreme cost increases which impacted volumes during FY23. The increased volumes were also supported by small reductions in gross margin, as we sought to maintain and gain market share, which meant a 2.4pp drop in adjusted operating margins.

 

Our UK animal health business saw revenues decrease by 8.5% year on year, with lower volumes in both the core bolus business and specialist aquaculture products. The latter have been produced under a long-standing contract which will come to an end during FY25.

 

Discontinued Operations

 

Divisional Review: Agriculture

 

Afgritech LLC	2024	2023 restated	% Change
Revenue (£m)	12.3	11.7	+4.4%
Adjusted operating loss (£m)	(0.5)	(0.2)	-207.2%
Adjusted operating margin (%)	-4.2%	-1.4%

 

The closure of Afgritech in October 2024 requires the results of that business to be disclosed as a discontinued operation. As the table above highlights, the business increased revenue by 4% on FY23, but a squeezing of commodity margins and inflationary cost increases meant a worsening of the adjusted operating loss to £0.5m in FY24.

 

Discontinued operations

 

Divisional Review: Engineering

 

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

 

	2024	2023 restated	% Change
Revenue (£m)	60.1	50.6	+18.8%
Adjusted operating profit (£m)	7.2	5.3	+36.8%
Adjusted operating margin (%)	12.0%	10.4%

 

Divisional adjusted operating profit performance for FY24 was 37% ahead of last year, with adjusted operating margin improving to 12.0% (up 1.6pp on FY23), driven by a strong performance in the robotics business.

 

The order book finished the year at £53.6m, down 10% on the record levels seen at August 2023 (£59.8m), but still 32% up on the comparative position at the end of August 2022 (£40.6m).

 

 

Financial Review 

 

The announcement in April of our decision to explore options for the maximisation of value of our Engineering Division was predicated on the differing circumstances of our two Divisions as we went into FY24. Our Engineering Division was performing strongly in structurally growing markets with an organisational design appropriate to optimise the opportunities available, whereas our Agriculture Division was unintegrated and ill equipped to optimise performance in globally challenging markets.

 

FY24 has therefore been a transformational year in which we have established an integrated agriculture management team and strategy, and have subsequently taken the first steps to implement that strategy at strategic and operational level, whilst continuing to focus on the long-term optimisation of value within the existing structures of the Engineering Division.

 

In light of the above, FY24 also marked a transitional year for our significant central costs as we embarked on a process to reduce costs following the expiration of the transitionary services associated with the FY23 disposal of the Agricultural Supplies Division whilst managing the transition to a future focused on the forward looking Agriculture Strategy. Realisation of value of non-core investment properties and de-risking from our defined benefit pension scheme have also been progressed in order to simplify the Group, with focus on future value creation.

 

The consequences of this have been:

 

1.         Improved performance of our strategically core agriculture businesses, supported by the benefit of integration of key roles, but offset by underperformance in two non- core businesses - now addressed;

 

2.         Improved performance of the Engineering Division - partially offset by underperformance in one business - now addressed; and

 

3.         A short-term increase in central costs as a global agriculture management team has been established (realising savings at operational level) in addition to the multi divisional central cost base that will largely be eradicated post completion of any Engineering sale.

 

The changes reflected above have resulted in improved operational performance of the Group and in Adjusted  Operating Profit despite continuing challenges in the agriculture sector, however they have required significant exceptional costs in restructuring the Group and preparing for future profitable growth. The Board considers it appropriate to have incurred these cash costs and to recognise non-cash exceptional costs, detailed below, in order to optimise current and future shareholder value.

 

Presentation of Results for the Year

 

The statutory presentation of financial results under IFRS is intended to give the reader the information required to assess future performance. These reflect the continuing operations of the Group and businesses and assets within the Group that are not expected to remain part of the Group are disclosed as being "discontinued". The Engineering Division and certain other assets are reported as being "discontinued activities" in FY24 and will again in FY25 for the period prior to any transaction.

 

Given the transition the Group is going through it is also relevant to report the performance of the Group on an equivalent basis to FY23 in addition to the statutory disclosure noted above.

 

On a basis comparable with that announced within our FY23 Annual Report and Accounts, Adjusted Operating Profit of £8.9m (FY23: £8.0m) reflects progress made in managing the activities of the Group throughout FY24 irrespective of their designation as continuing or discontinued.

 

 

FY24 Performance on basis comparable to the FY23 Report and Accounts

 

	FY23 Reported £'m	FY24 Comparable £'m	FY24 Continuing £'m	FY24 Discontinued £'m
Revenue
Agriculture	93.6	88.0	75.7	12.3
Engineering	50.6	60.1	-	60.1
Total	144.2	148.0	75.7	72.3
Adjusted Operating Profit
Agriculture	5.6	4.7	5.2	(0.5)
Engineering	5.3	7.2	-	7.2
Central	(3.0)	(3.0)	(3.0)	-
Total	8.0	8.9	2.2	6.7
Adjusting Items
Agriculture	(3.3)	(5.3)	(4.5)	(0.8)
Engineering	(2.3)	(4.8)	-	(4.8)
Central	(0.4)	(4.5)	(4.5)	-
Total	(6.0)	(14.6)	(9.0)	(5.7)
Operating Profit
Agriculture	2.3	(0.7)	0.7	(1.4)
Engineering	3.0	2.4	-	2.4
Central	(3.4)	(7.5)	(7.5)	-
Total	2.0	(5.8)	(6.8)	1.0

 

Continuing Operations

 

The continuing operations of the Group represent its direct interests in the feed supplements markets for pasture based livestock in the UK and US and its joint ventures in the US and Germany.

 

In what has been a transitional year for the Agriculture business, FY24 has seen significant activity impacting each of strategy, structure and operations:

 

Strategy:

 

•            to develop a strategy for value creation globally focused on nutritional supplements for pasture based livestock

•            assess structure and operations in existing markets to optimise performance of core businesses throughout economic / market cycles

•            decisively address under-performing and non-core businesses

•            explore opportunities to enter new growing pasture-based livestock markets

 

Structure and Operations:

 

•            establish a small global agriculture management team

•            integrate UK operational management

•            take first steps to integrate UK and Ireland operations

•            close one unproductive US site within the core feed block business

•            develop a turnaround plan for the production of boluses serving the UK business

•            progress the closure of the loss-making New Zealand operation and establish as a distribution market

•            prepare for closure and sale of the loss-making commodity feed business - Afgritech, closed post year end and reported as "discontinued"

 

 

Continuing operations

 

FY23 restated £'m		FY24 £'m	Movement %
Revenue
UK Agriculture	36.1	38.2	6%
US Agriculture	45.7	37.5	-18%
Total	81.8	75.7	-7%
Adjusted Operating Profit
UK Agriculture	2.6	1.1	-56%
US Agriculture	1.8	2.7	50%
JVs	1.4	1.4	-5%
Central	(3.0)	(3.0)	2%
Total	2.8	2.2	-24%
Adjusting Items
UK Agriculture	(2.7)	(2.7)	0%
US Agriculture	(0.6)	(1.8)	195%
Central	(0.4)	(4.5)	1016%
Total	(3.7)	(9.0)	141%
Operating Profit
UK Agriculture	0.3	(1.0)	-491%
US Agriculture	2.2	1.7	-24%
Central	(3.4)	(7.5)	122%
Total	(0.9)	(6.8)	680%

 

 

UK Agriculture

 

UK Agriculture comprises the Group's Crystalyx® operations in Silloth, its Scotmin operations in Ayr and the Animax operations near Bury St Edmonds.

 

During the year the commercial operations of the three locations were integrated under a common management team. In markets that continue to be challenging focus was on optimising performance and future prospects through in-depth analysis of the business and the optimisation of margins and performance through market share, operating efficiency, and purchasing optimisation.

 

Our UK based feed blocks revenue increased by 2% representing a volume increase of 12% offset by reductions in pricing due to movements in raw material pricing. Our bolus producing Animax business saw an 8.5% reduction in revenue as a lucrative but non-core aquaculture contract came to an end. Our focus now is on simplifying the remaining business and achieving a profitable contribution. The benefits of commercial integration of these businesses were evident from a strong close to FY24 from our feed blocks businesses which was carried into the early months of FY25 and in progress in resolving the issues at Animax following several years of under-performance.

 

The overall contribution of UK Agriculture in the current year was influenced by costs associated with the formation of an integrated management team. The benefits of this integration across the UK and in the transformation of the Irish and New Zealand markets in FY25 will result in value creation. This resulted in a short term increase in costs as well as restructuring costs in the current year only.

 

US Agriculture

 

US Agriculture represents the Group's New Generation Supplements ("NGS") feed blocks business and the Afgritech dairy feed business.

 

 

Early in the year the decision was taken to close the NGS loss making facility in Silver Springs, Nevada. This closure contributed to an overall reduction in NGS revenue of 18% from a volume reduction of 15%. Revenue was also impacted by reduced molasses pricing. The impact of the closure of Silver Springs combined with improved performance elsewhere resulted in the NGS contribution for the year being up year on year despite continuing challenging drought-led market conditions, particularly in the southern USA.

 

In FY24 the Afgritech business continued to suffer from structural movements in the commodity markets for soya and canola. The decision was taken to close the business with effect from 31 October 2024 and the assets of the business were sold on 1 November.

 

Late in the year the ERP implementation across the remaining NGS sites was completed, bringing the UK and US feed blocks businesses onto a common system. The £0.8m exceptional costs incurred in respect of this project in FY24 will be the final significant costs for this multi-year project.

 

The closure of Silver Springs and the post year end closure and sale of Afgritech also resulted in exceptional closure costs totalling £1.9m.

 

Joint Ventures

 

The Group continues to target growth through its participation in joint ventures in selected geographies. In FY24 our contribution from joint ventures in Germany (1) and the US (2) was broadly flat at £1.4m. During the year the Group supported the installation of a second production line at the Gold Bar facility in the US, bringing opportunity for future growth.

 

Central

 

Central costs in the year have been influenced by a number of factors required in order to prepare the Group for the future implementation of a focused agriculture strategy. Several of these factors pull in differing directions from the perspective of the level of resource required : 1) the end of the transitional services agreement under which the Group provided services to the acquirer of the Agricultural Supplies Division following its sale in FY23, 2) the completion of the Agriculture ERP implementation project, 3) the exploration of value for the Engineering Division, 4) the simplification of non-core activities through the process to dispose of investment properties and to manage pension risk. For many of these activities FY24 and into FY25 have been transitional periods and the Group is committed to materially reducing its central costs. In FY24 on an adjusted basis central costs were broadly flat on FY23 at £3.0m however Adjusting Items of £4.5m comprised costs associated with pension de-risking (£3.2m) and restructuring costs (£1.4m).

 

 

Discontinued Operations

 

As we position the Group to implement its focussed Agriculture strategy a number of activities of the Group in FY24 meet the criteria for classification as "Held for Sale" or "Discontinued" under IFRS. As such the impact of these activities is excluded from the detail of the primary statements with the net impact reflected under "discontinued operations". The full impact of these activities is presented above to give visibility of the profit and loss account on a basis comparable with that presented in the FY23 Annual Report and Accounts.

 

These discontinued operations are:

 

1.         The Group's Engineering Division. As announced in April 2024 the Group has been exploring means of optimising value for its Engineering Division, a process which is ongoing and progressing positively.

2.         Within Agriculture, the Afgritech business in Watertown, New York. This business was engaged in the supply of commodity feeds to the dairy industry. In recent years it has been significantly impacted by movements in the canola commodity market. As a consequence the business lost £0.5m at adjusted operating profit level in FY24 and is non-core to the future agriculture strategy. The business was closed on 31 October 2024 with the assets of the business sold on 1 November 2024.

3.         In the year the Group started the process to realise value for its non-core property portfolio comprising nine sites, one of which was sold in the year, and the Group's former head office premises in Carlisle.

 

 

Discontinued Operations

 

FY23 restated £'m		FY24 £'m	Movement %
Revenue
Agriculture	11.7	12.3	4%
Engineering	50.6	60.1	19%
Agricultural Supplies	53.2	-	-
Total	115.5	72.3	(37)%
Adjusted Operating Profit
Agriculture	(0.2)	(0.5)	207%
Engineering	5.3	7.2	37%
Agricultural Supplies	(1.4)	-	-
Total	3.8	6.7	79%
Adjusting Items
Agriculture	-	(0.8)	-
Engineering	(2.3)	(4.4)	91%
Agricultural Supplies	-	-	-
Total	(2.3)	(5.2)	128
Operating Profit
Agriculture	(0.2)	(1.4)	710%
Engineering	3.0	2.9	4%
Agricultural Supplies	(1.4)	-	-
Total	1.5	1.5	3%

 

 

 

Adjusting Items

 

In the year the Group recognised adjusting items totalling £14.6m, of which £7.1m were cash costs (now and in the future) and £7.4m reflected non-cash value adjustments. As indicated above the Board considers that this high level of charges was required to deliver the transformation of the Group and position it for growth through delivery of its focussed agriculture strategy.

 

Restructuring Costs

 

Restructuring costs in continuing operations of £2.1m were incurred primarily in restructuring the central organisation and Agriculture management structure as well as in the closure of the Silver Springs plant.

 

ERP Implementation

 

The ERP implementation within NGS in July 2024 brought to an end the multi-year project to implement a standardised ERP system across the UK and US feed blocks business.

 

Pension De-Risking

 

The Group has recognised past service costs of £2.9m in relation to a Barber Window equalisation adjustment identified by the Trustees of the Scheme during the year, which has been recognised as an adjusting item (see note 5 to the financial statements). This equalisation adjustment was discovered during the process undertaken to seek an insurer from whom to purchase an insured bulk annuity. This "buy-in" process remains ongoing.

 

Profit on Property Sale

 

In the year the sale of the first (of ten) non-core properties completed with a small gain. The process to achieve value for the remaining portfolio continues with one disposal in October 2024 bringing in cash of £1.3m and a further £2.6m expected in December 2024.

 

Asset Impairments

 

The Group reviews the carrying value of its assets annually and where appropriate adjusts the value down through impairment. In the current year the resultant impairments are:

 

·           Continuing: £2.2m in respect of the Animax business as a result of continued challenges in its bolus business and the loss of its aquaculture contract. The underperformance of the business is being addressed as a matter of urgency, and £0.7m in respect of the closure of the Silver Springs plant.

·           Discontinued: £3.2m in respect of assets in the Engineering Division and £0.8m in respect of assets in Afgritech LLC.

 

Adjusting items

 

As referred above, given the fundamental transformation of the Group that is in progress the level of adjusting items in FY24 is significant. The Board consider that the level of adjusting items is necessary and justified in order to effect the transformation and deliver a simpler and more resilient business. The adjusting items reflected in FY24 comparable reporting are:

 

	Continuing £'m	Discontinued £'m	Total £'m
Cash Items
Restructuring costs and costs to sell for disposal groups	2.1	1.2	3.3
ERP implementation	0.8	-	0.8
Pension de-risking	3.3	-
Profit on property sale	(0.2)	-	(0.2)
Non-Cash Items
Asset Impairments (excluding costs to sell for those assets held for sale)	2.9	4.0	6.9
Intangible asset amortisation	0.1	0.4	0.5
Total	8.9	5.6	14.6

 

 

Restatement of Prior Year Comparatives

 

In the Annual Report and Accounts for FY23 the full Group at that time was reflected in FY23 reporting. That Group has been unchanged throughout FY24 however as disclosed above material parts of the Group are disclosed as Discontinued Operations in this Report and prior year comparators are adjusted to relate only to these continuing activities in accordance with IFRS.   Like for Like results are presented to give a view consistent with FY23 reporting.

 

In addition, given the reduced size of the Group, two areas of accounting have been reviewed and revised in the year with the impact being a combined increase to revenue and cost of sales of £0.9m, FY23 impact of £0.9m (no margin or profit impact in either year) and an increase to assets and liabilities of £1.9m, (FY23: £2.3m) (no net assets impact in either year). After discussion with advisors the Directors felt that both adjustments were appropriate given the strict interpretation of current IFRS given the reduced size of the continuing Group moving forwards.  The two items have no impact on profitability or net assets.

 

 

Alternative Performance Measures

 

The Strategic Report and this Financial Review include references to both statutory and alternative performance measures (''APMs''). The principal APMs are intended to give the reader visibility of the potentially recurring performance of the business and as such measure profitability excluding items regarded by the Directors as adjusting items (note 3). These APMs, generally referred to as "adjusted" statutory measures are used in the management of the business and also in assessing some performance objectives under the Group's incentive plan. A glossary and reconciliation of the APMs is included in note 11.

 

 

Finance Costs

 

Net finance income from continuing activities of £0.3m and net finance costs from discontinued activities of £0.7m reflect the higher working capital nature of the Engineering businesses held as discontinued and the retention of cash centrally. The combined finance cost of £0.3m (FY23 on a like-for-like basis: £0.4m) reflects the impact of reduced interest rates and focus on working capital management.

 

 

Profit Before Tax

 

Adjusted profit before tax of £2.5m for continuing operations represented a reduction on a comparable basis from £2.9m in FY23. This reflects the impact of transitionary costs discussed above. The loss before tax of £6.5m (FY23: £0.8m) reflects the significant reorganisation and restructuring costs outlined above.

 

 

Taxation

 

The net tax credit of £0.4m reflects a tax credit on continuing operations of £2.0m and a tax charge from discontinued operations of £1.6m.

 

 

Earnings Per Share

 

The total loss attributable to the equity shareholders of the Company amounted to £5.7m, equating to a basic loss per share of 6.1 pence. The basic loss per share on continuing operations was 4.8 pence. The adjusted profit per share for continuing operations was 2.6 pence (FY23 restated: 2.5 pence).

 

 

Cash Flow and Net Cash / (Debt)

 

During the period the Group moved from a position of holding net cash of £4.2m to £4.5m (total Group) as at the period end. The period end net cash comprised £8.0m net cash for continuing activities and £3.5m net debt for discontinued activities. During the period the operating activities of continuing operations generated £4.2m of cash with additional inflows including dividends received from joint ventures of £0.9m and the final £4.0m deferred consideration from the sale of the Agricultural Supplies Division in FY23. Dividends of £6.0m were paid to shareholders during the period.

 

 

Pensions

 

The Group operates defined contribution and defined benefit pension schemes.

 

The defined benefit scheme is closed to new members and future accrual. During the period the Board, working with the defined benefit scheme trustees, have been exploring the viability of conducting a 'buy-in' of the pension scheme in order to de-risk the future position of both the Company and members. During this process a prior shortfall in accruals for past service costs came to light dating from equalisation of retirement ages in the 1990s. A one-off charge of £2.9m has been made in the year to address this shortfall.

 

This one-off charge has contributed to a reduction in the net pension asset recognised on the balance sheet from £5.3m to £1.8m. The other movements were increases in assessed obligations of £1.0m offset by an increase in fund assets of £0.4m. The net pension asset reflects assets of £48.2m and assessed liabilities of £46.4m.

 

 

CONSOLIDATED INCOME STATEMENT

for the year ended 31 August 2024

			2023
		2024	(restated)2,3
	Notes	£'000	£'000
Continuing operations Revenue	2	75,701	81,815
Cost of sales		(61,434)	(67,541)
Gross profit		14,267	14,274
Distribution costs		(4,408)	(4,746)
Administrative expenses		(18,028)	(11,840)
Share of post-tax results of joint ventures		1,374	1,441
Adjusted1 operating profit	2	2,168	2,845
Adjusting items	3	(8,963)	(3,716)
Operating loss	2	(6,795)	(871)
Finance income		1,013	814
Finance costs		(681)	(715)
Adjusted1 profit before taxation	2	2,500	2,944
Adjusting items	3	(8,963)	(3,716)
Loss before taxation	2	(6,463)	(772)
Taxation	4	1,974	(72)
Adjusted1 profit for the year from continuing operations		2,461	2,424
Adjusting items	3	(6,950)	(3,268)
Loss for the year from continuing operations		(4,489)	(844)
Discontinued operations
(Loss)/profit for the year from discontinued operations (including held for sale)	5	(1,231)	83
Loss for the year		(5,720)	(761)
Loss attributable to:
Equity shareholders		(5,720)	(226)
Non-controlling interests4		-	(535)
		(5,720)	(761)
Basic (loss)/earnings per ordinary share (pence)
Loss from continuing operations	6	(4.8)	(1.0)
(Loss)/profit from discontinued operations	6	(1.3)	0.7
	6	(6.1)	(0.3)
Diluted (loss)/earnings per ordinary share (pence)
Loss from continuing operations		(4.8)	(1.0)
(Loss)/profit from discontinued operations		(1.3)	0.7
		(6.1)	(0.3)

¹      Adjusted results are consistent with how business performance is measured internally and is presented to aid comparability of performance. Adjusting items are disclosed in note 3. An alternative performance measures glossary can be found in note 11.

²      Restated to provide comparable information for continuing and discontinued operations following the classification of the Engineering businesses and Afgritech LLC as disposal groups in the current year. Further details of the results from discontinued operations and net assets relating to the disposal groups can be found in note 5.

³      See note 10 for an explanation of the prior year restatements.

⁴      Non-controlling interests relate to businesses included in the Carr's Billington Agricultural disposal group.

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 August 2024

 

 

 

 

	2024	2023 (restated)2
	£'000	£'000
Loss for the year	(5,720)	(761)
Other comprehensive (expense)/income
Items that may be reclassified subsequently to profit or loss:
-   Foreign exchange translation losses arising on translation of overseas subsidiaries	(1,492)	(3,141)
Items that will not be reclassified subsequently to profit or loss:
-     Actuarial losses on retirement benefit asset:             -     Group             -     Share of associate (included within disposal group)	(412) -	(2,058) (717)
-   Taxation credit on actuarial losses on retirement benefit asset:             -     Group             -                  Share of associate (included within disposal group)	103 -	515 179
Other comprehensive expense for the year, net of tax	(1,801)	(5,222)
Total comprehensive expense for the year	(7,521)	(5,983)
Total comprehensive expense attributable to:
Equity shareholders	(7,521)	(5,448)
Non-controlling interests1	-	(535)
	(7,521)	(5,983)
Total comprehensive expense attributable to:
Continuing operations	(5,430)	(3,814)
Discontinued operations	(2,091)	(2,169)
	(7,521)	(5,983)

 

¹      Non-controlling interests relate to businesses included in the Carr's Billington Agricultural business disposal group.

²      Restated to provide comparable information for continuing and discontinued operations following the classification of the Engineering businesses and Afgritech LLC as disposal groups in the current year. Further details of the results from discontinued operations and net assets relating to the disposal groups can be found in note 5.

 

 

CONSOLIDATED BALANCE SHEET

as at 31 August 2024

 

		2024	2023 (restated)1	2022 (restated)1
	Notes	£'000	£'000	£'000
Assets
Non-current assets
Goodwill		2,068	19,161	23,609
Other intangible assets		32	3,318	4,635
Property, plant and equipment		9,900	29,950	33,204
Right-of-use assets		656	7,323	8,223
Investment property		316	2,640	74
Interest in joint ventures		6,288	6,101	6,065
Other investments		26	27	32
Contract assets		-	-	316
Financial assets
- Non-current receivables		-	21	23
Retirement benefit asset		1,807	5,316	6,828
Deferred tax asset		208	26	213
		21,301	73,883	83,222
Current assets
Inventories		12,062	26,613	26,990
Contract assets		-	7,915	7,564
Trade and other receivables		10,352	26,894	21,556
Current tax assets		712	3,895	3,866
Financial assets
- Cash and cash equivalents		13,714	23,123	22,515
Assets included in disposal groups and other assets classified as held for sale	5	85,663	-	144,389
		122,503	88,440	226,880
Total assets		143,804	162,323	310,102
Liabilities
Current liabilities
Financial liabilities
- Borrowings		(2,764)	(13,714)	(12,734)
- Leases		(267)	(1,264)	(1,416)
- Derivative financial instruments		-	(4)	(62)
Contract liabilities		-	(5,194)	(2,426)
Trade and other payables		(10,707)	(18,858)	(23,541)
Current tax liabilities		-	(131)	(711)
Liabilities included in disposal groups classified as held for sale	5	(31,748)	-	(101,566)
		(45,486)	(39,165)	(142,456)
Non-current liabilities
Financial liabilities
- Borrowings		(2,913)	(5,206)	(23,805)
- Leases		(448)	(5,559)	(6,128)
Deferred tax liabilities		(23)	(4,447)	(5,048)
Other non-current liabilities		-	(71)	(336)
		(3,384)	(15,283)	(35,317)
Total liabilities		(48,870)	(54,448)	(177,773)
Net assets		94,934	107,875	132,329
Shareholders' equity
Share capital		2,361	2,354	2,350
Share premium		10,945	10,664	10,500
Other reserves		81,628	94,857	105,283
Total shareholders' equity		94,934	107,875	118,133
Non-controlling interests		-	-	14,196
Total equity		94,934	107,875	132,329

 

¹ See note 10 for an explanation of the prior year restatements.

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 August 2024

 

 

1		Share Capital £'000	Share Premium £'000	Treasury Share Reserve £'000	Equity Compensation Reserve £'000	Foreign Exchange Reserve £'000	Other Reserve £'000	Retained Earnings £'000	Total Shareholders' Equity £'000	Non- controlling Interests £'000	Total Equity £'000
At 4 September 2022		2,350	10,500	-	528	6,268	192	98,295	118,133	14,196	132,329
Loss for the year		-	-	-	-	-	-	(226)	(226)	(535)	(761)
Other comprehensive expense		-	-	-	-	(3,141)	-	(2,081)	(5,222)	-	(5,222)
Total comprehensive expense		-	-	-	-	(3,141)	-	(2,307)	(5,448)	(535)	(5,983)
Dividends paid		-	-	-	-	-	-	(4,889)	(4,889)	-	(4,889)
Equity-settled share-based payment transactions		-	-	-	(85)	-	-	-	(85)	(7)	(92)
Excess deferred taxation on share-based payments		-	-	-	-	-	-	(4)	(4)	-	(4)
Allotment of shares		4	164	-	-	-	-	-	168	-	168
Sale of disposal group		-	-	-	-	-	-	-	-	(13,654)	(13,654)
Transfer		-	-	-	(179)	-	(2)	181	-	-	-
At 2 September 2023		2,354	10,664	-	264	3,127	190	91,276	107,875	-	107,875
At 3 September 2023		2,354	10,664	-	264	3,127	190	91,276	107,875	-	107,875
Loss for the year		-	-	-	-	-	-	(5,720)	(5,720)	-	(5,720)
Other comprehensive expense		-	-	-	-	(1,492)	-	(309)	(1,801)	-	(1,801)
Total comprehensive expense		-	-	-	-	(1,492)	-	(6,029)	(7,521)	-	(7,521)
Dividends paid		-	-	-	-	-	-	(6,006)	(6,006)	-	(6,006)
Equity-settled share-based payment transactions		-	-	-	358	-	-	-	358	-	358
Excess deferred taxation on share-based payments		-	-	-	-	-	-	14	14	-	14
Allotment of shares		7	281	-	-	-	-	-	288	-	288
Purchase of own shares held in trust		-	-	(74)	-	-	-	-	(74)	-	(74)
Transfer		-	-	74	(298)	-	(34)	258	-	-	-
At 31 August 2024		2,361	10,945	-	324	1,635	156	79,513	94,934	-	94,934

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 August 2024

 

 

 

		2024	2023 (restated)1,2
	Notes	£'000	£'000
Cash flows from operating activities
Cash generated from/(used in) continuing operations	7	2,657	(2,152)
Interest received		734	502
Interest paid		(681)	(715)
Tax received/(paid)		1,539	(507)
Net cash generated from/(used in) operating activities in continuing operations		4,249	(2,872)
Net cash generated from operating activities in discontinued operations		3,194	1,089
Net cash generated from/(used in) operating activities		7,443	(1,783)
Cash flows from investing activities
Sale of disposal group (net of cash disposed)		4,000	26,483
Dividends received from joint ventures		916	1,390
Purchase of intangible assets		(9)	(2)
Proceeds from sale of property, plant and equipment		17	13
Purchase of property, plant and equipment		(1,188)	(2,048)
Proceeds from sale of investment property		182	-
Net cash generated from investing activities in continuing operations		3,918	25,836
Net cash used in investing activities in discontinued operations		(3,526)	(1,789)
Net cash generated from investing activities		392	24,047
Cash flows from financing activities
Proceeds from issue of ordinary share capital		288	167
Purchase of own shares held in trust		(74)	-
New financing and drawdowns on RCF		-	5,574
Repayment of RCF drawdowns		(1,816)	(21,741)
Lease principal repayments		(322)	(367)
Repayment of borrowings		(863)	(2,400)
Dividends paid to shareholders		(6,006)	(4,889)
Net cash used in financing activities in continuing operations		(8,793)	(23,656)
Net cash used in financing activities in discontinued operations		(1,677)	(12,640)
Net cash used in financing activities		(10,470)	(36,296)
Net decrease in cash and cash equivalents		(2,635)	(14,032)
Cash and cash equivalents at beginning of the year		10,769	24,855
Exchange differences on cash and cash equivalents		(204)	(54)
Cash and cash equivalents at end of the year		7,930	10,769

 

 

 

¹ Restated to provide comparable information for continuing and discontinued operations following the classification of the Engineering businesses and Afgritech LLC as disposal groups in the current year. Further details of the results from discontinued operations and net assets relating to the disposal groups can be found in note 5.

² Restated to reclassify disposal group costs to sell of £(864,000) from cash flows from investing activities to cash flows from operating activities.