Carr : Full Year Results For the year ended 1 September 2018

Carr's Group plc

12 November 2018

CARR'S GROUP PLC ("Carr's" or the "Group")

FULL YEAR RESULTS

For the year ended 1 September 2018

"Strategic progress and financial performance ahead of expectations"

Carr's (CARR.L), the Agriculture and Engineering Group, announces its results for the year ended 1 September 2018.

Financial Highlights

Adjusted1
FY18	FY17	+/-
Revenue (£m)	403.2	346.2	+16.5%
Operating profit (£m)	17.5	12.1	+44.4%
Profit before tax (£m)	16.6	11.4	+45.2%
Adjusted1EPS (p)	13.9	8.9	+56.2%
Statutory
FY18	FY17	+/-
Revenue (£m)	403.2	346.2	+16.5%
Operating profit (£m)	16.4	10.7	+53.5%
Profit before tax (£m)	15.5	10.0	+55.0%
Basic EPS (p)	13.0	7.7	+68.8%
Dividend per share (p)	4.5	4.0	+12.5%
Net debt	15.4	14.1	+8.6%
Capex	5.5	3.9	+41.5%
Commercial Highlights

• •Strong performance in UK Agriculture with growth across all areas, reflecting improved farm incomes

• •USA feed blocks significantly ahead of expectations, up 17.7%, driven by recovery in USA cattle prices

• •Plans to expand feed block business internationally progressing well:

  -Agreements signed with leading distributors in New Zealand

• •Post year end, acquired Animax, a producer of market-leading livestock trace element supplementation products

• •Significant improvement in Engineering:

  -Strong recovery in UK Manufacturing

  -First full year contribution from NuVision

• •First contracts won to sell Wälischmiller remote handling equipment into the USA market

• •NuVision now integrated and two significant MSIP® contracts signed, strengthening order book to FY21

Chris Holmes, Chairman of Carr's Group, commented:

"We are very pleased to announce a significant improvement inthe Group's financialperformance for the year, exceeding theBoard's expectations, across both the Agriculture and Engineering divisions. This performance was largely as a result of investments we made across the business in recent years, in addition to a recovery in our underlying markets.

"UK Agriculture continued to perform well reflecting the sustained recovery in farm incomes. Our USA feed blocks business continued to benefit from the recovery in USA cattle prices and we made further progress on growing our international feed blocks business. Our Engineering division also delivered a significantly improved performance during the year.

"Trading for the new financial year has started in line with the Board's expectations. We made further progress duringthe year on our strategic objectives and continue to believe the breadth of our product offering, investments in acquisitions and research, and our international footprint leaves us well positioned for further growth across both ourdivisions in the medium term."

1Adjusted results are after adding back amortisation of acquired intangible assets and non-recurring items including acquisition costs (note 3)

Enquiries:

Carr's Group plc

Tel: [phone]

Tim Davies (Chief Executive)

Neil Austin (Group Finance Director)

Powerscourt

Tel: [phone]

Nick Dibden / Lisa Kavanagh / Sam Austrums

About Carr's Group plc:

Carr's is an international leader in manufacturing value added products and solutions, with market leading brands and robust market positions in Agriculture and Engineering, supplying customers in over 50 countries around the world.

Its Agriculture division manufactures and supplies feed blocks and supplementation products for livestock, distributes farm machinery and runs a UK network of rural stores, providing a one-stop shop for the farming community. Its Engineering division designs and manufactures bespoke equipment and provides technical engineering services into the nuclear, petrochemical, oil and gas, pharmaceutical, process and renewable energy industries, including robotic and remote handling equipment.

Chairman'sStatement

Review of the year

For the year ended 1 September 2018, the Group has delivered a performance ahead of the Board's expectations andsignificantly ahead of the prior year. Both our Agriculture and Engineering divisions have benefitted from the investments made in previous years, particularly the acquisition of NuVision, as well as a recovery in our UK Manufacturing business and continued improvements in our underlying markets.

In our Agriculture division, UK Agriculture continued to perform strongly reflecting improved farm incomes and higher levels of farmer confidence. In the USA, cattle prices improved steadily during the year supporting a recovery in USA feed block volumes, which were significantly ahead of the prior year. UK feed blocks performed in line with expectations. In Europe, feed block sales volumes through our joint venture business based in Germany, Crystalyx Products GmbH, continued to grow. Our plans to develop the feed block business internationally remain on track.

Our Engineering division delivered a significantly improved financial result compared to the prior year. We saw a strong recovery in our UK Manufacturing business, with the significant contract announced in July 2017 performing as expected and the benefit of improved controls over contract profitability. Our Remote Handling business also performed strongly, benefiting from the delivery of substantial contracts into the Chinese market. NuVision, acquired in August 2017, performed well in its first full year as part of the Group, securing several significant contracts to be delivered over the next three years. The business was also successfully integrated into the wider Engineering division.

During the year we have continued to invest in our people. Due to the retirement of a number of key, long-standing senior managers, we have recruited high calibre successors for a number of our businesses, including the appointment of a new Managing Director for our USA feed blocks business and a new Managing Director for our UK feed blocks business. In addition, the appointment of a new Divisional Managing Director for the Engineering division in November 2017 is driving the strategic focus and growth of that division.

In line with our strategy, we have continued to invest in technology and innovation to grow the business internationally. Following the commissioning of the new low moisture feed block plant in Tennessee, the site is now fully operational, and volumes continue to build. We also expanded our remote handling facility in Markdorf, Germany which has enabled us to complete the full integration of the STABER business, acquired in October 2016, within Wälischmiller.

Following the year end we acquired Animax Limited, a producer of market-leading trace element supplements, for a total cash consideration of up to £8.5m. This acquisition is highly complementary to our global feed blocks business and aligns with our stated strategy of investing in growing agriculture markets in the UK and internationally. We will continue to appraise new opportunities in line with our strategy.

Financial review

Revenue for the year increased by 16.5% to £403.2m (2017: £346.2m). Adjusted operating profit, which is before amortisation of acquired intangible assets and non-recurring items, was up 44.4% to £17.5m (2017: £12.1m), with Agriculture contributing £13.4m (2017: £11.4m) and Engineering £4.1m (2017: £0.6m). Reported operating profit was up 53.5% at £16.4m (2017: £10.7m). Non-recurring items include certain acquisition related costs totalling £0.3m and a write-off of goodwill relating to the UK Manufacturing business, Bendalls, totalling £0.5m.

Adjusted profit before tax was up 45.2% to £16.6m (2017: £11.4m) and reported profit before tax was up 55.0% at £15.5m (2017: £10.0m). Basic earnings per share were up by 68.8% to 13.0 pence (2017: 7.7 pence), with fully diluted earnings per share of 12.7 pence (2017: 7.6 pence) and adjusted earnings per share, excluding amortisation of acquired intangible assets and non-recurring items, of 13.9 pence (2017: 8.9 pence).

Net debt at 1 September 2018 was £15.4m (2017: £14.1m). The movement included £11.5m generated from operations, £7.1m used in investing activities, and £3.8m paid in dividends.

Dividend

The Board is proposing a final dividend of 2.35 pence per ordinary share, which together with the two interim dividends of 1.075 pence per ordinary share paid on 21 May 2018 and 5 October 2018, make a total of 4.5 pence per share for the year (2017: 4.0 pence per share). The final dividend, if approved by the Shareholders, will be paid on 11 January 2019, to Shareholders on the register on close of business 30 November 2018, and the shares will go ex-dividend on 29 November 2018.

Corporate governance

During the year, we have continued to review our governance framework following a number of changes implemented in 2017, including changing the membership of our Audit and Remuneration Committees and revising our policy on executive remuneration following a consultation with certain major shareholders. We were pleased to receive overwhelming support for these changes at our AGM in January 2018 and our Remuneration Committee will continue to consult with major shareholders on specific policy matters as and when appropriate.

In July this year, the Financial Reporting Council published its revised Corporate Governance Code 2018 which will apply to the Group from September 2019 onwards. The revised Code introduces some important changes to UK corporate governance. During the course of the current financial year, we will continue to review our governance practices to ensure that we are well placed moving into the new regime. As a Group, we remain committed to promoting a robust and transparent governance framework which will continue to serve the interests of all our stakeholders.

Outlook

The Group remains committed to delivering on its strategic objectives of investing in its people and its asset base, whilst continuing to drive innovation and delivering growth across our two divisions, with a focus on broadening our geographic footprint.

The Board remains confident in the prospects of the UK Agriculture business in the near term following the sustained recovery in farm incomes. While we now have greater visibility in relation to farming support post Brexit, we remain cautious over the nature of future trade agreements with the EU and the rest of the world. We expect the gradual recovery in USA cattle prices to continue in the current financial year, which, together with the acquisition of Animax and expansion into other geographic markets, provides a solid base for growth in the Agriculture division.

In Engineering, order books remain strong across most of the businesses and the recovery in the division's financialperformance is expected to continue. We continue to invest in product development and improved production methods to support the future growth of the division. While uncertainty remains over the potential impact of Brexit on certain supply chains, we remain encouraged by the growth opportunities available, particularly in the USA and Asia, which we continue to develop.

Trading in the new financial year has started in line with the Board's expectations. We remain confident that ourinvestments in acquisitions, research and product innovation position the Group well for sustained growth.

Chris Holmes DL

Chairman

12 November 2018

Chief Executive's Review

The year has seen significant progress for the Group, with our financial performance ahead of the Board's expectationsand significantly improved upon the prior year across both Agriculture and Engineering. We continued to deliver our strategic objectives, which are consistent with our vision to be recognised as a truly international business at the forefront of innovation and technology.

During the year we were also able to make significant progress with senior management succession plans for a number of key leadership roles across the Group, as well as continuing to invest in our own programmes to develop our next generation of leaders. People remain fundamental to our businesses; we recognise the enormous contribution of our people across the businesses which has enabled the Group to deliver a strong result for the year. Another key driver is keeping everyone safe, and we have continued to focus on safety throughout the financial year, improving our reporting mechanisms and further embedding our safety culture.

Agriculture

The Agriculture division has performed strongly this year, as a result of improvements in underlying markets as well as the investments made in recent years.

During the year, revenue was up 13.8% to £359.6m (2017: £315.9m). Adjusted operating profit was up 16.9% to £13.4m (2017: £11.4m) and reported operating profit was up 20.1% to £13.0m (2017: £10.8m).

Feed blocks

Total global feed block sales volumes were up 15.0% compared to last year.

Our USA feed blocks business was significantly ahead of last year with sales volumes up 17.7%. This performance was driven by the ongoing recovery in cattle prices in the USA. Our new low moisture feed block plant in Tennessee is now fully operational and provides additional capacity and access to new markets across the Eastern and South Eastern states of the USA.

UK feed blocks sales volumes were up 8.9%, in line with expectations.

Our joint venture business based in Germany, Crystalyx Products GmbH, performed strongly during the period with sales volumes up 12.4%, due to improved farm incomes following a recovery in the milk price across Europe.

Our plans to grow our feed blocks business internationally continue to progress well. In New Zealand, our direct sales operation distributing to farmers through merchants has continued to grow, with supply agreements now in place with several of the country's leading agricultural merchants. In South America, we are now supplying products through ourchosen distributors and made our first commercial sales during the year. Farm trials continue to demonstrate the efficacy of our products, providing local evidence which we will use in support of our plans to develop our market in South America.

The strength of our brands, including Crystalyx®, SmartLic®, Megastart®, FlaxLic® and Horslyx®, continue to enable us to drive growth and expand internationally and we remain focused on investment in new product development.

UK Agriculture

UK Agriculture continued to perform well across all areas of the business, reflecting improved farm incomes and ongoing farmer confidence. Manufactured feed volumes were up 8.7%, in line with the national average. Key drivers for the increased volumes were the late Spring and the dry weather during the summer months.

Our retail business delivered a strong performance during the period, with the country store network reporting an increase of 4.4% in like-for-like sales and a 12.1% increase in total sales. The increase in total sales was primarily driven by the acquisition of Pearson Farm Supplies, an agricultural retail business with locations across Yorkshire, Lancashire and North West Wales, which was completed in October 2017. This business has now been successfully integrated and as expected the acquisition has enabled synergies to be achieved with our existing retail business and the team has settled in well. Our retail footprint currently stands at 43 locations.