Carrs Group Regulatory News (CARR)

CARR'S MILLING INDUSTRIES PLC - INTERIM RESULTS

"…strong trading momentum…"

Carr's (CRM.L), the fully-listed agriculture, food and engineering group, announces results for the 26 weeks ended 26 February 2011.

Financial highlights

·; Revenue from external customers up 27.0% to £204.7m (2010: £161.3m)

·; Pre-tax profit up 48.9% to £7.9m (2010: £5.3m)

·; Fully diluted EPS up 52.6% to 58.6p (2010: 38.4p)

·; Net debt up to £28.2m (2010: £19.5m) in line with revenue growth and recent acquisitions

·; Declared first interim dividend per share up 8.3% to 6.5p (2009: 6.0p)

Commercial highlights

·; Agriculture Trading increased revenue by 26.8% and profit before taxation by 24.9%. In the UK, farmgate prices, except milk, remained favourable. Feed block increased market penetration and fuel oil customer base expanded, with further benefit to performance from the severe winter weather.

·; Strong demand for fertiliser, with UK farmers anticipating input price increases, resulted in Agriculture Manufacturing increasing revenue by 61.9% and profit before taxation more than doubling, despite a slow-down in US feed block sales during heavy snow after Christmas.

·; Food revenue increased by 13.2% and profit before taxation fell by 22.2%, reflecting stable flour volumes with milling wheat prices more than doubling since June 2010. Significant annual cost savings achieved will offset continuing pressure on margins.

·; In the absence of loss-making contracts last year, Engineering profit before taxation increased by 50%. A growing order book will benefit the performance for the second half.

Chris Holmes, Chief Executive Officer, commented:

"We have made encouraging strategic progress in our markets during 2010 and into 2011. We are confident that Carr's will continue to trade in line with management's expectations for the full year."

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 James Irvine-Fortescue

INTERIM MANAGEMENT REPORT

Financial Review

The strong financial performance of Carr's Milling Industries PLC ("Carr's") for the 26 weeks ended 26 February 2011 reflects a positive business environment, with demand from farmers increasing as prices for beef, lamb and cereals have remained firm. We also benefited from the severe winter weather during the period and the development of our fuel oil activities. Profitability from our engineering business has improved in line with a growing order book. However, continuing challenges in the UK flour industry resulted in reduced profit from our food activities.

Overall, revenue increased by 27.0 per cent to £204.7 million (2010: £161.3 million) on which profit before taxation was up 48.9 per cent to £7.9 million (2010: £5.3 million).

Earnings per share for the period increased by 52.6 per cent to 58.6 pence (2010: 38.4 pence).

As a result of revenue growth and recent acquisitions, net debt was up substantially to £28.2 million at 26 February 2011 (28 August 2010: £15.5 million; 27 February 2010: £19.5 million) representing gearing of 70 per cent as against 45 per cent and 60 per cent respectively. Historically, the peak borrowing requirements of the Group are in February and we expect net debt to fall by the year-end in line with inventory sold.

Dividend

In accordance with the company's policy of paying three dividends a year, the Board has declared a first interim dividend of 6.5 pence per share (2010: 6.0 pence per share) payable on 17 May 2011 to shareholders on the register at 26 April 2011.

Business Review

Agriculture Trading

Revenue for the period increased by 26.8 per cent to £124.0 million (2010: £97.8 million) with profit before taxation up by 24.9 per cent to £4.0 million (2010: £3.2 million). Like-for-like revenue was up 18.3 per cent.

Farmgate prices, except milk which continues to be unsustainably low, have remained favourable overall. From mid November 2010, severe winter conditions combined with our ability to deliver an excellent service boosted the performance of our UK activities for the period.

Caltech, our UK animal feed block business, increased penetration of a static market, achieving 8 per cent volume growth whilst maintaining margins. In addition to strong underlying demand, the trading performance for the period benefited from the integration of Scotmin Nutrition, the feed supplements business acquired in June 2010, as well as the launch of the Crystalyx brand in New Zealand in 2010. The success of Caltech's German joint venture in penetrating new European markets, notably France, also had a positive impact. The expansion of Caltech is consistent with our strategy of developing niche products with profitable growth potential, in both the UK and overseas. Accordingly, we believe there is scope for Caltech to achieve significant and sustainable further growth in the future.

Overall, compound feed volumes were slightly ahead of last year with margins maintained as the result of selling price increases offsetting higher input costs at a time of significant volatility in raw materials prices. Wheat prices increased by nearly 70 per cent compared with last year, a trend seen across many commodities. Price increases have been lower than the rises in spot raw materials as Carr's, in line with the market, purchases forward a portion of its raw materials requirement, which has helped to contain the impact on our farming customers.

Our associate company, producing compound and blended animal feed, benefited from operational efficiencies and higher volumes. The Group's share of profit after tax increased by £0.3 million.

The results for the period benefited from the acquisitions of Scotmin Nutrition Limited and A C Burn Limited in June 2010 and of Forsyths of (Wooler) Limited in September 2010, all of which have successfully been integrated into the Group.

In aggregate, acquisitions contributed revenue of approximately £8.3 million and profit before taxation of approximately £0.4 million to the result of Agriculture Trading for the period.

Our fuel oil business continued to grow following the opening of depots at Lancaster and Langwathby in Cumbria. Fuel oil volumes and margins both increased during the period. Over the past year, our total number of fuel customers has grown by 22 per cent and we plan to increase market share further. Our financial performance also benefited from the severe winter conditions when our focus on excellent customer service, particularly in the rural community, was rewarded.

Our farm machinery activities performed well and the early performance of the Kuhn distribution agency for agricultural machinery, won in September 2010, has been encouraging.

Agriculture Manufacturing

Price increases and advance fertiliser sales were a major factor in revenues increasing by 61.9 per cent to £36.8 million (2010: £22.7 million) with profit before taxation more than doubling to £2.6 million (2010: £1.1 million).

Strong demand for fertiliser during the period was the result of high cereal prices and anticipation of higher fertiliser raw materials prices causing early buying from a larger number of farmers. Raw material prices continued to rise during the period. We are seeing the benefits of our strategy of reducing our reliance on commodity products and of investment in value added products such as AVAIL, our unique phosphorous fertiliser enhancer, used in environmentally oriented products.

March and April are critical months for fertiliser sales and, whilst a significant proportion of sales that would normally fall into this period were made in the first half, current indications are that overall fertiliser volumes and margins for the full year will be significantly up on last year. Inventory acquired in advance of expected demand will unwind during the second half.

In the USA, animal feed sales volumes and margins are expected to be higher this year as compared with 2010 when the beef sector was impacted by the generally poor agricultural market conditions. Following a period of improvement in feed block sales and profitability during the first half, there was a significant slow down in January 2011 when heavy snow in key areas prevented delivery. It is unlikely that the shortfall during the period against budget will be recovered in the second half. Our new plant in upstate New York is on track to start production of Aminomax, the patented rumen bypass protein formulated to improve milk yields and profitability of dairy farmers, in August 2011.

Food

Revenue for the period increased by 13.2 per cent to £38.3 million (2010: £33.8 million) with profit before taxation lower at £0.7 million (2010: £0.9 million) after allowing for reorganisation costs.

This creditable performance reflects stable sales volumes achieved despite milling wheat prices more than doubling since June 2010. Our continuing focus on capital expenditure to reduce costs will result in significant annual savings to offset continuing pressure on margins.

The UK flour market continues to be challenged by industry over-capacity, with management responding to pressure on selling prices by developing speciality products which are now being sold through supermarkets.

Engineering

The 18.1 per cent fall in revenue for the period to £5.6 million (2010: £6.8 million) is due to the high material content and lower margins from completed contracts in the comparable period in 2010. Profit before taxation for the period was £0.6 million (2010: £0.4 million).

Profit at Wälischmiller Engineering was similar to last year. Expected contract completions during the second half include three projects for China, Japan and Germany, with a total value of approximately €4.5 million. The order book is strong through to late 2013, with significant contracts won from businesses engaged in nuclear activities in many countries, particularly Russia, Germany and France. To meet this demand and maintain its high reputation for engineering quality and safety, Wälischmiller has recruited additional skilled engineering personnel.

The performance of Carrs MSM was broadly in line with last year with activity expected to increase in the second half following the completion of an inventory reduction programme by its major customer and demand for additional manipulators for de-commissioning.

Bendalls Engineering is heavily engaged in 2 major contracts with a combined contract value of over £4 million, scheduled to be completed in late 2011, supplying a major vessel for the multi-million pound Evaporator D project at Sellafield and vessels for a nuclear plant in the USA.

Principal Risks and Uncertainties

The Board has identified vulnerabilities specific to the Group's activities, whose converse gives rise to potential upside. The principal risks and uncertainties, which are set out in detail on page 14 of the Report & Accounts for the year ended 28 August 2010, are the prosperity of the farming industry in the UK and USA, pricing of fertiliser raw materials, competition and funding of large engineering projects. No other significant risks and uncertainties have been identified subsequently.

Outlook

We have made encouraging strategic progress in our markets during 2010 and into 2011. Our decision to expand the geographical cover of our agricultural branch network in the Borders and North of England, the expansion of our fuel business and our feed supplements business, and the development of the New Zealand market for our animal feed block Crystalyx, leave Carr's well placed to take advantage of the improving agricultural markets.

Focus is beginning to return to the long-term positive fundamentals for agricultural markets and increasing demand for food, driven by global and UK population growth. This is creating more demand for protein which, in turn, creates the need for improved farmer productivity.

The continuing over-capacity in the UK flour market will present management with challenges and we anticipate that the Food division will, at best, sustain its first half performance in the second half.

Our engineering businesses have excellent skills, with good order books, and are well positioned to take advantage of the increasing demand in the nuclear, oil and gas sectors.

With a business environment that remains challenging it is pleasing to report growth in profitability and announce a rise in the first interim dividend.

We are confident that Carr's will continue to trade in line with management's expectations for the full year.

Chris Holmes

Chief Executive

11 April 2011

UNAUDITED CONSOLIDATED INCOME STATEMENT

for the 26 weeks ended 26 February 2011

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the 26 weeks ended 26 February 2011

UNAUDITED CONSOLIDATED BALANCE SHEET

as at 26 February 2011

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the 26 weeks ended 26 February 2011

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

for the 26 weeks ended 26 February 2011

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors confirm that to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 (an indication of important events during the first six months and a description of the principal risks and uncertainties for the remaining six months of the year) and DTR 4.2.8 (a disclosure of related party transactions and charges therein) of the Disclosure and Transparency Rules.

The Directors of Carr's Milling Industries PLC are listed in the Carr's Milling Industries PLC Annual Report and Accounts 2010. There have been no changes to the Board of Directors in the financial period.

On behalf of the Board

Chris Holmes Ron Wood

Chief Executive Finance Director

11 April 2011 11 April 2011

NOTES TO THE UNAUDITED INTERIM FINANCIAL RESULTS

1. Basis of preparation

This interim report was approved by the Directors on 11 April 2011 and has been prepared in accordance with the Disclosure and Transparency Rules of the UK's Financial Services Authority and the requirements of IAS 34 'Interim Financial Reporting' as adopted by the European Union. The information does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and has been neither audited nor reviewed. No statutory accounts for the period have been delivered to the Registrar of Companies.

The interim financial information has been prepared under the historical cost convention as modified by the revaluation of derivative financial instruments and share based payments at fair value through profit or loss.

The statutory accounts for the year ended 28 August 2010 prepared under IFRS as adopted by the European Union have been filed with the Registrar of Companies. The report of the auditors was not qualified and did not contain a statement under Section 498 of the Companies Act 2006.

2. Accounting policies

The accounting policies used in the preparation of the financial information for the 26 weeks to 26 February 2011 have been consistently applied to all the periods presented and are set out in full in the Group's financial statements for the 52 weeks ended 28 August 2010. A copy of these financial statements is available from the Company's Registered Office at Old Croft, Stanwix, Carlisle, CA3 9BA.

The following accounting standards, amendments and interpretations are not yet effective and have not been adopted early by the Group:

International Financial Reporting Standards ("IFRS")

IFRS 9: 'Financial instruments' 1 January 2013

IAS 24 (revised), 'Related party disclosures' 1 January 2011

Amendments to existing standards

Amendment to IFRS 1, Hyperinflation and fixes dates 1 July 2011

Amendment to IFRS 7: 'Financial instruments: disclosures' 1 July 2011

Amendment to IAS 12: 'Income taxes' on deferred tax 1 January 2012

Amendment to IFRIC 14: 'Pre-payments of a Minimum Funding Requirement' 1 January 2011

Annual improvements to IFRSs 2010 1 January 2011

From 29 August 2010 the following standards, amendments and interpretations became effective and were adopted by the Group:

International Financial Reporting Interpretations Committee ("IFRIC") interpretations

IFRIC 19: 'Extinguishing financial liabilities with equity instruments'

Amendments to existing standards

Amendment to IFRS 1 for additional exemptions

Amendment to IFRS 2: 'Share based payments - Group cash-settled share-based payment transactions'

Amendment to IAS 32 Financial instruments: 'Presentation on classification of rights issues'

Annual improvements to IFRSs 2009

Amendment to IFRS 1: 'First time adoption'

The adoption of these standards, amendments and interpretations has not had a material effect on the net assets, results and disclosures of the Group.

3. Segmental information

IFRS 8 requires operating segments to be identified on the basis of internal financial information about components of the Group that are regularly reviewed by the chief operating decision maker ("CODM") to allocate resources to the segments and to assess their performance.

The CODM has been identified as the Board of Directors. Management has identified the operating segments based on internal financial information reviewed by the Board. The Board considers the business from a products/services perspective. Operating segments have been identified as Agriculture Trading, Agriculture Manufacturing, Food and Engineering. Operating segments have not been aggregated for the purpose of determining reportable segments.

Performance is assessed using profit before taxation. For internal purposes, profit before taxation is measured in a manner consistent with that in the financial statements, with the exception of material non-recurring items, which are excluded.

Inter-segmental transactions are all undertaken on an arm's length basis.

Adjustments to segmental information represents non-reportable segments and consolidation adjustments.

The segment results for the 26 weeks to 26 February 2011 are as follows:

Assets

 The segment results for the 26 weeks to 27 February 2010 are as follows:

Assets

The segment results for the 52 weeks to 28 August 2010 are as follows: