Carrs Group Regulatory News (CARR)

CARR'S MILLING INDUSTRIES PLC

("Carr's" or "the Group")

Interim Results

Carr's (CRM.L), the agriculture, food and engineering group, announces interim results for the 26 weeks ended 3 March 2012.

Financial Highlights (Continuing Operations)

·; Revenue up 12% to £196.0m (2011: £175.5m)

·; Profit before taxation up 31% to £7.4m (2011: £5.7m)

·; Fully diluted EPS up 29% to 52.2p (2011: 40.4p)

·; First interim dividend up to 7.25p (2011: 6.5p)

·; Net cash £1.6m (2011 net debt: £28.2m)

Commercial Highlights

·; Agriculture revenue up 12% to £147.2m and profit before taxation up 19% to £5.2m, despite lower UK compound feed volumes resulting from the mild winter weather. The good performance reflects strong feed block sales, particularly in the US, UK and New Zealand, and growth in retail sales and margins.

·; Food revenue up 8% to £41.4m but profit before taxation down 39% to £0.4m, reflecting the continuing pressure on margins caused by volatile wheat prices and over-capacity in the flour industry.

·; Engineering revenue up 33% to £7.4m with profit before taxation up 175% to £1.6m, reflecting strong demand, the completion of significant contracts and an expanding order pipeline.

Chris Holmes, Chief Executive, commented:

"The Board is pleased with the first half performance, which was ahead of our forecast. The trading environment, particularly in agriculture, is mixed due to the milder weather conditions experienced and this trend has continued into the second half. However, demand for our products, particularly animal feed blocks, remains strong. Following the profit growth achieved in the first half the Board believes the results for the year will be ahead of the expectations that the Company had at the beginning of the year, and is well positioned for sustained profitable growth."

Enquiries:

INTERIM MANAGEMENT REPORT

Financial Review

The current year is the first following the disposal of the fertiliser blending business in July 2011. During the first 26 weeks ended 3 March 2012, the Group delivered a solid set of results in which revenue increased by 12% to £196.0 million (2011: £175.5 million), reflecting higher oil and feed commodity prices, increased volume in our feed block businesses, and strong sales from our Engineering division. Sales of animal feed and fuels were adversely impacted by milder weather but the prices for beef, lamb and milk remained firm, and our financial performance in the UK and overseas has been positive. In Engineering, we continue to experience strong demand from the nuclear industry which is reflected in our trading performance and a growing order book.

The combination of increased sales and a continuing focus on cost control resulted in an improvement in operating margin to 3.4% (2011: 2.9%) and Group operating profit increasing by 30% to £6.7 million (2011: £5.2 million). Profit before taxation increased by 31% to £7.4 million (2011: £5.7 million).

Fully diluted earnings per share were up 29% to 52.2 pence (2011: 40.4 pence).

The disposal in July 2011 of our fertiliser blending business has significantly reduced the volatility in our cash flow and at 3 March 2012 net cash was £1.6 million compared to net debt of £28.2 million at 26 February 2011.

On 11 November 2011, the Group restructured part of its bank facilities with the Clydesdale Bank and with the exception of the bank overdraft of £5.0 million, which is renewed annually, the other facilities, revolving credit £10.0 million and term loan £2.5 million, are committed through to November 2014.

Shareholders' Equity

Shareholders' equity at 3 March 2012 increased by £1.6 million to £58.6 million (3 September 2011: £57.0 million) due mainly to the profit retained by the Group in the period and a small reduction in the Group's defined benefit pension obligation.

Dividend

A first interim dividend of 7.25 pence per share (2011: 6.5 pence per share) will be paid on 25 May 2012 to shareholders on the register on 4 May 2012. The ex-dividend date will be 2 May 2012.

Business Review

Agriculture

Profit before taxation was up 19% to £5.2 million on revenue up 12% to £147.2 million.

Our global feed block sales were a significant contributor to this good performance. In the US, following the previous year's severe winter weather which prevented delivery in key areas, low-moisture feed block sales were up 40%. Sales volumes also benefited from supply agreements with our joint venture partner in the high moisture feed block plant in Shelbyville, Tennessee, which opened in November 2011. Demand for Crystalyx in New Zealand and Europe continues to grow. Sales of high moisture feed blocks in the UK benefited from the investment in Scotmin Nutrition completed last year and the re-launch of Megalix, the all-year-round supplement for cattle, and Megastart, a product for pre-lambing and pre-calving.

Due to the mild autumn and winter weather sales of our dairy, beef and sheep feeds were down, in line with the market.

Delayed commissioning, as a result of engineering issues, of the new AminoMax feed supplement plant in Watertown, New York State meant that it was not possible to supply AminoMax during the early winter season. The demand for AminoMax, the patented rumen bypass protein which improves the yield and profitability of dairy herds, is encouraging and should make a positive contribution in the next financial year.

Fuel sales volumes were maintained during the period, despite the mild autumn and winter weather, reflecting market share gains following the opening of new depots at Hexham in August 2011 and Cockermouth in February 2012, and a full period of trading from our depot at Lancaster.

Retail sales were ahead of the first half of last year with margins also increasing. This reflects the success of the increased range of animal health products sold through the expanded retail network, including the new branch opened at Stirling in June 2011. Safe at Work, the specialist supplier of protective clothing to the forestry and agricultural markets, was successfully integrated and made a positive contribution to profit and extended the product range across our branch network.

Farmer purchases of fertiliser reduced sales in the first half but we expect most of the sales shortfall to be recovered in the second half.

Sales of agricultural machinery continue to grow, benefiting from the larger range of franchises.

Food

The trading environment for our three flour mills remains difficult and competition remains intense. In the period wheat prices were once again volatile, with price fluctuations of approximately £35 per tonne, and while sales volumes and sales revenue were both ahead of last year, with revenue up 8% at £41.4 million, margins were lower. Profit before taxation was down 39% at £0.4 million. The new wheat handling facility which re-opened last year at Kirkcaldy, is working well, with the volume of grain through the port significantly exceeding our initial projections.

In recent months there have been signs of further consolidation and rationalisation within the UK milling industry. We are reviewing our own milling operations to ensure that we will be in a position to meet the needs of today's bakers and food manufacturers as efficiently as possible.

Engineering

Strong demand both in the UK and overseas is reflected in revenue for the period growing by 33% to £7.4 million with profit before taxation increasing by 175% to £1.6 million.

Specialist fabricators, Bendalls, completed a contract for the supply of pressure vessels to Bechtel in the US for the nuclear decommissioning plant in Handford, Washington State. In the second half, it will complete a major vessel for the Evaporator D project at Sellafield in Cumbria which is the UK's largest nuclear project.

Bendalls has also won a multi-million pound contract to supply pressure vessels for a floating production storage and offloading platform, being manufactured by Hyundai in South Korea, for the BP Quad 204 area west of the Shetland islands. Work is expected to commence during summer 2012 with delivery early in 2013.

MSM achieved sales growth as the result of increased demand largely from Sellafield where it has recently signed a 'life of plant' contract for the supply of critical parts which will make a positive contribution to this division going forward.

Wälischmiller, the remote handling technology and robotics business, has been exceptionally busy throughout the period and all contract delivery schedules were met, including the delivery of 3 Telbot specialist robots for a de-commissioning plant in Germany. In addition, significant contracts for master slave manipulators and remote handling equipment were completed for customers in France, Japan and South Korea.

As the result of continuing high demand, and strong order book leading to an increased production requirement, Wälischmiller has expanded its design and production engineering team by 10, taking the total number of employees to 90. Phase I (new office accommodation and some production capacity) of the new €4 million factory at Markdorf is on schedule to complete this summer, after which construction of the new production facility will begin.

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 are set out in detail on pages 16 and 17 of the Report & Accounts for the year ended 3 September 2011 and remain the same as the prior year.

The principal risks and uncertainties are not expected to change materially in the remainder of the year and can be summarised as follows:

·; Failure to act safely and to maintain the continued safe operation of our facilities and quality of products;

·; Failure to attract, develop and retain key personnel;

·; Non-compliance with legislation and regulation;

·; Fluctuations in prices, offtake and availability of raw materials, energy, freight and other operating inputs;

·; Failure to protect intellectual property;

·; Failure to maintain high standards of customer service and identify important customer trends;

·; Failure to maintain an effective system of internal financial controls;

·; Managing procurement costs.

Outlook

The Group delivered an excellent performance in the first half, with profit before taxation from continuing operations up by 31%, in mixed market conditions. The integration of our expanded retail branch operations and the opening of two fuel depots in recent months emphasises the determination and confidence of the Group to invest and deliver growth.

The Agriculture division, the largest sector of the Group, remains well placed to continue playing an important role in the UK and US agricultural markets, due to its broad range of products and investment in technology. The population growth is creating the need for improved farmer productivity and underlines and supports our investment in feed technology and animal health products.

The level of over-capacity in the UK flour market continues to 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 business has major contracts to be completed in the second half of the year and beyond and strives to ensure that all contracts are delivered on time meeting customer expectations.

The Board continues to view the outlook for the remainder of the year positively and believes that the results for the year ending 1 September 2012 will be ahead of the expectations that the Company had at the beginning of the year.

Chris Holmes 24 April 2012

Chief Executive Officer

UNAUDITED CONSOLIDATED INCOME STATEMENT

for the 26 weeks ended 3 March 2012

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the 26 weeks ended 3 March 2012

UNAUDITED CONSOLIDATED BALANCE SHEET

as at 3 March 2012

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the 26 weeks ended 3 March 2012

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

for the 26 weeks ended 3 March 2012

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 2011. 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

24 April 2012 24 April 2012

NOTES TO THE UNAUDITED INTERIM FINANCIAL RESULTS

1. Basis of preparation

This interim report was approved by the Directors on 24 April 2012 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 financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss.

The statutory accounts for the year ended 3 September 2011 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 3 March 2012 have been consistently applied to all the periods presented and are set out in full in the Group's financial statements for the 53 weeks ended 3 September 2011. 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 2015

IFRS 10: 'Consolidated financial statements' 1 January 2013

IFRS 11: 'Joint arrangements' 1 January 2013

IFRS 12: 'Disclosures of interests in other entities' 1 January 2013

IFRS 13: 'Fair value measurement' 1 January 2013

IAS 27 (revised 2011): 'Separate financial statements' 1 January 2013

IAS 28 (revised 2011): 'Associates and joint ventures' 1 January 2013

Amendments to existing standards

Amendment to IFRS 1: 'First time adoption' on government grants 1 July 2013

Amendment to IFRS 7 on Financial instruments asset and liability offsetting 1 July 2013

Amendment to IAS 1: 'Presentation of financial statements' on OCI 1 July 2012

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

Amendment to IAS 19 (revised 2011): 'Employee benefits' 1 January 2013

Amendment to IAS 32 on Financial instruments asset and liability offsetting 1 July 2014

From 3 September 2011 the following standards, amendments and interpretations became effective and were adopted by the Group:

International Financial Reporting Standards

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

Amendments to existing standards

Annual improvements to IFRSs 2010 1 January 2011

Amendment to IFRS 1: 'Hyperinflation and fixed dates' 1 July 2011

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

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

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

The chief operating decision maker (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, Food and Engineering. After the disposal of Carrs Fertilisers, the remaining businesses in what was our Agriculture Manufacturing segment do not have the scale to be reported as a separate segment. We have therefore combined Agriculture Manufacturing and Agriculture Trading businesses into a single segment for reporting continuing operations. 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 3 March 2012 are as follows:

Assets

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