Carrs Group Regulatory News (CARR)

CARR'S MILLING INDUSTRIES PLC - FULL YEAR RESULTS

"…a strong financial performance whilst continuing to build…"

Carr's (CRM.L), the fully-listed agriculture, food and engineering group, announces results for the 52 weeks ended 28 August 2010.

Financial highlights

·; Pre-tax profit increased 27.4% to £9.0m (2009: (£7.0m)

·; Fully diluted EPS increased 27.4% to 64.1p (2009: 50.3p)

·; Full year DPS increased 4.3% to 24.0p (2009: 23.0p)

·; Net debt reduced 19.7% to £15.5m (2009: £19.3m)

·; Gearing reduced 44.7% (2009: 64.7%) despite £6.0m spend on acquisitions

Commercial highlights

·; Revenue from Agriculture trading was 3% higher at £203.0m (2009: £197.4m) and profit before tax increased 1% to £5.23m (2009: £5.18m). Additionally, the Group's share of post-tax profit in associate and joint ventures was down 24% to £0.8m (2009: £1.1m).

·; Agriculture Manufacturing profit before tax was £2.54m (2009: £0.1m loss) on revenue 3% higher at £59.0m (2009: £57.6m) and benefited from a recovery in fertiliser.

·; Industry over-capacity in Food continues and profit before tax was lower at £1.51m (2009: £2.06m) on revenue 15% lower at £67.1m (2009: £79.0m)

·; Engineering revenue and profit before tax fell by 1% and 14% respectively, reflecting lower demand at Carrs MSM and a decline in the first half at Bendalls. Profit before tax was £1.0m (2009: £1.1m).

Richard Inglewood, Chairman, said

"Carr's achieved a strong financial performance for the past year whilst continuing to build the Group's market presence both in the UK and overseas. We strengthened our Agricultural businesses in Scotland and the North of England through the acquisitions of Ag Chem (UK), Scotmin Nutrition Limited and A C Burn Limited, and successfully launched the Crystalyx brand range into New Zealand, as well as expanding our export markets. Our Engineering division continues with an emphasis on niche high-skill contract-focused work with orders into 2013 including a significant demand from Japan, France and Germany. We believe we are ideally placed for a strong forthcoming year having laid a solid foundation for sustained growth, and are confident in the outlook for the Group."

Chris Holmes, Chief Executive Officer, said

"Carr's has had a strong start to the new financial year, benefiting from both recent acquisitions and strong sales of animal feed in the US. In the UK, our broad agricultural base has enabled us to continue growing despite the prevailing unsustainable farmgate milk price. We believe that the foundations laid last year are already paying dividends in this quarter and we expect this to continue."

Presentation

Today, there will be a presentation to analysts and private client brokers between 13.00 and 14.00 at the offices of Investec, 2 Gresham Street, London EC2V 7QP. Those wishing to attend should contact Rose Oddy at rose.oddy@bankside.com before 11.00.

Enquiries:

Carr's Milling Industries PLC 01228 554 600

Chris Holmes (Chief Executive Officer)

Ron Wood (Finance Director)

Bankside Consultants Limited 020 7367 8888

Simon Bloomfield or Rose Oddy

CHAIRMAN'S STATEMENT

I am pleased to report to Shareholders that Carr's achieved a strong financial performance for the past year whilst continuing to build the Group's market presence both in the UK and overseas.

The result for the 52 weeks ended 28 August 2010 reflects positive trading across both Agricultural businesses with our Engineering business benefiting from the first full-year contribution from Wälischmiller, which was acquired in March 2009. Over-capacity in the milling industry had an adverse impact on our food business where management continue to focus on reducing costs and developing higher-margin speciality products.

In March and June 2010, we strengthened our Agricultural businesses in Scotland and the North of England through the acquisitions of Ag Chem (UK), Scotmin Nutrition Limited and A C Burn Limited for a total consideration of £6.0 million. The integration of these businesses is progressing well and will be earnings enhancing in the current financial period.

Overall, the growth in profit and improvement in margins, combined with tight control over working capital, resulted in strong cash flow with net debt, after capital expenditure and acquisition costs, being £3.8 million lower at the end of the period compared to the previous year.

We believe that the Group's sound financial position and the investment made in developing the business has laid the foundation for a period of sustained growth, particularly in Agriculture.

Financial Review

Revenue for the period was £345.0 million (2009: £350.0 million) and operating profit was up 25.4% to £9.1 million (2009: £7.3 million). The growth in profit reflects increased sales of animal feed, feed blocks and fuel, and the recovery in fertiliser after the very substantial fall in sales last year. Revenue and profit from the Food and Engineering divisions were lower than 2009.

After a reduced retirement benefit charge, which offset a lower share of profit from associate and joint ventures, pre-tax profit increased by 27.4% to £9.0 million (2009: £7.0 million). Fully diluted earnings per share were 27.4% higher at 64.1p (2009: 50.3p).

The Group generated net cash from operating activities of £15.3 million (2009: £5.6 million). This included a net cash inflow of £6.5 million (2009: outflow £0.2 million) from reduced working capital, of which £3.2 million was from payments on account received from our engineering customers.

Capital expenditure was £3.7 million (2009: £4.7 million) as the Group continued to invest in necessary replacement of equipment, and the three acquisitions during the year cost a total of £6.0 million. After capital expenditure and acquisitions, net debt at 28 August 2010 was reduced to £15.5 million (29 August 2009: £19.3 million) representing gearing of 44.7% (2009: 64.7%).

Dividend

The Board paid two interim dividends of 6.0 pence per share in May 2010 and October 2010 to smooth the cash flow for our Shareholders. At the Annual General Meeting to be held on 11 January 2011, the Board will be proposing a final dividend of 12.0 pence per share. This makes a total for the year of 24.0 pence per share, an increase of 4.3 per cent on the total for last year of 23.0 pence. The final dividend, if approved by Shareholders, will be paid on 21 January 2011 to Shareholders on the register at close of business on 24 December 2010. Shares will go ex-dividend on 22 December 2010.

Agriculture Trading

The demand for animal feed and other agricultural products remains good. Farmgate prices, with the notable exception of milk, have generally been strong. During the year, the regions we serve endured severe winter weather. The excellent service we were able to give our customers during this difficult period was recognised by Carr's being presented with The Scottish Livestock Supplier of the Year award at the Royal Highland show in June of this year.

Against this background, sales of both animal feeds and low moisture feed blocks rose steadily during the year, with profitability enhanced. This was the result of our focus on added value products such as AminoMax, a bypass protein developed in the U.S., the benefits of investment in efficient facilities and our focus on customer service.

Looking forward, as both animal feed compound and block markets are relatively mature, the keys to growth will be product innovation, efficiency and selective acquisitions such as Scotmin Nutrition in June 2010. Scotmin's supplement ranges complement the feed block products produced and marketed by Caltech. We successfully launched the Crystalyx brand range into New Zealand, potentially a very large market for our products, and we expect this initiative to start contributing to revenues in the current financial year.

The demand for Crystalyx products in Germany continues to grow and new export markets have been opened, notably in France.

The performance of our branch network which retails farm inputs, rural supplies and agricultural machinery, has been very satisfactory. Despite price deflation across the product range, like-for-like sales increased by 2% for the year. Bolt-on acquisitions such as A C Burn, acquired last June, and Forsyths of Wooler, announced post year-end, augment the growth prospects of this part of our business. The network of branches has risen to 19 across Northern England and Scotland.

Our farm machinery activities also performed well throughout the year, winning in September 2010 the Kuhn distribution agency for agricultural machinery. The Kuhn product range expands our existing range of machinery and should enable us to enter new markets.

Our fuel oil business provides natural synergies between the retailing of agricultural and rural supplies. This has led us to expand our fuel oil business by opening depots at our feed mills which are located near to our retail branches. Market share continues to grow and the business benefited strongly from last winter's severe weather.

Agriculture Manufacturing

Following the sharp fall experienced last year, demand for fertiliser has been steadily improving, with prices rising; and we have seen a sharp recovery in profitability. This followed a period of two years of high sales, and then a period of low sales, but we now foresee a more orderly market.

We have reduced our reliance on commodity products and seen the benefits of investment in new value added products such as AVAIL, our unique phosphorus fertiliser enhancer, as well as environmentally oriented products. This enabled us to continue to grow our market share. Margins remain satisfactory, despite the pressure from phosphate and nitrogen input prices, and the immediate outlook is positive.

This segment of our operations includes our low moisture animal feed business operating from two plants in the US. Our market share in feed blocks is increasing as the result of our continuing focus on new product development for the cattle feed market, which is benefiting from a recovery in beef prices.

Food

Our food division comprises three flour mills, in Fife, Cumbria and Essex. We supply most sectors of the market, including industrial bakers, craft bakers, food manufacturers and multiple retailers. Markets continue to be extremely challenging as we contend with significantly higher raw material prices and industry over-capacity. We are responding by reducing operating costs, while at the same time focusing on developing speciality products. We have recently secured a contract to supply a leading UK food retailer with a new range of speciality flours for its own premium brand.

The rise in wheat prices over the last two months of the financial year has been extreme. Following drastic reductions in wheat output from Eastern Europe, exacerbated by wet weather downgrading harvest quality in Northern Europe, and further fuelled by commodity speculation on both sides of the Atlantic, the market price of wheat has moved up by over 60%.

These volatile and fast moving markets present challenges and opportunities. We have taken appropriate steps to manage the risks presented by greater volatility and continue to explore new wheat supply sources. In the past year we have received cargoes of wheat from Latvia, and also, for the first time in almost 50 years, direct shipments of Canadian wheat into our Cumbrian Silloth mill.

Engineering

The Engineering Division broadly maintained revenue but saw profits fall. This principally reflects lower demand at Carrs MSM as the result of more stringent stock control management by its major customer. Following a decline in the first half, the order book at Bendalls, the Group's specialist steel fabrication business recovered in the second half and there is evidence of scope to improve margins.

Wälischmiller has performed very well since acquisition in 2009 and continues to see sales volumes increase. The order book for 2011 and 2012 is strong with good demand from Japan, France and Germany. In addition we have received our first orders from China.

Key determinants of the trading performance of this division include demand from the nuclear and oil/petrochemical industries. The order book for the nuclear market is particularly strong with high activity in Europe and the Far East. The emphasis on niche high-skill contract-focused work will remain.

Acquisitions

The Group completed three acquisitions, all agriculture related businesses, in the second half of the year. Both Ag Chem and A C Burn are small businesses and have been successfully integrated. Scotmin Nutrition, a producer and distributor of animal feed supplements, complements our existing range of feed block products and will create one of the UK's leading feed and mineral block producers and suppliers.

Since the year-end a small agricultural business, Forsyths of Wooler, engaged in the sale of animal feed and proprietary health products was acquired.

Outlook

The positive momentum of the second half of the year ended 28 August 2010 has continued into the new financial year. We anticipate farmers will continue to invest in response to favourable prospects in beef, lamb and cereals. As a result of higher input prices the UK farmgate milk price must only improve from its current unsustainably low levels.

We are well positioned to service increasing demand. Our businesses have developed significant expertise in the supply chain, building on their long association in flour and feed milling and extending this into the procurement of fertiliser and animal feed ingredients. These factors, together with the spread and diversity of our customer base, encourage us to believe that the two Agriculture Divisions will continue to develop and deliver consistent performance, even in challenging times.

Our financial performance will further benefit from having strengthened our market presence through acquisition and we continue to look for further opportunities.

While Food is likely to remain a difficult environment, Engineering is trading well and remains a focused niche business.

Overall, therefore, we believe we have laid a solid foundation for sustained growth and are confident in the outlook for the Group.

Richard Inglewood

Chairman 8 November 2010

 UNAUDITED CONSOLIDATED INCOME STATEMENT

for the period ended 28 August 2010

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the period ended 28 August 2010

UNAUDITED CONSOLIDATED BALANCE SHEET

at 28 August 2010

UNAUDITED CONSOLIDATED BALANCE SHEET

at 28 August 2010 (continued)

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the period ended 28 August 2010

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

for the period ended 28 August 2010

NOTES TO THE UNAUDITED PRELIMINARY STATEMENT

1. Basis of preparation

The Group's unaudited Preliminary Announcement does not constitute statutory consolidated financial statements for the 52 week period ended 28 August 2010 or the 52 week period ended 29 August 2009, which will be filed with the Registrar of Companies for the 52 week period ended 28 August 2010, following the Company's annual general meeting.

The financial statements for the 52 week period ended 29 August 2009 were unqualified and have been delivered to the Registrar of Companies.

2. Segmental information

3. Taxation

4. Earnings per share

Basic earnings per share are based on profit attributable to shareholders and on a weighted average number of shares in issue during the period of 8,784,286 (2009: 8,773,022). The calculation of diluted earnings per share is based on 8,792,326 shares (2009: 8,781,060).

5. Cash generated from operations

6. Pensions

The Group operates its current pension arrangements on a defined benefit and defined contribution basis. The valuation of the defined benefit scheme under the IAS19 accounting basis showed a deficit net of the related deferred tax asset in the scheme at 28 August 2010 of £7.8m (29 August 2009: £10.6m).

A Group subsidiary undertaking is a participating employer in a defined benefit pension scheme of the associate. The IAS19 accounting basis showed a deficit, for that scheme, net of the related deferred tax asset in the scheme at 28 August 2010 of £4.0m (2009: £3.6m). The Group recognises in its balance sheet approximately 50% of the deficit and deferred tax asset through its investment in associate.

In the period, the retirement benefit charge in respect of the Carr's Milling Industries Pension Scheme 1993 was £1,187,000 (2009: £1,605,000).

7. Analysis of changes in net debt

8. The Board of Directors approved the preliminary announcement on 8 November 2010.

9. The results included in the preliminary announcement are unaudited. The financial information set out in this announcement does not constitute the statutory accounts for the periods ended 28 August 2010 and 29 August 2009. The statutory accounts for the period ended 28 August 2010 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

10. The Company intends to post the Report and Accounts to shareholders by 9 December 2010. Further copies will be available upon request from the Company Secretary, Carr's Milling Industries PLC, Old Croft, Stanwix, Carlisle, CA3 9BA or alternatively on the Company's website: www.carrs-milling.com