Carr’s Group — Initial look at FY22 performance

Carr’s Group (LSE: CARR)

Last close As at 20/05/2024

GBP1.38

0.50 (0.36%)

Market capitalisation

GBP131m

More on this equity

Research: Industrials

Carr’s Group — Initial look at FY22 performance

Carr’s Group has issued a detailed trading update giving some preliminary financial metrics on FY22 performance. These show both continuing divisions (Speciality Agriculture and Engineering) beating our EBIT estimates, following a strong finish to the year. The shares remain suspended until management finishes the final stages of the audit process, which it believes are ‘essentially complete’. Our note is based on the initial information in the trading update. We will publish a follow-on update once the full results are announced.

Analyst avatar placeholder

Written by

Industrials

Carr’s Group

FY22 trading update

Basic materials

2 March 2023

Price

121.5p

Market cap

£114m

Net debt (£m) on 3 September 2022 (excluding finance leases and before receipt of cash from disposal)

14.0

Shares in issue

94.0m

Free float

62.2%

Code

CARR

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(0.0)

1.3

(21.1)

Rel (local)

(1.6)

(3.0)

(25.5)

52-week high/low

160p

92p

Business description

Carr’s Group’s Speciality Agriculture division serves farmers in the UK, Ireland, the US, Germany, Canada and New Zealand with feed blocks and feed supplements. The Engineering division offers remote handling equipment and fabrications to the global nuclear and oil and gas industries.

Next event

FY22 results

March 2023

Analyst

Anne Margaret Crow

+44 (0)20 3077 5700

Carr’s Group is a research client of Edison Investment Research Limited

Carr’s Group has issued a detailed trading update giving some preliminary financial metrics on FY22 performance. These show both continuing divisions (Speciality Agriculture and Engineering) beating our EBIT estimates, following a strong finish to the year. The shares remain suspended until management finishes the final stages of the audit process, which it believes are ‘essentially complete’. Our note is based on the initial information in the trading update. We will publish a follow-on update once the full results are announced.

Initial look at FY22 performance

Year end

Revenue
(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

8/21**

120.3

10.4

10.1

5.00

12.0

4.1

8/22**

124.2

11.2

10.0

5.20

12.2

4.3

8/23e

150.0

10.5

8.8

5.40

13.8

4.4

8/24e

158.9

11.7

9.3

5.60

13.1

4.6

Note: FY21 has been restated to treat Agricultural Supply as a discontinued business. *PBT and EPS are normalised, excluding amortisation of acquired intangibles, and exceptional items. **Unaudited data.

Strong Engineering recovery in FY22

Group revenues grew by 3.3% y-o-y to £124.2m in FY22 as a result of higher commodity prices. Adjusted EBIT increased by 7.5% to £11.9m. Speciality Agriculture adjusted EBIT declined by 3.5% to £9.2m as feed block volumes in the United States reduced slightly because of the drought affecting northern states as well as margin pressures during H122, which have eased. The Engineering division benefited from a strong order book, particularly for fabrication work from the nuclear industry and good order intake in the precision engineering business, which was driven by a sustained recovery in the oil and gas market.

Trading environment becoming more challenging

H123 started well, with strong performances from both divisions. However, the trading environment became more challenging in November and December. Feed block volumes were adversely affected by a continuation of the drought in the United States and mild weather in the UK. Engineering performance was held back by very competitive pricing for tenders. We had previously changed our group FY23 estimates in August 2022 to reflect the disposal of the Agricultural Supplies division. We make further adjustments to reflect recent trading, though the group PBT is unchanged, and introduce FY24 estimates.

Valuation: Scope for share price uplift

Our sum-of-the-parts (SOTP) calculation, which compares the two remaining divisions with listed peers offering speciality products to livestock farmers and a sample of UK engineering companies, gives a value of 205.1p/share. Now that there is no excuse for valuing the group using companies engaged in the supply of more commoditised inputs to livestock farmers, the share price should, in our opinion, start to move towards the indicative value, particularly once management has been seen to reinvest the proceeds from the disposal into the Speciality Agriculture division.

Divisional performance

Speciality Agriculture affected by drought in northern US states

Divisional revenues increased by 14.0% y-o-y to £78.1m while adjusted operating profit (including joint ventures; JVs) declined by 3.5% to £9.2m. The revenue increase was attributable to commodity price inflation. Overall, the volume of feed blocks declined by 2% (including JVs). Volume sales grew marginally in the UK as although livestock and farmgate milk prices in the UK remained strong, a situation that typically encourages farmers to invest in feed blocks and supplements to enhance farm outputs, the high prices of inputs such as fertiliser caused farmers to limit discretionary purchases such as feed blocks. A 2% volume reduction in the US (including JVs) related to the drought affecting the northern part of the country and the resultant reduction in cattle numbers. The modest drop in profit reflects lower utilisation of the feed block plant serving the northern US throughout the year and a reduction in margin during H122 because of a lag in passing through increases in raw material prices in both the UK and the US. The margin situation stabilised during H222, with increases in both feed block prices and input costs. Divisional EBITA (including JVs) was higher than our £7.6m estimate because of a strong finish to the year in the UK, probably attributable to high farmgate milk prices in the UK. Divisional revenues were higher than our £73.1m estimate because of continued commodity price rises.

While H123 started strongly, trading became more challenging during November and December 2022, with lower volumes of feed blocks sold in the US because of the continued drought affecting the northern states and in the UK markets because of the mild weather. We model a year-on-year drop in EBITA during FY23 to £8.4m to reflect the weaker trading environment in November and December, though this still represents an increase to our previous estimate (£8.0m), which took a very cautious stance on margins that have recovered (see Exhibit 1 below for a summary of the changes to estimates). The 23% y-o-y revenue growth to £96.0m assumes that commodity prices continue to be high. Our FY24 estimates assume an improvement in product volumes supported by an initiative to promote sales of equine feed blocks in Texas, which has the largest horse population in the US, and continued growth in demand for a range of feed blocks for dairy cows, which was launched in the UK in CY21. In addition, revenues (medium term) and margins (shorter term) should benefit from the completion of the automation project at Animax, which will increase capacity while reducing production costs. 

Strong performance from fabrication and precision engineering businesses

Engineering revenues declined by 11.0% to £46.2m while adjusted operating profit jumped by 38.2% to £5.4m. The Engineering division benefited from a strong performance from the specialist fabrication business, which experienced a positive flow of orders from the nuclear reprocessing and decommissioning industry and from improved utilisation levels. The recovery in the oil and gas market, following the disruption caused by the COVID-19 pandemic, helped the precision engineering business rebuild its order book, resulting in improved performance. The Remote Handling and Robotics performance was weaker than the prior year against a strong comparator. Global shortages of components such as motor controllers meant that the business was not able to recognise milestone payments against some contracts during H122. As anticipated, although both the UK and US Engineering Solutions businesses had won major contracts during FY21, contract phasing meant that levels of activity for the US business were lower during H122 than during the prior year period. In addition, there were delays and higher costs associated with a major defence project, and delays on a service contract for the nuclear industry following a technical fault. Nevertheless, the division finished the year strongly, reaching some milestones on fabrication projects towards the year end, resulting in full year EBITA ahead of our £3.8m estimate (revenues were in line with our estimate).

While H123 started strongly, trading became more challenging during November and December 2022 because of intensifying competitive activity as new players entered the fabrication market. In the medium term, management expects that the Joint Supply Chain Accreditation Register (JOSCAR) accreditation will help the fabrication business secure high-margin work in the UK defence, aerospace and security sectors, which its new competitors will not be qualified to work on. In late CY22, the precision engineering business gained the ‘Fit for Nuclear’ quality accreditation, enabling it to tender for contracts in the nuclear industry with other companies in the division, and reducing the business’s dependence on the oil and gas industry. In the short term, however, although there will not be a repeat of the delays on one Engineering Solutions contract during FY23 because that contract is now complete, and the global oil price is supporting precision engineering activity, we now model a modest year-on-year reduction in divisional performance during FY23, whereas we had previously modelled a sharp increase. We model a modest improvement in divisional profit during FY24 to reflect the fabrication business winning more work in the nuclear industry. 

Group performance

Exhibit 1: Summary of divisional performance and changes to estimates

£m (unless otherwise stated)

FY21

FY22

FY23e

FY24e

Actual

Old*

Actual

Change

Old

New

Change

New

Speciality Agriculture revenues

68.5

73.1

78.1

6.8%

74.7

96.0

28.5%

102.7

Engineering revenues

51.9

46.0

46.2

0.4%

63.5

54.0

-15.0%

56.2

Group revenues

120.3

N/A

124.2

N/A

138.2

150.0

8.5%

158.9

Speciality Agriculture EBITA including JVs

9.5

7.6

9.2

20.5%

8.0

8.4

5.0%

8.9

Engineering EBITA

3.9

3.8

5.4

41.3%

6.6

5.2

-21.2%

5.5

Central costs

(2.3)

(1.9)

(2.6)

-70.0%

(3.0)

(2.6)

40.0%

(2.3)

Group EBITA after deducting share-based payments

11.1

N/A

11.9

N/A

11.5

10.9

-5.2%

12.1

Net finance costs

(0.7)

N/A

(0.7)

N/A

(1.0)

(0.4)

-60.0%

(0.4)

Normalised PBT after deducting share-based payments

10.4

N/A

11.2

N/A

10.5

10.5

0.0%

11.7

Normalised undiluted EPS after deducting share-based payments (p)

10.1

N/A

10.0

N/A

8.8

8.8

0.0%

9.3

Dividend per share (p)

5.0

5.2

5.2

0.0%

5.4

5.4

0.0%

5.6

Net debt/(cash)

25.4

N/A

21.5

N/A

(10.1)

(4.6)

-54.6%

(11.3)

Source: Carr’s Group data, Edison Investment Research. Note: *Previous estimates treated the Agricultural Supply division as a continuing business so group estimates are not comparable.

P&L: Strong improvement in Engineering division 

The recent trading update on the FY22 results presents key performance metrics for the group but not full financial details because the auditor has a small number of supplementary information requests outstanding. These performance metrics for FY21 and FY22 treat the Agricultural Supplies division as a discontinued activity. The ‘Actual’ columns in Exhibit 1 show group revenues, adjusted EBITA, adjusted PBT, net finance charges, adjusted EPS and DPS from the trading update. The trading update also discloses reported EBIT, PBT and undiluted EPS. All these adjusted and reported numbers are used in the FY21 and FY22 P&L section of the Financial summary in Exhibit 5.

Group revenues grew by 3.3% y-o-y to £124.2m in FY22, with higher commodity prices offsetting a small reduction in feed block volumes and lower revenues from the engineering division. Adjusted operating profit increased by 7.5% to £11.9m. The strong recovery in the Engineering division was partly offset by a reduction in profits from the Speciality Agriculture division and higher central costs. The full-year dividend was raised by 4% to 5.2p per share.

Balance sheet and cashflow reflect strong finish to FY22

Exhibit 2: Summary of net assets

£m

End-FY22

End-FY21

Fixed assets

75.8

113.7

Net working capital

30.1

39.7

Assets/liabilities held for resale

47.0

-

Assets employed

153.0

153.3

Pension surplus

6.8

9.4

Lease liabilities

(7.5)

(15.4)

Tax provisions

(1.7)

(2.7)

Net debt

(14.0)

(10.0)

Net assets

136.5

134.6

Source: Carr’s Group data

The recent trading update contains a summary of the key elements of the balance sheet. Crucially, it presents all of the assets and liabilities associated with the Agricultural Supply division as an asset for disposal. We reproduce the data from the trading update in Exhibit 2 and use this information as the basis for our balance sheet presentation in the Financial summary table. Note that Exhibit 2 shows a decrease in working capital between end-FY21 and end-FY22. This is because the value at the end of FY21 includes working capital associated with the Agricultural Supply division, while the value at the end of FY22 does not. The trading update also shows a cash flow summary for FY22, which we reproduce in its entirety in the Financial summary except for splitting out interest and tax paid. The FY21 cash flow shown in the Financial summary is derived from the reported FY21 accounts.

Net debt (excluding finance leases totalling £7.5m) increased by £4.0m during FY22 to £14.0m at the year-end. The movement is primarily attributable to an £8.7m increase in working capital for the continuing businesses, which reflects the strong finish to FY22 and consequent rise in receivables, as well as high commodity prices and a build-up in inventory to support the strong performance at the start of H123.

Estimates

We changed our group FY23 estimates in late August 2022 to reflect the disposal of the Agricultural Supplies division. We make additional changes as follows:

We change our divisional estimates as discussed above.

We reduce our net finance charges to reflect lower borrowings following the disposal of the Agricultural Supplies division.

We reduce central costs in line with FY22 levels.

We previously made the adjustments to fixed assets, working capital and debt associated with the disposal as occurring during FY23. The company has restated the FY22 balance sheet to show all of the assets and liabilities associated with the Agricultural Supply division as an asset for disposal. We have modified our FY23 balance sheet in line with this treatment. We also increase the net proceeds from the disposal in line with the guidance in the trading update.

We model a minimal increase in working capital, although it is likely that the sharp increase in receivables at the end of FY22 will unwind to some extent.

We reduce capital expenditure in line with FY22 levels and keep working capital at FY22 levels.

We introduce FY24 estimates. The assumptions regarding divisional performance are discussed above. In addition, we make the following assumptions:

Central costs decrease by 10% y-o-y.

We model a minimal increase in working capital and capital expenditure at FY23 levels.

Executing on strategic review

In August 2022 management announced that, following its strategic review, it was going to sell the Agricultural Supplies division to Edward Billington & Son, which already had a significant stake in the division. The disposal completed in October. In the trading update, management advised that the anticipated net proceeds after accounting for all transaction costs, debt and working capital adjustments would be £29.0m. This includes £4.0m deferred payment, which should be received in FY24 and £1.0m deferred contingent consideration, which we exclude from our estimates.

We expect the disposal to lead to an earnings reduction in the short term. However, the proceeds will be reinvested in the Speciality Agriculture and Engineering divisions. Management intends to reinvest up to £10.0m of the proceeds in Speciality Agriculture manufacturing capacity and up to £4.0m in working capital to enable the Engineering division to fund potential new larger and longer-term contracts. It also intends to make targeted acquisitions that diversify the activity of the Speciality Agriculture division. The disposal takes the group out of a market where there is overcapacity and little scope for differentiation. It will remove the significant build-up in working capital at the half-year stage and avoid the need to invest an estimated £10.0m in enhancements to meet more stringent operating regulations. Management believes this strategy will therefore generate faster growth in the longer term than retaining the Agricultural Supplies activity. 

Management changes

Peter Page moved from non-executive chair to an executive role in October 2021 while the group looked for a new CEO. In August 2022, the group announced that Peter was to stay in an executive role, following which he became CEO on 21 February 2023. Prior to becoming non-executive chairman in January 2020, Peter was chief executive officer of Devro, which manufactures collagen casings for the food industry. Before that, he worked for poultry breeder Aviagen and as an executive director of Adnams, a regional brewer.

David White joined the group on 3 January 2023 and became CFO on 21 February 2023 when Neil Austin, who had been in the post since May 2013, stood down. David has spent the previous 16 years in a variety of senior finance roles at international provider of mobile power solutions Aggreko. Between 2018 and late 2021, David was finance director of the Global Products and Technology division and, until mid-2022, he served as a senior adviser to the company. David has significant international experience, having helped establish new operations for Aggreko in the Middle East and serving as Aggreko’s general manager in the Gulf region, a $100m turnover business with 200 employees in five countries.

Tim Jones became non-executive chair on 21 February 2023. Tim served as non-executive chair of Treatt, the London Stock Exchange-listed manufacturer of natural extracts and ingredients between 2012 and January 2023. Tim is also chair of Allia Charitable Group, a social impact financier and catalyst, which he initially joined as CEO in 2002. In 2022, Tim was appointed chair of SP-Logistics Holdings, a multinational clinical-trials logistics organisation trading as the Oximio Group.

Valuation 

Exhibit 3: Peer multiples

Market cap (£m) 

EV/EBIT 1FY (x)

EV/EBIT 2FY (x)

P/E 1FY

(x)

P/E 2FY

(x)

Speciality agriculture

Anpario

79.9

15.3

13.8

21.3

19.0

Benchmark Holdings

255.4

52.5

21.5

(40.8)

(318.2)

Mean

15.3

13.8

21.3

19.0

Agricultural supply

ForFarmers NV

263.9

9.7

9.0

10.6

9.4

Origin Enterprises

416.7

6.6

6.4

8.8

8.5

Ridley Corporation

383.6

11.5

10.4

17.0

15.2

Wynnstay Group

117.6

8.5

8.2

12.9

13.1

Mean

9.1

8.5

12.8

13.0

Engineering

Avingtrans

130.5

13.3

12.5

18.3

17.1

IMI

3,993.0

14.0

13.2

15.0

14.5

James Fisher and Sons

192.6

15.0

11.1

14.6

8.7

Weir Group

4,748.6

16.3

14.7

19.9

17.7

Mean

14.7

12.9

17.1

15.0

Source: Refinitiv Note: Prices at 27 February 2023. Grey shading indicates exclusion from mean.

SOTP analysis 

We base our SOTP analysis (Exhibit 4) on the EBIT attributable to each remaining division, including the contribution from JVs where appropriate, applying multiples derived from the peer comparison in Exhibit 3. Obviously, this is a relatively small peer group, so does not provide a definitive valuation. For example, Anpario is heavily focused on the monogastric market (eg pigs and poultry) and Benchmark offers aquaculture biotechnology, so both of our speciality agriculture peers serve markets that are growing more quickly than the ruminant market, which Carr’s addresses. The engineering division may struggle to command multiples similar to the peers listed above until investors can see that the current margin pressures on some fabrication projects have eased. Subject to these limitations, our calculation gives an indicative valuation of 205.1p/share.  

Exhibit 4: SOTP analysis

FY23 EBIT (£m)

Multiple (x)

Value (£m)

Speciality Agriculture

8.4

15.3

127.5

Engineering

5.2

14.7

76.2

Central costs

(2.6)

8.0

(20.9)

EV

10.9

182.8

Net debt at end FY22

(14.0)

Net initial proceeds from disposal

24.0

Equity

192.8

Number of shares (m)

94.0

Indicative value per share (p)

205.1

Source: Refinitiv, Edison Investment Research. Note: We have corrected a calculation error in our SOTP analysis. This treated the net initial proceeds from the disposal incorrectly, resulting in a lower indicative valuation than now shown. We have updated Exhibit 4 and the associated text in the note (24 March 2023).

Now that there is no excuse for basing the group’s valuation on listed agricultural supply companies such as Wynnstay Group, the share price should, in our opinion, start to move towards the indicative value, particularly once management has been seen to reinvest the proceeds from the disposal into acquisitions that build up the Speciality Agriculture division.

Exhibit 5: Financial summary (continuing businesses only)

£m

2021e

2022e

2023e

2024e

Year end 31 August

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

restated

Revenue

 

 

120.3

124.2

150.0

158.9

EBITDA

 

 

14.3

15.1

14.1

15.2

Operating profit (before amort. and excepts.)

 

11.1

11.9

10.9

12.1

Amortisation of acquired intangibles

(1.2)

(1.2)

(1.2)

(1.2)

Exceptionals

(1.7)

(2.5)

0.0

0.0

Reported operating profit

8.2

8.2

9.8

10.9

Net Interest

(0.7)

(0.7)

(0.4)

(0.4)

Exceptionals

0.0

0.0

(2.0)

0.0

Profit Before Tax (norm)

 

 

10.4

11.2

10.5

11.7

Profit Before Tax (reported)

 

 

7.5

7.6

7.3

10.5

Reported tax

(1.7)

(1.6)

(2.3)

(2.9)

Profit After Tax (norm) - continuing businesses

9.4

9.5

8.3

8.7

Profit After Tax (reported) - continuing businesses

5.8

6.0

5.1

7.6

Average Number of Shares Outstanding (m)

93.1

93.9

94.0

94.0

EPS - normalised (p)

 

 

10.1

10.0

8.8

9.3

EPS - basic reported (p)

 

 

6.2

6.4

5.4

8.0

Dividend (p)

5.00

5.20

5.40

5.60

EBITDA Margin (%)

11.9

12.2

9.4

9.6

Normalised Operating Margin (%)

9.2

9.6

7.3

7.6

BALANCE SHEET

Fixed Assets

 

 

123.4

82.8

82.5

82.3

Intangible Assets

36.7

30.4

29.1

27.9

Tangible Assets

53.0

35.5

36.4

37.4

Investments & other

33.7

16.9

16.9

16.9

Current Assets

 

 

82.7

119.8

99.1

103.5

Stocks

21.1

24.0

24.2

24.4

Debtors

34.6

28.9

29.2

29.2

Cash & cash equivalents

24.3

17.3

40.4

44.7

Other

2.7

49.7

5.3

5.3

Current Liabilities

 

 

(30.5)

(33.9)

(31.1)

(28.8)

Creditors

(16.4)

(22.8)

(23.0)

(23.1)

Tax and social security

(0.0)

(0.0)

(0.0)

(0.0)

Short term borrowings including finance leases

(14.1)

(11.1)

(8.1)

(5.7)

Other

0.0

0.0

0.0

0.0

Long Term Liabilities

 

 

(41.1)

(32.2)

(32.2)

(32.2)

Long term borrowings including finance leases

(35.6)

(27.7)

(27.7)

(27.7)

Other long-term liabilities

(5.5)

(4.5)

(4.5)

(4.5)

Net Assets

 

 

134.6

136.5

118.3*

124.8

CASH FLOW

Operating Cash Flow

14.3

15.1

14.1

15.2

Working capital

3.2

(8.7)

(0.3)

(0.1)

Exceptional & other

0.9

0.0

0.0

0.0

Tax

(2.1)

(0.9)

(2.3)

(2.9)

Net Operating Cash Flow

 

 

16.2

5.5

11.5

12.2

Investment activities

(3.6)

(3.9)

(4.1)

(4.1)

Acquisitions/disposals

(1.1)

(0.8)

24.0

4.0

Net interest

(1.1)

(0.7)

(0.4)

(0.4)

Equity financing

0.9

0.0

0.0

0.0

Dividends

(5.5)

(4.7)

(4.9)

(5.1)

Other

0.3

0.4

0.0

0.0

Net Cash Flow

6.1

(4.1)

26.1

6.7

Opening net debt/(cash)

 

 

32.8

25.4

21.5

(4.6)

FX

0.0

0.0

0.0

0.0

Other non-cash movements

1.4

7.9

0.0

0.0

Closing net debt/(cash)

 

 

25.4

21.5

(4.6)

(11.3)

Finance leases

15.4

7.5

7.5

7.5

Closing net debt/(cash) excluding finance leases

10.0

14.0

(12.1)

(18.8)

Source: Edison Investment Research. Note: FY21 and FY22 are estimated from incomplete unaudited data because there is no pro forma information on shareholder equity; this is subject to change as information becomes available.


General disclaimer and copyright

This report has been commissioned by Carr’s Group and prepared and issued by Edison, in consideration of a fee payable by Carr’s Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Carr’s Group and prepared and issued by Edison, in consideration of a fee payable by Carr’s Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Carr’s Group

View All

Latest from the Industrials sector

View All Industrials content

Research: Healthcare

Paradigm Biopharma — Active year ahead with significant catalysts

Paradigm has presented its half yearly results and accounts, reflecting an active period. This included an encouraging safety review for injectable pentosan polysulfate sodium (iPPS, Zilosul) in the pivotal Phase III trial (PARA_OA_002) for patients with knee osteoarthritis (kOA) pain. The Phase II (PARA_OA_008) biomarker trial reached its primary endpoint, positioning iPPS as a potentially disease-modifying drug. In our opinion, the initiation of the confirmatory Phase III trial (PARA_OA_003) and six-month follow-up results from the PARA_OA_008 trial represent major catalysts expected in CY23. At end-December 2022, the company had A$83.9m cash, supported by an August 2022 capital raise of A$66.0m.

Continue Reading
Paradigm Photography Pool Bone

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free