STRATEGIC REPORT
The directors present their strategic report for the year ended 31 March 2023.
Principal activity
The principal activities of the Company include real estate investments, the operation of business parks, together with farming and fishing operations and managing a farm shop with an associated online retail platform. The company also acts as a Holding Company.
The principal activities of the Company’s main trading subsidiaries are fishing activities in the South-West of England, the management of Exmouth Marina, real estate investments and development and managing two hospitality venues.
Review of the business
Significant growth in turnover has been achieved against the back drop of uncertainty from the War in Ukraine and the cost of living crisis, both of which have impacted upon the margins achieved resulting in a decline in profits compared to prior year. The largest impacts have been felt in those areas which are more dependent upon fuel such as Waterdance and haulage and those impacted upon by the cost of living crisis which have driven a decline in profitability for the farm shop and Greendale Leisure. Further investment has been made in the year across the company, but most particularly in the fishing assets, farm buildings and further development of the business park. With respect to the property portfolio the FRS102 valuation has been updated to reflect the valuation undertaken as part of the refinancing of part of the Lloyds debt facility following the year end. The valuation has remained positive in the current year which reflects further investment. This area of the business continues to provide strong returns. There has been an overall increase to net debt during the year to fund vessel acquisitions which have further contributed to cashflow.
The balance sheet shows net current liabilities as at the 31 March 2023 of £5m (2022: net current assets of £5.4m), as a result of a long-term loan with Lloyds being due for renewal immediately following the year-end and therefore being classed as a short term loan. The refinancing of the £8m loan with Lloyds was completed following the year end in June 2023 and replaced with a £12.4m facility to allow for strategic growth plans along with the renewal of the overdraft facility. The company has total net assets of £69.4m (2022: £58.0m).
Within the Company’s main trading subsidiaries, Waterdance Limited has developed through acquisition of additional vessels with associated licenses and quota including some strategic purchases of quota. The Winter of Ladram, a new build crabber, was launched in August 2022. A significant refit and renewal programme has continued in the existing fleet. Two of the vessels have undergone extensive repairs as a result of incidents which have resulted in lost revenue and unanticipated costs with insurance compensation being sought.
Exmouth Marina Limited and Greendale Leisure Limited have been operated on a basis consistent to prior years.
Key Performance Indicators of the Company and its subsidiaries
The Key Performance Indicators of the Company and its subsidiaries include turnover, gross profit and margin, costs, gross and net assets, cash generation and capital expenditure. These KPI’s are reviewed against budget and prior year, with benchmarking against similar businesses where comparative information is available.
The company and its subsidiaries key financial follows:
Turnover £'000 - 65,180 (year ended 31 March 2023) | 57,743 (year ended 31 March 2022)
Group profit before tax (continuing operations) £'000 - 15,211 (year ended 31 March 2023) | 14,818 (year ended 31 March 2022)
Group fixed assets £'000 - 118,165 (year ended 31 March 2023) | 102,746 (year ended 31 March 2022)
Group net assets £'000 - 69,394 (year ended 31 March 2023) | 57,988 (year ended 31 March 2022)
Cash generated from operations £'000 - 10,047 (year ended 31 March 2023) | 14,365 (year ended 31 March 2022)
Capital expenditure £'000 - 7,940 (year ended 31 March 2023) | 9,147 (year ended 31 March 2022)
Future activities of the Group
The Directors intend to continue operating the Group on a consistent basis to prior year. In addition to the continuation and development of day to day operations, the Directors will continue to monitor opportunities for future growth including further acquisitions which further strengthen the group’s profit generating asset base.
Principal risks and uncertainties
The principal risks and uncertainties of the Group are under continual review by the Directors, on both a group wide and specific entity basis. The group pursues a diverse range of activities which delivers a broad portfolio approach to risk management.
The portfolio approach has been of benefit to the Group during the Coronavirus pandemic and Brexit. It is anticipated that the portfolio benefits will put the business in a strong position against the backdrop of uncertainties faced from the conflict in the Ukraine which will be monitored closely, in particular its impact upon electricity costs, fuel and material prices and their availability. Likewise the increased cost of living due to increasing levels of inflation affecting the cost of inputs and the ability to attract and retain staff under salary pressure along with recent and expected future increases in interest rates which will impact upon the servicing of borrowings.
The directors continue to monitor and plan for potential consequences that come as a result these economic changes.
Each area of the business is closely monitored in order to highlight any performance issues that may materialise in specific industries with special consideration towards the cost of living crisis and the war in Ukraine and therefore a prompt response can be established. Through this review the operational and profitable of the performance will be driven to improve through continual review of efficiencies and costs.
Other primary group wide risks in relation to credit availability, liquidity, fuel costs, exchange exposure and seasonal fluctuations are monitored through review of borrowing levels and cashflow assessment.
Important non adjusting events after the financial period
The refinancing of the £8m loan with Lloyds was completed following the year end in June 2023 and replaced with a £12.4m facility to allow for strategic growth plans along with the renewal of the overdraft facility. The £2.5m swap that ended at the same time was replaced with a £3.5m interest swap at 6%. Further information is available in the "Review of the business" section within the Strategic report.
On 28 June 2023 the company acquired 100% of the share capital of Willowglen Renewables Limited, a company incorporated in England & Wales, and which operates an anaerobic digestion power generation plant located within the business park owned by the company. A total consideration of £1.1m was payable which reflected the working capital and asset value of the acquisition. The acquisition was funded in part by the loan refinancing detailed above.
Directors’ Statement on the performance of their duties in accordance with S172 of the Companies Act
The board of directors of F W S Carter Limited, who are also board members of each of the subsidiary undertakings of the Group, consider, both individually and together, that they have acted in the way they consider would be most likely to promote the success of the companies for the benefit of their members as a whole (having regard to the stakeholders and matters set out in s172 (1) (a-f) of the Act) during the year ended 31 March 2023.
The Group’s core activities remained unchanged during the year. The Group’s strategy continues to be to invest in its core activities to build shareholder value. The Group is a family owned business with multiple generations active in the business. As such investment decisions are orientated to long term equity appreciation. The Group board sets and approves an annual operating and investment budget each March.
Stakeholder Engagement
Our key stakeholders are our employees, customers, suppliers, shareholders and finance providers. We have worked to build these relationships by meeting regularly and presenting our financial results and plans as appropriate. These relationships have proved to be particularly critical during the extraordinary year the business faced in 2022 to 2023.
Principal decision: Termination of the revolving credit facility with Lloyds
Impact on long-term success of business: In September 2022, the decision was made to terminate the revolving credit facility with Lloyds. The facility had never been drawn and incurred fees on the facility availability.
Stakeholder considerations: Monitoring of cash flow since the establishment of the RCF showed that investment could be better managed through existing facilities. Consultation with Lloyds prior to termination of the facility.
Principal decision: Refinancing of the £8m loan facility with Lloyds bank
Impact on long-term success of business: The £Sm loan with Lloyds reaches the end of its term in early July 2023. The board has takenthe decisionto renew and extend this facility until December 2026 when it will be co-terminus IVith other facilities held with Lloyds
Stakeholder considerations: Consultation with Lloyds in advance of the refinancing to ensure that the appropriate facilities are in place. A full valuation of the business park to be undertaken as part of the refinancing and the results to be included within the FRS102 valuation.
Principal decision: Acquisition of strategic quota packages
Impact on long-term success of business: Significant investment in strategicquota packages which enable the fishing of key species have been made during the year. The timing of such packages coming to the market is unpredictable hence the need to act when they become available.
Principal decision: Build of a workshop to carry out repairs for the fleet of vehicles across the business
Impact on long-term success of business: Escalating repair costs for the fleet of vehicles including company cars, tractors, vans, and lorries led to the decision to build and operate an in-house repairs workshop employing two full-lime mechanics in order to reduce costs and improve turnaround time for vehicles. The work shop also provides the ability to carry out work for third parties.
Stakeholder considerations: Operational management was consulted to establish whether repairs in-house woutd be beneficial for their departments. Lloyds bank was informed of the decision which was funded through cash flow.
Principal decision: Acquisition of Willowglen Renewables Limited
Impact on long-term success of business: In March 2023 the board approved the bid for the acquisition of Willowglen Renewables Limited, an anaerobic digestion plant located within the Hogsbrook business park, and vAlich provides electricity to the business park.
Stakeholder considerations: Consultation with Lloyds and AMC with regards to the potential for financing the deal. Detailed discussions with the operational management of FWS Carter to understand the implications of the transaction and interactions and opportunities for the wider business.
Principal decision: Phased renewal of the Waterdance fleet of vessels
Impact on long-term success of business: The Waterdance fishing fleet is undergoing a renewal with the acquisition of newer vessels during the period and the launch of the newbuild crabber in August 2022, the Winter of Ladram. This phased process will ensure the future safety of vessels \•Alilst improving upon environmental standards and efficiencies.
Stakeholder considerations: Consultation with skippers and crew to ensure that the appropriate vessels are removed and replaced with vessels that will meet the needs of the business going forward to comply with the latest environment and safety standards. Cashflow monitored closely to determine any financing requirements. engaging with the bank as required
Principal decision: Acquisition of a dredger within Exmouth Marina
Impact on long term success of business: The purchase of a dredger was agreed by the board in November 2022 as an asset within Exmouth Marina. The benefits of the acquisition are two fold; to perform dredging of Exmouth Marina basin in- house, saving on costs and enabling the dredging to take place when required; and as a new business opportunity with the ability to carry out dredging for third parties.
Stakeholder considerations: Lloyds bank was informed of the acquisition, however the business was able to fund the purchase through existing facilities. Existing employees were consulted to determine interest in crewing the vessel
Employee Engagement
Over the course of the year, we have engaged with our staff through the following:
The decision to implement a formal objective process that not only recognises and rewards employees but strengthens communication channels, and helps employees understand how their individual objectives form part of / impact the wider decision making. This process is also used as an engagement tool to help senior managers recognise staff feedback, development and training, which is fundamental to staff retention.
Charitable Giving Committee is comprised of individuals from across the business, who act as representatives and control the decision making for our charitable donations within any financial year. This has proved a valuable engagement tool as employees felt their views, opinions or interests were being represented. It also promotes community and social responsibility by giving employees the opportunity to participate in local community projects. Our charities this year represent land and sea, Exeter Food Action and Fishing for Litter, with additional monies allocated for charitable events that individual employees engage in .
The Social Committee is dedicated to setting up and executing team events, all whilst tackling the goal of strengthening team morale and breaking down barriers between departments. These events have helped people bond with others from different areas of the business, which in turn builds a stronger sense of community within our organisation.
Being a family business, we are able to provide employees at all levels, with the opportunity to be part of and take ownership for important projects and decision making that are integral to the overall goals of the business. These initiatives help individuals grow, develop and encourage employees to take ownership for their work; making individuals more enthusiastic and engaged about their contribution to the business.
Engage our employees with tangible tokens of our appreciation - tickets to County shows, rugby and football events.