Interim Management Statement

Carr's (CRM.L), the agriculture, food and engineering group, is issuing its interim management statement for the nineteen week period ending 12 July 2014.

The Group's financial position and trading across all of Carr's divisions in the period remains consistent with the Board's expectations for the full year.

Agriculture

We are pleased with the continued progress in the strategic development of this division.

The Group's UK position has been strengthened through the acquisition of Merit (Feeds & Storage) Limited, a compound feed and retail business based in Lancashire, which was completed on 30 April 2014 and has now been consolidated into the Lancaster Mill and the enlarged Brock branch.  

The Country store refurbishment programme of the last 12 months has resulted in significant improvements and increased efficiencies. Carr's customers continue to benefit from the vast range of core country store products available.

The growth in sales of the AminoMax® UK product is as a result of a significant uplift in demand from the Group's dairy customers, who realise the benefits of the patent-protected rumen-bypass protein product. This increase in sales supports the Group's ambition of becoming the UK leader in dairy nutrition.

Global demand for Carr's feed blocks continues, with increased recognition of the brands ensuring positive underlying growth and further global opportunities remain under constant evaluation.  Following successful trials, our feed block offering has been expanded to include two innovative new products, manufactured in Germany by Crystalyx GmbH, for the pig and poultry industries throughout Europe.

Food

Food safety and hygiene standards remain a primary concern for our customers and investment continues in this division in order to maintain our position at the cutting edge of flour milling efficiency. The new mill at Kirkcaldy has been operational for 10 months and delivering all the planned technological benefits as expected.

This year's UK harvest is expected to be large but the quality remains unknown at this stage. As our three mills are strategically located, with two at port-side locations, we remain well placed to procure the best quality wheat, which enables us to distribute flour to our customers in the most cost effective manner.

Engineering

The new Wälischmiller factory was officially opened on 27 June 2014 and feedback from customers, partners and suppliers has been extremely positive.

Research projects have commenced into the effects of radiation on battery life, as well as advances in motor technology, both of which could be applicable to a range of products manufactured by Wälischmiller. The Demo 2000 development project into the adaptation of the Telbot® for the oil and gas industry, being conducted in conjunction with Shell and Statoil is progressing well in line with our expectations. The long term benefits to Carr's of our investment are clear and will be leveraged by a new state-of-the-art customer facility at Walischmiller. 

The contract with BP Shah Deniz for 27 pressure vessels has been expanded further to a value of £8 million, and the forward order book at Bendalls is now full through 2014 and into 2015. Signs of activity in the nuclear sector are encouraging and the division is in a strong position to start capitalising on these in the next financial year.

Chirton Engineering, acquired in April this year, has been successfully integrated into the Engineering division. The full benefits of this acquisition are expected to be realised in the next financial year. The business will be moved to larger premises next year in order to meet the increasing customer demand.

Carrs MSM, the UK-based manipulator business, continues to perform well and ahead of expectations with demand emanating from the Sellafield "life of plant" contract signed in 2012.  Under the terms of the contract, MSM supplies parts that are critical for the major operating plants at Sellafield. MSM is also experiencing continued demand for upgrading manipulators at the Heysham II, Hinckley, and Hartlepool power plants.

Financial Position

The Group's financial position remains strong. Net debt at 31 May 2014 was £27.1 million up from £25.3 million at 1 March 2014, the increase being primarily due to the acquisition of Chirton Engineering and ongoing capital expenditure. The renewal of the Group's UK banking facilities has been completed ahead of schedule on improved terms. Committed undrawn facilities at 31 May 2014 totalled £16.4 million.

Tim Davies, Chief Executive, commented: "Our geographic diversity and continued investment has ensured that we are at the forefront of innovation, technology and design. This has resulted in a strong performance across every division during the period. As such, we expect the full year performance to be in line with our existing expectations."

The Group expects to issue its Preliminary Results for the year ending 30 August 2014 on 10 November 2014.

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About Carr's Milling:

Carr's Milling Industries (CRM.L) is an international leader in the provision of essential industrial services focused on the Agriculture, Food and Engineering sectors. With a facility footprint spanning the UK, Europe and North America, supplying customers in over 30 countries around the world, the Group offers a range of services including the manufacturing and supply of flour, robotic and remote handling equipment, a UK network of country stores, farm machinery, and feed blocks for livestock.

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