Carr's Group PLC

CREATING VALUE

THROUGH GROWTH

Annual Report and Accounts 2022

We have set out a clear strategy for

growth in earnings and shareholder

value. The disposal of our Agricultural

Supplies division will enable Carr’s to

focus on its Speciality Agriculture and

Engineering divisions and provide funding

for strategic growth and investment, thereby

enabling us to build upon our industry-

leading positions in these two higher

margin divisions.”

Peter Page

Chief Executive Officer

“

CARR’S IS AN

INTERNATIONAL GROUP

INVESTING IN THE

AGRICULTURAL AND

ENGINEERING SECTORS.

INTRODUCTION

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

WHAT’S IN OUR REPORT

OUR PURPOSE

To supply category-leading

products and services from

the best people through

effective and efficient

processes achieving

year-on-year growth.

CORPORATE GOVERNANCE

The Board

Chair’s Introduction

Corporate Governance Report

Nomination Committee Report

Audit Committee Report

Remuneration Committee Report

Directors’ Report

FINANCIAL STATEMENTS

Independent Auditor’s Report

101

Consolidated Income Statement

102

Consolidated Statement of

Comprehensive Income

103

Consolidated and Company

Balance Sheets

105

Consolidated Statement of Changes

in Equity

106

Company Statement of Changes

in Equity

107

Consolidated and Company

Statements of Cash Flows

108

Principal Accounting Policies

117

Notes to the Financial Statements

173

Five-Year Statement

175

Alternative Performance Measures

Glossary

178

Directory of Operations

179

Dormant subsidiaries at

3 September 2022

180

Registered Office and Advisers

STRATEGIC REPORT

Introduction

Highlights

At a Glance

Chair’s Statement and Board Review

Market Overview

Business Model

Strategic Framework

Group Performance Review

Divisional Review:

Speciality Agriculture

Divisional Review: Engineering

Divisional Review:

Agricultural Supplies

Financial Review

Key Performance Indicators

Principal Risks and Uncertainties

Viability Statement

Responsible Business Report

TCFD Disclosures

Stakeholder Engagement

Non-Financial Information Statement

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

£124.2m

Revenue

6.4p

Basic Earnings Per Share

2021 (restated)**

2020 (restated)**

6.2p

10.0p

Adjusted

earnings p

er share*

2021 (restated)**

2020 (restated)**

10.1p

8.3p

£39.7m

£35.0m

£40.6m

Year end Engineering order book

2021 (restated)**

2020 (restated)**

£113.5m

5.20p

Dividend Per Share

2021

2020

5.00p

4.75p

£11.2m

Adjusted profit Before

tax*

2021 (restated)**

2020 (restated)**

£8.9m

£10.4m

£120.3m

2021 (restated)**

2020 (restated)**

£11.9m

Adjusted operating

profit*

£11.1m

£9.8m

£8.2m

Reported Operating Profit

2021 (restated)**

2020 (restated)**

£7.2m

£8.2m

£7.6m

Reported Profit Before Tax

2021 (restated)**

2020 (restated)**

£6.3m

£7.5m

HIGHLIGHTS

Financial

(Continuing Operations)

Adjusted results are consistent with how business performance is measured internally and are presented to aid comparability of performance.

See note 39 for details of the prior year restatement in relation to the recognition of revenue from customer contracts within the Engineering division.

A STRONG PERFORMANCE

IN A TRANSFORMATIONAL

YEAR FOR THE GROUP

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

•

Revenue from continuing operations increased 3.3%

•

Adjusted profit before tax from continuing operations

increased 8.0%

•

Reported operating profit from continuing operations

in line with prior year at £8.2m

•

Agricultural Supplies business sold at market

comparable 6.4 x FY21 EBITDA

•

Post year end disposal leads to net cash on balance

sheet

•

Refreshed Board for 2023

•

Group now focused on higher margin, differentiated,

international businesses

Commercial and strategic

(Continuing Operations)

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

SPECIALITY AGRICULTURE

Locations

USA

Germany

ENGINEERING

Locations

USA

Germany

Speciality Agriculture

USA

GERMANY

Engineering

Registered Office

AT A GLANCE

Carr’s Group plc

is an internationally recognised leader

in the manufacture and supply of value-added products

and solutions. The Group produces market-leading brands

and occupies a robust market position in the speciality

agriculture and engineering sectors.

The Group operates a model which aims to empower operational

subsidiaries, enabling them to be competitive, agile and eﬀective in

their individual markets whilst maintaining overall standards and goals.

During the year the business was managed in three divisions. Following

a strategic review of the business, the Board announced in August 2022

the agreement to sell the Group’s interests in the Agricultural Supplies

division. The sale completed on 26 October 2022 and enables the

Group to focus on the Speciality Agriculture and Engineering divisions.

CREATING VALUE

THROUGH INNOVATION

AND LEADERSHIP

Our facilities:

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

SPECIALITY AGRICULTURE

Our Speciality Agriculture division manufactures and

supplies supplementation products for livestock and

comprises our feed block, mineral supplement, bypass

protein and animal health businesses.

These products are developed by our team of highly skilled

scientists and animal health specialists and

are designed to

improve animal performance.

Our patented products are manufactured from three sites

in the UK, six sites in the USA and one site in Germany. Our

customer base is made up of farmers across the UK, Europe,

North America and Australasia who are supplied through our

extensive global distribution and support network.

Key brands include:

• Crystalyx

, Horslyx

and SmartLic

feed blocks

• Tracesure

boluses

• AminoMax

bypass protein products

ENGINEERING

Our Engineering division designs and manufactures

bespoke complex equipment and products, and supplies

specialist technical services and solutions to customers

predominantly in the nuclear energy, oil and gas sectors.

These include robotic manipulators and remote handling

equipment, life-of-plant extension technologies, radiation

protection and decontamination services, design and

fabrication, and precision machining.

The division operates from four sites in the UK, two in the

USA and one in Germany. It serves a global customer base

which includes government bodies, utilities providers, and

large corporations.

Key brands include:

• TELBOT

robotic manipulators

•

MSIP

life-of-plant extension technology

•

Power Fluidics™ waste mobilisation systems

REVENUE

£78.1m

ADJUSTED OPERATING PROFIT

£9.2m

REPORTED OPERATING PROFIT

£9.3m

REVENUE

£46.2m

ADJUSTED OPERATING PROFIT

£5.4m

REPORTED OPERATING PROFIT

£2.0m

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

CHAIR’S STATEMENT AND BOARD REVIEW

Chair’s Statement

I am pleased to have joined the Board as Chair

on 21 February 2023. As I take up the role, I

believe that this is the start of a new chapter

for Carr’s.

We have a refreshed Board and a clear

focus for the future. The Board Review

which follows, outlines the changes which

took place over the FY22 which has positioned

the Group to enable growth through our

industry-leading Speciality Agriculture and

Engineering divisions.

I am very much looking forward to helping

guide the Company, supporting optimal

value creation for our shareholders and wider

stakeholders.

Tim Jones

Non-Executive Chair

22 March 2023

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Net debt at 3 September 2022, excluding

leases, was higher at £14.0m (2021:

£10.0m), funding increases in working

capital driven by inflationary cost

increases. Since year end, with completion

of the disposal of the Agricultural Supplies

division and the receipt of the initial

proceeds, the balance sheet is cash

positive.

The profit numbers referenced exclude

the impact of discontinued operations.

The net loss for the year after tax from

discontinued operations of £2.2m

(2021: £3.8m profit) consists of the loss

recognised relating to the disposal of the

Carr’s Billington Agricultural business, net

of profit from the Agricultural Supplies

division.

Dividend

The Board is proposing a final dividend

of 2.85 pence per share which, together

with the two interim dividends, makes a

total dividend of 5.20 pence per share for

the full year, up 4% on the prior year (2021:

5.00 pence).

Subject to approval by shareholders at

the forthcoming General Meeting of the

Company, the final dividend will be paid

on 12 May 2023, to shareholders on the

2023 and the shares will go ex-dividend

on 13 April 2023.

Strategy

Since April 2021, business performance

has been reported in three divisions:

Speciality Agriculture, Agricultural

Supplies, and Engineering. This provided

clearer information on the profitability

of each division and more detail on how

each contributes to earnings per share.

In January 2022, a review of the strategic

options for long-term growth in

shareholder value in each of the three

divisions was announced. Following

careful evaluation of all options,

supported by external advisers, the

Board determined that the Group will

most successfully create long-term

shareholder value by focusing on the

higher margin, differentiated, international

businesses in Speciality Agriculture and

Engineering.

Board Review

2022 was a transformational year for Carr’s

Group. The Board addressed strategic

priorities and made changes that will

enable growth in shareholder value by

developing the Group’s market-leading

businesses in Speciality Agriculture and

Engineering. The Group will focus on

higher margin, differentiated, international

businesses, following the disposal of

the Agricultural Supplies division in

October 2022.

The future development of the Speciality

Agriculture division will be through

organic growth opportunities and

carefully targeted acquisitions. The

Engineering division will focus on the

unique qualities and strengths of the

current businesses to realise their full

potential at a time when the nuclear

sector is expanding capacity and

capability.

The Board has been refreshed, bringing

considerable experience to lead the

Group at a time of change and renewal for

businesses that have strong prospects for

the future.

Financial performance

The review of financial performance

focuses primarily on revenue and profits

from continuing operations in Speciality

Agriculture and Engineering, following

the disposal of the Agricultural Supplies

division after the year end.

Revenue for the year from continuing

operations increased to £124.2m (2021

restated: £120.3m).

Adjusted operating profit from continuing

operations increased to £11.9m (2021

restated: £11.1m), with Speciality

Agriculture contributing £9.2m (2021:

£9.5m), and Engineering contributing

£5.4m (2021 restated: £3.9m). Reported

operating profit was in line with last year

at £8.2m (2021 restated: £8.2m).

Adjusted profit before tax from continuing

operations increased to £11.2m (2021

restated: £10.4m) whilst reported profit

before tax increased 0.4% to £7.6m (2021

restated: £7.5m).

Basic earnings per share from continuing

operations increased to 6.4p (2021

restated: 6.2p) and adjusted earnings per

share reduced to 10.0p (2021 restated:

10.1p).

The Speciality Agriculture division,

which delivers measurable productivity

benefits to livestock farmers through

patented products sold under market-

leading brands, will grow with investment

in the existing businesses and, over

time, by carefully targeted acquisitions.

Opportunities include demand for

nutritional supplements generated by

increasing use of low intensity pasture-

based grazing, the rise in sustainability-

related nutrition programmes, and

growing interest in welfare-centred

management systems.

The Engineering division will develop the

current portfolio of businesses, which

include patented and differentiated

products and services, to achieve their full

potential in specialist markets at a time

when totally dependable engineering

solutions and services, fit for the nuclear

industry, are in demand. Opportunities

include increasing capacity through small

modular reactor technology development,

extending installed asset life to maintain

capacity, and supporting high levels of

investment in long-term fundamental

research.

In August 2022, we reached agreement

with co-owners Edward Billington

& Son Limited for the sale of all our

holdings in the Agricultural Supplies

division. Following a general meeting

on 19 September 2022 at which 98% of

shareholder votes were in favour, the sale

was completed on 26 October 2022, with

the Group’s holding valued at £44.5m (on

a debt free basis), a market comparable

multiple of 6.4 x FY21 EBITDA, leading to

anticipated net proceeds of £29.0m, after

accounting for all transaction costs, debt

and working capital adjustments.

Whilst the Agricultural Supplies division

generated approximately 75% of historic

Group revenues, the market environment

and ownership structure meant that

it contributed approximately 25% to

adjusted earnings per share attributable

to shareholders. The split ownership

structure meant that Carr’s Group did

not have full control of the strategy or

direction of the combined business, whilst

it consumed a substantial proportion

of management time. It required up to

£10m of replacement capital expenditure,

and the rise in commodity prices led to

a substantial increase in working capital

during 2022. The disposal addresses

a fundamental challenge to growing

shareholder value.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

The decision to focus on high margin,

differentiated, international businesses,

and the disposal of the lower margin

UK-only division, are the first steps in an

ongoing process of strategic change for

the Group. The receipt of sale proceeds

puts the balance sheet in a strong net

cash position. The Board will carefully

consider the appropriate allocation of

capital to achieve a balance between

investment for growth in long-term value

of the Group and returns to shareholders,

including options to secure a fully-funded,

risk-free position for the legacy defined

benefit pension scheme.

Board

Carr’s Group has a refreshed Board of new

Executive and Non-Executive members

bringing considerable experience for the

benefit of all shareholders.

In line with Board succession plans,

Shelagh Hancock and Stuart Lorimer

were appointed as Non-Executive

Directors from 1 September 2022.

Shelagh, CEO of First Milk, the leading

UK farmer owned dairy co-operative,

has considerable experience relevant to

the Speciality Agriculture division. Stuart,

Finance Director of FTSE listed AG Barr

plc, will become Audit Committee Chair

in succession to John Worby, following

the forthcoming General Meeting of

the Company. Both Shelagh and Stuart

have already brought fresh insight to

Board meetings and provide constructive

challenge to the Executive Directors.

As part of the Board’s succession plan,

John Worby, who has been on the Board

since 2015, will complete his time as

Audit Committee Chair following the

forthcoming General Meeting of the

Company, and will retire from the Board in

mid-2023 following a period of handover

and support to the new Board members.

John has provided wise counsel and

shared a lifetime’s experience in finance

and public companies, which has been of

great value to the Group.

In August 2022, Neil Austin indicated his

intention to leave Carr’s Group, to take

up a new role at Westmorland Family,

headquartered at Penrith in Cumbria.

Neil had been on the Board for over ten

years and was central to many of the

improvements and developments at

Carr’s Group in recent times. Neil made

a significant contribution to the work of

the Board. His detailed understanding of

the workings of the Group combined with

a sharp intellect has been a real help to

Board members and senior managers

throughout his tenure. Neil stood down

as Chief Financial Officer and from the

Board on 21 February 2023 and left with

all the Board wishing him success in his

new role, and gratitude for his legacy at

Carr’s Group.

David White joined the Board on 21

February 2023 as Chief Financial Officer,

in succession to Neil Austin, bringing

extensive finance and operational

experience gained at Aggreko plc, Weir

Group and in professional services. David

was appointed following an external

search process and has made a very

positive impact since joining the Group on

3 January 2023.

In November 2022 following an extensive

search process, it was announced that

Tim Jones would be joining the Board

and would become Non-Executive Chair.

Tim’s appointment took effect on 21

February 2023. Tim brings substantial

experience to the role, having been Non-

Executive Chair of Treatt plc, a FTSE listed

business whose market capitalisation

increased eight-fold in the 11 years of his

tenure. Tim has a deep understanding

of equity markets, is an FCA approved

person and a member of the Chartered

Institute of Securities and Investment, and

is well placed to engage with, and reflect

the interests of, all shareholders.

Since October 2021 I have worked in the

business full-time as Executive Chair,

following agreement with the incumbent

Chief Executive Officer, Hugh Pelham,

that he would leave the business and

step down from the Board. Further to an

extensive internal and external search

process, it was announced in August 2022

by the Board that I would be appointed

Chief Executive upon the appointment

of a new Non-Executive Chair which

took effect on 21 February 2023 with the

appointment of Tim Jones.

As separately announced on 21 February

2023, Martin Rowland joined the Board as

a Non-Executive Director of the Company

on 6 March 2023 in accordance with

a relationship agreement entered into

between Harwood Capital Management

Limited and the Company on 20 February

2023.

Stakeholder engagement

The January 2022 Annual General

Meeting was the first opportunity to meet

with shareholders in person following

the lifting of COVID-19 restrictions.

Throughout the year we have met with

shareholders, in person, online and

through telephone calls. It is important

that the Chair and other Directors are

accessible to shareholders so we can

benefit from the dialogue, challenge,

and exchange of views.

Around the time of the Annual General

Meeting in January 2022, we consulted

with shareholders in some detail to

address the issue of Board composition

and diversity, taking the opportunity to

discuss and explain the changes to the

Board as part of the succession plans. The

feedback received and our response has

been published on the Group’s website,

with more detail in the Nomination

Committee Report.

Members of the Board meet regularly

with senior managers to review

business performance and progress

in non-financial areas including Health

and Safety and Environmental issues.

Ian Wood, as the Board’s nominee

for employee engagement, actively

participates in specific topics on behalf

of the whole Board.

There is regular engagement with current

and prospective customers, ranging from

farmers at UK and US trade events and

distributors at international trade shows,

to site visits in the UK, USA and Japan.

First hand contact with the market is

critical to understanding challenges and

opportunities for the future.

It is valuable to maintain contact with

related external educational, research

and development organisations, for

example the UK Atomic Energy Authority,

agriculture faculties of US universities and

local colleges for skills training and new

developments and opportunities.

CHAIR’S STATEMENT AND BOARD REVIEW

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Environment, Social

and Governance

ESG is about the way that we do things,

more than words and statements. With

ever increasing focus on sustainability,

business impact on the climate and

society, all the Group’s activities are

taking more direct responsibility for

monitoring and reducing emissions and

waste. An experienced Environment and

Sustainability Manager was appointed

in 2022, who has undertaken a critical

review of the systems and practices

currently in place and is developing a

comprehensive plan for changes and

actions to be addressed over the coming

year. The establishment of Green Teams

that involve a range of colleagues

to lead relevant activities will ensure

engagement across the Group in a way

that is appropriate for the circumstances

of each business.

Further details can be found in our

Responsible Business Report on pages 28

to 36 and our TCFD Disclosures on pages

37 to 39.

The Speciality Agriculture division offers

customers nutrition products which can

reduce carbon impact. The Engineering

division supplies services that support

low carbon sources of energy in the

nuclear sector. Following the sale of the

Agricultural Supplies division, the Group’s

environmental and sustainability priorities

have changed, ceasing involvement in

the energy-intensive fertiliser, fuels and

farm machinery markets and reducing

dependence on commodities.

High standards of Corporate Governance

are a priority, with an annual evaluation of

the Board’s performance in this area, to

ensure compliance with the UK Corporate

Governance Code 2018 and adapting our

practices accordingly. Our Statement of

Compliance can be found on page 57.

FY22 year end process

In November 2022 a delay was announced

to the completion of the year end

process that had several consequences

including a temporary suspension of

trading in the Company’s ordinary shares,

delayed release of this Annual Report,

audited results and payment of the final

dividend (subject to shareholder approval

at the forthcoming General Meeting of

the Company) later than usual. Whilst

the delay primarily related to a part

of the business in which Carr’s Group

had a minority shareholding and that

has now been sold, the Company will

carefully review the audit process to seek

opportunities for the timely completion

of the current financial year.

People

All colleagues have contributed to a

positive outturn for the Group in a year

of challenge and change. I am very

grateful for everyone’s commitment to

the business, and I wish all success to

our former colleagues in the Agricultural

Supplies division. A third of the Group’s

employees are now located outside

the UK, in Germany, USA, Ireland and

New Zealand, an indication of the more

international outlook for the Group in

the future.

Outlook

With considerable strategic progress

made during 2022, the Group is now

more focused. The unique know-how

and customer relations embedded in the

Speciality Agriculture and Engineering

divisions have considerable value as

markets seek technical solutions to long-

term sustainability challenges.

The Board is confident that both divisions

will generate value for shareholders in

the long term. A detailed update on trading

will be provided at the time of the half

year results.

Peter Page

Chief Executive Oﬃcer

22 March 2023

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

CREATING VALUE

THROUGH SPECIALIST

MARKET POSITIONS

Speciality Agriculture

The Speciality Agriculture division, with gross profit margins around

25% and a three-year average adjusted EBITDA of £9m, is well

positioned to deliver steady earnings growth over the next five years

based on opportunities in existing markets of the UK, Ireland, USA,

Europe and New Zealand. Our businesses have a good presence in

these markets with recognised brands that are known and trusted by

our customers.

Whilst Speciality Agriculture has a strong base of recurring business,

future growth will be linked to the four trends in ruminant agriculture

as outlined below.

SPECIALITY AGRICULTURE

MARKET TREND

WHAT THIS MEANS FOR CARR’S

The increasing importance of grass-based nutrition

With the growing costs of compound feeds and energy compressing

margins in confined management systems, grass-based nutrition is

increasingly important to beef, lamb, and dairy operations worldwide

as livestock managers seek to maximise returns from low-input

pasture systems.

Our Speciality Agriculture product ranges complement grass-based

systems and provide crucial supplements, minerals, and trace elements

to deliver a balanced diet.

Optimising productivity through data management

Optimising productivity in the key traits of milk yield and composition,

liveweight gain and carcase quality, and reproductive efficiency in

calving intervals and lambing percentages, on low-cost grass inputs is

fundamental to sustainable livestock farming.

Data-driven monitoring systems provide opportunities for livestock

farming to utilise nutritional and performance data to optimise

productivity in such key areas, and provide early detection of infections.

Our feed blocks and boluses help to deliver a balanced diet supporting

livestock performance.

Controlling emissions

Livestock agriculture is addressing greenhouse gas emissions in

various ways.

Our current ranges of Speciality Agriculture products help to limit

emissions by optimising productivity. Future opportunities include

products which reduce exhaled methane, and systems to monitor

emissions to provide valuable information and supply chain visibility.

The reduction in antibiotic use

The UN continues to promote the reduced use of antibiotics in

agriculture to combat antimicrobial resistance.

To avoid the use of antibiotics to treat infections such as laminitis which

is closely linked to diet, and mastitis which has a high prevalence in

dairy herds, supplements and minerals are used in balanced nutrition

programmes to manage symptoms of infections. Our ranges of feed

blocks and boluses provide crucial supplements, minerals, and trace

elements to deliver a balanced diet.

MARKET OVERVIEW

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Engineering

The Engineering division is well placed to generate growth in earnings

with its strong reputation in the nuclear sector, supported by a renewed

private and public sector commitment to energy security and nuclear

clean-up. New opportunities include the emerging nuclear medicine

sector and high-value long-term research projects in subatomic

particle physics and nuclear fusion technologies.

The Engineering businesses have a strong presence in international

markets, particularly the USA, UK, EU and Japan. Now at more than £40m,

the value of confirmed orders has grown by approximately 16% (restated)

in the past two years, nearly equivalent to the value of annual sales.

The trends and market opportunities for which our Engineering division

is particularly well positioned are outlined below.

ENGINEERING

MARKET TREND

WHAT THIS MEANS FOR CARR’S

Energy security

With a growing emphasis on energy security and reducing

dependence on imported energy, many governments and suppliers

are examining ways to extend the operational lifespan of existing

nuclear facilities.

Our patented MSIP

technology has been deployed for over 30 years,

maintaining assets by repairing stress fractures in welds in situ, saving

operators downtime and considerable cost.

Nuclear clean-up

The UK’s nuclear clean-up programme, centred on Sellafield, Cumbria

is one of the largest engineering infrastructure projects in Europe and

the disposal and storage of nuclear waste is a priority for the nuclear

sector worldwide.

We are well placed as part of the Programme and Project Partners

arrangement for accredited local businesses through which we have

already delivered on projects for Sellafield. Our Engineering Solutions

business, in collaboration with GeoRoc of Australia, is developing Hot

Isostatic Pressing technology for compressing and sealing large volumes

of nuclear waste, enabling operators to reduce expenditure on storage

infrastructure and handling.

Robotics for nuclear environments and medicine

Robotics continues to play an increasing role in engineering. Debris

removal from inaccessible, high-radiation, high-risk environments

requires specialised robotic equipment. In the global nuclear medicine

market, specialist robotics are designed to handle small quantities of

isotopes in the growing applications of nuclear medicine.

Planned work at the Fukushima plant in Japan is expected to generate

substantial investment, where our well-established and globally

recognised businesses in the UK and Germany are well placed to offer

their range of robotics products. Our new Wälischmiller A150 manipulator

arm is designed as a highly flexible, lightweight system to handle

isotopes for the growing nuclear medicine market. Our Lirob robot is

also the first fully-remote-controlled robot for this market.

Investment in particle research

Substantial long-term international investment in subatomic particle

research and fusion technology is expected to continue generating

opportunities in the USA, the UK and Europe.

Our Engineering businesses have already supplied internationally

renowned research laboratories in the USA, the UK and Europe.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

SPECIALITY AGRICULTURE

•

10 manufacturing sites across

the UK, the USA and Europe

• Patented products and

manufacturing processes

•

Research proven to add value

• Globally respected brands

ENGINEERING

•

7 sites across the UK, the USA

and Europe

• Unique products and innovative

solutions

• Customer-focused delivery

• Global customer base

BUSINESS MODEL

CREATING VALUE

FOR ALL OUR

STAKEHOLDERS

Our business strategy

Our operational divisions

During the financial year, the Board undertook a review of strategic options for

each of the Group’s divisions in order to enhance shareholder value. As the first

step in the long-term strategy the Board decided to simplify the Group structure

to concentrate resources and investments on the Speciality Agriculture division

and the Engineering division, ensuring growth initiatives deliver strong returns.

Carr’s Group provides a range of support and guidance to its operational divisions,

comprising Finance, IT, Legal, HR and Payroll, H&S and Environmental Management.

Our Group support

HOW WE CREATE VALUE

We invest in our people and assets, complemented by

carefully considered strategic investments, to drive growth.

We apply this approach in each of our divisions, centred

around a strong focus on adding value through innovative

products and solutions.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

The Group will focus on

growing shareholder

value, in balance with

the interests of all

our stakeholders.”

Employees

Our employees benefit from our expanding training

and development offering and enhanced engagement

initiatives.

Environment

We are taking steps to minimise our environmental impact

and to become a net zero organisation by 2050.

Communities

Across the Group we support charitable initiatives and the

communities in which we operate.

Partners

We build close relationships with a range of trusted

strategic partners across the UK, the USA and Europe.

Customers

We provide our well-established and expanding

customer base with leading product ranges and excellent

service levels.

Investors

Our strategy is designed to deliver sustainable growth.

During the last five years, we have increased the dividends

we pay to investors by 30%.

Talented people

We now employ 647 people

in our global workforce, who

benefit from continuous development opportunities to

reach their potential.

Culture and ethics

We are committed to ensuring that our businesses remain

ethically and sustainably managed.

Expert knowledge

Our businesses possess a wealth of specialist knowledge

and their focus on innovation and technology underpins

the delivery of new products and solutions to our

customer base.

Global network

We have a broad customer base in markets with the

potential for growth on an international scale.

Investment

We create value through continued investment in our

existing businesses.

Long-term, trusted relationships

We have built longstanding and trusted relationships

founded upon the quality of our offering, our organisational

culture, and our levels of customer service.

OUR KEY STRENGTHS

WHO WE CREATE VALUE FOR

Continuing operations only as at the date of this Annual Report. Prior to the sale of our holdings in the Agricultural Supplies division, our employee

numbers were 1,221.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

STRATEGIC FRAMEWORK

CREATING VALUE

THROUGH A

STRATEGIC FOCUS

In January 2022 the Board announced a strategic review

of all three of the Group’s divisions (Speciality Agriculture,

Agricultural Supplies and Engineering) with the focus on

identifying opportunities to increase shareholder value.

Framework

Strategic review

Each of the three divisions has performed well and has a

leading position in its respective market. However, the Board

determined that there were limited opportunities for synergy

between the divisions, varying levels of ownership and control

of businesses, competing demands for capital investment, and

differing returns on future investments.

As the first step in developing a long-term strategy, the Board

decided to concentrate resources and investments on the

Speciality Agriculture division and the Engineering division.

The future

The Board is confident that with the two divisions of Speciality

Agriculture and Engineering operating in international markets,

management’s focus on growth in existing businesses and

realising development opportunities will create shareholder

value over the coming years.

Focus on Speciality Agriculture and Engineering

•

Higher profit margins consistently achieved.

•

Potential for better returns on capital employed.

•

Anticipated market development suggests greater

opportunity for growth.

•

Recognised market-leading brands supplying an

international customer base.

•

Products manufactured and services supplied can be

differentiated from their respective competitors with scope

for development and extension in the future.

•

Most businesses are wholly owned and under the control

of the Company.

•

Whilst the Agricultural Supplies division accounted for

approximately 75% of Group revenue with a comparable

level of management input, it generated approximately

25% of the Group’s adjusted earnings per share.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Speciality Agriculture

Engineering

Expertise:

The Speciality Agriculture division consists of market-leading

brands in the supply of nutritional supplements to beef,

dairy, sheep, and equine customers predominantly in the UK,

Europe, North America and New Zealand, with manufacturing

assets in the UK, Germany and the United States.

Growth:

The Speciality Agriculture division has considerable potential

for growth in sales through increased market penetration in

North America, Europe and New Zealand, product extension

in its key markets and growth of equine product sales in all

markets. Current trends in ruminant agriculture, particularly

low-input grass and pasture-based management systems,

provide opportunities for the division’s brands, as they are

proven to be effective in more extensive grass-based nutrition

programmes rather than intensive, confined housing and

total-mixed-ration regimes.

These trends arise due to the increasing cost of cereals, soya

and oilseeds required for total-mixed-rations, consumer

demands for grass-fed and free-range food, and the scarcity

of labour in livestock agriculture. To achieve sales growth, the

Board plans to make careful investments in manufacturing

facility upgrades and expansion, in the UK and internationally.

Additionally, investment in product development and

strengthened commercial capabilities will further support

the Board’s growth ambitions for the Speciality Agriculture

division.

Development:

The Speciality Agriculture division provides opportunities for

extension in the products and services supplied to existing

customers and potential customers of existing products,

enabling growth in markets where the division is already well

established. The four trends in ruminant agriculture identified

on page 10 will be addressed by technical solutions and

new management systems and supported by our nutritional

supplement products.

The division continues to explore opportunities for investment

and acquisition to build on its existing capabilities to develop

a group of businesses that will address the evolving needs of

professional livestock farmers in the future.

Expertise:

The Engineering division consists of long-established,

specialist companies with expertise and strong reputations

primarily in the nuclear energy and oil and gas sectors,

providing market-leading capabilities in robotics, high-

specification fabrication and bespoke engineering solutions.

Growth:

The Board believes these capabilities will enable growth in

revenues and profitability over the next three to five years,

as government and private sector support for new nuclear

power generation capacity, additional nuclear assets and

ongoing decommissioning of older nuclear systems will

provide substantial funding in markets that include the UK,

the United States, Japan, Europe and South-East Asia.

The Engineering division will focus on its core competencies

and will invest in developing customer relationships where

cross-selling provides additional opportunities.

Development:

The Board will support organic growth and development

in the Engineering division to grow shareholder value in the

future. The Engineering division has a strong leadership team

in place, a growing order book and an active pipeline of pre-

qualification work and tenders. Growth in the Engineering

division will require increased liquidity and an increase in

skilled employees to provide the capacity for larger and

longer-term contracts that the division is being invited to bid

for by existing and potential new customers.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

GROUP PERFORMANCE REVIEW

Health & Safety

Health & Safety performance reflects

increased awareness of risks, and

changing habits. Reportable Incidents

declined from 9 in 2020 to 4 in each

of 2021 and 2022. Lost Time Incidents

reduced from 19 in 2020 to 9 in 2021 to

4 in 2022. Leading indicators, such as

identification of hazards and reporting

near misses, reflect a greater awareness

of safety-related issues and more

confidence in reporting them as a

preventative measure.

Operational review for Continuing

Operations

The

Speciality Agriculture

businesses

have patented and well-recognised

brands, differentiated products and strong

customer relationships. Sales teams

worked hard throughout the year to bring

sales prices in line with extraordinary

raw material cost increases, enabling the

businesses to finish FY22 ahead of initial

expectations. Adjusted operating profit

for the division, at £9.2m, was marginally

below prior year (2021: £9.5m), whilst

revenues rose 14.0%, to £78.1m (2021:

£68.5m), as inflation in raw material costs

was necessarily passed on to the market.

The

Engineering

division reported a

strong recovery in adjusted operating

profit during the year, up 38.2% to £5.4m,

as a result of closer control of projects and

improving utilisation as the interruptions of

COVID-19 receded (2021 restated: £3.9m).

Adjusted operating margins rose to 11.6%

(2021 restated: 7.5%) on lower revenues

of £46.2m (2021 restated: £51.9m). Several

important projects were awarded in the

nuclear industry, reflecting the specialist

expertise of the companies in the

Engineering division, with the order book

closing the year at £40.6m, 2.4% ahead of

the prior year (2021 restated: £39.7m).

Central costs

In 2022, central costs at adjusted

operating profit level were £2.6m, slightly

higher than the prior year (2021: £2.3m).

With the changing structure of the

Group’s businesses, central costs will be

reviewed to ensure that they remain in

line with the future strategy.

Discontinued Operations

Agricultural Supplies

coped with

an extraordinary increase in costs

affecting a large volume of raw

material and commodities, reflected in

a 21.0% increase in revenues as these

costs were necessarily passed on to

customers. Adjusted operating profit for

the division grew 6.8% to £6.9m, albeit

with a substantial increase in working

capital. Trading in the year was mixed,

with stronger performances in the retail

and machinery businesses partially

offsetting reduced trading volumes in

fuels and feeds. Whilst livestock and milk

prices remained high, rising input costs

presented a significant challenge for

farmers. In the second half, the business

saw a reduction in beef and sheep feed

volumes as customers extended grazing

to limit cash expenditure.

On 31 August 2022, the Group announced

an agreement to dispose of all its interests

in the Agricultural Supplies division

to Edward Billington & Son Limited.

Following shareholder approval at a

general meeting which took place on

19 September 2022, the disposal was

completed on 26 October 2022.

Peter Page

Chief Executive Oﬃcer

22 March 2023

Overview

The Group performed well during the ﬁnancial year ended

3 September 2022 (“FY22”). Continuing operations, comprising

Speciality Agriculture and Engineering, delivered 8.0% growth

in adjusted proﬁt before tax compared to the prior year, from

a 3.3% revenue increase. FY22 was challenging due to supply

chain delays, raw material cost increases and energy price

rises, as the eﬀects of the Covid pandemic receded and

global business activity started to return to higher levels.

CREATING VALUE

THROUGH OUR OPERATIONS

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Strategic report

Financial statements

Shareholder information

Governance

Strategic report

USA

Adjusted operating profit in the US feed

blocks business held up well, due to

strong margin discipline and a focus on

addressing the time lag between cost

increases and sales. At the start of the

year, a significant increase in raw material

costs impacted margins, due to timing

differences in the receipt of orders,

manufacturing, and deliveries, but was

promptly addressed in the first quarter

to bring costs and pricing into line for the

full year. US feed block volumes were

lower than prior year, adversely affected

by drought, in several regions of the

market, causing a reduction in the number

of livestock out on grass, an impact

that lasted throughout the year and will

continue into 2023. Market forecasts are

for a recovery in stock numbers in the

medium-term, once rainfall increases and

forage availability improves.

For 2023, the US blocks management

team has been expanded with the

appointment of a Vice-President of Sales

and Marketing to lead activity for revenue

growth, that will include recruitment of

additional distributors, and providing

strong product support. HorsLic

the equine feed block, is a priority for

additional volumes, with a recently

appointed account manager and new

distributor in Texas enabling the business

to increase activity in the region with the

largest horse population in the USA.

Substantial movements in the relative

prices of canola and soy meal adversely

impacted the bypass protein business

in the north-eastern US. New supply

contracts and opportunities for product

diversification are being developed.

UK and Europe

Strong farmgate prices for dairy, beef

and lamb in the UK in 2022 enabled the

market to absorb price increases for

feed blocks, as the business passed on

substantial rises in raw material costs.

Volumes were stable, with the UK slightly

ahead of the prior year, whilst Europe was

marginally behind. Escalating costs and

shortages of key raw materials impacted

margins in the first half of the year but

these were back on track by the year

end. The launch of the new Crystalyx

dairy range in 2021 was well received

and remains an opportunity for growth.

A period of 3-shift working at the UK

manufacturing operation helped maintain

inventories.

Bolus volumes were stable, with

strong demand in the UK. Ireland is a

significant market for grass-fed stock,

and now accounts for a third of bolus

revenues. Increases in raw material costs,

from copper to packaging, impacted

margins in view of the need to maintain

competitive prices. During 2022, all bolus

products were brought under one brand,

Tracesure

, which has been refreshed

in the USA, New Zealand and Europe, to

help extend our global reach.

New Zealand

Logistics issues, due to reduced

global freight capacity after Covid, and

associated increases in shipping costs

impacted short-term profitability of the

business in New Zealand, but sales

volumes of both feed blocks and boluses

were stable. A full evaluation of the

long-term opportunity for growth through

investment will be completed in 2023.

Outlook

The Speciality Agriculture division

enables farmers to optimise forage

and grass-based nutrition systems,

supporting their objectives to raise

healthy animals efficiently, in a welfare

friendly and environmentally responsible

way, by providing appropriate nutritional

supplements that are released in the

required quantities at the right time.

Investment in product development will

ensure a pipeline for future growth.

In 2022, the Speciality Agriculture division

responded well to supply chain and

market challenges, maintaining margins

and ensuring product availability for

customers. In 2023, costs of energy and

raw materials, whilst still much higher than

in previous years, are plateauing.

Overview

Performance in 2022 was impacted by the sharp rises

in raw material costs and our Speciality Agriculture

businesses worked hard to bring prices and costs in line,

ending the year ahead of initial expectations. Adjusted

operating proﬁt for the division was £9.2m, marginally

behind last year (2021: £9.5m), and revenues rose by 14.0%

to £78.1m reﬂecting the inﬂationary pressures experienced

during the period (2021: £68.5m).

SPECIALITY

AGRICULTURE

DIVISIONAL REVIEWS

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Fabrication and Precision

Engineering

The specialist fabrication business

generated a strong result in 2022, due to

a positive flow of orders from the nuclear

reprocessing and decommissioning

sector, together with enhanced utilisation.

In September 2022, the specialist

fabrication business was accredited to the

joint supply chain accreditation register

(JOSCAR) which enables the business to

bid for work in the UK defence, aerospace

and security sectors.

The precision engineering business

performed well, ahead of the prior year,

rebuilding the order book following

disruption during Covid, due to its close

involvement with the oil and gas sector,

which has now recovered strongly.

The business is currently focusing on

enhanced operating efficiencies and

new business opportunities to support

growth in profitability. In late 2022, the

precision engineering business achieved

the demanding Fit For Nuclear quality

accreditation.

To ensure availability of relevant skills in

the future, the fabrication and precision

engineering businesses have well-

established apprentice programmes,

with an intake of nine in 2022. Bendalls

Engineering opened a dedicated Skills

Academy in Carlisle, in conjunction with

Lakes College, that is open to other

manufacturers in the area. The Skills

Academy is home to the apprentice

programmes and provides short courses

to upskill employees for specific projects.

Robotics

The Global Robotics business performed

in line with expectations, maintaining a

strong presence in the nuclear market.

New contract wins include the first

supply of an A1000 power manipulator in

the USA to an internationally renowned

research laboratory, the first order for

an A100 master slave manipulator to the

US Navy, and powered manipulators

to Posiva Solutions in Finland for the

world’s first final deep storage solution

for nuclear waste.

The HWM double arm Telbot was

selected by RACE, (part of the UK

Atomic Energy Authority focussed on

remote applications in challenging

environments) for the UK-Japanese jointly

funded LongOps project to develop

capabilities for removing and handling

waste debris at damaged nuclear sites

such as Fukushima. The European

Spallation Source (ESS) in Sweden, one

of the largest science and technology

infrastructure projects in Europe, ordered

a double arm robotic manipulator for the

world’s most advanced neutron source.

Wälischmiller is the leading specialist

robotics supplier in the civil nuclear

market, with a full range of manipulators,

including the recently launched A150, a

lightweight, highly flexible, small-scale

telescopic manipulator for isotopes,

and the unique 100% stainless steel

manipulator, both designed for the

growing nuclear medicine market.

Engineering Solutions

The Engineering Solutions business in

the USA provides unique services in

the maintenance of nuclear facilities

worldwide. It performed well in 2022,

ahead of the Board’s expectations. The

business completed two MSIP

projects

in the USA during FY22, with another

in Slovenia closing out after year end.

Further MSIP

projects are progressing

in 2023.

During 2022, the business achieved

1,000,000 working hours (equating to

almost 12 years) without a lost-time injury,

a significant milestone as we continue to

focus on safety.

Performance in the UK Engineering

Solutions business was impacted by

delays and higher costs than expected

on one long-running defence contract.

All plant has been successfully installed

and commissioned and final handover

was completed in early 2023.

In November 2022, the US Government’s

Department of Energy announced the

award of a multimillion-dollar research

contract to NuVision Engineering, to

develop processes for recycling nuclear

waste, opening up the prospect of

further unique capabilities and business

opportunities in the future.

Outlook

The engineering companies are well

regarded in the growing nuclear market,

as governments seek to improve energy

security and reduce dependence on

fossil fuels. Each business is developing

a pipeline of long and short-term projects

to strengthen order books for 2023

and beyond.

Overview

The Engineering division reported a strong recovery

in adjusted operating proﬁt during the year, up 38.2%

to £5.4m, as a result of closer control of projects and

improving utilisation (2021 restated: £3.9m). Adjusted

operating margins rose to 11.6% ahead of last year’s 7.5%

(restated). Although revenues were lower at £46.2m (2021

restated: £51.9m), several important projects were won in

the nuclear industry, reﬂecting the specialist expertise of

the companies in the Engineering division, with the order

book closing the year at £40.6m, 2.4% ahead of the prior

year (2021 restated: £39.7m).

DIVISIONAL REVIEWS

continued

ENGINEERING

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

On 31 August 2022, the Group announced

an agreement to dispose of all its interests

in the Agricultural Supplies division

to Edward Billington & Son Limited.

Following shareholder approval at a

general meeting which took place on

19 September 2022, the disposal was

completed on 26 October 2022.

Trading in the year was mixed, with

stronger performances in the retail

and machinery businesses partially

offsetting reduced trading volumes in

fuels and feeds. Whilst livestock and milk

prices remained high, rising input costs

presented a significant challenge for

farmers. In the second half, the business

saw a reduction in beef and sheep feed

volumes as customers extended grazing

to limit cash expenditure.

AGRICULTURAL

SUPPLIES

Overview

Agricultural Supplies coped with an extraordinary increase

in costs aﬀecting a large volume of raw materials and

commodities, reﬂected in a 21.0% increase in revenues

as these costs were necessarily passed on to customers.

Adjusted operating proﬁt for the division grew 6.8% to

£6.9m, albeit with a substantial increase in working capital.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Adjusted Group operating

profit of £11.9m is up 7.5%

on last year.”

David White

Chief Financial Officer

Continuing operations

Following completion of the disposal

of the Agricultural Supplies division,

that segment has been treated as

discontinued in this year’s results. All

commentary below relates solely to

continuing operations, save where

otherwise stated. The impact of

the disposal, which completed on

26 October 2022, is included in note 9

to the financial statements.

Discontinued operations

The results of discontinued operations

were a loss of £2.2m reflecting

profits after tax in the year of £4.0m

(2021 restated: £3.8m) and a loss on

measurement to fair value, less costs to

sell, of £6.2m. The loss recognised on

the measurement to fair value, less costs

to sell includes £2.6m in respect of the

non-controlling interest’s share of the

measurement impairment. Further details

for discontinued operations can be found

in note 9.

Operating proﬁt

Adjusted Group operating profit of £11.9m

is up 7.5% on last year (2021 restated:

£11.1m). As a percentage of revenues, the

Group’s adjusted operating margin is 9.6%

(2021 restated: 9.2%). Reported operating

profit was £8.2m (2021 restated: £8.2m).

Adjusted operating profit per division and

as a percentage of divisional revenues are

as follows:

FINANCIAL REVIEW

The Group’s share of the adjusted post-

tax result in its joint ventures was £0.8m,

down 15.2% (2021: £1.0m). The Group’s

share of the adjusted post-tax result in its

associate is included within discontinued

operations as part of the disposal group.

Adjusting items

The Group reported a charge for adjusting

items of £3.7m (2021: £2.9m). This year’s

charge included £1.3m in relation to

contingent consideration on historic

acquisitions and £0.7m arising on the

accounting for the acquisition of the

remaining 50% of Afgritech, offset by

amortisation of acquired intangibles of

£0.9m, strategic review costs of £0.5m,

ERP system implementation costs of

£0.1m and goodwill impairment of £4.2m

(further details are set out in note 5).

Impairment of goodwill

During the year end accounting and

statutory audit process, the Group

conducts impairment reviews of goodwill

associated with previous acquisitions.

These use projected cash flows for

each business, updated for current

management forecasts, interest rates

and associated external market data, in

accordance with International Financial

Reporting Standards (IFRS). Economic

conditions at the year end required

higher discount rates than in prior years.

For FY22, this results in a non-cash

impairment charge of £4.2m against

goodwill paid for two acquisitions in the

Engineering division. Chirton Engineering

Limited, acquired in April 2014, operates

in the highly competitive oil and gas

sector. Following a previous downturn in

the sector, in 2017 an impairment charge

against goodwill of £1.7m was taken and

the Board has decided to write down

the remaining goodwill of £2.5 million in

full, based on the estimated recoverable

amount. In October 2016, Wälischmiller

GmbH, the Group’s international robotics

business, acquired Staber GmbH, a key

components supplier that had developed

strategically important Intellectual

Property. Much of the purchase price of

£7.0 million was valued as goodwill, and in

Current and future development

and performance

The key features of the year have been

the disposal of the Agricultural Supplies

division, and having to respond to rapidly

rising costs in our remaining two divisions.

Alternative performance measures

This Financial Review and other parts

of the Strategic Report include both

statutory and alternative performance

measures (“APMs”). The principal APMs

measure profitability excluding items

regarded by the Directors as adjusting

items (note 5). These APMs, generally

referred to as ‘adjusted’ measures,

are used in the management and

measurement of business performance

on a day-to-day basis and are also used

in assessing performance under the

Group’s incentive plans. A glossary and

reconciliation of APMs is included towards

the end of the report and accounts on

pages 175 to 177.

Adjusted* operating proﬁt 2022

Adjusted operating profit

2022

£m

2022

2021

£m

2021

Speciality Agriculture

9.2

11.8

9.5

13.9

Engineering

5.4

11.6

3.9

7.5

Central

(2.6)

(2.3)

Total

11.9

11.1

Segmental reported proﬁt ﬁgures can be found in note 2 to the ﬁnancial statements.

Restated

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

view of current economic conditions this

has been written down by £1.7m. As these

items do not relate to the underlying

trading performance they have been

treated as adjusting items (note 5).

Prior Year Restatements

The Financial Statements contain two

Prior Year Restatements to continuing

operations, both relating to revenue

recognition in the Engineering division.

The first case relates to the timing of

revenue recognition for a small number

of contracts with a single customer

in China, for which an adjustment to

correct the accounting treatment in the

previous year has been taken, specifically

regarding the contract not meeting IFRS15

requirements on rights to payment in

the event of termination of contract by

a customer. In the second case, these

arise following detailed review of the

interpretation of IFRS15 (Revenue from

Contracts with Customers), with reference

to the patented Mechanical Stress

Improvement Process (MSIP

) technology

that is deployed over a multi-year time

frame and usually involves two distinct

phases of work. Grant Thornton, as new

auditor, challenged the long-standing

treatment of revenue recognition under

these contracts as being recognised

over two performance obligations rather

than one. Whilst the arguments for either

treatment are finely balanced, the Board

have decided that it should account for

the contracts as having one rather than

two performance obligations. As required

by accounting standards the impact of the

change has been reflected on previous

years’ results as a prior year restatement.

In both cases, the total revenue is

unchanged, but timing of the recognition

of revenue is amended. The impact of the

change in the current year results was a

reduction of £41,000 to reported profit

before taxation. Full details of the impact

of the changes on previous years’ results

are set out in note 39 to the financial

statements.

The Board has also made two prior year

restatements to discontinued operations,

both related to revenue recognition.

Firstly, in prior years the Group had

incorrectly identified itself as acting as

a principal when recognising revenue

related to fertiliser sales, made through

one specific supplier. A review of this

transaction highlighted that the Group was

acting as an agent, rather than principal,

under IFRS15 guidance, which means the

net proceeds from the transaction, rather

than gross sales, should be recognised

as revenue. A correction has been made

to reduce both revenue and cost of sales

by £10.5m in the year. A further correction

to reduce both revenue and cost of sales

by £1.6m has also been made in respect

of intra-company transactions which had

not been netted off in prior years. In both

cases there is no impact on profit. Full

details of the impact of the changes on

the previous years’ results are set out in

note 9 to the financial statements.

Finance costs

Net finance costs of £0.7m were broadly

unchanged from the prior year. Interest

cover was 12.4 times based on reported

profit (17.9 times on an adjusted profit

basis) compared to 12.3 times in 2021.

Proﬁt before tax

Adjusted profit before tax at £11.2m was

8.0% higher than in the previous year (2021

restated: £10.4m). Reported profit before

taxation was £7.6m (2021 restated: £7.5m).

Taxation

The Group’s effective tax charge on profit

from activities after net finance costs

and excluding results from associate

and joint ventures, which are recorded

after tax, was 22.7% (2021 restated: 27.3%).

The reduction reflects the tax effect of

adjusting items including the impact to

the prior year tax charge in respect of the

UK deferred tax rate increase from 19%

to 25%.

Earnings per share

The profit attributable to the equity

holders of the Company in respect of

continuing operations amounted to £6.0m

(2021 restated: £5.7m), and basic earnings

per share was 6.4p (2021 restated: 6.2p),

an increase of 3.2%.

Adjusted earnings per share of 10.0p

(2021 restated: 10.1p) is calculated by

dividing the adjusted profit attributable

to equity holders for the year in respect

of continuing operations by the weighted

average number of shares in issue during

the year. The decrease of 1.0% reflects a

higher effective tax rate after excluding the

effects of tax related to adjusting items.

Cash ﬂow and net debt

Cash from operating activities of £2.9m

was generated in the year, representing

a decrease of 82.2% on £16.0m in the

previous year. This was driven by outflows

in relation to working capital of £8.7m

primarily linked to raw materials price

inflation and strategically higher levels

of inventories in Speciality Agriculture

versus an inflow in the prior year (restated)

of £5.3m.

Headroom against existing facilities

was £26.1m at the year end (continuing

operations: £11.1m). The Group’s main

banking facilities were extended in June

2022 and now expire on 20 December 2024.

The previously held invoice discounting

facility was solely for the Agricultural

Supplies division and is no longer in place

following the disposal on 26 October 2022.

Cash flow and net debt

2022

£m

2021*

£m

Cash flow from

operating activities

2.9

16.0

Net debt

(excluding leases)

14.0

10.0

2021 ﬁgures include discontinued operations

as the balance sheet has not been restated to

exclude net debt in respect of discontinued

operations.

Pensions

The Group operates its current pension

arrangements on a defined benefit

and defined contribution basis. The

defined benefit scheme is closed to new

members and closed to future accrual.

The scheme currently has 64 deferred

members and 216 current pensioners.

The valuation on an IAS 19 accounting

basis showed a surplus before the related

deferred tax liability in the scheme at

3 September 2022 of £6.8m (2021: £9.4m).

This is after an actuarial loss of £2.6m

(2021: gain of £1.2m) which has been

recognised in the Consolidated Statement

of Comprehensive Income. Following a

review of the Scheme rules the Directors

believe there is an unconditional right to a

refund of surplus from the defined benefit

pension plan in the event there are

surplus assets during the lifetime of the

plan or when it winds up. The Group and

Company have therefore recognised the

surplus in full on the balance sheet.

David White

Chief Financial Oﬃcer

22 March 2023

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

1,094

2021: 1,165

2 Figure includes the

Agricultural Supplies

division. Continuing

operations only: 520.5 days.

2022

2021

2020

1,094

1,165

823

+3.3%

2021 (restated)

: +6.0%

£2.9m

2021 (restated)

: £16.0m

+6.0%

+3.3%

-3.8%

2022

2021 (restated)

2020 (restated)

£2.9m

£16.0m

£7.0m

2021 (restated)

2022

KEY PERFORMANCE INDICATORS

Financial KPIs

Non-financial KPIs

Operating cash flow

(Continuing operations)

Number of training

days delivered

Sales growth

(Continuing operations)

Revenues are monitored by the Board,

although because of the nature of our

businesses they are not, in isolation, an indicator

of performance. Our volume-driven businesses

are all subject to significant raw material price

variations, the majority of which are passed

through to selling prices. Hence increasing

raw material prices are expected to lead to

higher revenues. The increase in the current

year is reflective of increased selling prices,

partially offset by a lower level of revenue in

the Engineering division.

We are committed to providing a variety of

development opportunities for our people.

We continue to provide face-to-face training

across the Group which is complemented by

online training modules.

We monitor our growth and health as a business, and our performance

against strategy, using the following key performance indicators.

This KPI indicates how much cash is available

for the Group to utilise for capital investment,

paying dividends, or financing/repaying

borrowings. The decrease year on year

primarily reflects increased working capital

requirements across the Group versus a year-

on-year reduction in FY21.

2020 (restated)

See note 39 for details of the prior year

restatement in relation to the recognition

of revenue from customer contracts

within the Engineering division.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

2022

2021

2020

1.89

2.03

3.76

2022

2021

2020

18.4

22.3

25.1

1.89

2021: 2.03

Total injuries/average

headcount x 100,000

3 Figure includes the

Agricultural Supplies

division. Continuing

operations only: 1.82.

18.4

2021: 22.3

Tonnes CO

e/£m turnover

4 Figure includes the

Agricultural Supplies

division. Continuing

operations only: 69.6 Tonnes

e/£m turnover.

This measures the Group’s leverage

and reflects its ability to service its

debt levels. The increase in the year

(continuing operations only with net

debt excluding net debt held for sale)

is due to the increased borrowings

required for working capital purposes.

23.8%

2021 (restated)

:25.9%

12.6%

2021 (restated)

: 12.3%

9.6%

2021 (restated)

: 9.2%

0.93

2021 (restated)

: 0.48

2022

2021 (restated)

2020 (restated)

12.6%

12.3%

10.8%

0.94

2021 (restated)

2020 (restated)

9.2%

8.6%

2022

2021 (restated)

2020 (restated)

0.93

0.48

25.9%

23.8%

9.6%

26.6%

2021 (restated)

2022

2020 (restated)

Gross margin is a reflection on how

successfully we have managed raw

material price volatility in our markets,

together with how successful we have

been in pricing in other areas of our

business in competitive markets. Our

gross margin reduced slightly to 23.8%

in the year, largely reflecting the lag in

passing on price rises to customers in

Agricultural markets.

Return on net assets was 12.6% this

year (continuing operations only

with net assets excluding assets and

liabilities held for sale), a slight increase

on the prior year.

We ensure that information relating

to all injuries and potential incidents,

no matter how serious, is properly

captured and reported to enable us

to continually improve the health and

safety of our people whilst at work.

The further reduction seen in the year

is again encouraging as we continue to

focus on employee safety.

The underlying Group operating

margin reflects the gross margin

achieved, but also indicates the

efficiency of our operations from

both an administrative and

distribution perspective.

We carefully monitor our carbon

emissions and are developing a

strategy to ensure that these

continue to reduce as we work

towards achieving net zero status

in the long term.

Gross margin

(Continuing operations)

Return on

net assets

Net debt to

adjusted EBITDA

Injury incident

frequency rate

Adjusted Group

operating margin

(Continuing operations)

e intensity metric

Prior year ﬁgures have been

restated to reﬂect the revised

basis on which data has been

calculated in the current year.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

PRINCIPAL RISKS AND UNCERTAINTIES

Our success as a Group depends upon our ability to

identify and maximise the opportunities generated by our

businesses and the markets in which we operate. In doing

so, we continue to develop an embedded approach

to risk management which puts risk and opportunity

assessment at the heart of our strategy.

Our approach to risk management

The Group has in place a structured

approach to risk management which

ensures a systematic and planned

approach to identifying, assessing,

mitigating, and monitoring risks.

The Board has overall responsibility

for the risk management framework.

The Board has established a clear

organisational structure with well-defined

accountabilities for the principal risks the

Group faces in the short, medium, and

long term, across all divisions together

with emerging risks. This is overseen by

the Executive Directors, who have an

active responsibility for focusing on those

areas of risk.

Identifying risks is a continual process and

risk registers are in place at both a Group

and individual business level. A dedicated

risk management IT system is in place to

facilitate this process. A risk scoring matrix

is integrated into this system to ensure

that risks are evaluated on a consistent

basis across the Group, which considers

likelihood of occurrence and impact

based on a range of criteria, including

profit, cash flow, and reputational

damage.

The Board reviews these risks and

associated controls and action plans on

a quarterly basis.

Risk appetite

Risk appetite is defined as the nature

and extent of risks that a business will

accept in order to achieve its operational

and strategic objectives. The Board

believes that in operating the Group’s

businesses it is critical to strike the right

balance between an appropriate and

comprehensive control environment and

encouraging entrepreneurial behaviours

required to seek out and develop

the business.

However well this is struck, the business

will always be subject to a number of

risks and uncertainties. The Board’s

approach is to minimise significant risks

that may impact the Group’s delivery of its

strategic objectives. Decisions that could

have a material impact on the Group

are reviewed as and when required at

Board meetings.

Board’s assessment of compliance

with the risk management

framework

The Board carries out a robust

assessment of the principal risks quarterly

together with any emerging risks. This

is supported by the Audit Committee

which undertakes an annual review of

the risk management system. This review

assesses the system of internal controls

and provides assurance over the Group’s

risk management framework, primarily

through the in-house Internal Audit

function. During the year, no significant

failings or weaknesses in the system

of internal control or risk management

framework were reported by Internal

Audit, and the Audit Committee’s annual

review concluded that key internal

controls were appropriate and that risks

are adequately identified and managed.

Principal risk factors

Our business is subject to a variety of

risks and uncertainties. On the following

pages we have identified the risks we

regard as most significant to our Group

and performance at this time. These have

been revisited in light of the disposal of

the Agricultural Supplies division, which

completed on 26 October 2022, and

the absolute level of risk reviewed. The

outcome of this review is reflected in the

tables on the following pages. The Board

however recognises that following the

disposal the relative risk to the Group

may in some cases be higher. These

may also change as the Group develops

in the future. We have commented on

mitigating actions that we believe help

us manage these risks. However, we

may not be successful in deploying

some or all of these mitigating actions. In

circumstances where these risks occur

or are not successfully mitigated, our

cash flow, operating results, financial

position, business and reputation could be

materially adversely affected.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Strategic report

Financial statements

Shareholder information

Governance

Risk

Description of the risk

What we are doing to manage the risk

Customer

Demand

Changes in customer demand, be that retail,

commercial or government customers, caused by

economic factors could result in a fall in demand for the

Group’s product offering, resulting in a significant loss

in revenue.

The Group operates in diverse worldwide markets,

which provides resilience for the Group against

difficulties faced by any one market or economy. The

businesses are managed flexibly to react to changing

demands in their own sector.

Supply Chain

▲

The Group may be affected by the unavailability of

critical raw materials or components. Margins may

also be affected by fluctuations in prices due to

inflationary factors.

In some cases, due to the basis for pricing in sales

contracts, or due to competitive markets, we may not

be able to pass on to customers the full amount of raw

material or component price increases, or higher labour,

energy, freight or other operating costs.

The Group has a number of mitigants in place to

manage this risk. These include:

•

strategic long-term relationships with suppliers;

•

multiple-source suppliers for key ingredients or

components;

•

raw material and forward energy purchasing policies

where possible to provide security of supply and

cost; and

•

close monitoring of contract execution to ensure

supply is within agreed terms.

Acquisitions

The Group is exposed to the possibility of acquiring a

company based on inaccurate information, unrealistic

synergies and financial benefits, or an inappropriate

deal structure.

Failure to effectively integrate acquired businesses

could also undermine any expected synergies.

A thorough and careful due diligence process

is undertaken, utilising relevant skilled internal

personnel, as well as external expertise when required.

Individual business unit and Group resource is used

to analyse potential synergies and financial benefits.

Consideration is given to the composition and skills of

the management team of the acquired company and

support and relevant training is provided by Group

personnel to ensure a successful integration.

The deal structure and proposed financing arrangements

are determined on a case-by-case basis.

Post-acquisition reviews are also undertaken to identify

any areas for improvement in future transactions.

IT and Cyber-

Security

The Group relies on information technology and key

systems to support the business. In common with other

organisations, the Group undertakes development

of its IT systems and is susceptible to cyber-attacks

with the risk of financial loss and threat to the overall

confidentiality and availability of data in systems.

The Group has a comprehensive suite of IT security

solutions in place, which are reviewed and tested by

specialist third parties where appropriate. These have

been further updated and improved during the course

of 2021/22.

From a system development perspective, major

projects are subject to appropriate project governance

arrangements.

Reliance on Key

Customers

Some businesses within the Group have a significant

proportion of their revenue generated from a small

number of key customers. A loss of a number of these

customers could adversely affect the performance of a

division and in turn the Group.

The businesses have established good long-term

relationships with key customers to ensure that demands

and expectations are met. The Group continues to invest

in its businesses to ensure that they are able to satisfy

customer needs and are market leaders.

The Group is continually working on identifying new

markets, products, and opportunities to expand the

customer base of all its businesses.

▲

▼

Change in risk (increase/decrease/no change)

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

▲

▼

Change in risk (increase/decrease/no change)

Risk

Description of the risk

What we are doing to manage the risk

Strategic

Partners

▼

The Group has a number of strategic business partners.

A successful working relationship with these partners is

paramount to those businesses’ success.

Close working relationships are maintained with all

the Group’s strategic partners. This includes regular

meetings, both formally and informally, and close

involvement in the setting and monitoring of strategy

for those businesses. In addition, arrangements

are appropriately documented in contracts and

legal agreements.

People

The knowledge, experience and skills of our employees

are central to the success of the Group.

We must attract, integrate, and retain the talent

required to fulfil our strategic growth ambitions.

Inability to retain key knowledge and adequately plan

for succession could have a negative impact on the

Group’s performance.

The Group has remuneration policies designed to attract

and retain employees with the ability and experience to

execute the Group’s strategy.

Management development programmes are in place,

alongside detailed succession planning across the

Group. Succession plans for senior management

and other key roles are reviewed by the Nomination

Committee regularly.

The Group undertakes a range of employee engagement

initiatives with a view to maintaining positive workplace

cultures and good working environments.

Treasury

We are exposed to a variety of financial risks in relation

to treasury. The Group must ensure that it has an

adequate level of facilities to provide sufficient funding

to operate its businesses and to develop growth

opportunities.

Changes to the value of currencies can fluctuate

widely and could have a significant impact on a

division’s results. Furthermore, because the Group

has international businesses, it is subject to exchange

risks in the translation of the underlying net assets and

earnings of its foreign subsidiaries and joint ventures.

The levels of facilities are regularly reviewed by the

Chief Financial Officer, and these are also regularly

reported to and discussed by the Board.

The Group operates a treasury policy of hedging all

significant transactional currency exposures.

To manage the risk of interest rate changes, we maintain

a mix of fixed rate debt, primarily finance leases, and

floating rate debt. These levels are monitored and

assessed against forecast changes in interest rates and

forward guidance from interest rate setting authorities.

Emerging risks

Climate

Change

Operating in the Agriculture sector, climate change,

raw material sustainability and regulatory requirements

can have an impact on the performance of the Group.

Such impact can include the cost of raw materials and

the sustainability of raw material supplies, farming and

manufacturing operations, and customer demand for

the Group’s products.

The impact of climate change has also been considered

in our Engineering business where our precision

engineering business currently operates in the oil and

gas sector, a sector in which there are longer-term risks

as a result of climate change.

The Group is geographically and operationally diverse

and has a focus on international growth markets.

The Group carefully manages its procurement of raw

materials, utilising ethically managed and sustainable

sources, and invests in the development of products

which are tailored to different farming conditions, and

which incorporate alternative ingredients for example

reducing reliance on imported soya for feed products.

In light of longer-term risks in the oil and gas sector, we

have been cautious in estimating the business’ future

cash flows when assessing the level of risk of goodwill

impairment.

PRINCIPAL RISKS AND UNCERTAINTIES

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Strategic report

Financial statements

Shareholder information

Governance

VIABILITY STATEMENT

The Group is very diverse both

operationally and geographically. In the

last 12 months, the Group undertook a

strategic review and its ongoing strategy,

following the disposal of the Agricultural

Supplies division, is subject to monitoring

and development as described below.

Following the disposal of the Agricultural

Supplies division the Group is in a net

cash position. To finance its future growth

plans, it has retained a combination of

bank facilities and leasing arrangements

secured on particular assets. The bank

facilities have a range of maturity/renewal

dates, some of which fall within the

three-year period covered by the viability

review. In undertaking this assessment, it

has been assumed that the facilities are

renewed as they fall due for review on the

same terms as the existing agreements.

The Group’s focus is particularly on

developing the Speciality Agriculture

division because of the opportunities

for international expansion and product

development, and its Engineering

division because of the global expansion

opportunities in the nuclear sector and

adjacent markets.

The Group’s prospects are assessed

primarily through its strategic planning

process. This process is typically led by

the Chief Executive and covers all aspects

of the Group. In FY22 the process was

led by the Executive Chair. The Board

participates fully in the annual process

through an annual strategy day, detailed

strategic presentations on all areas of

the business by the business leaders

throughout the year, and an annual half-

year strategic update. Part of the Board’s

role is to consider whether the plan

continues to take appropriate account of

the changing external environment.

The output of the strategic planning

process is a set of Group strategic

objectives and a number of strategic

priorities for the forthcoming financial

year. The latest updates to the strategic

plan were finalised in August 2022

following this year’s review. This

considered the Group’s current position

and the development of the business as

a whole over the next three years.

Given the nature of the business cycles

in both the Agriculture and Engineering

sectors, it was decided that a period of

three years to 31 August 2025 was the

most appropriate for the purpose of

a viability assessment. The Group has

prepared detailed financial forecasts

for the three-year period to 31 August

2025, so that two years and five months

remains at the time of approval of this

year’s Annual Report. The first year of

the financial forecasts form the Group’s

operating budget and is subject to a

re-forecast process at the half-year.

The second and third years are in a similar

level of detail.

The Group’s principal risks are set out on

pages 25 and 26. The principal risks table

summarises those matters that could

prevent the Group from delivering on its

strategy. A number of other aspects of the

principal risks – because of their nature or

potential impact – could also threaten the

Group’s ability to continue in business in

its current form if they were to occur. Of

the principal risks identified, the following

are the most important to the assessment

of the viability of the Group:

Customer Demand

Supply Chain

Strategic Partners

Reliance on Key Customers

From the detailed modelling undertaken,

it was determined that none of these risks,

either in isolation or in aggregation, would

compromise the Group’s viability.

Although the strategic plan reflects the

Directors’ best estimate of the future

prospects of the business, they have also

tested the potential impact on the Group

of a number of scenarios over and above

those included in the plan by quantifying

their financial impact and overlaying this

on the detailed financial forecasts in the

plan. These scenarios represent ‘severe

but plausible’ circumstances that the

Group could experience.

The scenarios tested included significant

reductions in profitability and associated

cash flows associated with the risks

highlighted above. The results of this

stress testing showed that, due to the

stability of the core business, the Group

would be able to withstand the impact

of these scenarios occurring over the

period of the financial forecasts by

making adjustments to its operating plans

within the normal course of business.

In the event that these measures were

insufficient, levels of capital expenditure

and dividend payments could be reduced

to ensure the Group’s viability.

The Group also considered a number of

scenarios that would represent serious

threats to its liquidity. None of these were

considered to be plausible. The Group’s

main banking facilities are due for renewal

by the end of 2024. Given the strength

of the balance sheet, and expected

performance, it has been assumed that

there would be no difficulty renewing

these, and any other required facilities, on

similar terms to those currently in place.

Based on their assessment of prospects

and viability above, the Directors confirm

that they have a reasonable expectation

that the Group will be able to continue

in operation and meet its liabilities as

they fall due over the three-year period

ending 31 August 2025. The Directors

also considered it appropriate to prepare

the financial statements on the going

concern basis, as explained in the

Basis of accounting and Going concern

paragraphs in the Principal Accounting

Policies on page 108 of the accounts.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

OUR PEOPLE

During this year of considerable

change for the Group, our proactive

communication with employees was a

key priority. We took on board feedback

from our second employee engagement

survey, placed more emphasis on

employee well-being and introduced

our first Group-wide Code of Ethics.

Attracting, retaining and developing

a skilled and engaged workforce is

critical to our success. We focus on the

development of our people which we

continually review to match the future

skills we need, with priorities aligned to

key areas of feedback in the survey.

At year end employee numbers were

1,221, slightly ahead of last year. This has

reduced to 647 following the disposal

of the Agricultural Supplies division on

26 October 2022, 65% of which are based

in the UK, and 35% based in the USA and

Germany. As Carr’s Group focusses on

the two retained divisions our people

continue to be central to the Group’s

future growth.

Employee engagement

This year’s survey was run by an

independent external provider, achieving

a response rate of 65%, an improvement

on the previous year. In comparison to the

previous year, results were slightly less

positive overall. Production pressures,

the implementation of new systems,

and changes in leadership were cited as

examples of challenges which colleagues

faced. Whilst some of these challenges

could be considered isolated events for

the particular year, we have nonetheless

taken action to address the results. A

Group Action Plan has been created with

initiatives to address specific points of

concern. The benefits which we offer

employees are continuously reviewed

and we have increased these in a

number of business units. In response

to feedback, line manager training has

been enhanced and a Code of Ethics

has been rolled out to set the standards

for internal behaviour. The Group Action

Plan is supported by local plans and

increased employee communications and

feedback opportunities. Our expertise

has been enhanced with the recruitment

of an experienced Group Environment

and Sustainability Manager to focus on

the Group’s environmental impact and

a Communications Manager to ensure

employees are kept up-to-date with

developments within the Group.

Employee well-being

The Employee Assistance Programme

introduced last year has been well-

received, with access to the helpline

increasing following a campaign at the

end of 2021. Mental health has been an

important focus as issues related to the

impact of COVID-19 such as loneliness,

prolonged illness and pressures of caring

for loved ones continue. We introduced a

programme of mental health awareness

training for 120 line managers early in

2022. This aimed to equip them with the

skills to recognise the possible issues and

signposted where to find professional

support for their staff.

In our German-based robotics business,

employees have been supported with the

introduction of Hansefit, a fitness platform,

allowing employees to access a range of

fitness clubs including swimming, yoga

and dancing. Launched earlier this year,

50% of our employees in that business

have joined already.

RESPONSIBLE BUSINESS REPORT

Attracting, retaining and

developing a skilled

and engaged workforce

is critical to our

success.”

OUR COMMITMENT TO BEING

A RESPONSIBLE BUSINESS

As our strategy continues to develop, we are

committed to achieving high standards in everything

we do. Our continued success is dependent on our

ability to inspire trust and earn the conﬁdence of our

stakeholders. To do this, we must act responsibly,

creating long-term, sustainable value.

H&S PROCESS

DRIVERS

H&S capability

and skills

development

Employee

behaviours,

engagement

& wellbeing

Physical

control of

the work

environment

Management

leadership and

accountability

Develop an organisation of

H&S leaders at all levels

Develop tools and increase our

technical expertise in H&S

Develop systems for H&S

continuous improvement

H&S Work

System

H&S PERFORMANCE & CULTURE GROWTH

H&S MANAGEMENT

CARR’S H&S PROCESS AND DRIVERS

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Strategic report

Financial statements

Shareholder information

Governance

Training and development

There has been significant uptake in the

use of our e-learning modules during

the year. Mandatory modules for all new

starters include cyber security, anti-

harassment and bullying, anti-bribery

and corruption, health & safety (H&S) and

GDPR, and these are complemented by a

series of modules which are available to

colleagues online.

In response to feedback from the

survey, we increased the focus on

improving managers’ performance

review capabilities, whether handling

performance development reviews,

disciplinary issues or coaching needs.

We continued our successful

management development and

leadership programme, running two

sessions this year and have provided

funding for employees who want to

undertake professional qualifications.

Our Engineering businesses in the UK

continue to offer apprenticeship schemes

providing on-the-job training alongside

college-based learning. In addition our

robotics business in Germany continues

to recruit two to three apprentices a year

who embark on a three-year programme

of technical school combined with

working on-site. Our apprentices and

trainees are not just within our operational

businesses, with two apprentices joining

the IT department, and recently a

member of the Legal Services team has

qualified as a Chartered Legal Executive.

Information on diversity and equal

opportunities, anti-bribery, conflicts of

interest and transparency, and human rights

can be found on pages 35 to 36.

HEALTH & SAFETY

Our H&S strategy, approach and culture

made significant progress this year, driven

by the Group H&S Director appointed

in 2021. The focus has been firmly on

physical control of the work environment,

ensuring that our sites are safe places

to work. Our Group H&S model links our

audit programme to H&S processes,

continuous improvement and clear KPIs.

Safety culture is a key feature of our

approach with a clear aim to embed a

culture of care, for example, incident

investigations have become learning

events and incident reviews are now

safety care events. We have installed

defibrillators at every site, with workers

trained to deliver this life-saving treatment

that increases the survival rate from a

cardiac arrest from 6% to 75%.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Health and Safety key metrics

To support our transition to

developing leading metrics, we

have taken the Kaizen continuous

improvement principles and

introduced a Safety Kaizen activity

into our workshops. This is being

rolled out across the Group and

made highly visual with physical

safety compliance boards to

increase workforce engagement.

So far this has been implemented

in the UK and will be rolled out to

Europe and the US in the coming

year. This is supported by a visual

felt leadership programme where

leaders walk the workplace,

engaging with the workforce and

getting a feel for risk reduction.

Incidents

FY2022

(continuing

Group only)

FY2022

FY2021

FY2020

Lost Time Incident Rate (LTIR)*100k

0.17

0.18

0.26

0.52

Total Recordable Incident Rate (TRIR)/

Million Hrs

1.66

1.8

1.77

3.4

All injuries

RIDDOR

Injury Incident Frequency Rate

1.82

1.89

2.03

3.76

Performance Metric

UOM

Target

Audit action close out

100

Hazard Conditions/Acts (2 per worker/annum)

Number

2/worker

Safety Committee Meetings/Events

Number

Training

100

Leadership Safety Inspections (ASI) completed

Number

Incident investigation close out

100

Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013.

RESPONSIBLE BUSINESS REPORT

continued

H&S auditing and continuous

improvement

The external H&S audit we commissioned

last year reported good standards

but noted that these were not applied

consistently across the Group. This

created a good base to develop our

H&S strategy. The H&S audit function

has been brought in-house under the

leadership of our Group H&S Director, to

ensure consistency across the business

and to build ownership at the operational

level. Every location has undergone an

H&S audit this year with the audit outputs

owned by each business who now have

an operational and business safety

improvement plan, local safety champions

and support from the centre to get the

resources they need to move forward.

During the year, we trialled a series

of safety standdown days at our feed

manufacturing plants in the US, where

production stopped to allow shared input

and learning from managers, employees

and suppliers. These have proved very

successful and will be promoted across

the Group in the coming year.

We expect every business in the Carr’s

Group to continue to make good progress

during the coming year.

H&S Performance

Despite a significant increase in activity as

we emerge from the COVID-19 pandemic,

we delivered our lowest ever Lost Time

Injury Rate (“LTIR”) of 0.18 (see table

below). RIDDOR

injuries were in line with

last year at four but fortunately none were

severe. The trends are shown in the table

below which also includes a new metric

measuring all incidents as total/million

hours worked on a 12-month rolling basis

– a measure that works on a global basis.

H&S Training and development

Mandatory H&S e-learning training for

all new recruits is now well embedded

in the business and this year we have

reintroduced some on-site learning, for

example working at height. Next year all

front-line managers will undertake safety

management training delivered through

a combination of physical and e-learning.

Our culture of care will be reinforced

through a series of development and

leadership workshops and build on

outcomes from our audit programme

which will now include culture and

best practice.

We continue to focus on giving staff

the tools and competence to deliver

high, sustainable safety levels, including

a new tool for incident learning being

introduced based on SCAT – Systematic

Cause Analysis Technique – and which

will be part of workshops and training

going forward.

Health and Safety

performance shows

a positive trend,

due to increased

awareness and

changing habits.”

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Strategic report

Financial statements

Shareholder information

Governance

OUR COMMUNITY

Working with our local communities is

an important aspect of our approach as

a responsible business, and the support

we provide takes a variety of forms

including charitable monetary donations,

fundraising, partnering initiatives and

voluntary work.

Many of our initiatives are centred around

Cumbria, where we are a significant

employer. Our fabrication business

works with local job centres in West

Cumbria and Carlisle in particular,

helping unemployed people with

their CVs, interviewing practice and

improving practical skills at the new

Carr’s Engineering Skills Academy which

has been established in association with

Lakes College in West Cumbria. This is

open to trainees outside the Carr’s Group

companies as well as building a pipeline

of skills specifically for the Group.

During the year our specialist fabrication

business has also been instrumental in

expanding the Cumbrian Manufacturing

Alliance (“CMA”) which is a collaboration

between Carr’s and West Cumberland

Engineering to deliver specialist services

to the nuclear decommissioning industry.

On the back of this success, the CMA is

being extended to other suppliers in the

local nuclear energy industry enabling

them to gain access to larger, longer

projects in this growing sector.

For the last four years our Speciality

Agriculture business has sponsored the

Scottish Association of Young Farmers

Clubs (“SAYFC”) flagship talent show

events across the central belt of Scotland,

in addition to sponsoring numerous

concerts, stock judging and sporting

events. We also sponsor the Royal Scottish

Agricultural Benevolent Institution (“RSABI”)

who provide practical, emotional and

financial support to people involved in the

Scottish agricultural industry, for example

donating products for a charity auction.

Carr’s Group continues to support the

Cumbria Community Foundation, part of

a national and international network of

community foundations which support

people and organisations that make a

difference to the most disadvantaged

people in the community.

We also support Carlisle Youth Zone,

which provides a safe, fun environment

for young people in the city. In these

challenging times, businesses in our

Engineering division have been helping

their communities by supporting local

food banks.

Sponsoring the Scottish Association

of Young Farmers talent show

Sponsoring the Royal Scottish

Agricultural Benevolent Institution

Supporting foodbanks

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

CASE STUDY: Investment in Training

Skills Academy

In 2022, Carr’s Engineering, in

association with the Lakes College,

opened a Skills Academy which aims

to support not only the development

of Carr’s employees but also the next

generation of engineering trainees

from across the county.

The Skills Academy began by providing

practical training for over 20 of our own

apprentices, alongside trainees from

other external businesses which are

partners to the Cumbria Manufacturing

Alliance. Our in-house welding and

machine shop tutors provide hands-

on instruction in our workshops

complemented by classroom training

led by Lakes College at our newly

refurbed Kingstown site in Carlisle.

The Academy will expand in the

coming years with plans to introduce

shorter ‘boot camp’ style courses on

specific skills, including CAD, robotics

and welding.

RESPONSIBLE BUSINESS REPORT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Strategic report

Financial statements

Shareholder information

Governance

SUSTAINABILITY

Our focus on sustainability has continued

throughout the year. The disposal of

the Agricultural Supplies division has

meant that we have exited from the

energy-intensive fertiliser, fuels and farm

machinery markets which will enable

us to align our goals for the continuing

operations, with good progress on

both strategy development and the

implementation of practical initiatives

across the Group. We have enhanced

systems for accurately collecting and

reporting a wide range of data and

developed processes for assessing climate-

related risks and opportunities. Our plan

will be further developed during 2023.

Developing our

sustainability strategy

We aim to be a net zero business by

2050, with a stretch target of 2040.

Our approach will be designed to

complement the Group structure and

deliver the right balance between

overarching and local targets which are

realistic and meaningful. Reviews into

every business this year are establishing a

solid foundation of environmental data to

enable robust targets to be set and aligned

to Greenhouse Gas (“GHG”) protocols.

The journey will continue as our new

Group strategy evolves and will include

our sustainability objectives and lead to

the development of a comprehensive

strategic framework that allows for a

consistent approach across the Group,

implemented locally.

Our progress and initiatives during

the past year and how they impact

our people, our community and

our environment are outlined in the

following section.

Progressing our

sustainability strategy

There have been many positive

developments to Carr’s Group’s net zero

goal this year. In April 2022, we recruited

a dedicated Group Environment and

Sustainability Manager whose focus to

date has been on establishing a clear

governance framework and undertaking

thorough reviews of data, site by site,

to ensure we have a solid base to set

realistic quantitative targets in the

years ahead.

In 2022 we launched the ‘Carr’s Go Green’

vehicle scheme to support employees

looking to adopt more environmentally

friendly forms of transport, for example

options for electric vehicle charging

points. Our Animax site had EV charging

points fitted in 2021. All businesses

have projects underway to move to

LED lighting, with many sites having

completed. Following the installation of

solar panels at our Animax plant, we are

exploring wind/solar options across our

sites. Solar panels across the roofline of

our Animax site in Suffolk again generated

over 268,670 kWh of electricity in the

year, of which 86.7% was used by our

own operations with the balance being

supplied to the grid.

We have established ‘Green Teams’

across our sites which are a critical

element in initiating, driving through

and owning local initiatives. These

will comprise multi-disciplined teams

responsible for setting, monitoring

and delivering against local targets.

The Green Teams will also support our

Environmental Steering Group which will

be launched in 2023 to co-ordinate the

Group’s approach to sustainability. The

Steering Group will be chaired by our

CEO and provide advice and support

to the Board on climate-related risk

management and strategy development.

The Steering Group will comprise

central and subsidiary senior managers

from across the business as well as the

Group Environment and Sustainability

Manager and representatives from the

Green Teams. Key responsibilities for the

Environmental Steering Group will also

include setting objectives in line with

Company strategy, developing reporting

metrics for the business, reporting

progress against targets to the Board

and assessing environmental and social

value risks. The Environmental Steering

Group will also review climate reporting

mechanisms and training and education

requirements across the business.

Work has continued on reviewing and

developing environmental policies,

such as water stewardship, aligning

them with the relevant UN Sustainable

Development Goals.

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AnnuAl RepoRt And Accounts 2022

In the US we have completed a major

water conservation project at three of our

plants which has had a significant impact.

Recycling the water used in production

has saved a total of 16.4m litres in the year.

Ultimately, the introduction of the

environmental standard ISO 14001 will

help set common standards across the

Group and generate site-specific targets.

Our specialist fabrication business in

the Engineering division has ISO 14001

accreditation and other businesses

across the Group are now in the process

of creating their own assets and impacts

registers as a first step. In particular, our

work in the energy sector is supporting

the move away from fossil fuels and

the development of carbon capture

programmes and internally we are

tracking our own waste and fuel usage.

STREAMLINED ENERGY AND

CARBON REPORTING (“SECR”)

Energy

Energy use across the Group on the year

totalled 46,734,848 kWh (2021: 48,488,718

kWh)

. Solar panels at our Animax plant

generated 268,670 kWh of which 35,777

kWh was returned to the grid.

Methodology

The information used to compile the

SECR data was collected and reported

in line with the methodology set out in

the UK Government’s Environmental

Reporting Guidelines 2019. Our

methodology for calculating GHG

emissions is via the DEFRA carbon

calculator for 2021/2022.

Scope 1 emissions are direct greenhouse

gas (GHG) emissions that occur from

sources that are controlled or owned by

the Group and include LPG, mains gas,

gas oil, and company vehicles. Scope 2

emissions are indirect energy emissions

from electricity purchased by the Group.

Carr’s Group* (tCO

2021/22

Change

versus

2020/21

baseline

2020/21

baseline

Emissions tCO

Scope 1

Agriculture UK

1,597

1,331

Agriculture overseas

4,937

5,011

Engineering UK

144

170

Engineering overseas

Head office

Total scope 1 (tCO

6,737

-3%

6,538***

Scope 2

Agriculture UK

656

1,170

Agriculture overseas

782

1,068

Engineering UK

291

302

Engineering overseas

141

199

Head office

Total scope 2 (market based) (tCO

1,895

31.6%

2,769***

Agriculture UK

Agriculture overseas

782

1068

Engineering UK

Engineering overseas

141

199

Head office

Total scope 2 (location based) (tCO

e)**

933

13.9%

1,282***

Total renewable energy (on-site generated), kWh

4.85

No change

4.85

Total renewable energy (on-site generated), kWh

versus total used

2.44%

REC (renewable energy certificates)

51.26%

Total emissions scope 1 and 2 (tCO

8,632

7.3%

9,307***

Agriculture UK

2,253

10%

2,501

Agriculture overseas

5,720

5.9%

6,078

Engineering UK

435

7.8%

472

Engineering overseas

182

10.3%

203

Head office

13.8%

Intensity metric (tCO

e per £m turnover)

18.4

20.6%

22.3***

Figure includes the Agricultural Supplies division.

Location based data is market based data adjusted to reﬂect the Group’s procurement of electricity from

100% renewable sources in the UK.

*** Prior year ﬁgures have been restated to reﬂect the revised basis on which data has been calculated in

the current year.

Scope 1 & 2 emissions

Our carbon generation as a Group (Scope 1 and Scope 2 emissions) is as set out below.

RESPONSIBLE BUSINESS REPORT

continued

kWh for FY22 includes the Agricultural Supplies division. Figures for FY22 and FY21 are for electricity, gas, gas oil and LPG. At the date of this report, we have been

unable to verify the conversion from CO

e to kWh therefore fuel consumption data is not included.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Strategic report

Financial statements

Shareholder information

Governance

CASE STUDY: Acting with Integrity

Code of Ethics

In the spring of 2022 we launched our

first Group-wide Code of Ethics. Carr’s

has always had a well-developed

framework of policies to set standards

and encourage positive behaviours.

The Code of Ethics builds upon this

by providing clear and straightforward

guidance, and a single message for all

our people, on a range of situations which

might be encountered at work.

After its launch through a series of

communications, all employees globally

were provided with a copy of the Code,

translated where necessary. Management

teams were provided with full training

on its contents, and a presentation pack

developed for managers to cascade

during toolbox talks.

We report in terms of CO

e (Carbon

Dioxide Equivalent) which includes CO

and other greenhouse gases which

enables reporting based on their relative

global warming potential. Reporting in

this way provides a truer figure of the

Group’s impact on the environment.

The comparative disclosure this year has

been disaggregated further than it was

in the prior period to better align with the

requirements.

Scope 3 emissions

As Scope 3 emissions are associated

with the operations of the business

that are not under our direct control,

collecting primary data from all our sites

is still underway to ensure that we set

an accurate benchmark of our current

position. Key to this is understanding

and engaging with our supply chain,

completing our review of waste disposal,

ACTING RESPONSIBLY

During this period of change we

reinforced our ethical approach to doing

business. We set clear standards on what

is expected, laid out in well-developed

policies. Employees can access these

policies via our intranet – CarrsConnect –

and they are introduced in our induction

programme and recruitment training

modules. The creation of an overarching

Code of Ethics, issued to all employees

in spring 2022, aims to set a cohesive,

consistent framework for the way

we behave.

Diversity and equal opportunities

We actively promote a working

environment free from discrimination,

harassment or victimisation, and where

everyone receives equal treatment

and opportunities regardless of

looking at the transport of goods to and

from our operations and the production

of our raw materials. Business travel

is also particularly relevant, given the

international nature of our business and

the location of our sites in the US and

Europe. There are a wide variety of Scope

3 emissions meaning that reporting will

take time and be progressed over the

coming years.

This will enable us to establish our full

carbon footprint and impact on our

environment under Scopes 1, 2 & 3, that

will underpin our journey to net zero.

Energy-eﬃcient action

During FY22 we have continued to

undertake energy and carbon related

initiatives. Details can be found on pages

33 to 39.

Scan the QR code

to view our Code

of Ethics pdf

Importantly, our Code of Ethics refers

to SeeHearSpeakUp, an independent

whistleblowing service available

to all employees and which can be

used anonymously. The Code also

references Health Assured, our

employee assistance programme

which can be accessed by employees

to discuss personal or work-related

problems.

The Code has been well received,

and we will continue to develop and

improve it as a useful guide which helps

promote the right behaviours and a

positive workplace culture.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

matters such as gender, race, colour,

nationality, religion or belief, marital or

civil partnership status, family status,

pregnancy or maternity, sexual orientation,

gender reassignment, disability, or age.

Our policy is clear that all decisions

relating to employment practices will

be objective, free from bias and based

upon the individual needs of the business

and merit. Our interview and recruitment

training aligns with this policy and focuses

on ensuring that we select the right

person for the role. Our gender statistics

are reflective of broader engineering and

agriculture industries which currently

contain a predominately male workforce.

As a Group, we recognise the benefits

of attracting the broadest range of

candidates, and the range of skills

and experiences brought by a diverse

workforce, and we continue to enhance

our recruitment practices.

Anti-bribery, conﬂicts of interest

and transparency

Carr’s operates its businesses in a culture

of honesty and openness. The Group

takes a very firm stance against unethical

behaviours including bribery and other

corruption which are prevented through

a robust framework of controls, including

standardised policies and transparent

practices, which every employee is

made aware of, and which are subject

to regular review.

The Group’s policies require the regular

declaration of gifts and hospitality by all

personnel, which are the subject of strict

parameters, and of any matters which

could give rise to a conflict of interest for

consideration approval.

The Group is committed to tax

transparency. We aim to comply fully

with all tax disclosure, payment, and filing

requirements in every country in which

we operate and to paying appropriate

amounts of tax. Our Tax Strategy and Tax

Code of Conduct is published online at

www.carrsgroup-ir.com.

We also have an independent

whistleblowing service, SeeHearSpeakUp,

to enable people at any of our locations

globally to report concerns easily,

anonymously, and in total confidence.

Training on whistleblowing is included in

our employee induction programme.

Human rights

Carr’s is committed to the sustainable

development of its business and to

improvement in its management of ethical

issues, including ensuring that its business

and its supply chain remain free from

modern slavery and human trafficking.

Whilst the risk of modern slavery and

human trafficking within the Group and

its supply chain is assessed as low, Carr’s

remains vigilant and is aware that the risk

of modern slavery appearing in supply

chains can increase, particularly as the

Group continues to grow. Carr’s will not

undertake business with any third parties

where concerns arise and will accordingly

report such circumstances to appropriate

authorities.

The Group operates internal policies,

supported by training, on the issue of

modern slavery which both protect

against risks and promote awareness.

We also carry out appropriate due

diligence on supply chains and engage

with suppliers in relation to their policies

on tackling slavery and human trafficking.

ESG and s.172

Environmental and social considerations

feature heavily in Group decision-making

processes, and we are committed to

high standards of governance. The Board

is mindful of its duties to stakeholders,

including its employees, customers,

strategic partners, investors and its

communities. More information on how

the Board discharges these duties is set

out in our Stakeholder Engagement report

on pages 40 to 44 and in the Corporate

Governance Report on pages 48 to 57.

RESPONSIBLE BUSINESS REPORT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Strategic report

Financial statements

Shareholder information

Governance

TCFD DISCLOSURES

TCFD

Recommendation

How we apply the recommendation

Further

information

Governance

– Disclose the

organisation’s

governance

around climate-

related risks and

opportunities.

Describe the Board’s

oversight of climate-

related risks and

opportunities

The Board meets regularly throughout the year and is ultimately

responsible for determining the Group’s strategy, risk appetite, and

systems of risk management. This includes oversight of climate-

related risks and opportunities. Risk is assessed by the full Board,

considering the size of the Board and scale of the Group, with reports

being considered on at least a quarterly basis. TCFD disclosures

were made for the first time in 2022 and going forward the Audit

Committee, assisted by a newly established Environmental Steering

Group, will be responsible for monitoring the Group’s compliance

with climate change reporting including approval of TCFD

disclosures. The Remuneration Committee sets performance-related

remuneration targets aligned with strategy, including the achievement

of environment and sustainability goals, and assesses performance

against these targets. In FY2022/23 the Group‘s Environmental

Steering Group will provide support and advice to the Board and

its Committees to enable these responsibilities to be effectively

discharged.

Corporate

Governance

Report on

pages 48 to 57

Principal

Risks and

Uncertainties

on pages 24

to 26

Responsible

Business on

pages 28 to 36

Describe

management’s role

in assessing and

managing climate-

related risks and

opportunities

The CEO has overall responsibility for delivery of the Group’s

sustainability strategy. A Group Environmental Steering Group is

being formed and will be formally launched in early 2023, chaired by

the CEO. The Steering Group will also comprise senior central and

subsidiary management across the Group. The Environmental Steering

Group will meet quarterly and assess the Group’s performance

by reviewing data, reviewing progress against agreed actions and

providing advice to the Board in support of the development of

strategy and management of risk. The Environmental Steering Group

will also be responsible for developing the Group’s framework for

assessing climate-related risks and opportunities, reporting to the

Board regularly. At a local level, sites across the Group have their

own Green Teams, which are responsible for considering resource

efficiencies together with the environmental and social impacts of our

business at a local level.

We are fully supportive of the aims of the

Task Force on Climate-Related Financial

Disclosures (“TCFD”). Addressing the

impact of climate change requires a

long-term approach, and we are actively

working to fully integrate the TCFD’s

recommendations with the way we

operate and report.

During the year, a significant strategic

milestone was achieved through the

disposal of the Agricultural Supplies

division, which has changed the profile

of the Group and enables us to focus our

efforts. We have also progressed a range

of initiatives including the development

of processes for assessing climate-

related risks and enhanced systems for

accurately collecting and reporting a wide

range of data.

Information about the evolution of our

approach is set out below. We recognise

the importance of climate change and

sustainability to our colleagues, partners,

customers, investors, and communities,

and we remain committed to addressing

the challenges.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

TCFD

Recommendation

How we apply the recommendation

Further

information

Strategy –

Disclose the actual

and potential

impacts of climate-

related risks and

opportunities on

the organisation’s

businesses,

strategy, and

financial planning

where such

information is

material.

Describe the climate-

related risks and

opportunities the

organisation has

identified over the

short, medium and

long term

As part of the Board’s review of strategic options first announced in

January 2022, the Board considered the environmental and climate-

related impact of the Group’s businesses over the longer term.

The Board considered that elements of the Agricultural Supplies

division represented a higher risk including the distribution of oils

and lubricants, the sale of traditionally fuelled machinery, and animal

feed production. That the combined business had split ownership

also added challenges to addressing these risks. The disposal

of the division has enabled us to focus our efforts on a detailed

assessment of risks and opportunities for our Speciality Agriculture

and Engineering divisions over the short, medium and long term

which is to be completed in 2023, supported by our Environmental

Steering Group and external specialists. To date we have identified

within our Speciality Agriculture division that the cost of raw materials,

sustainability of raw material supplies, farming, manufacturing

operations and customer demand for the Group’s products may all be

impacted by climate change, raw material sustainability and regulatory

requirements. In our Engineering division, our precision engineering

business currently operates in the oil and gas sector, a sector in which

there are longer-term risks as a result of climate change.

Strategy

Report on

pages 02 to 45

Corporate

Governance

Report on

pages 48 to 57

Strategy –

Disclose the

actual and

potential impacts

of climate-

related risks and

opportunities on

the organisation’s

businesses,

strategy, and

financial planning

where such

information is

material.

Describe the

impact of climate-

related risks and

opportunities on

the organisation’s

business, strategy

and financial planning

Following the disposal of our Agricultural Supplies business, our

business is relatively low-carbon-intensive and our assessment

of physical climate-related risks is low. Climate change and

sustainability goals are included in our business objectives, and

linked to remuneration structures for Executive Directors and senior

management. Targets will be set annually to achieve a 2050 global

target of net-zero carbon generation. In line with this global target we

will endeavour to accelerate our progress to net-zero to achieve this

target earlier. The retained Group is geographically and operationally

diverse and has a focus on international growth markets. The

procurement of raw materials is carefully managed, utilising ethically

managed and sustainable sources. We invest in the development of

products which are tailored to different farming conditions, and which

incorporate alternative ingredients to reduce reliance on imported

soya for feed products, and we offer customers nutrition products

which can reduce carbon impact. Our Engineering division supplies

services that support low carbon sources of energy in the nuclear

sector. We recognise longer-term risks in the oil and gas sector and

adopt a cautious approach.

Strategy

Report on

pages 02 to 45

Corporate

Governance

Report on

pages 48 to 57

Describe the

resilience of the

organisation’s

strategy, taking into

consideration different

climate-related

scenarios, including a

2°C or lower scenario

We currently assess climate-related risks as low, but recognise the

importance and benefit of external assurance. Following the disposal

of the Agricultural Supplies division, we plan to conduct a rigorous

climate scenario analysis in 2023 to better understand the potential

impacts of physical climate risks, and to identify opportunities to help

us to transition to a low-carbon economy. It was not practicable to

complete this analysis in 2022 due to the demands of the strategic

review and sale of the Agricultural Supplies division. To ensure

robustness in our approach, the analysis will be undertaken with

the support of external specialists.

TCFD DISCLOSURES

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

TCFD

Recommendation

How we apply the recommendation

Further

information

Risk Management

– Disclose how

the organisation

identifies,

assesses, and

manages climate-

related risks.

Describe the

organisation’s process

for identifying and

assessing climate-

related risks

The Group’s risk-assessment process considers internal know-how

and external data to present an understanding of the potential

risk avenues and opportunities including those which are climate-

related. Input is sought from management teams across the Group’s

operations which is incorporated into our risk software tool. Risks

are assessed for likelihood and severity, and the potential financial

impact. Appropriate steps in mitigation are developed and agreed with

management and incorporated into business strategy.

In 2023, we will build upon our assessment process to ensure that

this remains comprehensive and robust, and to enable actions to

be developed to address physical and transitional risks, and which

support our sustainability strategy.

Principal

Risks and

Uncertainties

on pages 24

to 26

Corporate

Governance

Report on

pages 48 to 57

Describe the

organisation’s process

for managing climate-

related risks

Once identified, risks are assessed for likelihood and severity, and

potential financial impact. Where appropriate, steps in mitigation are

developed and implemented, and a post-mitigation assessment is

made of the risk. The Group’s risk management process is one of

continual development, with agreed actions and considerations being

incorporated into business strategy.

Describe how

processes for

identifying, assessing

and managing

climate-related risks

are integrated into the

organisation’s overall

risk management

Climate risks are considered as part of our overall framework for

identifying and managing risk. As an emerging risk, climate impacts

have been under increased focus in the last two years. Following

the refocusing of the Group in 2022, and through the support of

our Environmental Steering Group in 2023, we will continue to raise

the profile of climate impact across the businesses and continue to

enhance our risk management model.

Metrics and

Targets –

Disclose the

metrics and

targets used

to assess and

manage relevant

climate-related

risks and

opportunities

where such

information is

material.

Disclose the

metrics used by the

organisation to assess

climate-related risks

and opportunities in

line with its strategy

and risk management

process

Our current monitoring focuses on carbon generation across our

operations covering Scope 1 and Scope 2 emissions. In the year,

enhanced systems were developed to collect data across all of our

operations globally. As we look forwards with a refocused Group, we

will be developing our methodology for collecting, understanding

and reporting our Scope 3 emissions to help support our evaluation

of risks and opportunities.

Responsible

Business

Report on

pages 28 to 36

Disclose Scope

1, Scope 2 and, if

appropriate, Scope

3 greenhouse gas

(“GHG”) emissions

and the related risks

Pages 34 and 35 detail our Scope 1 and Scope 2 GHG emissions and

provide details on our approach to Scope 3 GHG emissions.

Describe the

targets used by the

organisation to manage

climate-related risks

and opportunities

and performance

against targets

Current targets include reducing our Scope 1 and Scope 2 carbon

emissions to become net zero by 2050. As we continue to enhance

our approach for addressing climate change with a refocused Group,

including collecting Scope 3 data, further targets will be set and

progress monitored by the Environmental Steering Group.

Our report presented on pages 37 to 39 is considered consistent with the TCFD’s Recommendations and Recommended Disclosures, with

the exception of the following which are as a result of changes to the Group following the disposal of the Agricultural Supplies division:

Strategy (c) – Work planned to be undertaken in relation to climate-rated scenario analysis in 2023 is detailed in the table above, and Metrics

and Targets (a) – (c) – In 2023 we aim to work closely with our total supply chain to identify and validate Scope 3 emissions, however in the

presence of data limitations, we are unable to disclose Scope 3 emissions in this year’s TCFD report and SECR report. Our Environmental

Steering Group will work to ensure accurate data measurement and, once complete, we will be presenting Scope 3 emissions.

Our stakeholders

CUSTOMERS

INVESTORS

PARTNERS

COMMUNITIES

ENVIRONMENT

EMPLOYEES

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

STAKEHOLDER ENGAGEMENT

AND OUR SECTION 172

RESPONSIBILITIES

We ﬁrmly believe that proper consideration of the

interests and views of our broader stakeholders produces

better outcomes and enhances the sustainability of our

businesses. Eﬀective engagement is essential to growth

and to creating long-term value.

We have a broad range of stakeholders

with whom we engage to provide

information about developments across

our businesses and to understand

stakeholder priorities and perspectives.

This engagement is fundamental

to informing Board and Committee

discussions and decision making.

We adopt a number of initiatives which

focus on ensuring that a regular dialogue

is maintained with our stakeholders,

some of which are carried out directly

by the Board whereas others are built

into day-to-day management across

the Group. On the following pages, we

highlight our key stakeholders and explain

why and how we engage with them

and detail outcomes in the year. These

disclosures demonstrate how we have

regard to the matters set out in section

172(1) of the Companies Act 2006. For

detailed information on the stakeholder

considerations associated with the

disposal of the Group’s Agricultural

Supplies division, please see the case

study on page 44.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Strategic report

Financial statements

Shareholder information

Governance

Employees

Customers

Why we engage

Our people remain a primary consideration in everything we do. We strive to ensure that our people remain an active part of

our businesses, helping shape the future of the Group. We work to create an environment where people have opportunities to

develop their skills and experiences, and feel properly valued and rewarded for their contributions. We are also committed to

ensuring that our people remain safe, and that our sites are places in which people can reach their potential.

How we engage

We use a variety of methods to ensure that our people remain engaged, for example:

•

Regular briefing notes, announcements and vlogs available through CarrsConnect and on noticeboards.

•

Informal meetings with Directors.

• Annual Employee Engagement Survey.

•

Non-Executive Director briefings and site visits to better understand the views of our people together with the issues and

opportunities for them and their businesses.

•

Interactions with the Board’s Employee Engagement representative, responsible for reporting on employee-related matters to

the Board and ensuring that employee interests are properly considered in Board decision making.

•

Board members regular updates and meetings with senior managers.

For more information, see from page 28.

Outcomes

Our annual employee survey generated a good response rate and identified areas where we can improve (see page 28). We

also acted on the results of the previous year’s employee survey, focussing on our commitment to colleague well-being and

mutual respect (see page 28 and page 35). We continue to offer broad training and development opportunities, as well as internal

training delivered throughout the year (see pages 28 to 30). CarrsConnect and noticeboards continue to be an important source

of information and we have recently appointed a Communications Manager to ensure that our people remain informed about key

developments. Briefings from the Chair throughout the year ensured colleagues were kept informed, including updates on the

interim arrangements and Board succession. Following its announcement, the Chair also provided an update to employees on the

outcome of the strategic review and the disposal of the Agricultural Supplies division alongside communications tailored to impacted

colleagues and to the Group as a whole.

Why we engage

Regular engagement with our customers and suppliers is important to our business. It allows us to understand their needs and

priorities and helps shape our strategy. Customers want to work with businesses who can meet demands and deliver on promises,

who treat them fairly, and who can be trusted to put their interests first. Customers also expect us to manage our business in a

sustainable manner.

How we engage

Engagement with current and potential customers distributors and suppliers takes the form of:

•

Regular and open dialogue between our management teams and with those with whom we do business which helps build

long-lasting and trusted relationships.

•

Reporting to the Board regularly, both formally through presentations and business plans, and also informally to ensure that

customer perspectives are properly understood as part of the Board’s decision-making process.

•

Attendance at UK and international trade events and shows.

•

Site visits to customers and distributers in the UK and internationally.

Outcomes

Throughout the year, we have been in constant dialogue with our customers and suppliers to understand their developing needs. On

a day-to-day basis, this enables us to add value to our customers’ businesses, from contingency planning and risk reduction on the

high-scale projects being delivered in our Engineering division to providing support and expertise to our customers and suppliers across

Speciality Agriculture. Understanding our customers has also helped develop our strategy for future growth (see pages 02 to 27).

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Investors

Why we engage

Investor trust and confidence is essential. All investors, whether private individuals, employee shareholders or institutional

investors, need to be able to trust us to manage their assets and execute the Group’s strategy. In so doing, we must act ethically,

in a sustainable manner, and in accordance with good governance. Our investors expect us to remain open about the Group’s

current and expected performance so that they can properly assess risks and opportunities when making investment decisions.

How we engage

We communicate with investors through a variety of different ways:

•

Shareholders have access to the Company’s website at www.carrsgroup-ir.com.

•

We maintain a regular calendar of announcements and events for investors and host presentations on the full year and interim

results.

•

Significant matters relating to trading or development of the business are disseminated to the market by way of Stock

Exchange announcements, and are uploaded to the Company’s website.

•

The Chair, Non-Executives and Company Secretary regularly engage with investors on governance issues and other matters

concerning the Board.

•

The Chief Executive Officer and the Chief Financial Officer meet with investors following half year and year end results

announcements, and as requested at other times.

•

All reports and updates are made available on the Company’s website. The Group maintains dialogue with substantial and

institutional shareholders and analysts.

•

Enquiries from individual shareholders are welcomed and should be addressed through the Company Secretary’s office.

Outcomes

In addition to our regular investor engagement, during the year we liaised with key investors on matters such as the outcome of the

strategic review (see page 44), Board composition and diversity (see page 59), CEO/Chair interim arrangements (see pages 65 and

66), and remuneration relating to the CEO/Chair interim arrangements (see pages 65 to 83). In the year, the Chair engaged directly

with a large number of shareholders on wider topics in order to understand their views more broadly. The Board agenda includes a

specific item for considering the views of shareholders, with the involvement of the Group’s brokers as required.

Partners

Why we engage

The Group includes a number of businesses with strategic partners with whom we maintain an active dialogue. Our strategic

partnerships are founded upon mutual trust and strategic alignment. Our partners value long-term commitment, open

communication and diligence so that we can effectively pursue jointly developed strategic goals.

How we engage

We maintain an active dialogue with our strategic partners through:

•

Executive meetings and management team meetings ensuring that the businesses work very closely to understand risk and

opportunities, and in the development of business strategy.

•

Regular formal and informal meetings with our partners involving both Board members and senior management covering

strategic, operational and industry issues.

•

Regular reporting to the Board to ensure that it remains fully appraised and informed of matters impacting our partners.

Outcomes

These longstanding and trusted relationships are a foundation for the success of those businesses and help build strength and

resilience into our business model, to our mutual benefit. Having a strong relationship with mutual respect enables us to work

collaboratively and understand our partners’ key drivers. During the year, we worked with two of our strategic business partners

to achieve successful outcomes for both them and us, with our partner business Philafrica Foods (PTY) Ltd disposing of its

interest in Afgritech Limited to us and Edward Billington & Son Limited acquiring our interest in the Agricultural Supplies division

(see pages 06 to 09, page 19 and page 44).

STAKEHOLDER ENGAGEMENT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Strategic report

Financial statements

Shareholder information

Governance

Communities

Why we engage

We operate across 18 sites and have colleagues based in various countries. We recognise the importance of working within and

contributing to the local communities. Our various community stakeholders have broad interests ranging from the provision of

jobs and investment in local economies, to supporting vulnerable people and charitable initiatives.

How we engage

We engage with our local communities by:

•

Involvement in the local community and encouraging active participation in community initiatives.

•

Continuing to support a range of selected charitable causes.

•

Supporting employment and apprenticeship schemes.

• Local news reports.

•

Sponsorship of local sports teams.

•

Reporting to the Board on significant community issues and sustainability programmes.

Outcomes

The Group is committed to ethical and responsible business practices and during the year introduced a comprehensive Code

of Ethics for our employees. We provide apprenticeship schemes and training opportunities and through our involvement with

the Cumbrian Manufacturing Alliance we have contributed to the creation of jobs in the local community. Across the Group, our

people devote considerable time and resources to good causes and community initiatives including supporting local food banks,

local charities, sponsoring local events and sports clubs near to our sites. For more information see our Responsible Business

Report on pages 28 to 36.

Environment

Why we engage

Sustainable business and environmental impact are key areas of focus and integral to the growth of the Group. We are

committed to proactively improving the sustainability of our business and minimising our environmental impact.

How we engage

•

We practise responsible behaviours at all times.

•

We are party to raw material sustainability programmes.

•

Supporting colleagues making more environmentally friendly choices.

•

Encouraging ownership of local initiatives aimed at addressing the environmental and social impacts of our business at

local level.

•

Reporting to the Board on sustainability programmes.

Outcomes

The Group adheres to the sustainable sourcing of raw materials. We also ensure that environmental considerations feature

prominently on the Board’s agenda and we are developing our sustainability strategy. Initiatives such as the Carr’s Go Green

vehicle scheme, establishing Green Teams at our sites, and changes in the way we source and use electricity at our sites all

contribute to our sustainability goals. For more information see our Responsible Business Report on pages 28 to 36.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Section 172 Statement

Engagement with stakeholders is

an essential element in Board and

Committee discussions and decision

making and supports the principles

of Section 172 of the Companies Act

2006. Section 172 requires directors of

a company to act in the way which they

consider, in good faith, would be most

likely to promote the success of the

company for the benefit of its members

as a whole, and in doing so have regard

(amongst other matters) to:

•

the likely long-term consequences of

any decisions;

•

the interests of the company’s

employees;

•

the need to foster the company’s

business relationships with suppliers,

customers and others;

•

the impact of the company’s operations

on the community and environment;

•

the desirability to maintain a reputation

for high standards of business conduct;

and

•

the need to act fairly as between

members of the company.

At Carr’s Group these factors are carefully

considered in the Board’s key decisions

and strategic discussions. The Board

receives regular updates and reports

from business areas which include

matters concerning our stakeholders.

Directors are also provided with details

of our strategic progress, financial

performance and risk management

and matters such as health and safety,

ESG and corporate governance are also

included. The information received is

considered in the Board’s discussions,

with the Board seeking further information

and assurances where appropriate. Board

minutes detail the Board decisions and

the relevant factors which have been

taken into account when reaching those

decisions. Maintaining good governance

and high standards of conduct is

central to the Directors who receive

regular training on Directors’ duties and

obligations under Section 172. Further

details on how the Board discharges its

duties under s.172 are set out in pages 40

to 44, in the Strategic Report on pages 02

to 39 and in the Corporate Governance

Report on pages 48 to 57.

For more information on specific initiatives

during the year, please see:

People: pages 28 to 29; Health & safety:

pages 29 to 30; Environment: pages 33 to

39; Communities: pages 31 and 32; Board

initiatives: pages 48 to 57.

CASE STUDY: Stakeholder considerations and the sale of the Agricultural Supplies division

The sale of the Agricultural Supplies

division was a significant step in shaping

the Group’s future, and one of the most

important decisions made by the Board

in recent years. Given the magnitude of

the decision, stakeholder considerations

were firmly at the heart of the process.

Board decision making and

stakeholder considerations

In January 2022, recognising the limited

opportunities for synergy between the

Group’s divisions, the Board announced

that it was undertaking a review of

strategic options. That review continued

throughout 2022, supported by external

advisers, during which the Board

considered how best to achieve growth

in shareholder value. As part of the

review process, the Board considered

a number of options, which included an

assessment of the impact these would

have on various stakeholder groups.

Some key considerations in respect of

the decision to dispose of the Agricultural

Supplies division were as follows:

Shareholders

A disposal of the Agricultural Supplies

division would focus the Group on

higher-margin areas of the business.

The Speciality Agriculture and

Engineering divisions supply

differentiated products and services

and have internationally recognised

brands with strong growth prospects.

These divisions are also substantially

wholly owned, whereas the Agricultural

Supplies division had a split ownership

structure. Proceeding with the sale

was considered to provide the Group

with better prospects for enhancing

shareholder value in the longer term.

Employees

Employees within and former employees

of the Agricultural Supplies division were

considered likely to benefit from single

and familiar ownership, better placing

the business to respond to opportunities

and benefit from synergy. Members of

the Carr’s Group closed defined benefit

scheme were also safeguarded with a

contribution out of the sale proceeds to

enhance the scheme’s surplus, and a

commitment to consider a full buy-out

of the scheme in the medium term.

Comprehensive communications across

the Group ensured that our employees

remain engaged, and enhanced

management focus will better place

the Group to deliver growth.

Customers, suppliers

and partners

Business relationships with suppliers

and customers were not expected to

be negatively affected. As part of the

transaction, a comprehensive suite of

arrangements was agreed with the

Billington Group, particularly transitional

services and the distribution of our

Speciality Agriculture product ranges,

to ensure seamless business continuity.

Community and environment

The Group intends to use the sale

proceeds to invest in capital and

business development activity, with

an expectation that this will positively

impact on the community by securing

employment, improving skills, and

investing in modern manufacturing

processes. The disposal also takes the

Group away from trading in fuels, bulk

feeds, fertilisers, and machinery; activities

with high environmental impact.

Decision

Considering all circumstances, the

Board agreed that proceeding with

the transaction would be in the best

interests of the Group and its various

stakeholder groups. Following its

announcement of the proposed

sale on 31 August 2022, the Group’s

shareholders voted in favour of the

Board’s recommendation at a general

meeting on 19 September 2022, with

98.7% of votes being cast in favour and

representing an absolute majority of all

shareholders. Following shareholder

approval, the sale was ultimately

completed on 26 October 2022.

STAKEHOLDER ENGAGEMENT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Strategic report

Financial statements

Shareholder information

Governance

NON-FINANCIAL INFORMATION STATEMENT

Reporting

requirement

Group policies and standards

Additional information

Environmental

Matters

Environmental Policy

Responsible Business Report

(see pages 33 to 36)

TCFD Disclosures

(see pages 37 to 39)

Employees

Employee Handbook

Health & Safety Policy

Code of Ethics

Speak-up/Whistleblowing

Modern Slavery

Responsible Business Report

(see pages 28 to 36)

Human Rights

Employee Handbook

Modern Slavery Statement and Policy

Responsible Business Report

(see pages (28 to 36)

Social Matters

Charitable Donations Policy

Responsible Business Report

(see page 31)

Anti-corruption &

anti-bribery

Anti-bribery Policy

Gifts and Entertainment

Responsible Business Report

(see pages 28 to 36)

Policy

Implementation and

due diligence

Employee Handbook

Financial and Other Controls

Internal due diligence/Integration processes

Strategic Report

(see pages 02 to 45)

Business Model

–

Business Model

(see pages 12 and 13)

Principal Risks

–

Principal Risks and Uncertainties

(see pages 24 to 26)

Non-financial KPIs

Environmental Policy

Heath & Safety Policy

Employee Handbook

KPIs

(see pages 22 and 23)

In line with the Non-Financial Reporting Directive, we have set out below where relevant information we are required to report on can be found.

STRATEGIC REPORT APPROVAL

The Strategic Report, on pages 02 to 45 inclusive comprises the Group Highlights and Overview; the Chair’s Statement; the Market

Overview; our Business Model and Strategy; the Group Performance Review and Divisional Reviews; the Financial Review; the Key

Performance Indicators; the Principal Risks and Uncertainties; the Viability Statement; the Responsible Business Report and TCFD

Disclosures; the Stakeholder Engagement and s.172 Statement; and the Non-Financial Reporting Statement.

The Strategic Report was approved by the Board on 22 March 2023.

By order of the Board

Matthew Ratcliﬀe

Company Secretary

22 March 2023

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Tim Jones

Non-Executive Chair

Tim Jones was appointed to the Board as

Non-Executive Chair on 21 February 2023.

Tim is an FCA approved person and a member

of the Chartered Institute of Securities and

Investment. He is also an Associate of the

Chartered Insurance Institute. Since 2012 Tim

served as Non-Executive Chair of Treatt plc a

position he stood down from on 27 January 2023

and is also chair of Allia Charitable Group and

SP-Logistics Holdings Limited. .

Peter Page

Chief Executive Oﬃcer

Peter joined Carr’s in November 2019, was

appointed Non-Executive Chair of the Board in

January 2020 and Executive Chair in October

2021. Peter become CEO on 21 February 2023

upon the appointment of Tim Jones as the new

Non-Executive Chair. Peter has worked in

international agriculture and food since 1986,

as CEO of Devro plc from 2007 to 2018, and prior

to that in senior management roles at Aviagen

International, Adnams plc and Hillsdown

Holdings plc.

Ian Wood

Non-Executive Director

Employee Engagement Representative

Ian was appointed to the Board in October 2015.

He retired as the Commercial Director,

International Business Development for Centrica

(previously British Gas) in January 2016 having

held a number of positions with the Company,

covering various aspects of the business including

engineering, customer services, industrial and

commercial marketing, and energy trading within

the UK, Continental Europe and North America.

Ian is a Director of Talkin Energy Ltd and a

Non-Executive Director of Cumbria County

Holdings Ltd.

Shelagh Hancock

Non-Executive Director

Shelagh was appointed a Non-Executive Director

and joined the Board on 1 September 2022.

Shelagh has over 30 years’ experience in the food

and agricultural supply sectors and is currently

Chief Executive Officer at First Milk, the British

farmer-owned dairy co-operative, where she is

highly respected for delivering significant growth

in member returns since being appointed in 2017.

Prior to this Shelagh held several executive

positions across the UK dairy industry including at

Milk Link (formerly Glanbia Foods) and Medina

Dairy, having trained as an animal nutritionist.

Chair

Committee membership

Nomination

Remuneration

Audit

None

—

THE BOARD

—

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

John Worby

Senior Independent Director

John was appointed a Non-Executive Director in

April 2015. John is a chartered accountant and has

previously held the positions of Senior

Independent Director and Chairman of the Audit

Committee of Hilton Food Group plc and

Cranswick plc. He was also Finance Director of

Genus plc and a Non-Executive Director of

Fidessa Group plc. John will stand down as Audit

Committee Chair following the forthcoming

General Meeting of the Company, and will stand

down from the Board later in 2023.

David White

Chief Financial Oﬃcer

David White joined Carr’s on 3 January 2023 as

Chief Financial Officer Designate and was

appointed to the Board as an Executive Director in

the role of Chief Financial Officer on 21 February

2023. David joined the Company from Aggreko plc

where he held a variety of senior roles, most

recently as Finance Director of the Global

Products and Technology division. David is a

Chartered Accountant having qualified in London

in 1997 and spent time at Ernst & Young.

Martin Rowland

Non-Executive Director

Martin was appointed a Non-Executive Director

on 6 March 2023 as a representative of Harwood

Capital Management Limited pursuant to a

relationship agreement between the Group and

Harwood. Martin is currently Non-Executive Chair

of AIM-listed Smoove plc and has spent the last

14 years in a variety of investment roles. Prior to

this Martin held operational and strategic roes in

mid and large-scale corporates. He has been a

director of companies in an executive and

non-executive capacity, helping businesses to

scale organically and through acquisition.

Stuart Lorimer

Non-Executive Director

Stuart was appointed a Non-Executive Director

and joined the Board on 1 September 2022. Stuart

is currently Finance Director at AG Barr plc, the

FTSE-listed soft drinks brand owner, a role which

he has held since 2015. Prior to this Stuart was

with Diageo plc for 22 years in various senior roles

working across Europe, the USA and Asia,

ultimately as Finance Director for Diageo’s Global

Supply Operation. Stuart brings strong finance

expertise together with a wealth of experience in

supply chain operations, logistics and business

optimisation. He is a qualified accountant having

begun his career at KPMG. Stuart will succeed

John Worby as Audit Committee Chair when

John stands down as Chair following the

forthcoming General Meeting of the Company.

—

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

CORPORATE GOVERNANCE REPORT

Q: How would you describe your

appointment process?

The appointment process was

extremely thorough. I was given the

opportunity to meet other Board

members for open discussion about

the business and the challenges and

opportunities it faces. This provided real

insight into the role and where I might be

able to contribute.

Q: Where do you think your skills will

be most relevant to Carr’s?

My entire career has been in the

agriculture and food industries, and

my current role is as Chief Executive

in a farmer-owned co-operative.

What this means is that I have in-depth

knowledge of the dynamics of the

agricultural market, and so can bring a

useful external perspective to the Carr’s

Board. In particular, I’ve been involved

in developing strategies that address

the evolving sustainability issues facing

agricultural and food businesses,

particularly focusing on how this can be

delivered to provide differentiation and

value in the market.

Q: What are you most looking forward

to in your new position?

I’m genuinely interested in the

business and I am really looking forward

to meeting people and learning more

about the Company, particularly the

areas that are new to me. I hope that my

industry experience will bring a new point

of view to the Carr’s Board but I know

that this role will also give me a fresh

perspective and ideas that can inform my

thinking elsewhere, and it’s that cross-

fertilisation of ideas that I look forward to.

Q: What do you see as the key

challenges ahead for the Carr’s Board?

The pace of change seems to

accelerate and every company faces

a challenging external environment.

Carr’s is well-placed in that it has already

taken steps to reshape its business. To

my mind, the focus for the Board is to

provide support, guidance and critical

thinking to the Executive team as it

drives the new strategy forward, setting

the tone from the top that this fresh

approach will require.

Chair’s introduction

I am pleased to present the Corporate

Governance Report for the year ended

3 September 2022.

This report describes how Carr’s Group

plc adopts the UK Corporate Governance

Code 2018 (the “Code”). In preparation,

the Board considered each Principle of

the Code to review how it is applied and

how it relates directly to the Group.

This has been a significant year of

development for the Group, with a

strategic evaluation of the business.

There have also been changes to

the Board and the composition of

Committees. Peter Page, who has

been Executive Chair under the interim

arrangements announced in October

2021, stepped down as Chair on 21

February 2023 having been appointed as

Chief Executive Officer. I was appointed

to the Board as Non-Executive Chair on

21 February 2023 and have been working

closely with Peter to ensure an orderly

transition of responsibilities.

The Board’s priority is to create value

through sustainable growth. We

recognise the importance of regular

engagement with all stakeholders. The

Board remains committed to maintaining

good governance which is central to the

integrity, reputation and performance

of the Group and we will continue to

operate in an open and transparent

manner. The overview below provided

by Peter together with the information

in the following pages, includes further

details about our corporate governance

in the FY22.

Tim Jones

Non-Executive Chair

22 March 2023

Q&A

With new Non-Executive Director, Shelagh Hancock

Overview of FY22 Stakeholder

engagement

The Board is mindful of its responsibility

to consider properly the interests

of stakeholders when matters of

significance are proposed and agreed.

Engagement with our stakeholders is key

to understanding their interests and views

when making strategic decisions. This is

achieved by holding regular meetings

with shareholders and being available to

respond to enquiries at General Meetings

and on an ad hoc basis.

In 2021 shareholders had been asking

about strategy, earnings growth and how

shareholder value will be created, in view

of the share price history and shareholder

returns over the preceding five to ten years.

In January 2022 the Board announced

a review of strategic options for each of

the Group’s three divisions to evaluate

the potential to grow shareholder value.

The Executive Directors were tasked with

developing a coherent, well-researched

strategy for the long-term benefit of all

stakeholders, including consideration of

environmental, social and sustainability

factors as they apply specifically to the

sectors in which the Group operates.

The Board worked with external advisers

to examine options and identify the

best sequence of activities to enhance

shareholder value, and to consider the

implications of the available options.

On 31 August 2022 as the first step in the

Group’s long-term strategy, the Board

announced its proposal to exit from the

Agricultural Supplies market by disposing

of all interests in the Agricultural Supplies

division through a sale to Edward Billington

and Son Limited, the joint owner. The

Resolution supporting the disposal was

passed by shareholders at a General

Meeting on 19 September 2022 with

completion on 26 October 2022. The Board

will now focus on developing the Speciality

Agriculture and Engineering divisions which

are considered to have greater opportunity

for earnings growth in the long term.

Board composition

Changes in the Board composition

are detailed in full in the Nomination

Committee Report on pages 58 to 60. Tim

Jones’s appointment as Non-Executive

Chair took effect on 21 February 2023

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Q: What attracted you to Carr’s?

As a Group with a long heritage that

is currently going through substantial

change, Carr’s offered the combination

of responsibility and exciting challenge.

This is something that I can relate to in

my own organisation and I am hoping

that I can bring that experience to the

table. Carr’s has a similar heritage to AG

Barr’s with a family-orientated history

and collegiate style board so I’m hoping

there is a cultural fit too – the chemistry

just felt right.

Q: What do you think your experience

will bring to the Group?

The governance agenda for

public companies is growing rapidly

so I think my board experience in

communicating with the City, auditors

and shareholders during a period of

business reorganisation and M&A

could add value. I believe that I have

built a track record of strong financial

governance and instilling a clear

performance culture over my career in

both Diageo and AG Barr. I’m hoping this

can help support the Carr’s business.

Q: What will your key areas of focus be

for 2022/23?

My first priority is to listen and learn.

There is huge experience and passion in

the business and I would like to benefit

from this before I form any views. I know

the Board has spent considerable time

developing the right long-term business

strategy for the Group and I hope that

I will be able to provide support and

guidance during the implementation of

the new strategy, whilst providing some

fresh perspective to areas that are not

yet clear.

Q&A

With new Non-Executive Director, Stuart Lorimer

External reviews are commissioned periodically (required every three years for FTSE 250+) with the last one being undertaken in FY2020/21).

and following the forthcoming General

Meeting of the Company, Tim will also

become Nomination Committee Chair and

a member of the Remuneration Committee.

Upon Tim’s appointment on 21 February

2023, I stepped down as Executive Chair

and as announced in August 2022, took

the role of Chief Executive Officer. I look

forward to working with Tim over the

coming years.

In line with the Board’s Non-Executive

Director succession plan, Shelagh Hancock

and Stuart Lorimer were appointed as

Non-Executive Directors from 1 September

2022. Shelagh and Stuart are also members

of each of the Audit, Remuneration and

Nomination Committees, with Stuart taking

over from John Worby as Audit Committee

Chair following the forthcoming General

Meeting of the Company, Non-Executive

Directors Alistair Wannop and Kristen Eshak

Weldon stood down from the Board in

January 2022, and John Worby will stand

down from the Board mid-2023 following

a period of handover and support to new

Board members.

CFO Neil Austin left the Group in February

2023 to take up a new role. David White

joined the Board as Chief Financial Officer

from 21 February 2023. David has worked

alongside Neil to ensure continuity and

an orderly handover and became CFO on

21 February 2023 on Neil’s departure from

Carr’s.

Martin Rowland was appointed as a

Non-Executive Director of the Company

on 6 March 2023. Martin is appointed

as a representative of Harwood Capital

Management Limited (“Harwood’) pursuant

to a relationship agreement between the

Company and Harwood.

Employee engagement

Ian Wood was appointed as the Board’s

Employee Engagement representative at the

end of 2021, with responsibility for reporting

on employee-related matters to the Board

and ensuring that employee interests are

properly considered in Board decision-

making. I am grateful to Kristen Eshak

Weldon, the Board’s previous Non-Executive

Director for Employee Engagement, for

her contribution to this important role of

overseeing our efforts in this area.

Culture

During the year the Group launched its

Code of Ethics across all sites globally.

The code brings together Group-wide policies

and best practice on a range of circumstances

which can be encountered in the modern

workplace. The code was launched alongside

a programme of training delivered to explore

its content and raise awareness. As a Group,

we are committed to the application of high

standards and professional behaviour to the

decisions we may make at all levels of the

organisation, and the launch of our Code of

Ethics in 2022 provides us with a framework for

continuous improvement. Further details can

be found on page 35.

Sustainability

We have continued to focus on sustainability

during the year. As our new Group strategy

develops we will expand our sustainability

goals and framework for our approach and

future plans across the Group. Details of our

progress and future plans can be found in

the Responsible Business Report and the

TCFD Disclosures on pages 33 to 39.

Board evaluation

Board effectiveness reviews take place

annually

. An external effectiveness review

was completed in 2021, with the previous

external review having taken place in 2017.

Annual internal reviews facilitated by the

Company Secretary on behalf of the Chair

are carried out in between external reviews.

In August 2022 the internal effectiveness

review reflected on the FY21 external

evaluation, key developments in the year,

and the interim arrangements in place since

October 2021. Questions were developed in

the light of discussions at the August Board

meeting and circulated to Board members

who were in position during FY22. These

reviews were led by the Chair with the

support of the Company Secretary. Reports

were presented to the Board detailing views

together with progress made to date against

previous recommendations. Reports were

the subject of detailed and constructive

discussion by the Board. Details of that

process and its outcomes are set out in

the Overview section of this Corporate

Governance Report on pages 56 and 57.

Peter Page

Chief Executive Oﬃcer

22 March 2023

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

The Group’s governance structure is designed to enable effective delivery of the Group’s strategy. The Group is structured to encourage

entrepreneurial leadership within a framework of risk management controls. Key features are set out below:

The Board

What

The Board is responsible for promoting the long-term sustainable success of the Group, creating value for its shareholders

and supporting all stakeholders. The Board determines the Group’s purpose and strategy, ensuring that these remain aligned with the

Group’s ethics and positive culture. The Board reviews business performance and monitors progress towards the Group’s strategic

objectives.

Who:

The Board consists of Senior Executive Management together with experienced Non-Executive Directors.

How:

The Board meets regularly in accordance with its planned agenda, and otherwise as may be required. Meetings take place

in person or where necessary by video conferencing. All Directors have full and timely access to relevant information. The Board

maintains a schedule of matters reserved for its approval, which is regularly reviewed and made available on the Group’s website.

The Board also engages with employees, customers and suppliers to develop a thorough understanding of the business.

Further details about the Board, including key activities and responsibilities, are set out on pages 52 to 57.

Board Committees

What:

Board Committees support the Board. The Board delegates certain matters to the Committees.

Who:

The Board has established Audit, Remuneration, and Nomination Committees. Each Board Committee consists of experienced

Non-Executive Directors. John Worby is Audit Committee Chair; Ian Wood chairs the Remuneration Committee and the Nomination

Committee is chaired by Peter Page.

How:

The Committees ensure that there is independent oversight of the matters within their remit and assist the Board in fulfilling its

responsibilities. Written terms of reference govern the responsibilities of the Committees, which are reviewed regularly by the relevant

Committee and made available on the Group’s website.

Full reports from each of the Committees, detailing their responsibilities, key considerations and actions during the year, are set out on

pages 58 to 60 (Nomination Committee), pages 61 to 64 (Audit Committee) and pages 65 to 83 (Remuneration Committee).

Senior Management Team

What:

The Senior Management Team is responsible for implementing policies and the operational delivery of the Group’s strategies

and to monitor performance and commercial developments.

Who:

The Senior Management Team consists of the Executive Directors, managing directors of individual businesses and Group

functional directors for Finance, Health & Safety, HR, Legal and IT.

How:

Meetings to discuss operational performance and commercial developments take place regularly, with focused strategic

discussions taking place at regular intervals. Feedback from meetings is shared with the Board.

Subsidiary and Joint Venture Operating Boards

What:

The Subsidiary and Joint Venture Operating Boards’ purpose is to monitor performance and commercial developments.

Who:

Operating Boards for subsidiary and joint venture businesses include managing directors together with other subsidiary

management, Executive Directors, leaders of Group functions and, where appropriate, executives from joint venture partners.

How:

Meetings take place regularly and feedback on business performance and key developments is shared with the Board.

Internal

controls

and risk

management

Stakeholders

The Board

Board Committees

Senior Management Team

Subsidiary and Joint Venture Operating Boards

Overview of Group governance

The Group’s governance structure is outlined in the diagram below:

CORPORATE GOVERNANCE REPORT

continued

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Internal controls and risk

management

The Board is responsible for overseeing

the Group’s systems of internal control

and internal audit, and for reviewing

their effectiveness (including financial,

operational, and compliance controls)

together with processes for risk

management which collectively safeguard

the Group’s assets. The Audit Committee

supports the Board in this process and

the report on pages 61 to 64 provides

further information. Such systems provide

reasonable but not absolute assurance

against material misstatement or loss, being

designed to manage rather than eliminate

the risk of failure to achieve business

objectives.

The Group’s organisational structure is

designed to effectively plan and implement

the Group’s objectives, to monitor progress,

and to ensure that robust controls become

embedded in operations. The Group’s

internal risk-based control systems have

been fully operative throughout the year

and up to the date of this Annual Report

and Accounts.

The Group’s internal controls include

financial reporting processes, including

monthly reporting from subsidiaries, its

associate and joint ventures. This reporting

is subject to detailed review by the Chief

Financial Officer and detailed validation

by the Group finance team, and forms

the basis for information presented to

and reviewed by the Board. All monthly

reporting is prepared in line with Group

accounting policies, which are reviewed

annually and are also subject to review by

the external auditor.

Key risks to the Group and its businesses

are identified and reviewed during regular

reviews which take place between

Executive Directors, managing directors

and business unit management teams.

Such reviews consider the financial and

other implications of such risks and assess

the effectiveness of mitigation controls.

The Audit Committee also reviews the

effectiveness of risk management and

internal control systems. Reports on risk

are delivered to the Board regularly which,

together with direct involvement in strategy,

investment appraisal and budgeting,

enable the Board to report on the overall

effectiveness of internal control.

A summary of the risk management

framework and key risks to the Group are

set out on pages 24 to 26.

Stakeholders

The Board recognises and values the

importance of good engagement with all

stakeholders. The Board has developed

processes for enabling effective

engagement with the Group’s stakeholders,

and to ensure that stakeholder interests

and views are fully considered in making

key business decisions.

Ian Wood is the Board’s Non-Executive

Director for Employee Engagement, with

oversight of Group initiatives, responsibility

for reporting on matters to the Board

and ensuring that employee interests are

properly considered in Board decision-

making.

The Board is aware that the Group has a

diverse shareholder base representing

a range of interests. Shareholders have

access to the Company’s website at

www.carrsgroup-ir.com. We engage with

our shareholders through our regular

communications, announcements of our

financial results on a six-monthly basis

and trading updates during the year. All

reports and updates are made available

on the Company’s website. The Group

maintains dialogue with substantial and

institutional shareholders and analysts,

and hosts presentations on the preliminary

and interim results. Enquiries from

individual shareholders are welcomed,

being addressed through the Company

Secretary’s office.

Further information on how the Board

engages with stakeholders and discharges

its section 172 responsibilities is set out on

pages 40 to 44.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

The Board: Activities

Key areas

The Board’s principal activities can be grouped into the eight key areas as outlined below.

●

Strategy

●

Risk

●

Health & Safety

●

Environment

Setting strategic aims and

objectives, including those

relating to Environmental,

Social and Governance

considerations.

Reviewing new business

developments and

opportunities including

potential acquisitions.

Investing in research and

technology.

Overseeing the Group’s risk

and internal control framework.

Considering feedback from

external and internal audit.

Reviewing financial forecasts

and other considerations

in support of the viability

statement.

Approving Health & Safety

strategy, and monitoring

performance.

Considering Health & Safety

reports from management.

Providing support where

appropriate to drive continuous

improvement.

Oversight of climate-related

risks and opportunities.

Considering environmental and

climate-related impacts on the

Group and wider stakeholders.

Setting climate-related and

sustainability goals and

Executive Director and senior

management remuneration

structures linked to

environmental objectives.

●

People and Culture

●

Governance

●

Stakeholder Engagement

●

Finance

Promoting the Group’s culture

and behaviours.

Monitoring and assessing

feedback from employees and

ensuring employee interests

are considered.

Succession planning for

Board Members and senior

management.

Ensuring compliance with

legal, regulatory and disclosure

requirements.

Determining Group delegations

of authority, including matters

reserved for the Board, and

terms of reference for Board

Committees.

Reviewing potential conflicts

of interest.

Overseeing Board and

Committee performance

evaluation.

Succession planning and

Board appointments.

Approving strategy for

stakeholder engagement.

Ensuring that effective

engagement with employees,

shareholders and other

stakeholders is carried out, and

considering feedback.

Approval of public

announcements.

Considering feedback from

investor meetings and

roadshows.

Approving budgets.

Monitoring financial

performance.

Overseeing preparation and

management of the financial

statements.

Ensuring adequate cash and

external finance.

Approving major capital

projects, acquisitions or

materially significant contracts.

Determining dividend policy.

Determining pensions strategy.

CORPORATE GOVERNANCE REPORT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

The Board: Division of responsibilities

The UK Corporate Governance Code 2018 requires there to be a clear division of responsibilities between the leadership of the Board

and executive leaders of the Group’s businesses. The roles of the Chief Executive Officer, Chair, Senior Independent Director and

Non-Executive Directors are reviewed regularly by the Board and details are set out on the Group’s website.

A summary of key responsibilities is set out below:

Title

Responsibility

Chair

•

The effective running of the Board demonstrating objective judgement

•

Promoting openness and debate on the Board

•

Ensuring the Board is well-informed to enable constructive discussion and sound decision-making

•

Ensuring the effectiveness of the Board in the development of the Group’s strategy and the monitoring of

performance

•

Promoting ethical behaviours and high standards of corporate governance

•

Setting the Board’s agenda in conjunction with the CEO and Company Secretary

•

Ensuring effective communication with shareholders and other stakeholders

•

Leading the performance evaluation of the Board

•

Providing a sounding board for the CEO on key business decisions, challenging proposals where appropriate

Chief Executive

Officer

•

Developing and implementing the Group’s strategy and commercial objectives

•

The overall management of the Group’s businesses

•

Effecting the decisions of the Board and its Committees

•

Maintaining and protecting the reputations of the Group and its subsidiaries

•

Establishing an annual budget consistent with the agreed strategy

•

Ensuring that dialogue is maintained with the Chair on important issues facing the Group

•

Developing and overseeing the Group’s Environmental, Social and Governance work, and sustainability strategy

•

Promoting the Group’s culture and behaviours, and adhering to the highest standards of integrity and governance

Senior

Independent

Director (“SID”)

•

Acting as a sounding board for the Chair and providing support in the delivery of their objectives

•

Working closely with the Chair and other Directors and/or shareholders to resolve significant issues as may be

required from time to time

•

Leading evaluation of the Chair on behalf of the other Directors

•

Ensuring an orderly succession process for the Chair

Non-Executive

Directors

(including the

Chair and SID)

•

Bring complementary skills, knowledge and experience to the Board

•

Constructively challenge the Executive Directors and help develop Group strategy with an independent outlook

•

Devote time to developing and refreshing their knowledge and skills, to ensure that they are well-informed about

the Group and make a positive contribution

•

Satisfy themselves as to the accuracy of the Group’s financial results and the effectiveness of controls and

systems of risk management

•

Determine appropriate levels of remuneration of Executive Directors and have a prime role in

succession planning

From 11 October 2021 to 21 February 2023, Peter Page acted as Executive Chair on an interim basis. During this period, in addition to the

responsibilities of the Chair set out above, Peter Page took on some of the key responsibilities of the Chief Executive Officer with Neil

Austin, Chief Financial Officer, taking on the remainder of the key responsibilities. Additional arrangements were put in place, including

the delegation of certain of the Chief Financial Officer’s responsibilities to senior finance personnel, to ensure that the Group continued to

be managed effectively, governance remained robust and to enable the Group’s strategy to be delivered during the interim period. On 5

August 2022 it was announced that Peter Page was to be appointed as Chief Executive Officer, but that the interim arrangements would

continue with Peter remaining as Executive Chair until such time as a new Non-Executive Chair is in place. The process to recruit the new

Non-Executive Chair, led by Senior Independent Director John Worby concluded in November 2022 and on 30 November 2022 it was

announced that Tim Jones would be appointed Non-Executive Chair. Further details can be found in the Nomination Committee Report

on pages 58 to 60.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

CORPORATE GOVERNANCE REPORT

continued

The Board: Composition

The Board currently comprises two Executive Directors

, and six Non-Executive Directors

. There is also a Company Secretary to the

Board. Biographies of Board members are set out on pages 46 and 47. The appointment and removal of Directors is governed by the

Company’s Articles of Association, and the Companies Act 2006. In accordance with the Corporate Governance Code, all Directors stand

for re-election annually at the Group’s AGM.

The Board: Powers and responsibilities

The powers of the Directors are set out in the Company’s Articles of Association. In addition the Directors have responsibilities and duties

under legislation, in particular those arising under s.172 of the Companies Act 2006.

The Board: Non-Executive Director independence

Taking into account all circumstances, including those factors set out in the Corporate Governance Code, the Board considers Non-

Executive Directors John Worby, Ian Wood, Shelagh Hancock and Stuart Lorimer to be independent. Tim Jones joined the Group as Non-

Executive Chair on 21 February 2023. The Board considers Tim to be independent. Martin Rowland was appointed as a Non-Executive

Director of the Company on 6 March 2023. Martin is appointed as a representative of Harwood Capital Management Limited (“Harwood”)

pursuant to a relationship agreement between the Company and Harwood. As a representative of Harwood, the Board considers Martin

Rowland not to be independent.

The Board: Directors’ conﬂicts of interest

The Companies Act 2006 and the Company’s Articles of Association require the Board to consider any actual or potential conflicts of

interest. The Board has a policy for managing and, where appropriate, authorising actual or potential conflicts of interest, or related party

transactions. Under that policy, Directors are required to declare any interests they or close family members have in any organisations

which are not part of the Group, as well as other circumstances which could give rise to a conflict of interest. At the outset of every

Board meeting, Directors are required to declare any actual or potential conflicts in relation to matters on the agenda. In respect of

discussions relating to CEO succession, the Board noted in the relevant Board meetings that Peter Page was directly interested in the

matters discussed and accordingly the Board minutes note that Peter Page would not vote in connection with such matters. In respect of

discussions relating to the CFO succession, Board minutes reflect that Neil Austin was directly interested in discussions relating to CFO

succession and accordingly the Board minutes note that Neil Austin would not vote in connection with such matters.

The Board regularly reviews its registers of related parties and third-party interests. Directors are required to seek clearance from

the Chair before taking on any new appointments to ensure that any potential conflicts of interest can be identified and addressed

appropriately. Any potential conflicts of interest in relation to proposed Directors are considered by the Board prior to their appointment.

In the financial year ended 3 September 2022, there were no declared conflicts of interest, and there have been no declared conflicts of

interest in the period from 3 September 2022 to the date of this report.

The Board: Support and advice

The Board is supported by the Company Secretary who provides advice on corporate governance matters. The Company Secretary

ensures that information is made available to Board members in a timely manner and provides support to the Chair on arrangements for

the management of meetings including setting the agenda. The Company Secretary also assists in arranging Board effectiveness reviews,

arranging Board inductions for new members and ensuring that the Board has appropriate training.

Directors can obtain independent professional advice at the Group’s expense in performance of their duties as Directors. None of the

Directors obtained independent professional advice in the period under review. All Directors have access to the advice and the services of

the Company Secretary and access to senior management across the Group where required.

The Board: Information, induction and professional development

The Chair is responsible for ensuring all Directors receive comprehensive information on a regular basis to enable them to perform their

duties properly. Updates, where necessary, are provided at Board meetings and governance updates are provided to keep all Directors

up to date with regulatory requirements. New Directors receive an appropriate induction on joining the Board, typically including meeting

members of the senior management team and visits to sites.

Peter Page as Chief Executive and David White as Chief Financial Oﬃcer (“CFO”).

Alistair Wannop and Kristen Eshak Weldon stood down as Non-Executive Directors at the last AGM on 18 January 2022. Shelagh Hancock and Stuart Lorimer

joined the Board on 1 September 2022. John Worby and Ian Wood are also Non-Executive Directors. Tim Jones joined the Board as Non-Executive Chair on 21

February 2023. Martin Rowland joined the Board as a Non-Executive Director on 6 March 2023.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

The Board: Focus for FY23

At the date of writing this Annual Report, it is anticipated that the following areas will receive focus by the Board during the year ending 2

September 2023:

•

Scrutiny of financial control and reporting processes, specifically where accounting judgements are required, including revenue

recognition in the Engineering division

•

Continued development of the strategy to grow shareholder value

•

Development of the Speciality Agriculture division through organic growth opportunities and carefully targeted acquisitions

•

Development of opportunities for growth in the Engineering division through focusing on the unique strengths and qualities of the

current businesses to realise their potential

• Onboarding new Board members

•

Stronger emphasis on climate-related risks and opportunities including the establishment of an Environmental Steering Group and

supporting activities to ensure it is effective in setting the direction for Carr’s Group

•

Implementation of new ERP system in the US feed blocks business

Board Committees: Details

The Board has established Committees to carry out certain aspects of its duties. Each is ordinarily chaired by a Non-Executive Director

and has written terms of reference which are available to view on the Company’s website. The Chair of each Committee reports regularly

to the Board as to how that Committee has discharged its responsibilities.

Committee

Purpose

Audit Committee

John Worby (Chair)

The Audit Committee’s key responsibilities are to review the effectiveness of the

Company’s financial reporting, the performance of the external auditor and the Group’s

systems of risk management and internal control. Details of the work, responsibilities and

governance of the Audit Committee are set out on pages 61 to 64.

Remuneration Committee

Ian Wood (Chair)

The Remuneration Committee’s primary role is to review and set the reward structures

for Executive Directors and other senior management to ensure that these promote the

correct behaviours and are appropriate when considered in conjunction with the levels

of pay and benefits offered across the Group. Details of the work, responsibilities and

governance of the Remuneration Committee are set out on pages 65 to 83.

Nomination Committee

Peter Page (Chair)

The role of the Nomination Committee is to ensure that an appropriate balance of

skills, experiences and backgrounds is achieved across the Board, and that the Group is

properly prepared for the succession of members of the Board and senior management.

Details of the work, responsibilities and governance of the Nomination Committee are set

out on pages 58 to 60.

Board and Board Committees: Agendas and attendees

Board agendas are set by the Chair in consultation with the Executive Directors and with the assistance of the Company Secretary.

In advance of all Board meetings the Directors are supplied papers covering the matters to be addressed. Members of the Senior

Management Team or other third parties may also attend meetings, or parts of meetings, where appropriate from time to time

by invitation.

All Directors are expected to attend scheduled Board meetings and relevant Committee meetings in addition to the Annual General

Meeting unless they are prevented from doing so by prior work or extenuating personal commitments. Directors who are unable to attend

a particular meeting receive relevant briefing papers and are given the opportunity to discuss matters with the Chair or other Directors.

The Company Secretary is responsible to the Board for the timeliness and quality of information.

Peter Page continued to chair the Nomination Committee despite serving as Executive Chair under the interim arrangements announced in October 2021.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

CORPORATE GOVERNANCE REPORT

continued

Board and Board Committees: Schedule and attendance

The Board met on ten scheduled occasions throughout the year ended 3 September 2022. In addition to regular scheduled meetings, a

number of additional meetings took place during the year in order to deal with specific business arising from time to time.

Details of Director

attendance at scheduled Board and Board Committee meetings are set out below:

Board

Audit

Com

Rem

Com

Nom

Com

No. of scheduled meetings

Peter Page

N/A

Hugh Pelham*

N/A

Neil Austin

N/A

John Worby

Ian Wood

Alistair Wannop*

4**

3**

Kristen Eshak Weldon*

4**

3**

Shelagh Hancock*

0**

Stuart Lorimer*

0**

Notes:

N/A – Not applicable (where a Director is not a member of a Committee).

Executive Directors may attend Committee meetings (or parts of such meetings) by invitation where required.

Hugh Pelham stood down from the Board on 11 October 2021. Alistair Wannop and Kristen Eshak Weldon stood down as Non-Executive Directors at the AGM

on 18 January 2022. Shelagh Hancock and Stuart Lorimer joined the Board on 1 September 2022 although no Board or Board Committee meetings were held

between 1 September 2022 and the end of FY22.

Being 100% of the meetings scheduled to take place whilst a member of the Board.

The Board and Board Committees: Evaluation

In 2022, the Board facilitated an internal review of its effectiveness which built upon the external review led by external advisers in 2021.

The 2021 external review provided an independent perspective on Board governance and effectiveness with recommendations for

continuous improvement. The 2022 internal review reflected the 2021 recommendations, key developments in the year, and focused

particularly on the interim arrangements which were in place from October 2021 (see page 53).

The internal review took the form of scored and written feedback on a range of questions which challenged Directors to consider matters

including Board and Committee operation and governance; Board composition; quality of discussion and effectiveness of relationships;

strategy development and understanding of purpose; understanding of responsibilities; and the effectiveness of risk management and

control systems. Questions also challenged the effectiveness and robustness of the interim arrangements, focused upon the review of

strategic options which took place during the year and identified areas for improvement and learning opportunities arising from experiences.

The feedback was the subject of review and discussion by the Board. Key findings were as follows:

•

Board governance is considered generally strong, with a good understanding of duties/responsibilities and collective responsibility.

•

The current balance of knowledge, skills and experience on the Board is considered appropriate to deliver strategic objectives.

Leadership is considered strong and relationships between Board members constructive.

•

Board operation is seen as effective, and the balance of topics covered at meetings considered appropriate. It was noted that reporting

on key targets/performance objectives could be improved.

•

Progress with the strategic review to enhance shareholder value was viewed as very positive, with external support viewed as appropriate.

•

Board engagement is considered positive. Fewer collective Board meetings took place at Group sites during the year, with one-to-one

meetings between Non-Executives and management at Group sites being preferred and proving to be beneficial.

Key findings specifically in relation to the interim arrangements in place since October 2021 were:

•

The decision to move swiftly to adopt interim arrangements was welcomed.

•

The arrangements were considered to have operated effectively and provided good levels of assurance and stable management

during the year.

•

Increased levels of open dialogue between Executive and Non-Executive Directors helped to mitigate the downside of reduced Board

membership.

•

It was noted that increases to Executive workloads and sharing of responsibilities did present some challenges in the period, although

this was not considered to increase levels of risk.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Recommendations following from the internal and external reviews, together with actions taken and plans agreed by the Board, are set

out below:

Recommendation

Progress in 2021/22

Future plans 2022/23

Increase focus

on strategy

development

Review of strategic options undertaken including review

of market insights and Group competencies to grow

shareholder value, resulting in disposal of Agricultural

Supplies division in October 2022 and decision to focus

on Speciality Agriculture and Engineering divisions.

Having taken the first steps in the ongoing process of

strategic change for the Group, the Board will continue

to develop Group strategy as a key priority.

Determine risk

appetite of Board

Focus in the year was on the strategic review and

subsequent disposal of the Agricultural Supplies division.

Board to re-evaluate and determine appropriate

parameters to govern its risk appetite in line with strategy

development.

Reduce level of

operational detail

The presentation of management materials, particularly

markets information, management accounts and health

and safety information, was reviewed and enhanced in the

year to better align reporting with strategy, performance

and governance.

Incoming Chair will review the Board calendar and agenda,

and incoming CFO will review the provision of monitoring/

forecasting information, to support optimisation of the

Board’s effectiveness.

Embed ESG

considerations

ESG and climate change risk received significant focus

in the year. The appointment of an Environment and

Sustainability Manager for the Group is supporting the

Board in progressing key initiatives.

CEO to chair the Group’s Environmental Steering Group

to drive key initiatives and to support the Board and the

development of Group strategy. Incoming Chair and refreshed

Board will continue to promote high standards of governance.

Develop reporting

on targets/

performance

objectives

N/A*

To be developed in conjunction with incoming CFO’s review

of monitoring/forecasting information described above.

Increase focus

on employee

engagement

N/A*

Build upon Group’s current engagement structures with

more regular feedback being provided to the Board.

Board training

N/A*

Refreshed Board will receive training on key topics such as

Health and Safety and Directors’ duties and responsibilities.

Recommendation from internal evaluation during 2022.

The Board recognises that significant challenges were experienced in finalising the Group’s year-end accounting and audit process for

FY22. In the light of this, a detailed review will be undertaken during FY23 to understand shortcomings, and where improvements can be

made to ensure that similar issues are not encountered in future years. The Company will update shareholders on such matters, and the

progress made in relation to the items identified above in its 2023 Annual Report.

Statement of compliance

Save in relation to the following items, the Board considers that the Company has, during the year ended 3 September 2022, complied

with the requirements of the Corporate Governance Code 2018 in their entirety:

Code Provision 9: Interim arrangements

The Board recognises that the interim Executive arrangements first announced on 12 October 2021 included the Chair acting in an

Executive capacity which is not consistent with Code Provision 9. Peter Page stood down as Chair upon the appointment of Tim Jones as

the new Non-Executive Chair for the Group which took effect on 21 February 2023.

Code Provision 41: Workforce engagement on Executive remuneration

Whilst the Group’s employee engagement survey during FY2021/22 sought feedback in relation to remuneration and benefits, this was

not directly in relation to the alignment of Executive remuneration with broader Group remuneration policy. The Remuneration Committee

does however evaluate broader Group remuneration such as basic pay increases, bonuses and share awards, when determining

remuneration levels for Executive Directors and senior management. Further details on the considerations of the Remuneration

Committee are set out on pages 65 to 83.

Matthew Ratcliﬀe

Company Secretary

Carlisle

CA3 9BA

22 March 2023

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Peter Page

Nomination Committee Chair

Introduction

The Nomination Committee ensures

that the Board and Senior Management

Team possess the right balance of skills,

experience and knowledge to support

the Group’s strategy and to meet the

requirements of good governance. The

Committee monitors succession plans

for the Board and senior management to

anticipate future vacancies arising due

to promotion or retirement along with

developments in the business.

Committee membership

The Committee currently comprises four

independent Non-Executive Directors

(John Worby, Ian Wood, Shelagh Hancock

and Stuart Lorimer) together with Peter

Page who chairs the Committee. Tim Jones

joined the Group as Non-Executive Chair on

21 February 2023 and will take over

as Nomination Committee Chair following

the forthcoming General Meeting of

the Company.

In September 2022 Stuart Lorimer and

Shelagh Hancock joined the Committee,

succeeding Alistair Wannop and Kristen

Eshak Weldon who each stood down

from the Committee and the Board in

January 2022.

Responsibilities of the Committee

The key responsibilities of the Nomination

Committee are:

•

Reviewing the structure, size and

composition of the Board and monitoring

the range of skills, knowledge and

experience required for the Board to

operate effectively and to deliver the

Group’s strategy;

• Overseeing Board and senior

management succession planning,

including setting objective selection

criteria and transparent recruitment

processes, and making recommendations

to the Board in relation to the appointment

of Executive and Non-Executive Directors;

and

•

Setting the Group’s policy on diversity

and inclusion and overseeing its

implementation in succession planning

across the Group.

Activities of the Committee

In the year, the Committee’s primary areas

of focus were:

• Non-Executive Director succession, with

the appointment of Shelagh Hancock

and Stuart Lorimer as independent Non-

Executive Directors announced in June

2022;

•

CEO succession, with Peter Page

appointed as CEO following a search

process to take effect upon the

appointment of a new Non-Executive

Chair for the Group;

• Non-Executive Chair succession, with

Tim Jones being appointed as Non-

Executive Chair Designate for the Group;

•

CFO succession with the appointment of

David White announced on 15 December

2022 following the announcement in

August 2022 that Neil Austin would stand

down from the Board after ten years

at Carr’s;

•

Employee engagement, with Ian Wood

appointed as Board Representative for

Employee Engagement in succession to

Kristen Eshak Weldon as announced in

November 2021;

• Senior management succession

planning;

•

The structure, size, composition and

diversity of the Board, its Committees

and senior management across

the Group;

•

Implementation of the Board’s policy on

diversity and inclusion;

•

The Group’s talent management, training

and development programmes; and

•

The Committee’s terms of reference to

ensure they appropriately reflect the

Committee’s remit.

Meetings in the year

The Committee met five times during the

year. Details of meetings of the Committee

and attendance can be found on page 56.

NOMINATION COMMITTEE REPORT

Nomination Committee

Highlights

•

Significant changes to

Executive and Non-Executive

Board membership

•

Conclusion of internal Board

effectiveness review

•

Changes to Committee

membership

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Board succession

In October 2021, interim arrangements were

announced by the Board, under which Peter

Page became Executive Chair to provide

strategic support to the management team

until the appointment of a permanent CEO,

following the departure of Hugh Pelham. In

August 2022, following an extensive search

by the Nomination Committee, Peter Page

was asked to take on the CEO role once a

new Non-Executive Chair is appointed and

in place.

The Committee engaged recruitment

consultants Korn Ferry to assist with the

CEO recruitment. A detailed candidate

profile was developed following an in-

depth analysis of the skills, knowledge and

experience which would best benefit the

Group. The search considered a large pool

of potential candidates from a diverse range

of backgrounds, industries, and countries.

Of the total candidate pool identified, 37

individuals were considered further for the

position from both internal and external

sources (of that total, 33 candidates

were male and four were female). Three

shortlisted candidates were ultimately

identified. In addition following the Board’s

request, Peter Page was also considered a

candidate in the Committee search process

upon which John Worby led the search

process. As announced in August 2022 Peter

Page was appointed and became Chief

Executive Officer upon the appointment of a

new Non-Executive Chair, which took effect

on 21 February 2023.

Following the Board’s decision to

appoint Peter Page as CEO, a search was

conducted for a Non-Executive Chair, led

by the Senior Independent Director, John

Worby. Tim Jones joined the Group on 21

February 2023 and became the Group’s

Non-Executive Chair. The recruitment

process was supported by recruitment

consultants, Warren Partners. The search

identified potential candidates based

on experience and skills. A pool of 128

was identified and 76 people were

approached, of which 43 were female.

Of the 43 females who were approached,

39 either did not reply to the enquiry or

did not pursue the role, principally due to

timing of the opportunity. Three candidates

were shortlisted, one being female. Tim

Jones joined the Board and become

Non-Executive Chair on 21 February 2023.

Tim has been assessed as independent

by the Board. Following the forthcoming

General Meeting of the Company, Tim will

also serve as Nomination Committee Chair

and as a member of the Remuneration

Committee.

At the AGM in January 2022, Alistair

Wannop left the Board after 16 years’

service as a Non-Executive Board member,

and Kristen Eshak Weldon stood down

from her role as Non-Executive Board

member due to a potential conflict with a

new executive role that she had taken on

in 2021. A search for successors to these

Non-Executive roles was announced and

commenced in December 2021, leading

to Shelagh Hancock and Stuart Lorimer

joining the Board as independent Non-

Executive Directors in September 2022,

bringing significant sector and plc board

experience. The recruitment process

was led by the Committee supported by

Warren Partners. In selecting candidates

for each role a detailed profile matrix was

developed which also included the position

of Audit Committee Chair as successor to

John Worby. The Committee considered

a broad range of important skills and

characteristics. The Committee also

considered the balance of skills, experience

and knowledge present across the Board,

the culture of the Group and the benefits

of diversity. For the Non-Executive Director

and Audit Committee Chair position,

of the 121 people identified, 80 were

approached (being 39 male and 41 female).

For the Non-Executive Director position

from 75 potential candidates, a longlist

of 13 potentials was identified including

four female candidates. Following the

Committee’s recommendations, Shelagh

and Stuart were appointed to the Board on

1 September 2022 as independent Non-

Executive Directors.

It was announced in August 2022 that Neil

Austin would stand down as Chief Financial

Officer (“CFO“) after ten years with Carr’s.

Following a full external search for Neil’s

successor, David White joined the Group

as Chief Financial Officer Designate on 3

January 2023. The recruitment process was

led by the Committee and supported by

recruitment consultants, Russell Reynolds.

Russell Reynolds searched a large pool of

potential candidates aimed at producing

a diverse selection. Of a candidate pool

of 135, 21 were female. The Committee

considered experience and skills as well

as sector experience and culture of the

Group. Following the interview process,

David White joined the Group on 3 January

2023 and became CFO upon Neil standing

down as CFO and from the Board on 21

February 2023.

As announced on 21 February 2023,

Martin Rowland was appointed as a

Non-Executive Director of the Company

with effect from 6 March 2023. Martin is

appointed as a representative of Harwood

Capital Management Limited (“Harwood”)

pursuant to a relationship agreement

between the Company and Harwood.

For a short period after the AGM in January

2022, the Board comprised two Executive

Directors, (one being Peter Page as

Executive Chair on an interim basis), and

two independent Non-Executive Directors.

This composition in the Board was noted

at the AGM in January 2022, where certain

shareholders voted against the Executive

Director appointments including one

major shareholder whose voting policy

required the Board to comprise a majority

of independent Non-Executive Directors

and at least one female member. Whilst

the Board composition was in line with

Provision 11 of the Code which requires at

least half the Board, excluding the Chair, to

be independent Non-Executive Directors,

we nonetheless undertook a shareholder

engagement exercise to understand

shareholders’ concerns and explain the

Group’s Non-Executive Director succession

plans and investors were updated

accordingly.

Committee succession

As part of the interim Board arrangements

announced in October 2021, Peter

Page stood down as a member of the

Remuneration Committee whilst acting

as Executive Chair. Following their

appointment on 1 September 2022,

Shelagh Hancock and Stuart Lorimer

joined Ian Wood (Chair) and John Worby

as Remuneration Committee members

and Tim Jones will become a member

following the forthcoming General Meeting

of the Company. Peter has continued

as Nomination Committee Chair but

will hand over to Tim Jones following

the forthcoming General Meeting of the

Company. The Nomination Committee also

includes Ian Wood, John Worby, Shelagh

Hancock and Stuart Lorimer. John Worby

will stand down as Audit Committee Chair

following the forthcoming General Meeting

of the Company, and will be succeeded

by Stuart Lorimer. The Audit Committee

members are Ian Wood and Shelagh

Hancock as well as John Worby and Stuart

Lorimer.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

NOMINATION COMMITTEE REPORT

continued

John Worby will remain on the Board for a

period to enable a smooth handover and

will stand down from the Board later in

2023.

Board evaluation

In August 2022 an internal Board

effectiveness review was undertaken.

Details of the process and its outcomes are

set out in the Corporate Governance Report

on pages 56 and 57.

Committee eﬀectiveness

The effectiveness of the Committee was

considered as part of the Board’s internal

effectiveness evaluation described on

pages 56 and 57. Feedback was that

the Committee had demonstrated its

effectiveness in steering the Group through

changes over the last 12 months. It was

agreed that the Committee continues

to operate effectively and fulfil its

responsibilities.

Group succession planning

and development

The Group’s succession planning focuses

upon ensuring that sufficient appropriately

qualified and experienced employees are

recruited or developed internally to meet

the future management and leadership

needs of the business. Recruitment

processes for leadership and senior

positions across the Group are managed

under the supervision of the Group’s HR

Director, inviting both internal and external

candidates. Independent recruitment

consultants are also appointed where

appropriate.

Across the Group our career pathway and

employee development initiatives continue

to evolve which are designed to attract,

retain and develop the best talent. Further

details of those initiatives are described

from pages 28 and 29. During the year,

the Group’s HR Director met with the

Committee to review succession planning

for senior management and key personnel,

together with leadership development

initiatives and training programmes across

the Group.

Diversity and inclusion

As at the date of this report, employee

numbers were 647 across four countries.

The Group’s principal concern when

making employment decisions is ensuring

that candidates possess the skills,

knowledge and experience, or the potential

to develop the required skills, knowledge

and experience, to meet the requirements

of the Group. All appointments, whether

external recruitments or internal

promotions, are based on merit, and are

not influenced or affected by race, colour,

nationality, religion or belief, gender, marital

status or civil partnership, family status,

pregnancy or maternity, sexual orientation,

gender reassignment, disability, or age.

There are no differences in pay structures

for persons of different genders performing

similar roles.

The Nomination Committee recognises

that diversity strengthens the Board,

and that it is important to ensure that it

is not solely comprised of like-minded

individuals with similar backgrounds. The

Group is committed to extending diversity

throughout the organisation. Successful

delivery of the Group’s strategy depends

on the recruitment and retention of a

motivated and skilled workforce in an

increasingly competitive labour market.

The Board recognises that steps taken

to improve diversity in the workplace

increase the attractiveness of the Group to

prospective employees and enhance the

available talent pool.

Gender breakdown

Total

Male

Female

Group Employees*

647

502

145

Senior Managers

Direct Reports to

Senior Managers

Male

Female

Speciality Agriculture

74%

26%

Engineering

83%

17%

Head Office

57%

43%

Figures as at year end: Total: 1,221; Male: 864;

Female: 357.

Director independence

Details relating to Director independence

can be found in the Corporate Governance

Report on pages 50 to 57.

Director re-election

At the AGM on 27 February 2023, Peter

Page, John Worby and Ian Wood each

stood for re-election to the Board, and

Shelagh Hancock, Stuart Lorimer, David

White and Tim Jones each stood for

election to the Board, in accordance

with best practice under the Corporate

Governance Code.

The Board set out in the Notice of Annual

General Meeting for February 2023 its

reasons for supporting the election or

re-election of each of Peter Page, John

Worby, Ian Wood, Shelagh Hancock, Stuart

Lorimer, David White and Tim Jones. Their

biographical details on pages 46 and 47

demonstrate the range of experience and

skills which each brings to the benefit of

the Group.

All resolutions to elect or re-elect directors

as set out in the Notice of Annual General

Meeting for February 2023 were passed at

the AGM held on 27 February 2023.

All Directors on the Board at the time of

the next annual general meeting of the

company will each stand for election or

re-election to the Board in accordance

with best practice under the Corporate

Governance Code.

Tim Jones will take over from Peter Page

as Nomination Committee Chair following

the forthcoming General Meeting of

the Company. Peter will be available at

the General Meeting to respond to any

shareholder questions that might be raised

on the Committee’s activities.

Peter Page

Nomination Committee Chair

22 March 2023

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

John Worby

Audit Committee Chair

Audit Committee Highlights

•

Completion of external audit

tender

•

First year working alongside

Grant Thornton as external

auditor

•

Review of new TCFD

disclosures

•

Changes to Committee

membership

AUDIT COMMITTEE REPORT

Introduction

The Audit Committee focuses on effective

governance and financial reporting.

It assists the Board in discharging its

responsibilities for the integrity of the

financial statements and narrative reporting,

the effectiveness of internal controls, the

identification and management of risks, and

the external and internal audit processes.

This was the first year that the Group

audit was undertaken by Grant Thornton

UK LLP, following its appointment at the

2022 AGM. Issues identified during the

audit relating to the independence of the

auditor of the Group’s associate company

contributed to a delay in the finalisation of

the audit. Whilst the associate company

concerned has been sold, this together

with other complications arising from the

ERP implementation in the now disposed of

Agricultural Supplies division, resulted in an

entirely unsatisfactory delay in publishing

the Group’s results. Further details of this

are set out in the report below.

The report on the pages which follow

details the principal activities of the

Committee during the year, together

with information on its governance.

Committee membership

The Committee currently comprises four

independent Non-Executive Directors: John

Worby, Shelagh Hancock, Stuart Lorimer,

and Ian Wood. John Worby is Chair of the

Committee and is a chartered accountant

with recent and relevant financial experience

(see page 47). John Worby will stand

down as Audit Committee Chair following

the forthcoming General Meeting of the

Company, and will be succeeded by Stuart

Lorimer, who is a qualified accountant with

recent and relevant financial experience

(see page 47).

There were changes to Committee

membership in 2022. Following the AGM in

January 2022, at which Alistair Wannop and

Kristen Eshak Weldon stood down from the

Board, the Board determined that until such

time as further independent Non-Executive

Directors were appointed to the Board, the

minimum membership of the Committee

should be two independent Non-Executive

Directors (being John Worby and Ian Wood).

Subsequently, Shelagh Hancock and

Stuart Lorimer joined the Committee on

1 September 2022.

The Committee acts independently of

management, and the Board is satisfied

the Committee taken as a whole has the

appropriate skills, knowledge, experience,

and understanding of the Group’s

undertakings to effectively discharge

the Committee’s responsibilities.

Responsibilities of the Committee

The key responsibilities of the Committee

are to provide effective governance

over the integrity of the Group’s financial

reporting and the effectiveness of its

systems of internal control and risk

management. This includes reviewing

and monitoring:

•

The integrity of the Group’s financial

statements and related narrative

reporting including the appropriateness

of the Group’s accounting policies;

•

Where requested by the Board, whether

the Annual Report and Accounts,

taken as a whole is fair, balanced and

understandable and provides the

information necessary for shareholders

to assess the Group’s position and

performance, business model

and strategy;

•

The effectiveness of the Group’s internal

financial controls, and other systems of

internal control and risk management;

•

The scope and effectiveness of the internal

audit function;

•

The scope and effectiveness of the

external audit, taking into consideration

relevant professional and regulatory

requirements;

•

The independence and objectivity of the

external auditor, and the Group’s policy on

the engagement of the external auditor to

supply non-audit services;

•

The Group’s whistleblowing and anti-

bribery policies and arrangements; and

•

The process for assessing the Group’s

prospects and the disclosures made in the

Viability Statement in the Annual Report.

The Committee also makes

recommendations to the Board, in relation

to the appointment, reappointment

and removal of the external auditor and

conducts any tender process in relation to

the appointment of any new external auditor.

The Committee reviews its terms

of reference annually and makes

recommendations to the Board for any

appropriate changes (the Committee’s terms

of reference can be found on the Group’s

website at www.carrsgroup.com). The

Committee regularly reports to the Board on

how it discharges its responsibilities.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Meetings in the year

The Committee met six times during the

year (details of attendance can be found on

page 56) including two meetings relating

specifically to the selection and appointment

of the external auditor, and has an agenda

linked to the Group financial calendar. It

invites the Executive Directors, the Head

of Internal Audit, representatives from the

external auditor, and other senior finance

personnel to attend its meetings. During

the year, the Committee met with each of

the Head of Internal Audit and the external

auditor without the Executive Directors or

other senior management being present.

The Committee has met six times since

the end of the financial year to consider

internal audit work, the Group’s results,

and the Annual Report for the year ended

3 September 2022.

Activities during the year

The key activities of the Committee during

the year are summarised below.

Financial reporting

•

Reviewed and challenged key financial

reporting judgements and estimates.

•

Reviewed the Group’s going concern and

viability statement disclosures.

•

Reviewed the Group’s new disclosures

in respect of the Task Force on Climate-

related Financial Disclosures.

• Reviewed the Group’s financial

statements and narrative to ensure that

this is fair, balanced and understandable.

External audit

•

Completed a tender exercise relating to

the appointment of the Group’s external

auditor and made recommendations to

the Board in relation to the appointment

of Grant Thornton as the Group’s external

auditor following conclusion of that

tender process.

•

Reviewed the audit strategy and plan.

•

Agreed the terms of engagement and

remuneration of the external auditor.

•

Reviewed the Group’s policy for

non-audit work and monitored the

independence of the external auditor.

•

Discussed extensively with the external

auditor issues relating to their concern

with the independence of component

auditors as explained more fully below.

Internal control and risk management

•

Reviewed the Group’s internal controls

and risk management systems.

•

Reviewed and updated where necessary

the Committee’s terms of reference.

•

Reviewed the effectiveness of the

Committee.

Internal audit

•

Reviewed and challenged the work of

the Group’s internal auditor.

•

Reviewed the effectiveness of the

internal auditor.

•

Reviewed the internal audit charter.

•

Reviewed the internal audit work plan for

the coming year.

Whistleblowing and anti-bribery

• Reviewed the Group’s whistleblowing

policy.

•

Reviewed the Group’s anti-bribery policy.

•

Reviewed on behalf of the Board any

whistleblowing or similar reports together

with their resolution.

Group viability and related disclosures

•

Reviewed the three-year time horizon for

the Group’s Viability Statement.

•

Reviewed the Group’s budget, forecasts

and downside sensitivity analysis, and

concluded that the Group is viable over

the three-year time horizon.

•

Reviewed and approved the Group’s

going concern and Viability Statement

disclosures in the Annual Report.

Further details on the work undertaken

during the year are set out on the

following pages.

Financial reporting

The activities undertaken by the Committee

in the year in relation to financial reporting

covered four main aspects:

•

Review and challenge of key financial

reporting judgements and estimates.

•

Review of the Group’s going concern and

Viability Statement disclosures.

•

Review the Group’s new disclosures in

respect of the Task Force on Climate-

related Financial Disclosures.

•

Review of the Group’s financial

statements and narrative to ensure

that they are fair, balanced and

understandable.

Each of these is discussed in more

detail below.

Review of key judgements and estimates

An important responsibility of the Committee

is to review and agree significant estimates

and judgements made by management.

To satisfy this responsibility, the Committee

reviewed detailed written reports from

management, including the Chief Financial

Officer, and the external auditor at its

meetings, to review the half-year and

year end results. The Committee carefully

considered the content of these reports in

evaluating the significant issues and areas

of judgement across the Group.

The key areas of judgement in the year

were as follows:

•

Revenue recognition in relation to

Engineering

ISA (UK) 240 presumes a risk of

revenue misstatement due to improper

recognition. The key risk to revenue

recognition is judged to be in relation to

the recognition of revenue and profit on

engineering contracts, the completion or

final agreement of which extend beyond

the year end. To assess the risk to the

Group, the Committee reviewed reports

from management and the external

auditor on the application of revenue

recognition policies by management

to major contracts not completed or

finalised at the year end. Particular

focus was given to the basis used for

revenue recognition including the

identification of separate performance

obligations where appropriate and to

the forecast costs to complete such

contracts. Grant Thornton as new

auditor challenged the approach to

recognition of revenue across a selection

of contracts. On two similar contracts,

they challenged whether these reflected

two performance obligations (as had

been used in previous years) rather than

one. Whilst the arguments appeared

to be finely balanced, management

decided that it should account for the

contracts as having one rather than two

performance obligations. As required

by accounting standards, the impact

of the change has been reflected on

the previous years’ results as a prior

year adjustment. On contracts with

one specific customer entered into in

prior years, Grant Thornton challenged

whether rights to payment under

these contracts enabled revenue to be

recognised as works were performed.

Although all contracts with this customer

have now been fulfilled and amounts

due paid in full, management accepted

that these specific contracts did not

AUDIT COMMITTEE REPORT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

contain a sufficiently enforceable right

to payment for work done prior to

completion of the contract and therefore

the treatment followed in prior years had

incorrectly recognised revenue earlier

than the standard allows. As a result, a

prior year adjustment has been made

to correct the accounting treatment.

The Audit Committee considered these

matters and accepted management’s

recommendations. The impact of the

changes in the current year results

was noted to be minimal. Full details of

the impact of the change on previous

years results are set out in note 39 to

the financial statements. As would be

standard for any new auditor, Grant

Thornton also challenged judgements

related to revenue recognition on

discontinued operations, which in two

instances, the Committee have accepted

requires adjustment to correct the

accounting treatment. The result is a

further two prior period restatements

which, combined, reduce revenue in FY21

by £12.1m, although there is no impact on

profit. Details of the impact of these are

set out in note 39.

•

Potential goodwill impairment

The Committee challenged the

reasonableness of the future business

performance assumptions adopted by

management for those businesses that

had underperformed against expectations

in the light of historical performance,

industry benchmarks and market trends.

The Committee also reviewed the

assumptions underlying the discount rates

used in the evaluation. The Committee

concurred with management’s view that

goodwill in two businesses required

impairment. On Chirton Engineering, the

Committee agreed with management’s

proposal, given the competitive sector

in which that business operates, that

the remaining goodwill for that business

be fully impaired. On Wälischmiller

Engineering, management proposed a

partial impairment of goodwill relating to

the Staber acquisition in 2016, reflecting

uncertainty of the expected future

demand for Wälischmiller products

despite a strong opportunity pipeline. The

Committee agreed with management’s

assessment. Details of the impairment

are contained in note 12 to the financial

statements.

•

Defined benefit pension scheme

The Committee considered and

challenged valuations of the scheme’s

investments, and the key actuarial

assumptions used to value the scheme

obligations. The assumptions made

were reviewed against market data in

conjunction with independent actuarial

specialists to assess their appropriateness,

and the disclosures on the sensitivity

of the obligations to changes in such

assumptions were reviewed. The

Committee was satisfied that the

scheme’s assets were appropriately

valued, that the assumptions adopted in

relation to the scheme’s liabilities were

appropriate, and that disclosures made in

relation to the scheme were appropriate.

•

Agricultural Supplies division

During the year, difficulties were

experienced in the Carr’s Billington

business following the implementation

of a new ERP system. This resulted

in delays to processing of purchase

invoices, and pricing issues in certain

invoices to customers. As a result of

focusing efforts on resolving these

issues, certain reconciliation procedures

lapsed. The time taken to resolve these

issues was further hampered by resource

issues due to the process involved in

disposing of the business. After reviewing

with management and the external

auditor the work done to rectify this, the

Committee was satisfied that the results

for the year have been fairly stated. The

Committee also reviewed the accounting

treatment of the Agricultural Supplies

business as discontinued in the light

of the agreement to sell the business

entered into before the year end on

31 August 2022 and the subsequent

completion of the sale after the year end.

The Committee was satisfied with the

accounting treatment and disclosures

made in the Annual Report.

Going concern and viability statement

The Committee reviewed a report

prepared by the Chief Financial Officer

in relation to the Group’s going concern

and Viability Statement disclosures and

challenged management’s assessment

of going concern, including the base

assumptions used in cash flow forecasts

in the light of historic forecasting accuracy,

together with management’s various

sensitised scenario analyses and analysis

of headroom under available financing.

The Committee also reviewed reports

from the external auditor in relation to the

appropriateness of the period of viability

considered by management and the risks

and scenarios applied. Considering all

available information, including the impact

of inflationary pressures, and challenging

the assumptions adopted by management,

the Committee was satisfied that the going

concern assumption remained appropriate,

and that disclosures in the Annual Report in

relation to going concern and the Viability

Statement were appropriate.

TCFD Disclosures

The Committee reviewed the TCFD

disclosures and a report prepared by

the Head of Internal Audit reviewing the

accuracy of the reported Scope 1 and

Scope 2 emissions. The Committee was

satisfied with the reasonableness of the

disclosures noting that work to further

enhance the TCFD disclosures was planned

for the year ahead.

Fair, balanced and understandable

The Committee, further to the Board’s

request, reviewed the Annual Report, and

provided advice to the Board in relation

to whether the Annual Report, taken as

a whole, is considered fair, balanced,

and understandable, and provides the

information necessary for shareholders to

assess the Group’s position, performance,

business model and strategy.

To make this assessment, the Committee

reviewed a report prepared by the Chief

Financial Officer outlining key matters and

circumstances affecting the Group. The

Committee was satisfied that such matters

were adequately referenced or reflected

within the Annual Report.

Internal control and

risk management

During the year the Committee continued

to monitor the effectiveness of the Group’s

internal control and risk management

systems and at the end of the year carried

out a review of the effectiveness of such

systems based on a report prepared by the

Head of Internal Audit.

As noted above, issues arose over the

timely processing of purchase invoices and

with certain customer invoices during the

implementation of a new ERP system at

Carr’s Billington. During the time taken to

resolve these issues there was a lapse in

certain controls in this business including

in relation to monthly reconciliation

procedures. As a result additional effort

was required at the year end to ensure the

results were fairly stated.

The Committee reported to the Board

that other than in respect of this lapse

of controls at Carr’s Billington it was

satisfied with the overall effectiveness

of the Group’s internal control and risk

management systems.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

External audit

The appointment of Grant Thornton as

the Group’s external auditor for the first

time was approved by shareholders at the

AGM in January 2022 following the tender

process conducted in 2021. Full details of

the process undertaken are set out in the

2021 Annual Report.

The Audit Committee assessed the

qualifications, expertise and independence of

Grant Thornton as part of that tender process

and updated its assessment during the year.

Grant Thornton’s audit partner is Michael

Frankish, and this is his first year in that role.

During the year, the Committee reviewed

the terms of engagement and remuneration

of Grant Thornton. It also reviewed Grant

Thornton’s detailed audit plan presented

by them in June 2022 and an updated audit

plan presented in October 2022 following

the Group’s announcement of the disposal

of its Agricultural Supplies division.

Subsequent to the October audit plan

update, the external auditor identified

concerns over the independence of the

component auditor to the Group’s associate

company Carrs Billington Agriculture

(Operations) Limited (“CBAO”), part of the

now sold Agricultural Supplies division.

Grant Thornton determined that the

Financial Reporting Council’s independence

requirements, as updated and published

in December 2019, could not be met due

to the length of Mitchell Charlesworth’s

key team members association with

CBAO, the limited scope for partner and

manager rotation and the provision of

prohibited non-audit services which had

been provided in prior years. As a result the

Committee agreed that a separate audit of

CBAO was then required for the purposes

of completing the Group’s audit process.

A number of alternatives to undertake such

an audit were considered by management,

none of which could be completed to a

timescale required to enable the Group

to report to the timetable required under

the listing rules to avoid the Company’s

shares being suspended. Ultimately it was

agreed by the Committee that the audit

should be undertaken by Grant Thornton.

However, it was not possible for this to

be undertaken in a timescale to avoid

suspension of the Company’s shares,

in part because of the additional effort

required by the external auditor in the light

of the ERP implementation issues in the

Carr’s Billington business discussed above.

The Committee noted that the issues

leading to the share suspension would

not be expected to recur especially as the

business concerned has now been sold.

Nevertheless the Committee intends to

have early discussions with the external

auditor aimed at ensuring a more timely

audit completion in the year ahead.

Each year, the Committee assesses the

performance and the effectiveness of the

external auditor through a questionnaire

completed by Committee members and

members of the Group’s senior finance team.

External auditor independence

The Committee keeps under review the

objectivity and independence of the

external auditor. The external auditor

confirms compliance with their own internal

policies and procedures designed to

ensure that they comply with UK regulatory

and professional standards, including

ethical standards, and to ensure that their

objectivity is not compromised.

The Committee also annually reviews

the Group’s non-audit services policy,

updating and approving the policy where

appropriate. The objective of the policy

is to ensure that the provision of any

such services does not impair, or is not

perceived to impair, the external auditor’s

independence or objectivity. The policy

imposes guidance on the areas of work

that the external auditor may be asked to

undertake and those assignments where

the external auditor should not be involved.

The policy can be viewed on the Group’s

website www.carrsgroup.com.

To ensure that the policy is effective, and the

level of non-audit fees is kept under review,

all non-audit services must be approved by

the Chief Financial Officer and reported to the

Committee. Prior approval of the Committee

is also required before the external auditor

is engaged to provide non-audit services

costing over £25,000 in aggregate.

During the year, the Committee reviewed

and approved the appointment of Grant

Thornton to provide reporting accountant

services in connection with the disposal of

the Group’s Agricultural Supplies division

after being satisfied that there were

sufficient safeguards in place to ensure

their independence as auditor, including a

review of Grant Thornton’s remuneration

for non-audit services. As part of its review,

the Committee noted that the services

were supplied by an entirely different team

within Grant Thornton not including staff

involved in the Group’s external audit.

The Committee considers Grant Thornton

to remain independent and recommended

to the Board that Grant Thornton be

reappointed as the Group’s external auditor.

Internal audit

The Committee is responsible for monitoring

the performance and effectiveness of the

Group’s internal audit activities.

During the year, the Committee reviewed

and approved the internal audit plan which

is devised from assessments across the

Group’s operations and aligned to the Group

risk framework as well as business-specific

risks. On an annual basis, the Committee also

reviews and approves the Group’s internal

audit charter which describes the role and

mandate of the internal audit function.

At each of the Committee’s meetings during

the year, the Group’s Head of Internal

Audit provided updates on internal audit

activities. Internal audit findings, together

with responses from management, were

considered by the Committee and where

necessary challenged. The Committee also

keeps the performance and effectiveness

of the internal audit function under review

and in doing so it also assesses the quality,

experience and expertise within the internal

audit function. The Committee was satisfied

that the internal audit function continues to

operate effectively.

Since the year end, the Committee has

agreed an outline internal audit plan for

2023, which will continue to be reviewed on

a quarterly basis to respond to emerging

risks or challenges arising.

Committee eﬀectiveness

The effectiveness of the Committee was

considered as part of the Board’s internal

effectiveness evaluation described on pages

56 and 57. Feedback from the evaluation

was strong in all areas and it was agreed

that the Committee continues to operate

effectively and fulfil its responsibilities.

John Worby will be available at the

forthcoming General Meeting to respond

to any shareholder questions that might be

raised on the Committee’s activities.

John Worby

Audit Committee Chair

22 March 2023

AUDIT COMMITTEE REPORT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

REMUNERATION COMMITTEE REPORT

Introduction to the report

The Committee’s report is presented in the

following sections:

This Annual Statement, which

summarises the key considerations of

the Committee during the year.

The Directors’ Remuneration Policy.

The most recent Policy has been in

place since January 2021 and covers

remuneration arrangements for

Executive Directors, the Chair and Non-

Executive Directors. No changes to the

Policy are proposed this year.

The Annual Report on Remuneration.

The Report sets out how the Directors’

Remuneration Policy was applied

in 2021/22; provides details of the

remuneration received by Directors

relating to the financial year 2021/22;

and outlines how the policy will be

applied during the next financial

year 2022/23. The Annual Report on

Remuneration will be subject to an

advisory shareholder vote at

the forthcoming General Meeting

of the Company.

1. Annual Statement from the

Chair of the Remuneration

Committee

Performance and remuneration in

2021/22

The Group’s financial performance in the

year was strong. Adjusted profit before

tax for the full Group was in line with the

Board’s original expectations at £17.4m and

4.3% ahead of the prior year (2021: £16.6m).

Adjusted earnings per share, including

discontinued operations, increased 3.0% to

13.7p (2021: 13.2p).

In January 2022, the Board announced a

review of the strategic options for each

of the Group’s three divisions to evaluate

potential to grow shareholder value. As a

first step, the Board took the decision to

exit the Agricultural Supplies market, which

was achieved through a disposal which was

approved by shareholders on 19 September

2022 and completed on 26 October 2022.

Taking into consideration the Group’s

financial performance and strategic

development in the year, the Committee

determined that an annual bonus was

payable to Neil Austin (being the only

eligible Executive Director). Owing to the

performance of the Group over the last

three financial years, no award shares

granted to Executive Directors under the

Group’s Long-Term Incentive Plan will vest

in relation to the performance period which

ended on 3 September 2022.

The Committee is satisfied that the

Remuneration Policy operated as intended

in 2021/22, and that remuneration

outcomes for Executive Directors aligned

with Group strategy and shareholder

interests.

Full details of the remuneration targets

set by the Committee, together with

performance against those targets and

the remuneration outcomes, are set out in

the Annual Report on Remuneration which

follows from page 75.

Committee activity in 2021/22

The key areas of activity for the Committee

over the past financial year included:

• Determining remuneration changes

for Peter Page under interim and

permanent executive arrangements

following engagement with certain major

shareholders.

• Determining remuneration arrangements

for Tim Jones as incoming Non-Executive

Chair.

•

Overseeing wider workforce

remuneration in the context of fairness.

• Reviewing the remuneration of

the Executive Directors and senior

management.

• Developing and agreeing performance-

related targets for Executive Directors

in line with strategy and determining

outcomes against previously agreed

targets.

•

Determining exit arrangements for Neil

Austin as outgoing CFO.

• Determining remuneration arrangements

for David White as incoming CFO.

• Reviewing and approving discretionary

share plans for the Group, put to

shareholders at the AGM on 27 February

2023.

•

Considering outcomes from the Board’s

review of the Committee’s effectiveness.

Ian Wood

Remuneration Committee Chair

Remuneration Committee

Highlights

•

Shareholder engagement

on, and determination of,

remuneration under interim

arrangements

•

Consideration of remuneration

for incoming Executive and

Non-Executive Directors

•

Determining new discretionary

share plans for the Group

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Further information on each of the above

matters is set out on the pages which

follow.

Interim Executive arrangements

As previously announced, Peter Page

agreed to act as Executive Chair until

the appointment of a permanent CEO

under interim arrangements effective

from 11 October 2021. The remuneration

arrangements for Peter Page during

the interim period were subsequently

considered by the Committee which

included consulting with certain major

shareholders and taking advice from

remuneration advisers at PwC. Given the

expectation that Peter Page would resume

his role as Non-Executive Chair upon the

appointment of a permanent CEO, the

Committee determined that there would

be no performance-related remuneration

payable, but that Peter Page would receive

an increased level of fees during the interim

arrangements to reflect the additional time-

commitment required by an Executive role.

In August 2022, following an extensive

search by the Nomination Committee, it

was announced that Peter Page was to be

appointed as the new CEO for the Group.

New permanent executive remuneration

arrangements were therefore considered

by the Committee and agreed with Peter

Page.

Committee membership

At the AGM in January 2022, Alistair Wannop

and Kristen Eshak Weldon each stood

down from the Board and the Committee.

This followed Peter Page standing down

from the Committee in October 2021 upon

becoming Executive Chair under interim

arrangements. Following these changes,

the Remuneration Committee comprised

two Non-Executive Directors, one being

myself as Chair, and the other being John

Worby. The Board determined that, until

such time as further independent Non-

Executive Directors were appointed to the

Board, the minimum membership of the

Committee should be two independent

Non-Executive Directors.

Following the appointment of Shelagh

Hancock and Stuart Lorimer to the Board

and the Committee on 1 September 2022,

the Committee currently comprises four

independent Non-Executive Directors which

will increase to five when Tim Jones joins

the Committee following the forthcoming

General Meeting of the Company.

Meetings in the year

The Committee met five times during the

year. Details of attendance can be found on

page 56.

New LTIP and renewal of DBSP

During the year, the Committee considered

the Group’s discretionary share plans.

Long-Term Incentive Plan

The Carr’s Milling Industries Long-Term

Incentive Plan 2013 (“2013 LTIP”) was

approved by shareholders in January 2013.

Under the 2013 LTIP, nil cost options were

awarded over shares in the Company to

Executive Directors and other employees

at the discretion of the Committee. Awards

are subject to performance conditions

generally measured over three years.

Since its approval, the 2013 LTIP has been

amended once by the Committee (in 2018)

to include provisions relating to malus and

clawback. Awards under the 2013 LTIP can

be made for up to ten years from the date

of its approval, meaning that a replacement

plan is required to enable long-term

incentive awards to continue to be made.

The Committee considered whether to

replace the existing plan with a similar

arrangement or propose an alternative

with the support of remuneration advisers

at PwC and considering feedback

predominately provided by shareholders.

The Committee noted that the current

plan (and Remuneration Policy) contains

the flexibility for the Committee to add

further performance measures should

these be considered appropriate. In all

circumstances, the Committee determined

that a replacement scheme would be

designed on similar terms to the existing

(updating where required). A new plan was

approved at the Remuneration Committee

Meeting on 6 December 2022 and was

approved by shareholders at the AGM on

27 February 2023.

Deferred Bonus Share Plan

The Carr’s Group plc 2018 Deferred Bonus

Share Plan (“2018 DBSP”) was approved by

the Committee on 14 May 2018. The 2018

DBSP is designed to defer a proportion of

Executive Director annual bonus payments

in the form of shares (being 25% of any

awarded bonus for a period of two years

under the current Directors’ Remuneration

Policy). The 2018 DBSP provides for the

grant of nil-cost options or conditional

awards over shares in the Company,

cash awards or any other form of award

decided by the Company’s Remuneration

Committee.

The Committee considered it to be

appropriate to review both the LTIP and

DBSP, and seek shareholder approval in

relation to new updated schemes, at the

same time. A new plan was approved at

the Remuneration Committee Meeting on

6 December 2022 and was approved by

shareholders at the AGM on 27 February

2023.

The adoption of the proposed new Long-

Term Incentive Plan and Deferred Bonus

Share Plan does not impact on the current

Directors’ Remuneration Policy.

Remuneration in 2022/23

For 2022/23, the maximum annual bonus

for the Executive Directors will remain

100% of salary, with 25% of any amount

awarded being deferred for two years in

the form of shares. Non-financial targets

will incorporate ESG considerations as

the Group develops its ESG strategy. The

Committee also intends to grant awards

under the new Long Term Incentive Plan of

100% of salary to David White as incoming

CFO and 150% (being an exceptional

amount) of salary to Peter Page, subject to

stretching performance targets designed

to reflect the position of the Group and

strategy following the disposal of the

Agricultural Supplies division.

I hope that shareholders are able to

support the Remuneration Committee’s

Report at the forthcoming General Meeting

of the Company.

Ian Wood

Remuneration Committee Chair

22 March 2023

REMUNERATION COMMITTEE REPORT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

2. Remuneration Policy

Introduction

This part of the report sets out the

Remuneration Policy for the Group and

has been prepared in accordance with

The Large and Medium-Sized Companies

and Groups (Accounts and Reports)

(Amendment) Regulations 2013 (as

amended).

The current policy was approved by the

shareholders at the AGM which took place

on 12 January 2021, receiving a 99.7% proxy

vote in favour. There have been no changes

to the Remuneration Policy since January

2021 and no changes are proposed to the

policy this year.

The role of the Committee

The primary role of the Remuneration

Committee is to make recommendations

to the Board on the Group’s policy

for Executive Director remuneration.

The Committee also has delegated

responsibility for determining the

remuneration and benefits of the Chair,

the Executive Directors and senior

management including the Company

Secretary.

Key responsibilities include:

• Determining the Executive Directors’

Remuneration Policy to ensure that it

aligns with Group culture and strategy,

and to ensure that the Group rewards

fairly and responsibly.

• Reviewing remuneration trends,

employment conditions and policies

across the Group.

•

Determining the broad policy on

executive remuneration, and setting

remuneration for the Chair, Executive

Directors and senior management.

• Determining targets and outcomes

for performance-related pay schemes

of the Executive Directors and senior

management.

•

Reviewing the design of any share

incentive plans for approval by the Board

and/or shareholders.

•

Engaging with stakeholders on matters

within its remit.

Overview of policy

When setting the policy for Directors’

remuneration, the Committee takes into

account the overall business strategy,

considering the long-term interests of

the Group, with the aim of incentivising

the delivery of rewards to the Group’s

shareholders, workforce and broader

stakeholders.

The Group’s policy is that the overall

remuneration packages offered should be

sufficiently competitive to attract, retain

and motivate high-quality executives and to

align the rewards of the Executive Directors

with the progress of the Group, whilst giving

consideration to salary levels in similar

size quoted companies in similar industry

sectors and views of shareholders.

The remuneration package is split into two

parts:

•

a non-performance-related element

represented by basic salary, benefits and

pension; and

•

a performance-related element in the

form of an annual bonus (including a

Deferred Bonus Share Plan) and a Long

Term Incentive Plan.

Considerations of conditions

elsewhere in the Group

In determining the remuneration of the

Group’s Directors, the Committee takes

into account the pay arrangements and

terms and conditions across the Group as

a whole. The Committee seeks to ensure

that the underlying principles which form

the basis for decisions on Directors’ pay

are consistent with those on which pay

decisions for the rest of the workforce are

taken. For example, the Committee takes

into account the general salary increase

for the broader employee population

when conducting the salary review for the

Executive Directors.

However, there are some differences in

the Executive Directors’ Remuneration

Policy compared to that for the wider

workforce, which the Committee believes

are necessary to reflect the differing levels

of seniority and scope of responsibility. A

greater weight is placed on performance-

based pay through the quantum and

participation levels in incentive schemes to

ensure the remuneration of the Executive

Directors is aligned with the performance of

the Group and the interests of shareholders.

Consideration of shareholder views

In formulating this policy, the Committee

took into consideration the views and

policies of shareholders and proxy

agencies. Proposed changes to the

policy were communicated to major

shareholders prior to its formation in 2020,

and all feedback taken into consideration.

Advice was also taken on best practice

from appropriately qualified remuneration

advisers Aon and PwC. The views offered

to the Committee were taken into account

in developing the policy below, which

received overwhelming support (99.7% of

proxy votes cast by shareholders) at the

AGM on 12 January 2021.

In 2021, a consultation exercise

was undertaken in connection with

the Committee’s Annual Report on

Remuneration. The Committee reviewed

the Directors’ Remuneration Policy during

the year in the light of its consultation,

determining that no changes were required

at this time but remaining cognisant of

shareholder views. The Policy was further

reviewed internally during 2022 and it was

determined that there were no changes

required. The Committee welcomes

feedback from all stakeholders at all times

on the Remuneration Policy.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Remuneration Policy table

Element

Purpose and link to strategy

Policy and approach

Opportunity

Executive Directors

Base salary

To attract and retain the

best talent.

Reflects an individual’s

experience, performance

and responsibilities within

the Group.

Salary levels (and subsequent salary increases)

are set taking into consideration a number of

factors, including:

•

level of skill, experience and scope of

responsibilities of individual;

•

business performance, economic climate and

market conditions;

•

increases elsewhere in the Group; and

•

external comparator groups (used for

reference purposes only).

Salaries are normally reviewed annually with any

increase effective 1 September each year.

There is no formal

maximum; however,

increases will normally align

with the general increase

for the broader employee

population of the Group.

More significant increases

may be awarded from time

to time to recognise, for

example, development in

role and change in position

or responsibility.

Current salary levels are

disclosed in the Annual

Report on Remuneration.

Pension

Provides a competitive

and appropriate pension

package that is aligned

with arrangements across

the Group.

Executive Directors are entitled to participate in a

defined contribution pension arrangement or to

receive a cash alternative to those contributions.

Subject to as provided below, Company

contributions for all Executive Directors are at

a rate which does not exceed the contribution

rate available to the majority of the UK workforce

(currently 4%).

To the extent that pension contributions exceed

annual tax-free allowances, Executive Directors

will be entitled to receive payment through

ordinary payroll in lieu of pension contributions.

Up to a maximum rate not

exceeding that available

to the majority of the UK

workforce.

Benefits

To aid retention and

remain competitive in

the marketplace.

Benefits provided include permanent health

insurance, private medical insurance and life

assurance. Relocation benefits may also be

provided in the case of recruitment of a new

Executive Director. The benefits provided may

be subject to minor amendment from time to

time by the Committee within this policy.

The Company may reimburse any reasonable

business-related expenses incurred in

connection with their role (including tax thereon

if these are determined to be taxable benefits).

Market rate determines

value. There is no prescribed

maximum level but the

Remuneration Committee

monitors the overall cost

of benefits to ensure that it

remains appropriate.

REMUNERATION COMMITTEE REPORT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Element

Purpose and link to strategy

Policy and approach

Opportunity

Annual bonus

Designed to reward delivery of

key strategic priorities during

the year.

Bonus levels and appropriateness of

performance measures and weighting are

reviewed annually to ensure they continue to

support our strategy. Bonuses are capped at

100% of base salary. 25% of any bonus earned

will be deferred into awards over shares, with

awards normally vesting after a two-year period.

Performance is measured against stretching

targets. These may include financial and non-

financial measures. Financial measures will

account for the majority and will typically include

a profit-related target. Performance targets will

be disclosed retrospectively, given commercial

sensitivities of disclosing targets. The threshold

level of bonus under each measure is 0%.

The cash element of the bonus is usually paid

in November each year for performance in the

previous financial year (following completion of

the Audit).

Dividends will accrue on deferred awards over

the vesting period and be paid out either as cash

or as shares on vesting and in respect of the

number of shares that have vested.

A malus and clawback mechanism applies in

specific circumstances, including in the event of

a material misstatement of the Group’s accounts,

and also for other defined reasons including

material financial misstatement, reputational

damage, gross misconduct, fraud, error in the

assessment of performance measures and

corporate failure. These provisions apply to both

the cash and deferred elements of the bonus.

Maximum of 100% of

base salary.

Save As You

Earn (“SAYE”)

To encourage employee

involvement and encourage

greater shareholder alignment.

An HMRC approved SAYE scheme is available to

eligible staff, including Executive Directors.

The schemes are subject to

the limits set by HMRC from

time to time.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Element

Purpose and link to strategy

Policy and approach

Opportunity

Long Term

Incentive Plan

(“LTIP”)

To motivate and incentivise

delivery of sustained

performance over the longer

term, and to support and

encourage greater shareholder

alignment.

Annual awards of performance shares which

normally vest after three years subject to

performance conditions.

Award levels and performance conditions

required for vesting are reviewed annually to

ensure they continue to support the Group’s

strategy. Annual awards are capped at the

equivalent of 100% of base salary at the date

of award.

In accordance with the rules of the LTIP, which

were approved by shareholders at the AGM on

8 January 2013, in circumstances considered by

the Committee to be exceptional, single awards

in excess of 100% of base salary can be made,

up to a maximum of 200% of base salary at the

date of the award.

Awards are currently based solely upon an

EPS growth measure, although the Committee

reserves the right to introduce further alternative

performance measures where considered

appropriate from time to time and following

consultation with major shareholders.

25% vests at threshold performance. There is

straight-line vesting between threshold and

maximum.

A two-year post-vesting holding period applies

to the net of tax shares for awards granted in

2018 and beyond.

A malus and clawback mechanism applies in

specific circumstances including in the event of

a material misstatement of the Group’s accounts

and also for other defined reasons.

Maximum of 100% of base

salary for annual awards.

Exceptional awards can

be made of up to 200% of

base salary.

Shareholding

guidelines

To provide alignment with

shareholder interests.

Executive Directors are required to build up a

shareholding equivalent to 200% of base salary

over a five-year period.

N/A

Post-cessation

shareholding

To provide alignment with

shareholder interests in the

long term.

Executive Directors are required to retain all

shares acquired on vesting under the Company’s

LTIP, up to a value equal to 200% of their basic

salary, for a period of two years following the

cessation of their employment with the Company

for any reason.

This requirement will apply to all shares which

vest after the Policy took effect on 12 January

2021, regardless of when awards were made

under the Company’s LTIP.

N/A

REMUNERATION COMMITTEE REPORT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Element

Purpose and link to strategy

Policy and approach

Opportunity

Non-Executive Directors

Non-Executive

Director fees

To attract and retain a

high-calibre Chair and Non-

Executive Directors by offering

market-competitive fee levels.

Remuneration reflects:

•

the time commitment and responsibility of

their roles;

•

market rate; and

•

that they do not participate in any bonus,

pension or share-based scheme.

Our policy is for the Executive Directors to review

the remuneration of Non-Executive Directors

annually following consultation with the Chair.

The Chair’s remuneration is reviewed annually by

the Remuneration Committee.

The Chair and the Non-Executive Directors

are entitled to reimbursement of reasonable

expenses. They may also receive limited travel or

accommodation-related benefits in connection

with their role as a Director.

The Non-Executive Directors will not participate

in the Group’s share, bonus or pension schemes.

Non-Executive Directors are engaged for

terms of one year subject to appointment and

reappointment at the Company’s AGM.

Non-Executive Directors

receive a single fee for all

services to the Company.

Levels of fee are reviewed

annually with any increases

normally aligning with

general increases for

the broader employee

population of the Group.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Remuneration Committee

discretions

The Committee will operate the annual

bonus plan and LTIP according to their

respective rules. To ensure the efficient

operation and administration of these plans,

the Committee retains discretion in relation

to a number of areas. This is consistent with

market practice. Such areas include (but

are not limited to):

• the participants;

•

the timing of grants and/or payment;

•

the size of grants and/or payments

(within the limits set out in the Policy

table);

•

the determination of vesting based on

the assessment of performance;

•

the determination of a ‘good leaver’ and

where relevant the extent of vesting in

the case of the share-based plans;

• treatment in exceptional circumstances

such as a change of control;

•

making the appropriate adjustments

required in certain circumstances (e.g.

rights issues, corporate restructuring

events, variation of capital and special

dividends);

• cash-settling awards; and

•

the annual review of performance

measures, weightings and setting targets

for the discretionary incentive plans from

year to year.

The Committee also retains the ability to

adjust existing performance conditions

for exceptional events so that they can

still fulfil their original purpose. Any varied

performance condition would not be

materially less difficult to satisfy in the

circumstances.

Performance measures and targets

Our Group strategy and business objectives

are the primary consideration when we

are selecting performance measures

for incentive plans. The annual bonus is

based on performance against a stretching

combination of financial and non-financial

measures. Profit before tax reflects the

Group’s strategic objective to increase profit.

In addition, Executive Directors are assessed

on strategic objectives as agreed by the

Committee at the beginning of the year.

The LTIP is assessed against growth in

adjusted earnings per share as it rewards

improvement in the Group’s underlying

financial performance and is a measure of

the Group’s overall financial success and is

visible to shareholders.

Targets within incentive plans that are

related to internal financial measures, such

as profit, are typically determined based on

our budgets. The threshold and maximum

levels of performance are set to reflect

minimum acceptable levels at threshold

and very stretching but achievable levels at

maximum. At the end of each performance

period we review performance

against the targets, using judgement

to account for items such as foreign

exchange rate movements, changes in

accounting treatment, and significant

one-off transactions. The application of

judgement is important to ensure that final

assessments of performance are fair and

appropriate. In addition, the Remuneration

Committee reviews the bonus and

incentive plan results before any payments

are made to Executive Directors or any

shares vest and has full discretion to adjust

the final payment or vesting downwards if

they believe the circumstances warrant it.

Approach to recruitment

remuneration

The remuneration package for a new

Executive Director would be set in

accordance with the terms of the Group’s

approved remuneration policy in force at

the time of appointment.

Buy-out awards

In addition, the Committee may offer

additional cash and/or share-based

elements (on a one-time basis or ongoing)

when it considers these to be in the best

interests of the Group (and therefore

shareholders). Any such payments would

be limited to a reasonable estimate of

value of remuneration lost when leaving

the former employer and would reflect

the delivery mechanism (i.e. cash and/or

share-based), time horizons and whether

performance requirements are attached to

that remuneration.

Maximum level of variable pay

The maximum initial level of long-term

incentives which may be awarded to a new

Executive Director will ordinarily be limited

to 200% of base salary (i.e. 100% annual

bonus plus 100% Long Term Incentive

Plan). This can be increased to 300% in

exceptional circumstances (i.e. 100% annual

bonus plus 200% Long Term Incentive

Plan). These limits are in addition to the

value of any buy-out arrangements which

are governed by the policy above.

In the case of an internal appointment, any

variable pay element awarded in respect of

the prior role would be allowed to pay out

according to its terms, adjusted as relevant

to take into account the appointment. In

addition, any other previously awarded

entitlements would continue, and be

disclosed in the next Annual Report on

Remuneration.

Base salary and relocation expenses

The Committee has the flexibility to set the

salary of a new appointment at a discount

to the market level initially, with a series of

planned increases implemented over the

following few years to bring the salary to

the appropriate market position, subject to

individual performance in the role.

For external and internal appointments,

the Committee may agree that the Group

will meet certain relocation expenses as

appropriate.

Appointment of Non-Executive

Directors

For the appointment of a new Chair or Non-

Executive Director, the fee arrangement

would be set in accordance with the

approved remuneration policy in force at

that time.

REMUNERATION COMMITTEE REPORT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Directors’ terms of employment and

loss of oﬃce

The Group’s current policy is not to enter

into employment contracts with any

element of notice period in excess of one

year. All Non-Executives are appointed

for terms of 12 months and stand for re-

election annually at the Company’s AGM.

Copies of Executive Directors’ service

contracts and Non-Executive Directors’

letters of appointment are available for

inspection at the Company’s registered

office during normal hours of business.

An Executive Director’s service contract

may be terminated summarily without

notice and without any further payment or

compensation, except for sums accrued up

to the date of termination, if they are deemed

to be guilty of gross misconduct or for any

other material breach of the obligations under

their employment contract.

The Group has the right to terminate

contracts by making a payment in lieu of

notice. Any such payment will typically

reflect the individual’s salary, benefits

and pension entitlements. The Group has

the ability to mitigate costs and phase

payments if alternative employment is

obtained.

There will be no automatic entitlement to a

bonus if an Executive Director has ceased

employment or is under notice. However,

the Committee may at its discretion pay a

prorated bonus in respect of the proportion

of the financial year worked. Such payment

could be payable in cash and not subject to

deferral.

Any share-based entitlements granted to

an Executive Director under the Group’s

share plans will be treated in accordance

with the relevant plan rules. Usually, any

outstanding awards lapse on cessation

of employment. However, in certain

prescribed circumstances, such as death,

ill-health, injury, disability, redundancy,

retirement with the consent of the

Committee, or any other circumstances

at the discretion of the Committee, ‘good

leaver’ status may be applied.

For good leavers under the LTIP,

outstanding awards will vest at the

original vesting date to the extent that

the performance condition has been

satisfied and be reduced on a pro rata

basis to reflect the period of time which

has elapsed between the grant date and

the date on which the participant ceases

to be employed by the Group. For good

leavers under the deferred bonus plan,

unvested awards will usually vest in full

upon cessation.

In determining whether a departing

Executive Director should be treated as

a ‘good leaver’, the Committee will take

into account the performance of the

individual and Group over the whole period

of employment and the reasons for the

individual’s departure.

In the event of a change of control resulting

in termination of office, the Executive

Directors are entitled to 12 months’ base

salary.

The Non-Executive Directors are not entitled

to any compensation for loss of office.

Dates of service contracts and appointment

to the Board for all Directors are given

below:

Date of service contract/letter of appointment

Date of first appointment to the Board

Date stood down

Executive Directors

Hugh Pelham

23 August 2020

4 January 2021

11 October 2021

Neil Austin

1 January 2013

1 May 2013

21 February 2023

Peter Page*

4 August 2022

1 November 2019

David White

14 December 2022

21 February 2023

Non-Executive Directors

Peter Page*

1 September 2021 (as amended on

3 December 2021)

1 November 2019

21 February 2023

John Worby

1 September 2022

1 April 2015

Ian Wood

1 September 2022

1 October 2015

Alistair Wannop

1 September 2021

1 September 2005

18 January 2022

Kristen Eshak Weldon

1 September 2021

1 October 2020

18 January 2022

Shelagh Hancock

7 June 2022

1 September 2022

Stuart Lorimer

8 June 2022

1 September 2022

Tim Jones

29 November 2022

21 February 2023

Martin Rowland

2 March 2023

6 March 2023

Reﬂecting Executive Chair appointment under interim arrangements from 11 October 2021 and appointment as CEO in August 2022.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

REMUNERATION COMMITTEE REPORT

continued

Estimates of total future potential remuneration from 2022 pay packages

The tables below provide estimates of the potential future remuneration of each Executive Director based on the remuneration opportunity

granted in the 2022/23 financial year. Potential outcomes based on different scenarios are provided for each Executive Director.

The assumptions underlying each scenario are described below.

Fixed

Consists of base salary, pension and other benefits.

Save as otherwise stated, base salaries are as at 1 September 2022.

Benefits are valued using the figures in the total remuneration for the 2022 financial year table,

adjusted for any new benefits or benefits that will not be provided during 2023.

Pensions are valued by applying the appropriate percentage to the base salary.

Base

£’000

Benefits

£’000

Pension

£’000

Total

£’000

Peter Page

354

369

Neil Austin*

133

139

David White**

147

154

On target

Based on what a Director would receive if performance was in line with plan, and the threshold

level was achieved under the LTIP.

Maximum

Assumes that the full stretch target for the LTIP is achieved, and maximum performance is

obtained under both the financial and non-financial targets set for the annual bonus scheme.

Maximum with 50% share price

appreciation

Assumes maximum remuneration outcomes are achieved and a 50% increase in the value of

share-based remuneration.

Reﬂecting that Neil Austin stood down from the Board on 21 February 2023.

Reﬂecting that David White joined the Group as CFO designate on 3 January 2023.

Remuneration estimates based upon outcomes

Reﬂecting Neil Austin stood down from the Board on 21 February 2023

Peter Page

Maximum

On Target

Fixed

Neil Austin

Total

Maximum

On Target

Fixed

Chief Financial Oﬃcer*

Chief Executive Oﬃcer

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Reﬂecting that David White joined the Group as CFO designate on 3 January 2023

3. Annual Report on Remuneration

This part of the Directors’ Remuneration Report sets out a summary of how the Directors’ Remuneration Policy was applied during the

2021/22 financial year.

Remuneration Committee

During the 2021/22 year, the Remuneration Committee comprised Ian Wood (Chair), Peter Page (until October 2021)

, John Worby, Alistair

Wannop (until January 2022)

, Kristen Eshak Weldon (until January 2022)

and Shelagh Hancock and Stuart Lorimer (from 1 September

2022). The Committee held five scheduled meetings during the year with all members in attendance (see page 56).

The Executive Directors may attend meetings of the Remuneration Committee by invitation and in an advisory capacity only. No person

attends any part of a meeting at which his or her own remuneration is discussed. The Chair and the Executive Directors determine the

remuneration of the other Non-Executive Directors.

During the year the Committee considered:

•

levels of basic pay and remuneration structures for Executive Directors, the Chair and senior management;

•

variable pay performance targets for Executive Directors, both financial and non-financial;

•

outcomes under variable pay arrangements for Executive Directors and senior management;

•

interim remuneration arrangements for Peter Page as interim Executive Chair;

•

new terms of appointment for Peter Page as interim Executive Chair and CEO;

• existing CEO arrangements;

•

pay and benefits structures across the Group (including gender pay gap reporting and CEO pay ratios);

•

the Committee’s terms of reference (no change);

•

the Directors’ Remuneration Policy (no change);

•

the Corporate Governance Code and developing remuneration trends, and their impact on the activities of the Committee and the

Remuneration Policy;

•

the Group’s Long Term Investment Plan; and

•

the Group’s Deferred Bonus Share Plan.

Peter Page stepped down from the Remuneration Committee upon assuming the role of Executive Chair on an interim basis in October 2021.

Alistair Wannop and Kristen Eshak Weldon stood down in January 2022.

David White

Total

LTIP

Share price growth

Maximum

On Target

Fixed

Chief Financial Oﬃcer**

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

2022 Remuneration (audited information)

In this section we summarise the pay packages awarded to our Executive Directors for performance in the 2022 financial year versus

2021. The table below shows all remuneration that was earned by each individual during the year and includes a single total remuneration

figure for the year.

Salary/Fees

Benefits

Pension

Total fixed pay

Bonus

LTIP

Total variable pay

Total remuneration

£’000

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

Executive Directors

Hugh Pelham

208

225

–

210

235

–

210

235

Neil Austin

256

245

268

261

108

242

–

108

242

376

503

Tim Davies

–

120

–

139

–

120

–

120

–

259

Peter Page

297

–

297

–

297

–

Non-Executive Directors

Peter Page

–

John Worby

–

Ian Wood

–

Alistair Wannop

–

Kristen Eshak

Weldon

–

Shelagh Hancock

–

Stuart Lorimer

–

Figures for 2021 are reﬂective of 8 months’ service in the year following appointment on 4 January 2021. Figures for 2022 include pay in lieu of notice.

Figures for 2021 are reﬂective of 5 months’ service in the year.

Figures for 2021 are reﬂective of 12 months’ service as Non-Executive Chair. Figures for 2022 reﬂect services as Non-Executive Chair until 11 October 2021 and

services as Executive Chair under interim arrangements from 11 October 2021.

Figures for 2022 are reﬂective of 5 months’ service in the year.

Figures for 2021 are reﬂective of 11 months’ service in the year following appointment on 1 October 2020. Figures for 2022 are reﬂective of 5 months’ service in the year.

Shelagh Hancock and Stuart Lorimer joined the Board on 1 September 2022.

2022 Annual bonus pay out

The annual bonus is calculated using a combination of financial and strategic performance targets which are set with regard to Group

budget, historic performance, market outlook and future strategy. No bonus was paid under either financial or non-financial targets to

Hugh Pelham who stood down from the Board on 11 October 2021. No bonus was paid to Peter Page. Under the interim arrangements

effective from 11 October 2021, it was agreed that Peter Page would not receive any performance-related remuneration and would

receive a fixed fee only.

Financial targets

80% of the bonus was based on Group adjusted profit before tax (“PBT”). Adjusted PBT is calculated as reported PBT after adding back

or deducting any one-off items outside of normal trading that were not anticipated at the time the performance targets were set, such as

acquisition-related costs. The Group is committed to disclosing its performance targets retrospectively save where this is prevented due

to commercial sensitivities. For the year ended 3 September 2022, the PBT targets were set in accordance with the table below.

Threshold target (0%) £’000

Basic target (40%) £’000

Maximum target (80%) £’000

16,400

17,300

18,200

Payments are adjusted on a straight-line basis between the targets set out above, although the Committee determined that no annual

bonus would be payable in the event of a performance which failed to exceed performance in the prior year at £16.6m.

For the year ended 3 September 2022, adjusted profit before tax for the Group was £17.4m. The Committee however noted that this figure

included the benefit of unbudgeted changes to revenue recognition following on from a prior year adjustment amounting to £0.3m. To

ensure that the outcome was assessed on a basis consistent with previously set targets, the Committee exercised its discretion and

deducted the impact of the change from the Group’s adjusted profit before tax year to determine the bonus payable under financial

targets. As a result, the outcome under the financial targets was taken to be £17.1m, with the result that 32.0% of the available bonus was

payable in respect of the financial targets.

REMUNERATION COMMITTEE REPORT

continued

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Strategic targets

Strategic targets, which account for 20% of the bonus, are assessed independently of financial performance, but the Committee

determined that no more than 50% of the bonus available for the strategic targets would become payable if financial performance did not

at least meet the basic target.

Details of certain key strategic targets set by the Committee are provided in the tables below. These objectives were formalised in

November 2021, and do not reflect the refocusing of CFO priorities to primarily focus on the delivery of the disposal of the Agricultural

Supplies division following the initial stages of the strategic review.

Chief Financial Oﬃcer: Neil Austin

Objective

Performance Measure

Performance Outcome

Committee’s assessment

of achievement

Strategy/Growth.

Build, develop and execute a strategy

for growth across the existing

Agricultural businesses.

Progress strategic portfolio review

including future options for the

Engineering division. Execute options

agreed with the Board, including

engagement with appropriate advisers

where required.

Developed strategic options with

the Board and external advisers,

resulting in the disposal of the

Agricultural Supplies division.

Represented Carr’s Group

throughout the negotiations and

sale process to achieve successful

completion in October 2022 at a

market comparable valuation.

100%

Lead the development

of a people strategy and

cultural development

programme with the

objective of making Carr’s a

“Great Place to Work”.

Lead a Group-wide review of

recruitment systems, ensuring they

incorporate appropriate diversity

and inclusion factors. Incorporate

long-term recruitment initiatives,

considering graduate training,

management development and other

initiatives. Review and implement a

revised rewards system, focussed on

recognition of exceptional performance

and building in flexible rewards.

Lead the action planning and delivery

of improvements following the 2021

employee engagement survey results,

demonstrating improvement in key

measures.

Following a Group wide employee

engagement survey undertaken in

2021, implemented programmes

to respond to feedback, including

recruitment of a dedicated Group

Communications Manager.

Subsequent initiatives were held

back whilst the sales process for

the Agricultural Supplies division

progressed.

n/a

Develop an ESG strategy

and measurable plan

for delivery of agreed

improvement targets.

Set, and agree with the Board, ESG

goals for the next decade. Ensure there

is a detailed, fully resourced plan in

place to achieve these goals.

Fully define measures to be used in

measurement of ESG progress.

Regularly report progress to the Board.

Initiated recruitment of a Group

Environment and Sustainability

Manager and oversaw the

implementation of new systems

to record and report on key

environmental data across the

Group. Subsequent initiatives were

held back whilst the sales process

for the Agricultural Supplies division

progressed.

n/a

Committee’s assessment of total opportunity to be awarded:

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

REMUNERATION COMMITTEE REPORT

continued

Following the year end, the Committee considered outcomes against the strategic targets. The table on page 77 summarises the

Committee’s assessment of performance against the targets together with the resulting bonus assessed as payable for Neil Austin as

the only eligible Executive Director. In light of the developments with the review of the strategic options and subsequent disposal of the

Agricultural Supplies division during 2022, the Committee applied a greater weighting to the attainment of objectives under the first target

set out above. Overall, following consideration of outcomes and the successful disposal of the division, the Committee determined that it

would award a bonus attributable to non-financial targets equal to 50% of the available opportunity (being 10% of the total available bonus).

The total annual bonus payable to Neil Austin was therefore 42.0% of salary or £108,000. In accordance with the Directors’ Remuneration

Policy, 25% of the bonus payable will be deferred in the form of shares for two years.

In addition to the above financial and strategic performance indicators, the Committee retains full discretion when assessing performance

outcomes to consider other factors which may include environmental, social and governance considerations and in order to avoid

formulaic outcomes where these would not be appropriate.

Chief Executive Oﬃcer: Hugh Pelham/Peter Page

Strategic targets were scheduled to be considered at the first meeting of the Remuneration Committee at the start of the financial year

2021/22. As that meeting was held after Hugh Pelham left the business on 11 October 2021, no strategic targets were approved for the

CEO at that time in relation to FY2021/22. Under the interim arrangements, Peter Page was appointed as Executive Chair for a period until

a new CEO could be appointed. For this interim period it was agreed that Peter Page would only receive a fixed fee and no performance-

related remuneration would be awarded to ensure that his independence would not be compromised given the intention at the time that

he revert to Non-Executive Chair upon appointment of a new CEO. As Executive Director, there were nonetheless strategic goals and

targets and the Chair was still subject to appraisal by the Non-Executive Directors, however these were not linked to remuneration.

Long Term Incentive Plan

The awards made to Executive Directors in 2019 were subject to average annual adjusted EPS growth targets over the three-year period

ending on 3 September 2022 and from a base adjusted EPS of 15.78p. Threshold vesting was set at 3% average annual growth (at which

level 25% of award shares would vest), with maximum vesting achieved at 10% average annual growth.

The average EPS growth over the three-year period from the base adjusted EPS was below the threshold target and, accordingly, none of

the shares under the long-term awards made to Executive Directors in 2019 vested.

Long Term Incentive Plan awards during the year (audited)

Long-term awards were made to the Executive Directors during the 2021/22 financial year in line with the Directors’ Remuneration Policy

as follows:

Number of shares

Basis on which

the award was made

Face value of

the award (£’000)

Threshold

vesting

End of

performance period

Hugh Pelham

–

Peter Page

–

Neil Austin

169,550

100% of salary

256

25%

August 2024

In relation to the ﬁnancial year 2020/21, it was determined that the award relating to 272,324 shares under the Long Term Incentive Plan would lapse without

vesting upon Hugh Pelham standing down from the Board on 11 October 2021. No award was made for the ﬁnancial year 2021/22 in the period to 11 October 2021.

Awarded on 10 December 2021 using a share price of £1.51.

The performance conditions which govern the vesting of those shares are based on annual average growth in adjusted EPS over a three-

year period. The Committee regularly reviews the performance measures it adopts to incentivise long-term incentives and considers

growth in adjusted EPS to be appropriate because it directly measures the Group’s underlying financial performance and is visible to

shareholders.

Average annual growth

vesting

100

Nothing is payable below 3%, and a sliding scale operates between this and the maximum available.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

All-employee share plans

The Executive Directors are also eligible to participate in the UK all-employee plans.

The Carr’s Group Sharesave Scheme 2016 is an HM Revenue & Customs (“HMRC”) approved scheme open to all staff permanently

employed in a UK Group company as of the eligibility date. Options under the plan are granted at a 20% discount to market value.

Executive Directors’ participation is included in the option table later in this report.

Total pension entitlements (audited)

The table below provides details of the Executive Directors’ pension benefits:

Normal

retirement age

Total contributions to

DC-type pension plan

£’000

Cash in lieu of

contributions to

DC-type pension plan

£’000

Neil Austin

–

Hugh Pelham

–

Peter Page

–

Hugh Pelham stood down from the Board on 11 October 2021.

As agreed under the interim arrangements for the Executive Chair, Peter Page did not receive a pension but accepted an increase in his fee arrangements.

As CEO Peter Page will receive a cash payment in lieu of pension of 4%.

Each Executive Director has the right to participate in the Carr’s Group defined contribution pension plan or to elect to be paid some or all

of their contribution in cash.

During the year, pension contributions and/or cash allowances in the year were 4% of salary for existing Executive Directors. This reflects

a change made from January 2021 to align with the majority of the Group’s UK workforce.

Payments to past Directors (audited)

Hugh Pelham stood down from the Board on 11 October 2021 with immediate effect receiving a payment of £170,000 as compensation for

loss of office (payment in lieu of notice).

Salary

(£’000)

Cash in lieu of pension

contribution

(£’000)

Bonus

(£’000)

Total

(£’000)

Hugh Pelham

208*

209

Includes £170,000 as compensation for loss of oﬃce (payment in lieu of notice).

No other payments to past Directors have been made during the year.

Payments for loss of oﬃce (audited)

Hugh Pelham stood down from the Board on 11 October 2021 with immediate effect receiving a payment of £170,000 as compensation for

loss of office (payment in lieu of notice). No other payments for loss of office have been made to Directors during the year.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

REMUNERATION COMMITTEE REPORT

continued

Directors’ interests in the shares of the Company (audited information)

A summary of interests in shares and scheme interests of the Directors (as at the date of this report) is given below.

Total number

of interests in

Vested

LTIP

Unvested

LTIP

SAYE (unvested

without

performance

conditions)

Unvested

deferred bonus

% of salary

held in

Executive Directors

Peter Page

124,500

42%

David White

–

N/A

Non-Executive Directors

Tim Jones

–

John Worby

32,500

–

N/A

Ian Wood

30,000

–

N/A

Shelagh Hancock

–

N/A

Stuart Lorimer

–

N/A

Martin Rowland

–

N/A

Based upon the average three-month share price over the year ended 3 September 2022.

Alistair Wannop and Kristen Eshak Weldon stood down from the Board on 18 January 2022.

Shelagh Hancock and Stuart Lorimer were appointed to the Board on 1 September 2022 and Tim Jones and David White joined the Board on 21 February 2023

and each has an interest in 0 Ordinary Shares in the capital of the Company. Martin Rowland joined the Board on 6 March 2023 and has an interest in 0 Ordinary

Shares in the capital of the Company. At the date of this report, Harwood Capital Management Limited (of whom Martin Rowland is a representative), holds an

interest in 6.04% of the Company’s share capital.

Performance shares (audited information)

The maximum number of outstanding shares that have been awarded to Directors under the LTIP are currently as follows:

2019/20 award

2020/21 award

2021/22 award

Neil Austin

147,859

200,800

169,550

Tim Davies

199,810

N/A

Hugh Pelham

N/A

N/A*

N/A

Peter Page

N/A

It was determined that the award to Hugh Pelham made in the year would lapse without vesting upon him standing down from the Board on 11 October 2021.

Assessing pay and performance

In the table below we summarise the Chief Executive’s single remuneration figure over the past ten years, as well as how variable pay

plans have paid out in relation to the maximum opportunity.

2013

Chris

Holmes

2013

Tim

Davies

2014

Tim

Davies

2015

Tim

Davies

2016

Tim

Davies

2017

Tim

Davies

2018

Tim

Davies

2019

Tim

Davies

2020

Tim

Davies

2021

Tim

Davies

2021

Hugh

Pelham

2022

Hugh

Pelham

2022

Peter

Page

Single figure of total

remuneration (£’000)

286

283

559

911

531

308

861

764

508

259

244

210

312

Annual variable element

(actual award versus maximum

opportunity)

100%

55%

100%

60.41%

15%

100%

N/A

Long-term incentive (vesting

versus maximum opportunity)

N/A

100%

37.45%

100%

51.64%

N/A

Reﬂective of a 6-month period.

Reﬂective of an 8-month period. In relation to the ﬁnancial year 2020/2021, it was determined that the award relating to 272,324 shares under the Long Term

Incentive Plan would lapse without vesting upon Hugh Pelham standing down from the Board on 11 October 2021.

Reﬂective of remuneration to 11 October 2021, including £170,000 paid as compensation for loss of oﬃce (payment in lieu of notice). In relation to the ﬁnancial year

2021/22, no award under the Long Term Incentive Plan was made to Hugh Pelham in the period to 11 October 2021.

Reﬂective of services as Non-Executive Chair until 11 October 2021 and services as Executive Chair under interim arrangements from 11 October 2021.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Ten-year historical TSR performance

100

150

200

250

300

Aug 22

Aug 21

Aug 20

Aug 19

Aug 18

Aug 17

Aug 16

Aug 15

Aug 14

Aug 13

Aug 12

Carr’s Group plc

FTSE All-Share Price Index

Source: Thomson Datastream

Change in Directors’ remuneration

In the table below we show the percentage change in the Directors’ remuneration between the 2021 and 2022 financial years compared

to the other employees.

Base pay/fees

Benefits

Annual bonus

Hugh Pelham

N/A

Neil Austin

N/A

-47%

Peter Page

N/A

John Worby

N/A

Ian Wood

N/A

Alistair Wannop

N/A

Kristen Eshak Weldon

N/A

Shelagh Hancock

N/A

Stuart Lorimer

N/A

Other UK employees

-42%

A 2% increase in base pay was implemented from 1 September 2021. In addition, a payment of £170,000 was made to Hugh Pelham as compensation for loss of

oﬃce (payment in lieu of notice).

When compared with the basic pay of the previous CEO as disclosed in the 2020/21 Remuneration Report.

Alistair Wannop and Kristen Eshak Weldon stood down from the Board on 18 January 2022.

4 Continuing operations only.

Other UK employees

The Remuneration Committee considers pay across the entire Group when setting Executive Director remuneration. Annual consultations

take place across the Group between the Executive Directors, senior management and the Group HR Director in relation to employee pay.

The outcome of that exercise, and any changes to employee pay levels, are considered when determining the appropriateness of any

changes in Executive Director pay.

Chief Executive Oﬃcer pay ratio (unaudited)

The table below shows the pay ratio based on the total remuneration of the Chief Executive Officer to the 25th, 50th and 75th percentile

of all permanent UK employees of the Group.

CEO pay

25th percentile

Median

75th percentile

2022

2021

2022

2021

2022

2021

2022

2021

Total pay (£’000)

340

351

Pay ratio

–

Annualised ﬁgure on the basis of Hugh Pelham’s remuneration.

Annualised ﬁgure based upon Peter Page’s fees as Executive Chair.

The Group adopted Option A as defined in The Companies (Miscellaneous Reporting) Regulations 2018, as the calculation methodology

for the above ratios. The 25th, median and 75th percentile pay ratios were calculated using the full-time equivalent remuneration for all

UK employees as at 3 September 2022.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

REMUNERATION COMMITTEE REPORT

continued

Gender pay gap

The Group’s gender pay gap reporting information was as follows for the snapshot period ending 5 April 2021 consistent with reporting

requirements. For information on the Group’s approach to equal opportunities and diversity, please see our Responsible Business Report

on pages 35 and 36 and the Nomination Committee Report on pages 58 to 60.

Diﬀerence between men and women

Mean

Median

2021

2020

2021

2020

Hourly pay

28%

29%

24%

25%

Bonus

73%

90%

Proportion of people awarded a bonus

2021

2020

Men

40%

Women

36%

Percentage of men/women in each pay quartile

Lowest

Highest

2021

2020

2021

2020

2021

2020

2021

2020

Men

54%

53%

63%

64%

83%

82%

84%

Women

46%

47%

37%

36%

17%

18%

16%

Relative spend on pay

The table below shows the relative importance of spend on pay compared to distributions to shareholders.

2022

£’000

2021

£’000

% change

Employee costs

52,007

50,796

+2.4%

Dividends paid to shareholders

4,687

5,490

-14.6%*

The signiﬁcant change shown in dividends paid in the year is due to the deferral of the interim dividend announced on 15 April 2020. That interim dividend

was reinstated and declared on 15 July 2020 (and paid following the year end on 2 October 2020). But for the deferral of that interim dividend, the decrease in

dividends in the year shown above would be an increase of 5.3% compared with the prior year.

External appointments

The Executive Directors did not receive any remuneration from the Group in respect of any external appointments in 2021/22.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Implementation of the policy in 2022/23

For 2022/23, the maximum annual bonus for the Executive Directors will remain 100% of salary. 25% of any bonus will be deferred for

two years in the form of shares. Performance will be assessed against stretching targets which will be 80% financial and 20% strategic.

Financial targets will be based upon adjusted PBT for the Group only and will not have any divisional splits. All annual bonus targets will

vest at thresholds of 0%. Due to commercial sensitivity, targets will be disclosed retrospectively in next year’s report.

The Committee intends to grant LTIP awards of 150% to Peter Page as incoming CEO, and of 100% to David White as incoming CFO.

Awards exceeding 100% of base salary can be made only in exceptional circumstances. The Committee considers that the disposal of the

Agricultural Supplies division in October 2022, and the development of Group strategy to deliver growth in shareholder value focusing on

the Speciality Agriculture and Engineering divisions, are significant events creating exceptional circumstances and justifying an increased

level of share-based incentivisation for Peter Page on this occasion to align more closely with shareholder interests. LTIP awards are

made subject to stretching performance targets and currently use adjusted EPS as the sole performance target, with threshold vesting

(25% of awards) being achieved where average growth in adjusted EPS is at least 3% over the performance period, and maximum vesting

(100% of awards) being achieved where average growth is at least 10%. For LTIP awards to be made in FY23, given the development of

Group strategy, and the position of the Group following the disposal of the Agricultural Supplies division, the Committee has determined

that awards should be made subject to even more stretching targets and as such threshold vesting (25% of awards) will now be achieved

when average growth in adjusted EPS is at least 5% over the performance period, with maximum vesting (100% of awards) being achieved

where average growth is at least 14%.

The Committee is also considering introducing an additional performance measure based upon total shareholder return (“TSR”) for awards

to be made in FY23, and is currently consulting with major shareholders in accordance with the Directors’ Remuneration Policy, prior to

determining whether to do so.

Tim Jones joined the Board on 21 February 2023 as Non-Executive Chair and will be paid a single fee of £95,000 per annum (gross). Martin

Rowland joined the Board on 6 March 2023 as Non-Executive Director and will be paid a single fee of £42,662.63 per annum gross.

Inflationary salary increases were awarded to the Executive Directors effective 1 September 2022, of 4% which is consistent with the

broader workforce who were generally awarded between 4% and 8%.

External advisers

During the year, external advisers PricewaterhouseCoopers LLP (“PwC”) were engaged to advise the Committee on remuneration

issues, most notably in connection with the remuneration arrangements for the interim Executive Chair, the preparation of the Directors’

Remuneration Report and in connection with the review of the LTIP. PwC is a signatory to the Remuneration Consultants’ Code of Conduct,

which requires that its advice be objective and impartial. Total fees paid for the services provided amounted to £7,500 (exclusive of

VAT). PwC provides other services to the Company, in relation to accounting. The Committee is satisfied that no conflicts of interest exist

in relation to advice provided to the Committee. It is also satisfied that the members of PwC teams do not have connections with the

Company which might impair their independence.

Committee eﬀectiveness

The effectiveness of the Committee was considered as part of the Board’s internal effectiveness evaluation described on pages 56 and

57. Feedback was positive, noting that the Committee continues to work effectively.

2022 AGM

At our AGM on 18 January 2022, the Annual Report on Remuneration was approved, with 96.89% of proxy votes being cast in favour.

By order of the Board

Ian Wood

Remuneration Committee Chair

22 March 2023

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

DIRECTORS’ REPORT

The Directors submit their report and the audited accounts of the Group for the year ended 3 September 2022. The Corporate Governance

Report, which can be found on pages 48 to 57, and details of the Board on pages 46 and 47 also form part of this Directors’ Report.

Activities and business overview

Carr’s Group plc is a public limited company incorporated in England and Wales and whose shares are listed and traded on the London

Stock Exchange Main Market. Its registered office is at Old Croft, Stanwix, Carlisle, CA3 9BA. Details of subsidiary companies and joint

ventures can be found at note 18 and note 19 of the Financial Statements.

The principal activities and business overview of the Group are set out within the Strategic Report on pages 02 to 45.

Corporate Governance Statement

The Corporate Governance Statement, prepared in accordance with Rule 7.2 of the Financial Conduct Authority’s Disclosure Guidance and

Transparency Rules, comprises the following sections of the Annual Report: the ‘Strategic Report’; the ‘Corporate Governance Report’; the

‘Audit Committee Report’; the ‘Nomination Committee Report’; the ‘Remuneration Committee Report’; together with this Directors’ Report.

As permitted by legislation, some of the matters required to be included in the Directors’ Report have been included in the Strategic

Report by cross-reference, including details of the Group’s financial risk management objectives and policies, business review, future

prospects, stakeholder engagement, Section 172 Statement and environmental policy. The 2018 UK Corporate Governance Code is

available from the Financial Reporting Council’s website (www.frc.org.uk).

Annual General Meeting and General Meeting

The Annual General Meeting of the Company was held on 27 February 2023 at The Halston Hotel Carlisle, 20-34 Warwick Road, Carlisle

CA1 1AB. The forthcoming General Meeting of the Company will be held also at the Halston Hotel Carlisle, to consider approval of the Annual

Report and Accounts, and also approval of the final dividend for FY22, approvals for the reappointment and remuneration of the external

auditor, and approval of the Directors’ Remuneration Report.

Results and dividends

A review of the results can be found on pages 20 to 21.

2022

2021

Aggregate interim dividends

2.35p

Final dividend per share proposed

2.85p

2.65p

Subject to approval at the forthcoming General Meeting of the Company, the final dividend will be paid on 12 May 2023 to members on the

The Group profit from continuing operations before taxation was £7.6m (2021 continuing operations restated: £7.5m). After taxation

charge of £1.5m (2021 continuing operations restated: £1.8m), the profit for the year from continuing operations is £6.0m (2021 continuing

operations restated: £5.7m).

Share capital

The Company has a single class of share capital which is divided into Ordinary Shares of £0.025 each. The movement in the share capital

during the year is detailed in note 30 to the financial statements.

At the Annual General Meeting in January 2022 the Directors received authority from the shareholders to:

•

Allot shares – this gave Directors the authority to allot shares and maintains flexibility in respect of the Company’s financing

arrangements. The nominal value of Ordinary Shares which the Directors could allot in the period up to the Annual General Meeting

held on 27 February 2023, was limited to £773,366.70 which represented approximately 33% of the nominal value of the issued share

capital on 30 November 2021. The Directors did not have any intention at that time of exercising this authority other than in connection

with the issue of Ordinary Shares in respect of the Company’s share option plans. This authority expired at the end of the Annual

General Meeting held on 27 February 2023.

•

Disapplication of rights of pre-emption – this disapplied rights of pre-emption on the allotment of shares by the Company and the sale

by the Company of treasury shares. The authority allowed the Directors to allot equity securities for cash pursuant to the authority to

allot shares mentioned above, and to sell treasury shares for cash without a pre-emptive offer to existing shareholders:

–for general purposes, up to an aggregate nominal amount of £117,176.75, which represented approximately 5% of the Company’s

issued share capital on 30 November 2021; and

–in connection with acquisitions or other capital development, up to a further aggregate nominal amount of £117,176.75, which

represented approximately 5% of the Company’s issued share capital on 30 November 2021.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

This authority expired at the end of the Annual General Meeting held on 27 February 2023.

•

To buy own shares – this authority allowed the Company to buy its own shares in the market, as permitted under the Articles of Association

of the Company, up to a limit of 9,374,142 Ordinary Shares which represented approximately 10% of the Company’s issued share capital

on 30 November 2021. The price to be paid for any share could not be less than £0.025, being the nominal value of a share, and could

not exceed 105% of the average middle market quotations for the Ordinary Shares of the Company as derived from the London Stock

Exchange Daily Official List for the five business days immediately preceding the day on which the Ordinary Shares were purchased.

The Directors had no immediate plans to exercise the powers of the Company to purchase its own shares and undertook that the

authority would only be exercised if the Directors were satisfied that a purchase would result in an increase in expected earnings

per share and was in the best interests of the Company at the time. The Directors would consider holding any of its own shares that

it purchased pursuant to this authority as treasury shares. This authority expired at the end of the Annual General Meeting held on

27 February 2023.

Details of the authority received by the Board from shareholders at the AGM on 27 February 2023 can be found on the Company’s website

www.carrsgroup-ir.com/content/investor/agm.

Directors

Details of the Directors of the Company are shown on pages 46 and 47, and details relating to Director re-election, Directors’ powers and

Directors’ conflicts of interest can be found in the Corporate Governance Report on page 54.

The interests of the Directors, as defined by the Companies Act 2006, in the Ordinary Shares of the Company, other than in respect of

options to acquire Ordinary Shares (which are detailed in the analysis of options included in the Director’s Remuneration Report on pages

65 to 83), are as follows:

At 3 September 2022

Ordinary Shares

At 28 August 2021

Ordinary Shares

P W B Page

124,500

90,000

N Austin

382,703

370,896

J G Worby

32,500

I Wood

30,000

S M Hancock

N/A

S Lorimer

N/A

All the above interests are beneficial. There have been no other changes to the above interests in the period from 3 September 2022 to

the date of this report. Tim Jones and David White joined the Board on 21 February 2023 and each has an interest in 0 Ordinary Shares in

the capital of the Company. Martin Rowland joined the Board on 6 March 2023 and has an interest in 0 Ordinary Shares in the capital of the

Company. At the date of this report, Harwood Capital Management Limited (of whom Martin Rowland is a representative), holds an interest

in 6.04% of the Company’s share capital.

Rights and obligations attaching to shares

In a general meeting of the Company, subject to the provisions of the Articles of Association and to any special rights or restrictions as to

voting attached to any class of shares in the Company (of which there are none), the holders of the Ordinary Shares are entitled to one

vote in a poll for every Ordinary Share held. No member shall be entitled to vote at any general meeting or class meeting in respect of any

shares held if any call or other sum then payable in respect of that share remains unpaid. Currently, all issued shares are fully paid.

Full details of the deadlines for exercising voting rights in respect of the resolutions considered at the Annual General Meeting held in

February 2023 were set out in the Notice of Annual General Meeting. Full details of the deadlines for exercising voting rights in respect of the

resolutions to be considered at the forthcoming General Meeting will be set out in the Notice of General Meeting.

Subject to the provisions of the Companies Act 2006, the Company may, by ordinary resolution, declare a dividend to be paid to the

members, but no dividend shall exceed the amount recommended by the Board. The Board may pay interim dividends, and also any

fixed rate dividend, whenever the financial position of the Company, in the opinion of the Board, justifies its payment. All dividends shall be

apportioned and paid pro rata according to the amounts paid up on the shares.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

DIRECTORS’ REPORT

continued

Major shareholders

The Company has been informed of the following interests at 28 February 2023 in the 94,021,533 Ordinary Shares of the Company, as

required by the Companies Act 2006.

At 28 February 2023

At 3 September 2022

Name

Number of

Ordinary Shares

Percentage of issued

Ordinary Share capital

Number of

Ordinary Shares

Percentage of issued

Ordinary Share capital

Heygate & Sons Limited

13,025,120

13.85%

13,025,120

13.86%

Fidelity Management & Research Co. LLC (Boston)

9,204,776

9.79%

9,400,153

10.00%

Harwood Capital (London)

5,675,000

6.04%

1,100,000

1.17%

Jupiter Asset Management (London)*

4,750,000

5.05%

4,750,000

5.05%

Artemis Investment Management LLP

3,876,254

4.12%

5,759,006

6.13%

Interactive Investor Limited (Glasgow)

3,844,500

4.09%

3,909,574

4.16%

Hargreaves Lansdown Asset Management (Bristol)

3,762,892

4.00%

3,668,575

3.90%

Charles Stanley & Co. Limited (London)

2,947,900

3.14%

3,029,584

3.22%

Previously known as (Rights & Issue Investment Trust Plc).

External auditor

A resolution to reappoint Grant Thornton as external auditor will be proposed at the forthcoming General Meeting of the Company.

More information about the external audit can be found on pages 62 to 64 of the Audit Committee Report.

Political and charitable donations

During the year ended 3 September 2022 the Group contributed £22,750 (2021: £52,000) in the UK for charitable purposes. Further details

have been included within the Responsible Business Report on page 31. There were no political donations during the year (2021: £nil).

Pensions

Estimates of the amount and timing of future funding obligations for the Group’s pension plans are based on various assumptions including,

among other things, the actual and projected market performance of the pension plan assets, future long-term corporate bond yields,

longevity of members and statutory requirements. The Group continually reviews this risk and takes action to mitigate where possible.

In addition, while the Group is consulted by the trustees on the investment strategies of its pension plans, the Group has no direct control

over these matters as the trustees are directly responsible for the strategy. Details of the Group’s pension plans are in note 29 of the

financial statements.

Change of control

There are a number of significant agreements across the Group with provisions that take effect, alter or terminate upon a change of

control of the Company, such as bank facility agreements, agreements with strategic partners, employee share scheme rules and certain

project contracts within the Engineering division. The Directors are not aware of any agreements between the Company and its Directors

or employees that provide for compensation for loss of office or employment that occurs solely because of a change of control.

Environment

The Company’s report on sustainability and the environment, including its carbon footprint, can be found on pages 33 to 39.

Employee share schemes

Awards under employee share schemes do not confer any shareholder rights, such as the right to vote the shares or to receive any

dividend, until a participant has received the shares after vesting or exercise (as applicable).

Employment policies and employees

The Company is committed to its employees and further details on the Company’s policies and commitment can be found in the

Responsible Business Report on pages 28 to 45.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Financial statements

Shareholder information

Governance

Strategic report

Conﬁdential reporting of concerns

The Group maintains various channels through which people can report concerns or suspicions of wrongdoing within the workplace,

including anonymous reporting via an independent whistleblowing service operated by SeeHearSpeakUp. The Board regularly reviews

the Group’s Whistleblowing Policy which is implemented by the Company Secretary as the Group’s Whistleblowing Officer.

Other information

Other information relevant to this Directors’ Report, and which is incorporated by reference, including information required in accordance

with the UK Companies Act 2006 and Listing Rule 9.8.4R, can be located as follows:

Subject matter

Page(s)

Financial risk management

Principal Risks and Uncertainties

Corporate Governance Report

Audit Committee Report

24-26

48-57

61-64

Exposure to price risk, credit risk,

liquidity risk and cash flow risk

Notes to the Financial Statements (Derivatives and other financial

instruments) (note 28)

150-154

Going concern

Principal Accounting Policies

108

Important events since the financial year end

Notes to the Financial Statements (Post balance sheet events) (note 38)

170

Likely future developments in the business

Strategic Report

02-45

Research and development

Strategic Report

02-45

Employment of disabled persons

Responsible Business Report

Non-Financial Information Statement

Stakeholder engagement

Corporate Governance Report

48-57

s.172 Statement

40-44

SECR energy and carbon reporting

Responsible Business Report

33-35

The information required to be disclosed by Listing Rule 9.8.4R can be located as set out below:

Listing Rule 9.8.4R Information Required

Page

(1)

Interest capitalised

N/A

(2)

Publication of unaudited financial information

N/A*

(3)

N/A

(4)

Details of Long Term Incentive Schemes

N/A

(5-6)

Waiver of Director emoluments

N/A

(7-8)

Non pre-emption issues

of equity for cash

N/A

(9)

Parent participation in a placing by a listed subsidiary

N/A

(10)

Significant contracts involving a director or shareholder

168 (note 37)

(11)

Provision of services by a controlling shareholder

N/A

(12-13)

Dividend waivers

(14)

Agreements with a controlling shareholder

N/A

For information on the disposal of the Agricultural Supplies division please see note 9 to the ﬁnancial statements.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

DIRECTORS’ REPORT

continued

Directors’ responsibilities statement

The Directors are responsible for preparing

the Strategic Report and Directors’ Report

and the financial statements in accordance

with applicable law and regulations.

Company law requires the Directors to

prepare financial statements for each

financial year. Under that law the Directors

have elected to prepare the financial

statements in accordance with UK-adopted

international accounting standards. Under

company law the Directors must not

approve the financial statements unless

they are satisfied that they give a true and

fair view of the state of affairs and profit

or loss of the Company and Group for

that period. In preparing these financial

statements, the Directors are required to:

•

select suitable accounting policies and

then apply them consistently;

•

make judgements and accounting

estimates that are reasonable and

prudent; and

• state whether applicable UK-adopted

international accounting standards have

been followed, subject to any material

departures disclosed and explained in

the financial statements.

The Directors are responsible for keeping

adequate accounting records that

are sufficient to show and explain the

Company’s transactions and disclose

with reasonable accuracy at any time the

financial position of the Company and

enable them to ensure that the financial

statements comply with the Companies

Act 2006. They are also responsible for

safeguarding the assets of the Company

and hence for taking reasonable steps for

the prevention and detection of fraud and

other irregularities.

The Directors confirm that:

•

so far as each Director is aware, there is

no relevant audit information of which the

Company’s auditor is unaware; and

•

the Directors have taken all the steps that

they ought to have taken as Directors

in order to make themselves aware of

any relevant audit information and to

establish that the Company’s auditor is

aware of that information.

The Directors are responsible for preparing

the Annual Report in accordance with

applicable law and regulations. Having

taken advice from the Audit Committee,

the Directors consider the Annual Report

and the financial statements, taken as a

whole, provides the information necessary

to assess the Company’s performance,

business model and strategy and is fair,

balanced and understandable.

The Directors are responsible for the

maintenance and integrity of the corporate

and financial information included on the

Company’s website. Legislation in the

United Kingdom governing the preparation

and dissemination of financial statements

may differ from legislation in other

jurisdictions.

To the best of our knowledge:

•

the Group financial statements, prepared

in accordance with UK-adopted

international accounting standards, give a

true and fair view of the assets, liabilities,

financial position and profit or loss of the

Company and the undertakings included

in the consolidation taken as a whole; and

•

the Strategic Report and Directors’

Report include a fair review of the

development and performance of

the business and the position of the

Company and the undertakings included

in the consolidation taken as a whole,

together with a description of the

principal risks and uncertainties that

they face.

By order of the Board

Matthew Ratcliﬀe

Company Secretary

22 March 2023

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Opinion

Our opinion on the ﬁnancial statements is unmodiﬁed

We have audited the financial statements of Carr’s Group Plc (the ‘parent Company’) and its subsidiaries (the ‘Group’) for the

period from 29 August 2021 to 3 September 2022, which comprise the Consolidated Income Statement, Consolidated Statement

of Comprehensive Income, Consolidated and Company Balance Sheets, Consolidated Statement of Changes in Equity, Company

Statement of Changes in Equity and Consolidated and Company Statements of Cash Flows and notes to the financial statements,

including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation

of the Group financial statements is applicable law and UK-adopted international accounting standards. The financial reporting

framework that has been applied in the preparation of the parent Company financial statements is UK-adopted international

accounting standards as applied in accordance with the provisions of the Companies Act 2006.

In our opinion:

•

the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 3 September

2022 and of the Group’s profit for the period then ended;

•

the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;

•

the parent Company financial statements have been properly prepared in accordance with UK-adopted international accounting

standards as applied in accordance with the provisions of the Companies Act 2006; and

•

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

INDEPENDENT AUDITOR’S REPORT

to the members of Carr’s Group Plc

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities

under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial statements’ section of our report.

We are independent of the Group and the parent Company in accordance with the ethical requirements that are relevant to our audit of

the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled

our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We are responsible for concluding on the appropriateness of the Directors’ use of the going concern basis of accounting and, based

on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on

the Group’s and the parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are

required to draw attention in our report to the related disclosures in the financial statements or, if such disclosures are inadequate, to

modify the auditor’s opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future

events or conditions may cause the Group or the parent Company to cease to continue as a going concern.

A description of our evaluation of management’s assessment of the ability to continue to adopt the going concern basis of accounting,

and the key observations arising with respect to that evaluation is included in the key audit matters section of our report.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually

or collectively, may cast significant doubt on the Group’s and the parent Company’s ability to continue as a going concern for a period of

at least 12 months from when the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation

of the financial statements is appropriate.

In relation to the Group’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or

draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate

to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of

this report.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Description

Disclosures

Audit response

Key observations

/Our results

KAM

Overview of our audit approach

Key audit

matters

Scoping

Materiality

Overall materiality:

Group: £1,463k, which represents 0.3% of the Group’s revenues from continuing operations and

revenues from discontinued operations.

Specific materiality for continuing Group: £871k, which represents 0.7% of the continuing Group’s

revenues.

Parent Company: £484k, which represents 0.75% of the parent Company’s net assets.

Key audit matters were identified as:

•

Revenue recognition in components in the Engineering division where revenue is recognised

over time (Long-term contracts);

• Carrying value of goodwill;

•

Implementation of new IT system and sufficiency of reconciliation procedures within

component Carrs Billington Agriculture (Sales) Ltd; and

• Going concern.

We did not issue the audit report for the period ended 28 August 2021.

Key audit matters reported by predecessor auditor in the auditor’s report for the period ended 28

August 2021 were:

•

Contract risk in Engineering on over time contracts;

•

Valuations of the recoverable amount of certain cash-generating units;

•

Provision for trade receivables in Agriculture; and

•

Parent Company: Valuation of Carr’s Group defined benefit obligation.

The Group engagement team performed an audit of the parent Company financial statements,

full-scope audit procedures on the financial information of four components and specified

procedures on one component.

Component auditors performed full-scope audit procedures on the financial information of two

components and specified audit procedures on a further three components.

The Group engagement team performed analytical procedures on the financial information of

the remaining 24 components.

Key audit matters

Key audit matters are those matters that, in our professional judgement,

were of most significance in our audit of the financial statements of the

current period and include the most significant assessed risks of material

misstatement (whether or not due to fraud) that we identified. These matters

included those that had the greatest effect on: the overall audit strategy;

the allocation of resources in the audit; and directing the efforts of the

engagement team. These matters were addressed in the context of our audit

of the financial statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

In the graph on the next page, we have presented the key audit matters,

significant risks and other risks relevant to the audit.

INDEPENDENT AUDITOR’S REPORT

continued

to the members of Carr’s Group Plc

Our approach to the audit

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Key Audit Matter – Group

How our scope addressed the matter – Group

Revenue recognition in components in the Engineering

division where revenue is recognised over time (Long-

term contracts)

We identified revenue recognition in components in the

Engineering division (NW Total Engineered Solutions Ltd.,

NuVision Engineering, Inc., Wälischmiller Engineering

GmbH and Carr’s Engineering Ltd – Bendalls) where

revenue is recognised over time (Long-term contracts)

as one of the most significant assessed risks of material

misstatement due to fraud and error. Such revenue

totalled £29,054k in the period. We pinpointed the

significant risk to contracts which exhibited certain

qualitative and quantitative risk criteria.

For a significant portion of contracts within the Group’s

Engineering division, revenue is recognised based on

stage of completion measured in reference to either

costs incurred as a proportion of total costs (‘input

method’) or delivery towards complete satisfaction of

performance obligations with reference to certified

or valued contract works (‘output method’). Measured

stage of completion is therefore based on either actual

costs incurred to date over estimated costs to complete

or on units delivered/produced against performance

obligations.

The estimation process is inherently complex and

significant management judgement is required.

In responding to the key audit matter, we performed the following audit

procedures:

•

obtaining an understanding of and evaluating the design and

implementation of key controls over the revenue cycle;

•

assessing the revenue recognition accounting policy for compliance with

accounting standards, including appropriateness and disclosure within

the financial statements;

•

obtaining and inspecting contract documents and challenging the

identification of performance obligations, contract clauses and assessing

whether the method of revenue recognition is in accordance with IFRS

15 ‘Revenue from contracts with customers’;

•

recalculating the revenue recognition on a sample of contracts based on

either percentage completion in relation to estimated costs to complete

or through progress towards satisfaction of performance obligations and

compared to amounts recorded by the Group;

•

making inquiries of project managers to obtain an understanding of the

performance of the contract throughout the period and at period end;

•

obtaining and assessing management’s forecast estimated costs to

completion and challenging the Group’s estimates in respect of costs

to complete via agreement to third-party certifications, confirmations

and other external documentation, challenge of senior operational and

financial management, and with reference to our own expertise. We also

performed corroborative inquiries of the Group’s in-house legal counsel;

•

sensitising the estimated costs to complete to determine how sensitive

management’s forecasts are to changes in inputs, by applying

sensitivities for inflation and labour cost increases;

•

obtaining post-period end updates from project managers to understand

subsequent performance of projects and assessing whether the updated

costs to complete forecasts indicate completeness of estimated costs to

complete at the period end;

•

assessing the Group’s historical contract forecasting accuracy by

comparing prior estimated costs to complete to actual costs incurred

and actual margin achieved when the contracts were completed during

the current period; and

•

assessing the adequacy of disclosures of the key judgments and

estimates involved in long-term contract accounting.

Implementation of new IT system

and sufficiency of reconciliation

procedures within component Carrs

Billington Agriculture (Sales) Ltd

Revenue recognition in components

in the Engineering division where

revenue is recognised over time

(Long-term contracts)

Carrs Billington Agriculture

(Sales) Ltd Completeness of

trade payables and GRNI

Carrs Billington Agriculture

(Sales) Ltd Accuracy

of revenue

Pension

surplus

Inventory

valuation

Fraud in revenue

recognition

Cash

Employee

remuneration

Related party

transactions

Compliance with

laws and regulations

Key audit matter

Significant risk

Other risk

Recoverability of

trade receivables

Litigation

and claims

Completeness

of liabilities

Management

override of controls

Carrying value

of goodwill

Going concern

Low

Extent of management judgement

Low

High

Potential

financial

statement

impact

High

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Key Audit Matter – Group

How our scope addressed the matter – Group

Relevant disclosures in the Annual Report and

Accounts 2022

•

Financial statements: Principal accounting policies,

Revenue recognition, Note 3, Revenue and Note 39,

Prior year restatements

•

Audit committee report: Revenue recognition in

relation to Engineering

Key observations

In performing our audit procedures, we noted instances where the Group's

accounting for long-term contracts did not meet the requirements of

the accounting standard IFRS 15. These findings resulted in individually

material adjustments within a few components for which the net impact

was a prior period restatement in revenue of £565k, as outlined in Note 39

of the Group financial statements.

Carrying value of goodwill

We identified the carrying value of goodwill as one of the

most significant assessed risks of material misstatement

due to error. We pinpointed the significant risk to

the carrying value of goodwill in the following Cash-

Generating Units (“CGUs”), which relate to the valuation

and allocation assertion (Pre impairment carrying value):

•

NuVision Engineering, Inc. £9,494k;

•

Wälischmiller Engineering GmbH £5,742k;

•

Carr’s Engineering Ltd – Chirton £2,526k; and

•

Animax Ltd £1,742k.

Under International Accounting Standard (IAS) 36

‘Impairment of Assets’, management are required to

perform an annual assessment of whether the Group’s

goodwill for its relevant CGUs is impaired.

The process for assessing whether impairment of goodwill

exists under IAS 36 is complex. Management prepared an

impairment model to assess the value in use. Calculating

value in use, through forecasting cash flows relating to

each individual CGU, and the determination of CGUs,

appropriate discount rates and other assumptions to

be applied can be highly judgemental and subject to

management bias or error. The selection of certain inputs

into the cash flow forecasts can also significantly impact

the results of the impairment assessment.

In responding to the key audit matter, we performed the following audit

procedures:

•

obtaining an understanding of and evaluating the design and

implementation of key controls relating to the impairment model;

•

obtaining management’s Board approved assessment over carrying

value and value-in-use, understanding and challenging sensitivities

performed;

•

assessing the mathematical accuracy of the impairment model and

methodology applied by management for consistency with the

requirements of IAS 36, including the associated sensitivities performed;

•

testing the accuracy of management’s forecasting through a comparison

of current period budget to actual data;

•

assessing the appropriateness of management’s assumptions and

sensitivities relating to the calculations of the value-in-use of CGUs and

estimated future cash flows, including growth rates and discount rates

used to assess the level of headroom;

•

using our internal valuation specialists to inform our challenge of

management, that the assumptions used within the calculation of

weighted average cost of capital are reasonable; and

•

assessing the accuracy and sufficiency of financial statements

disclosures with respect to the carrying value of Group goodwill.

Relevant disclosures in the Annual Report and

Accounts 2022

•

Financial statements: Principal accounting policies,

Goodwill and Note 12, Goodwill and other

intangible assets

•

Audit committee report: Potential goodwill impairment

Our results

Our audit testing and challenge of management resulted in revision of their

forecasts and the following impairment charges recognised:

•

Wälischmiller Engineering GmbH £1,693k; and

•

Carr’s Engineering Ltd – Chirton £2,526k.

Based on our audit work, we are satisfied that the assumptions used in

management’s revised impairment model were appropriate. We consider

the disclosures with respect to the carrying value of the Group’s goodwill

to be in accordance with IAS 36.

INDEPENDENT AUDITOR’S REPORT

continued

to the members of Carr’s Group Plc

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Key Audit Matter – Group

How our scope addressed the matter – Group

Implementation of new IT system and sufficiency of

reconciliation procedures within component Carrs

Billington Agriculture (Sales) Limited

We identified the implementation of new IT system

and sufficiency of reconciliation procedures within

component Carrs Billington Agricultures (Sales) Limited

as one of the most significant assessed risks of material

misstatement due to both fraud and error.

During the financial period the Group introduced a new

IT system into its subsidiary Carrs Billington Agriculture

(Sales) Limited. The implementation of the new IT system

proved challenging due to unforeseen difficulties with

the system and insufficient reconciliation procedures

performed during the period. In particular, this gave

rise to concerns regarding the completeness of trade

payables and accruals due to the lack of supplier

statement reconciliations performed during the period.

The implementation of the new system also resulted in

the incorrect recognition of revenue in the first quarter

of the period, driven by a high volume of sales invoices

which were being generated by the system with incorrect

values. The correction of this error in revenue recognition

required manual intervention and a higher than expected

number of journals. This gave rise to concerns regarding

the accuracy of revenue, specifically on retail sales.

Management assessed the impact of the challenges

presented by the implementation of the new system

by performing a detailed review of trade payables

and accruals. Management also performed a detailed

review of the reconciliations performed at the period

end, including associated journals posted and a detailed

supplier statements review, to ensure completeness and

accuracy of trade payables and accruals. The IT system

provider was engaged to resolve the IT issue in relation

to incorrect sales invoices being generated to customers.

Management also performed a gross margin and other

key performance indicator review throughout the period

to identify any further unusual transactions.

The challenges presented by the implementation and

acclimatisation of the new IT system at the start of

the period and personnel changes during the period

contributed to a lapse of control over the reconciliation

procedures in the first half of the period. Reconciliations

were not being performed on a timely basis, or effectively,

and erroneous transactions were being recorded on the

system. This resulted in the requirement for a higher-than-

expected number of manual transactions and journals and

increased the risk of material misstatement in the financial

statements. These matters were initially brought to our

attention by the Board during attendance at the Audit

Committee during the planning stage of the audit.

However, the full extent of the challenges presented

by these matters did not become apparent until later in

the audit process. We accordingly reassessed the risk of

material misstatement of the financial statements based

upon our revised understanding.

In responding to the key audit matter, we performed the following audit

procedures:

•

obtaining an understanding of and evaluating management’s key

controls implemented on the IT system migration process;

•

obtaining an understanding of the fixes completed by the IT system

provider to remediate the system configuration issues in relation to

raising of sales invoices;

•

obtaining an understanding and assessing management’s reconciliation

process of the key accounts at the period end and investigation of a

sample of unusual reconciling items;

•

testing a sample of manual journals posted during the period relating to

unusual posting combinations to ensure that the entries are appropriate;

•

testing of a sample of post period end journals, using our data analytics

tool, which met the criteria for unusual accounts posting combinations or

reversal of period end accounting entries;

•

utilising our cash analytics to identify and test a sample of unusual credit

to cash postings;

•

reducing the performance materiality applied to trade payables and

good received not invoiced accounts (for Carrs Billington Agriculture

(Sales) Limited) which is deemed to be the most significant risk area

in light of the issues around supplier statement reconciliations;

•

completing extended supplier statement testing in response to

deficiencies relating to reconciliations of supplier balances and

processing of purchase invoices during the period;

•

performing alternative procedures where extended supplier statements

testing as above didn’t provide us with sufficient audit evidence such as

agreeing to post period end invoices received and payments made for

the specific suppliers selected for testing;

•

from the list of post period end payments made and invoices received,

testing an extended sample of payments and invoices post period end to

determine whether they have been accounted for in the correct period;

•

using our suite of data analytics tools, assessing all cost of sales

transactions in the period and testing a sample of unusual entries,

including entries where no corresponding revenue has been recorded,

revenue with no corresponding cost of sales, or sales made at a negative

margin and evaluating the reasonableness of these unusual entries to

supporting documentation;

•

performing data analytics on selected account balances within

payables, with a particular focus on understanding any unusual accounts

combinations. We sought supporting evidence for any transactions

following unusual patterns, with a particular focus on any account

combinations impacting from payables posted into cash;

•

completing extended sample testing of revenue recorded in the period,

agreeing transactions to source documentation to assess whether

revenue has been recognised appropriately;

•

assessing the level of credit notes raised during the period and post

period end, to identify unusual trends and identify whether system issues

relating to the raising of erroneous invoices persisted throughout the

period to determine whether the revenue recognised in the period is

appropriate; and

•

inspecting extended sample of credit notes raised post period end, to

assess the accuracy of revenue recorded during the period.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

INDEPENDENT AUDITOR’S REPORT

continued

to the members of Carr’s Group Plc

Key Audit Matter – Group

How our scope addressed the matter – Group

Relevant disclosures in the Annual Report and

Accounts 2022

Audit committee report: Disposal of Agricultural Supplies

division

Our results

Our extended supplier statement reconciliations and post period end

invoices/payments testing identified a number of audit adjustments with

total impact below materiality (£825k debit to trade and other payables

and credit to cost of sales). These adjustments have been posted by

management.

Other testing did not identify any other issues regarding completeness of

trade payables and accruals.

Our testing confirmed remediated actions were implemented effectively

to correct the system issues in relation to revenue recognition and our

extended substantive testing on accuracy of revenue has not identified

any further issues

Going concern

We identified going concern as one of the most

significant assessed risks of material misstatement due to

fraud and error as a result of the judgement required to

conclude whether there is a material uncertainty related

to going concern.

In our evaluation, we considered the inherent risks

associated with the Group’s business model including the

effects arising from macro-economic uncertainties such

as the unprecedented increases in energy prices, interest

rates and inflation. The Group will be impacted going

forward and these unprecedented levels of uncertainty,

could adversely impact the future trading performance of

the Group, leading to increased judgement in respect of

the forward-looking assessment.

In undertaking their assessment of going concern for the

Group, management considered the impact of increasing

energy costs, interest rates and inflation in their forecast

future performance of the Group, compliance with

covenants and anticipated cash flows.

As a result, there is significant judgement applied in

developing forecasted revenue and profits for the Group.

In responding to the key audit matter, we performed the following audit

procedures:

•

obtaining an understanding of relevant controls relating to the

assessment of going concern model;

•

assessing the reasonableness of the inputs and assumptions used in

the model;

•

obtaining and assessing management’s paper and assessment of going

concern, including forecasts covering the period up to March 2024 and

testing the mathematical accuracy of the forecasts, as approved by

the Board;

•

testing the accuracy of management’s forecasting through a comparison

of budget to actual data;

•

assessing the forecasts prepared to ensure consistency with other areas

of the audit such as forecasts used in management’s impairment review

of goodwill;

•

using industry data and other external information such as forecasted

interest rates to challenge the reasonableness of management’s

assumptions regarding future costs and revenue, built into the forecast

cashflow;

•

corroborating the existence of the Group’s loan facilities and relevant

covenant requirements to loan agreements for the period covered by

management’s forecasts;

•

assessing scenario sensitivities and reverse stress tests performed by

management, and determining if they are plausible;

•

performing our own scenario sensitivities over and above the sensitivities

of management and considering the available headroom and

compliance with covenants;

•

testing the adequacy of the supporting evidence for cash flow forecasts,

and considered the headroom available to the Group;

•

assessing the appropriateness of assumptions regarding mitigating

actions to reduce costs or manage cashflows in downside scenarios; and

•

assessing the adequacy of related disclosures within the Annual Report.

Relevant disclosures in the Annual Report and

Accounts 2022

•

Financial statements: Principal accounting policies,

Going concern

•

Audit committee report: Going concern and viability

statement

Our results

We have nothing to report in addition to that stated in the ‘Conclusions

relating to going concern’ section of our report.

Our application of materiality

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified misstatements on

the audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion in the auditor’s report.

Materiality was determined as follows:

Materiality measure

Group

Parent Company

Materiality for financial

statements as a whole

We define materiality as the magnitude of misstatement in the financial statements that, individually or in

the aggregate, could reasonably be expected to influence the economic decisions of the users of these

financial statements. We use materiality in determining the nature, timing and extent of our audit work.

Materiality threshold

£1,463k, which represents 0.3% of the Group’s

revenues from continuing operations and revenues

from discontinued operations.

Specific materiality for continuing Group: £871k,

which represents 0.7% of the continuing Group’s

revenues.

£484k, which is 0.75% of parent Company’s net

assets.

Significant judgements

made by auditor in

determining materiality

In determining materiality, we made the following

significant judgements:

Revenue is determined to be the most appropriate

benchmark due its importance in both external

financial reporting and internal management

reporting.

The Group engagement team compared

the determined amount against the range of

materialities that would have been calculated had

different benchmarks (adjusted operating profit

and adjusted PBT) been used, recognising that a

number of measures are relevant to the users of the

financial statements.

Specific materiality for continuing Group was

determined using the same significant judgements.

In determining materiality, we made the following

significant judgement: Net assets is considered

the most appropriate benchmark for the parent

Company because the principal activity is that of

a holding company that does not trade.

Performance materiality

used to drive the extent of

our testing

We set performance materiality at an amount less than materiality for the financial statements as a whole

to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected

misstatements exceeds materiality for the financial statements as a whole.

Performance materiality

threshold

£951k, which is 65% of financial statement materiality.

Specific performance materiality for continuing

Group: £566k, which is 65% of specific materiality.

£315k, which is 65% of financial statement

materiality.

Significant judgements

made by auditor in

determining performance

materiality

In determining performance materiality we considered:

•

the number and magnitude of unadjusted

misstatements to the Group’s financial statements

in prior periods;

•

the nature and impact of significant control

deficiencies identified by the predecessor auditor

in the prior period;

•

the challenges with the new IT system

implementation in Carrs Billington Agriculture

(Sales) Ltd.; and

•

our risk assessment procedures did not identify

any significant changes in business objectives and

strategy of the Group.

In determining performance materiality we considered:

•

the number and magnitude of unadjusted

misstatements to the parent Company’s financial

statements in prior periods;

•

the nature and impact of significant control

deficiencies identified by the predecessor auditor

in the prior period; and our risk assessment

procedures did not identify any significant

changes in business objectives and strategy of

the parent.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

INDEPENDENT AUDITOR’S REPORT

continued

to the members of Carr’s Group Plc

Materiality measure

Group

Parent Company

Specific materiality

We determine specific materiality for one or more particular classes of transactions, account balances or

disclosures for which misstatements of lesser amounts than materiality for the financial statements as a

whole could reasonably be expected to influence the economic decisions of users taken on the basis of

the financial statements.

Specific materiality

As above, we determined a lower level of specific

materiality for continuing Group: £871k, which represents

0.7% of revenues from continuing operations. The

significant judgements made in determining this

specific materiality are consistent with those made in

determining the Group materiality.

We also determined a lower level of specific

materiality for related party transactions and Directors’

remuneration.

We determined a lower level of specific materiality for

related party transactions and Directors’ remuneration.

Communication of

misstatements to the

Audit Committee

We determine a threshold for reporting unadjusted differences to the Audit Committee.

Threshold for

communication

£73k and misstatements below that threshold that,

in our view, warrant reporting on qualitative grounds.

Threshold for continuing Group: £44k and

misstatements below that threshold that, in our

view, warrant reporting on qualitative grounds.

£24k and misstatements below that threshold that,

in our view, warrant reporting on qualitative grounds.

The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential

uncorrected misstatements.

Overall materiality – Group

Overall materiality – Parent Company

Total revenue

£468,078k

Continuing revenues

£124,240k

Revenue from

discontinued operations

£343,838k

FSM

£1,463k,

0.3%

£951k,

65%

TFPUM

£512k, 35%

FSM

£484k,

0.75%

£315k,

65%

TFPUM

£169k, 35%

Net assets

£64,754k

FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected misstatements

An overview of the scope of our audit

We performed a risk-based audit that requires an understanding of the Group’s and the parent Company’s business and in particular

matters related to:

Understanding the Group, its components, and their environments, including Group-wide controls

•

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and

assessing the risks of material misstatement at the Group level.

•

The Group engagement team noted that due to the historical acquisitive nature of the Group, there are many components, spread

primarily across the UK, USA, Germany, with different finance teams and control processes in place.

•

In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed on the

components by us, as the Group engagement team, or component auditors which included other engagement teams within Grant

Thornton UK LLP and engagement teams from member firms of the Grant Thornton International network.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

Identifying signiﬁcant components

•

The Group's components vary in size and nature of operations. The Group engagement team identified certain components as

significant based on a variety of both qualitative and quantitative factors. The quantitative factors used in determining significance were

based on a combination of the Group's continuing revenues, profit from discontinued operations and Group profit before taxation. The

qualitative factors used in determining significance were whether any components were likely to include significant risks of material

misstatement due to their its specific nature or circumstances.

Type of work to be performed on ﬁnancial information of parent and other components (including how it addressed the key

audit matters)

•

For those components which were scoped as significant, full-scope audit procedures were performed based on component materiality.

•

Significant components identified were Carrs Agriculture Ltd, Carrs Billington Agriculture (Sales) Ltd, Carrs Billington Agriculture

(Operations) Ltd, Animal Feed Supplement, Inc., Wälischmiller Engineering GmbH, NuVision Engineering, Inc. and the parent Company.

Significant components Wälischmiller Engineering GmbH and NuVision Engineering, Inc. were audited by component auditors based

on instructions issued by the Group engagement team. The parent Company, Carrs Agriculture Ltd, Carrs Billington Agriculture (Sales)

Ltd, Carrs Billington Agriculture (Operations) Ltd and Animal Feed Supplement, Inc. were audited by the Group engagement team.

•

Furthermore, there were four components which were not deemed to be significant, on which specified procedures were performed

either by the Group engagement team (for one such component) or by component auditors (for three such components).

•

For the remaining 24 components, analytical procedures were performed by the Group engagement team at Group level

commensurate with their significance to the Group‘s results and financial position.

•

Where components within the Engineering division were not scoped as significant, we performed target procedures particularly over

revenue from contacts to address the key audit matter “Revenue recognition in components in the Engineering division where revenue

is recognised over time (Long-term contracts)” included above.

Performance of our audit

In order to gain sufficient appropriate audit evidence to address the risks described above, an audit of financial information was carried

out at each individually significant reporting component: audits for Group reporting purposes were carried out at seven significant

components located in the following countries: United Kingdom (four components), USA (two components) and Germany (one

component). In addition, specified audit procedures for Group reporting purposes were performed at a further four components.

The components within the scope of our work accounted for the percentages illustrated below.

Audit approach

No. of

components

% coverage

total assets

% coverage

continuing revenue

% coverage profit

before tax

Full-scope audit

85%

68%

94%

Specified audit procedures

4**

13%

Analytical procedures

11%

19%

Of components where full-scope audits were performed, two were performed by component auditors, the remaining ﬁve were performed by the Group

audit team.

Of components where speciﬁed audit procedures were performed, three were performed by component auditors, the remaining one was performed by the

Group audit team.

Communications with component auditors

•

Where the work was performed by component auditors, we determined the level of involvement we needed to have in the audit

work at those components to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our

opinion on the Group financial statements as a whole. This involved issuing instructions to component auditors and having regular

communication throughout the audit.

•

During the planning stages of the Group audit the Group engagement team sent detailed instructions to the component auditors that

detailed the scope of the work, component materiality and planned audit approach on significant risk areas. The Group team also held

planning meetings with component auditors to discuss these instructions and provide direction to the component auditor.

•

During the fieldwork stage, the Group engagement team was in communication with the component auditors and performed detailed

reviews of a selection of working papers that cover the significant risks at Group level as well as working papers to ensure that the

Group engagement team have sufficient appropriate audit evidence to support the Group opinion.

•

During the completion stage, the Group engagement team was in communication with the component auditors to enquire of any

subsequent events.

Other information

The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s report

thereon. The Directors are responsible for the other information contained within the annual report. Our opinion on the financial statements

does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of

assurance conclusion thereon.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

INDEPENDENT AUDITOR’S REPORT

continued

to the members of Carr’s Group Plc

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with

the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such

material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the

financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact.

We have nothing to report in this regard.

Our opinions on other matters prescribed by the Companies Act 2006 are unmodiﬁed

In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the

Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

•

the information given in the strategic report and the Directors’ report for the financial period for which the financial statements are

prepared is consistent with the financial statements and those reports have been prepared in accordance with applicable legal

requirements;

•

the information about internal control and risk management systems in relation to financial reporting processes and about share

capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency Rules sourcebook made

by the Financial Conduct Authority (the FCA Rules), is consistent with the financial statements and has been prepared in accordance

with applicable legal requirements; and

•

information about the Company’s corporate governance code and practices and about its administrative, management and

supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.

Matter on which we are required to report under the Companies Act 2006

In the light of the knowledge and understanding of the Group and the parent Company and their environment obtained in the course of

the audit, we have not identified material misstatements in:

•

the strategic report or the Directors’ report; or

•

the information about internal control and risk management systems in relation to financial reporting processes and about share capital

structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,

in our opinion:

•

adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received

from branches not visited by us; or

•

the parent company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the

accounting records and returns; or

•

certain disclosures of Directors’ remuneration specified by law are not made; or

•

we have not received all the information and explanations we require for our audit; or

•

a corporate governance statement has not been prepared by the parent Company.

Corporate governance statement

We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance

Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified for our review by the

Listing Rules.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance

Statement is materially consistent with the financial statements or our knowledge obtained during the audit:

•

the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material

uncertainties identified set out on page 27;

•

the Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why the period is

appropriate as set out on page 27;

•

the Director’s statement on whether they have a reasonable expectation that the Group will be able to continue in operation and meet

its liabilities set out on page 27;

•

the Directors’ statement on fair, balanced and understandable set out on page 88;

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

•

the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 24;

•

the section of the Annual Report that describes the review of the effectiveness of risk management and internal control systems set out

on page 51; and

•

the section describing the work of the Audit Committee set out on page 61.

Responsibilities of Directors

As explained more fully in the Directors’ responsibilities statement set out on page 88, the Directors are responsible for the preparation of

the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine

is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the parent Company’s ability to continue

as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the

Directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the ﬁnancial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high

level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement

when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our procedures are capable

of detecting irregularities, including fraud, is detailed below:

•

We obtained an understanding of the legal and regulatory frameworks applicable to the parent Company and the Group and the

industry in which they operate. We determined that the most significant laws and regulations are: UK-adopted international accounting

standards, UK Corporate Governance Code and tax legislation in the jurisdictions in which the Group operates, including the application

of local and overseas sales taxes;

•

We enquired of management, finance team, legal counsel and the Board of Directors about the Group and parent Company’s policies

and procedures relating to:

–

the identification, evaluation and compliance with laws and regulations;

–

the detection and response to the risks of fraud; and

–

the establishment of internal controls to mitigate risks related to fraud or non-compliance with laws and regulations.

•

We inquired of management, finance team, legal counsel and the Board whether they were aware of any instances of non-compliance

with laws and regulations or whether they had any knowledge of actual, suspected or alleged fraud. We corroborated our inquiries

through our review of board minutes and papers provided to the Audit Committee;

•

We communicated relevant laws and regulations and potential fraud risks to all engagement team members, including internal

specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit;

•

We assessed the susceptibility of the parent Company’s and Group’s financial statements to material misstatement, including how

fraud might occur. Audit procedures performed by the Group engagement team included:

–

assessing the design and implementation of controls management has in place to prevent and detect fraud;

–

obtaining an understanding of how those charged with governance considered and addressed the potential for override of controls

or other inappropriate influence over the financial reporting process;

–

challenging assumptions and judgments made by management in significant accounting estimates;

–

identifying and testing journal entries, in particular any journals with unusual characteristics, and increasing our testing in areas of

higher risk as identified during our audit;

–

engaging with our internal tax specialists to address the risk of non-compliance with taxation legislation;

–

designing audit procedures to incorporate unpredictability around the nature, timing or extend of our testing; performing additional

procedures over information provided by the entity during the course of our audit; and

–

assessing the extent of compliance with the relevant laws and regulations as part of our procedures on the related financial

statement item.

•

These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. The

risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error and detecting

irregularities that result from fraud is inherently more difficult than detecting those that result from error, as fraud may involve collusion,

deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with laws and regulations

is from events and transactions reflected in the financial statements, the less likely we would become aware of it;

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

100

•

The assessment of the appropriateness of the collective competence and capabilities of the Group engagement team included

consideration of the Group engagement team’s knowledge of the industry in which the Group operates, and the understanding of, and

practical experience with, audit engagements of a similar nature and complexity through appropriate training and participation;

•

In assessing the potential risks of material misstatement, we obtained an understanding of:

–

the parent Company’s and Group’s operations, including the nature of its revenue sources, products and services and of its objectives

and strategies to understand the classes of transactions, account balances, expected financial statement disclosures and business

risks that may result in risks of material misstatement;

–

the applicable statutory provisions;

–

the rules and interpretative guidance issued by the Financial Conduct Authority;

–

the parent Company’s and Group’s control environment, including the policies and procedures implemented to comply with the

requirements of its regulator, including the adequacy of the training to inform staff of the relevant legislation, rules and other

regulations of the regulator, the adequacy of procedures for authorization of transactions, internal review procedures over the entity's

compliance with regulatory requirements, the authority of, and resources available to the compliance officer and procedures to

ensure that possible breaches of requirements are appropriately investigated and reported; and

•

For components at which audit procedures were performed, we requested component auditors to report to us instances of non-

compliance with laws and regulations that gave rise to risk of material misstatement of the group financial statements. No such matters

were identified by the component auditors.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website

at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Other matters which we are required to address

We were appointed by the Audit Committee on 18 January 2022 to audit the financial statements for the period from 29 August 2021 to 3

September 2022. Our total uninterrupted period of engagement is 1 year, covering the period ended 3 September 2022.

During the year ended 3 September 2022, a non-Grant Thornton International member firm in the UK, that was a component auditor,

provided tax and financial statement preparation services to a significant component of the group which are prohibited in accordance with

the Financial Reporting Council’s Ethical Standard. We identified these prohibited services through our Group audit oversight. There were

no appropriate safeguards to mitigate the impact these prohibited services would have had on our independence such that we could

conclude that they were minor and/or inconsequential to our audit of the Group’s financial statements. We also identified rotation issues

as explained in the Audit Committee Report that could not be appropriately safeguarded. As a result, we performed our own audit of this

component of the group, instead of using the work of the component auditor, to support our Group audit opinion.

Except for the matter described above, the non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or

the parent Company. We remain independent of the Group and the parent Company in conducting our audit.

Our audit opinion is consistent with the additional report to the Audit Committee.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our

audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in

an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone

other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Michael Frankish

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

Manchester

22 March 2023

INDEPENDENT AUDITOR’S REPORT

continued

to the members of Carr’s Group Plc

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

101

Notes

2022

£’000

2021

(restated)

2,3

£’000

Continuing operations

Revenue

2,3

124,240

120,319

Cost of sales

(94,632)

(89,195)

Gross profit

29,608

31,124

Other operating income

1,731

–

Distribution costs

(5,338)

(5,213)

Administrative expenses

(18,609)

(16,612)

Share of post-tax results of joint ventures

840

991

Impairment of joint venture (adjusting item)

–

(2,090)

Adjusted

operating profit

11,906

11,077

Adjusting items

(3,674)

(2,877)

Operating profit

2,4

8,232

8,200

Finance income

351

260

Finance costs

(1,017)

(925)

Adjusted

profit before taxation

11,240

10,412

Adjusting items

(3,674)

(2,877)

Profit before taxation

7,566

7,535

Taxation

(1,524)

(1,788)

Adjusted

profit for the year from continuing operations

9,374

9,357

Adjusting items

(3,332)

(3,610)

Profit for the year from continuing operations

6,042

5,747

Discontinued operations

(Loss)/profit for the year from discontinued operations (including held for sale)

(2,193)

3,849

Profit for the year

3,849

9,596

Profit attributable to:

Equity shareholders

5,072

7,656

Non-controlling interests

(1,223)

1,940

3,849

9,596

Earnings per ordinary share (pence)

Basic

Profit from continuing operations

6.4

6.2

(Loss)/profit from discontinued operations

(1.0)

2.1

5.4

8.3

Diluted

Profit from continuing operations

6.4

6.1

(Loss)/profit from discontinued operations

(1.0)

2.0

5.4

8.1

Adjusted results are consistent with how business performance is measured internally and is presented to aid comparability of performance. Adjusting items are

disclosed in note 5. An alternative performance measures glossary can be found on pages 175 to 177.

Restated to provide comparable information for continuing and discontinued operations following the classiﬁcation of the Carr’s Billington Agricultural business

as a disposal group in the current year. Further details of results from discontinued operations and net assets relating to the disposal group can be found in note 9.

See note 39 for an explanation of the prior year restatement in relation to the recognition of revenue from customer contracts within the Engineering division.

Non-controlling interests relate to businesses included in the disposal group.

CONSOLIDATED INCOME STATEMENT

For the year ended 3 September 2022

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

102

2022

£’000

2021

(restated)

£’000

Profit for the year

3,849

9,596

Other comprehensive income/(expense)

Items that may be reclassified subsequently to profit or loss:

Foreign exchange translation gains/(losses) arising on translation of overseas subsidiaries

4,288

(1,762)

Net investment hedges

165

Taxation charge on net investment hedges

(11)

(31)

Items that will not be reclassified subsequently to profit or loss:

Actuarial (losses)/gains on retirement benefit asset:

– Group

(2,576)

1,205

– Share of associate (2022: included within disposal group)

(287)

578

Taxation credit/(charge) on actuarial (losses)/gains on retirement benefit asset:

– Group

644

(301)

– Share of associate (2022: included within disposal group)

(144)

Other comprehensive income/(expense) for the year, net of tax

2,190

(290)

Total comprehensive income for the year

6,039

9,306

Total comprehensive income attributable to:

Equity shareholders

7,262

7,366

Non-controlling interests

(1,223)

1,940

6,039

9,306

Total comprehensive income attributable to:

Continuing operations

8,447

5,023

Discontinued operations

(2,408)

4,283

6,039

9,306

Non-controlling interests relate to businesses included in the disposal group.

See note 39 for an explanation of the prior year restatement in relation to the recognition of revenue from customer contracts within the Engineering division.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 3 September 2022

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

103

CONSOLIDATED AND COMPANY BALANCE SHEETS

As at 3 September 2022

(Company Number 00098221)

Notes

Group

Company

2022

£’000

2021

(restated)

£’000

2020

(restated)

£’000

2022

£’000

2021

£’000

Assets

Non-current assets

Goodwill

23,609

31,560

32,041

–

Other intangible assets

4,635

5,151

6,365

–

Property, plant and equipment

33,204

36,198

38,259

Right-of-use assets

8,223

16,777

14,856

336

346

Investment property

152

158

–

Investment in subsidiary undertakings

16,19

–

34,143

32,461

Investment in associate

16,17

–

14,268

14,042

–

245

Interest in joint ventures

16,18

6,065

9,482

10,551

172

Other investments

–

Contract assets

316

312

–

Financial assets

– Non-current receivables

34,208

33,494

Retirement benefit asset

6,828

9,371

8,037

6,828

9,371

Deferred tax asset

213

182

–

83,222

123,545

124,402

75,775

76,174

Current assets

Inventories

26,990

43,226

41,579

–

Contract assets

7,564

7,202

7,765

–

Trade and other receivables

19,015

61,735

51,686

3,128

2,279

Current tax assets

3,866

2,669

2,068

2,550

2,586

Financial assets

– Cash and cash equivalents

22,515

24,309

17,571

12,726

11,063

– Derivative financial instruments

–

Assets included in disposal group classified as held for

sale

148,531

–

582

–

228,481

139,141

120,672

18,986

15,928

Total assets

311,703

262,686

245,074

94,761

92,102

See note 39 for an explanation of the prior year restatement in relation to the recognition of revenue from customer contracts within the Engineering division.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

104

Notes

Group

Company

2022

£’000

2021

(restated)

£’000

2020

(restated)

£’000

2022

£’000

2021

£’000

Liabilities

Current liabilities

Financial liabilities

– Borrowings

(12,734)

(11,113)

(11,420)

(1,413)

(2,341)

– Leases

(1,416)

(2,967)

(2,778)

(113)

(98)

– Derivative financial instruments

(62)

–

Contract liabilities

(2,426)

(3,312)

(2,179)

–

Trade and other payables

(21,000)

(69,526)

(55,522)

(4,193)

(2,395)

Current tax liabilities

(711)

(42)

(33)

(119)

–

Liabilities included in disposal group classified as held for

sale

(101,566)

–

(139,915)

(86,960)

(71,932)

(5,838)

(4,834)

Non-current liabilities

Financial liabilities

– Borrowings

(23,805)

(23,159)

(25,021)

(22,757)

(21,906)

– Leases

(6,128)

(12,458)

(11,171)

(231)

(250)

Deferred tax liabilities

(5,048)

(5,503)

(4,580)

(1,181)

(2,201)

Other non-current liabilities

(336)

(55)

(1,385)

–

(35,317)

(41,175)

(42,157)

(24,169)

(24,357)

Total liabilities

(175,232)

(128,135)

(114,089)

(30,007)

(29,191)

Net assets

136,471

134,551

130,985

64,754

62,911

Shareholders’ equity

Share capital

2,350

2,343

2,312

2,350

2,343

Share premium

10,500

10,155

9,176

10,500

10,155

Other reserves

6,988

2,606

4,445

608

536

Retained earnings:

At the beginning of the year

102,295

98,252

92,702

49,877

47,909

Profit attributable to equity shareholders

5,072

7,656

7,814

7,987

6,261

Other changes in retained earnings

(6,710)

(3,613)

(2,264)

(6,568)

(4,293)

100,657

102,295

98,252

51,296

49,877

Total shareholders’ equity

120,495

117,399

114,185

64,754

62,911

Non-controlling interests

15,976

17,152

16,800

–

Total equity

136,471

134,551

130,985

64,754

62,911

See note 39 for an explanation of the prior year restatement in relation to the recognition of revenue from customer contracts within the Engineering division.

The financial statements set out on pages 101 to 172 were approved by the Board on 22 March 2023 and signed on its behalf by:

Peter Page

David White

CONSOLIDATED AND COMPANY BALANCE SHEETS

continued

As at 3 September 2022

(Company Number 00098221)

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

105

Capital

£’000

Premium

£’000

Treasury

Reserve

£’000

Equity

Compensation

Reserve

£’000

Foreign

Exchange

Reserve

£’000

Other

Reserve

£’000

Retained

Earnings

£’000

Total

Shareholders’

Equity

£’000

Non-

controlling

Interests

£’000

Total

Equity

£’000

As previously reported at

29 August 2020

2,312

9,176

(45)

734

3,550

197

98,907

114,831

16,800

131,631

Prior year adjustment

–

(655)

(646)

–

(646)

At 30 August 2020 (restated)

2,312

9,176

(45)

734

3,559

197

98,252

114,185

16,800

130,985

Profit for the year

–

7,656

1,940

9,596

Other comprehensive

(expense)/income

–

(1,628)

–

1,338

(290)

–

(290)

Total comprehensive

(expense)/income

–

(1,628)

–

8,994

7,366

1,940

9,306

Dividends paid

–

(5,490)

(1,647)

(7,137)

Equity-settled share-based

payment transactions

–

406

–

406

464

Excess deferred taxation

on share-based payments

–

Allotment of shares

979

–

1,010

–

1,010

Purchase of own shares

held in trust

–

(110)

–

(110)

–

(110)

Transfer

–

155

(660)

–

(2)

507

–

At 28 August 2021

2,343

10,155

–

480

1,931

195

102,295

117,399

17,152

134,551

As previously reported at

28 August 2021

2,343

10,155

–

480

1,903

195

103,006

118,082

17,152

135,234

Prior year adjustment

–

(711)

(683)

–

(683)

At 29 August 2021 (restated)

2,343

10,155

–

480

1,931

195

102,295

117,399

17,152

134,551

Profit/(loss) for the year

–

5,072

(1,223)

3,849

Other comprehensive

income/(expense)

–

4,337

–

(2,147)

2,190

–

2,190

Total comprehensive

income/(expense)

–

4,337

–

2,925

7,262

(1,223)

6,039

Dividends paid

–

(4,687)

–

(4,687)

Equity-settled share-based

payment transactions

–

199

–

199

249

Excess deferred taxation

on share-based payments

–

(30)

(3)

(33)

Allotment of shares

345

–

352

–

352

Transfer

–

(151)

–

(3)

154

–

At 3 September 2022

2,350

10,500

–

528

6,268

192

100,657

120,495

15,976

136,471

See note 39 for an explanation of the prior year restatement in relation to the recognition of revenue from customer contracts within the Engineering division.

The equity compensation reserve reflects the cumulative accounting impact, at the balance sheet date, of the fair value of the share

schemes over the vesting periods. The movement on the equity compensation reserve is taken through the consolidated income

statement. During the year £151,000 (2021: £660,000) was transferred from the equity compensation reserve to retained earnings in

respect of options exercised in the year.

The Group has opted to use previous revaluations of property made under UK GAAP as deemed cost. On adoption of IFRS the revaluation

reserve was reclassified to other reserves.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 3 September 2022

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

106

Capital

£’000

Premium

£’000

Treasury

Reserve

£’000

Equity

Compensation

Reserve

£’000

Retained

Earnings

£’000

Total

Equity

£’000

At 30 August 2020

2,312

9,176

(45)

825

47,909

60,177

Profit for the year

–

6,261

Other comprehensive income

–

904

Total comprehensive income

–

7,165

Dividends paid

–

(5,490)

Equity-settled share-based payment transactions

–

133

–

133

Excess deferred taxation on share-based payments

–

Allotment of shares

979

–

1,010

Purchase of own shares held in trust

–

(110)

–

(110)

Transfer

–

155

(422)

267

–

At 28 August 2021

2,343

10,155

–

536

49,877

62,911

At 29 August 2021

2,343

10,155

–

536

49,877

62,911

Profit for the year

–

7,987

Other comprehensive expense

–

(1,932)

Total comprehensive income

–

6,055

Dividends paid

–

(4,687)

Equity-settled share-based payment transactions

–

146

–

146

Excess deferred taxation on share-based payments

–

(23)

Allotment of shares

345

–

352

Transfer

–

(74)

–

At 3 September 2022

2,350

10,500

–

608

51,296

64,754

The equity compensation reserve reflects the cumulative accounting impact, at the balance sheet date, of the fair value of the share

schemes over the vesting periods. The movement on the equity compensation reserve is taken through the income statement where

it relates to employees of the Company and to investment in subsidiaries where it relates to employees of the subsidiaries. During the year

£74,000 (2021: £422,000) was transferred from the equity compensation reserve to retained earnings and £103,000 (2021: £331,000) was

transferred from the equity compensation reserve to investment in subsidiaries in respect of options exercised in the year.

COMPANY STATEMENT OF CHANGES IN EQUITY

For the year ended 3 September 2022

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

107

Group

Company

Notes

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Cash flows from operating activities

Cash generated from/(used in) continuing operations

4,473

18,131

(3,685)

(1,909)

Interest received

179

109

1,548

1,443

Interest paid

(986)

(936)

(486)

(484)

Tax paid

(805)

(1,278)

(58)

–

Net cash generated from/(used in) operating activities in

continuing operations

2,861

16,026

(2,681)

(950)

Net cash (used in)/generated from operating activities in

discontinued operations

(6,901)

2,871

–

Net cash (used in)/generated from operating activities

(4,040)

18,897

(2,681)

(950)

Cash flows from investing activities

Acquisition of subsidiaries (net of cash acquired)

(426)

–

Contingent consideration paid

–

(1,077)

–

Dividends received from subsidiaries

–

6,195

8,248

New loans to subsidiaries

–

(941)

(862)

Repayment of loans to subsidiaries

–

2,165

1,339

Investment in subsidiaries

–

(1,020)

–

Dividend received from associate and joint ventures

2,250

1,148

1,656

1,039

Purchase of intangible assets

(342)

(107)

–

Proceeds from sale of property, plant and equipment

167

–

Purchase of property, plant and equipment

(3,696)

(3,026)

(30)

–

Proceeds from sale of investment property

149

–

Net cash (used in)/generated from investing activities in

continuing operations

(2,034)

(2,895)

8,025

9,764

Net cash (used in)/generated from investing activities in

discontinued operations

(2,749)

155

–

Net cash (used in)/generated from investing activities

(4,783)

(2,740)

8,025

9,764

Cash flows from financing activities

Proceeds from issue of ordinary share capital

352

1,010

352

1,010

Purchase of own shares held in trust

–

(110)

–

(110)

New financing and drawdowns on RCF

10,051

11,526

9,963

10,000

Repayment of RCF drawdowns

(8,000)

(8,500)

(8,000)

(8,500)

Lease principal repayments

(1,550)

(1,778)

(105)

(98)

Repayment of borrowings

(2,840)

(2,400)

Receipt/(repayment) of loans from subsidiaries

–

1,125

(110)

Dividends paid to shareholders

(4,687)

(5,490)

(4,687)

(5,490)

Net cash used in financing activities in continuing operations

(6,674)

(5,742)

(3,752)

(5,698)

Net cash generated from/(used in) financing activities in

discontinued operations

20,324

(727)

–

Net cash generated from/(used in) financing activities

13,650

(6,469)

(3,752)

(5,698)

Effects of exchange rate changes

332

(296)

(37)

Net increase in cash and cash equivalents

5,159

9,392

1,663

3,079

Cash and cash equivalents at beginning of the year

19,696

10,304

11,063

7,984

Cash and cash equivalents at end of the year

24,855

19,696

12,726

11,063

CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS

For the year ended 3 September 2022

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AnnuAl RepoRt And Accounts 2022

108

Basis of accounting

The consolidated and Company financial statements are prepared on a going concern basis in accordance with UK-adopted International

Accounting Standards and with the requirements of the Companies Act 2006 applicable to companies reporting under those standards.

The Company is a public limited company incorporated and domiciled in England and Wales whose shares are listed and traded on the

London Stock Exchange. The address of its registered office is Old Croft, Stanwix, Carlisle, Cumbria CA3 9BA.

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and

assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of

revenues and expenses during the reporting year. Although these estimates are based on management’s best knowledge of the amount,

event or actions, actual results ultimately may differ materially from the estimates.

The Group has recognised prior year restatements in relation to the recognition of revenue from customer contracts within the

Engineering division together with prior year restatements related to revenue recognition within discontinued operations. Further details of

these restatements can be found in note 39.

Accounting policies have been applied consistently, other than where new policies have been adopted.

The consolidated and Company financial statements are prepared under the historic cost convention as modified by the revaluation of

certain financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss.

The accounting policies for the Group and Company are detailed below:

Going concern

The financial statements have been prepared on a going concern basis which the Directors consider to be appropriate for the following

reasons.

The Directors have reviewed the Group’s operational forecasts and projections for the three years to 31 August 2025 as used for the

viability assessment, taking account of reasonably possible changes in trading performance, together with the planned capital investment

over that same period. The Group is expected to have a sufficient level of financial resources available through operating cash flows

and existing bank facilities for the period to 31 March 2024 (“the going concern period”). The Group has operated within all its banking

covenants throughout the year. In addition, the Group’s main banking facility is in place until December 2024.

For the purpose of assessing the appropriateness of the preparation of the Group’s accounts on a going concern basis, the Directors have

prepared financial forecasts for the Group, comprising profit before and after taxation, balance sheets and cash flows covering the period

to 31 March 2024. The forecasts consider the current cash position, the availability of banking facilities and an assessment of the principal

areas of risk and uncertainty. These forecasts have been sensitised on a combined basis for severe but plausible downside scenarios. The

scenarios tested included significant reductions in profitability and associated cashflows linked to the four principal risks highlighted in the

Viability Statement on page 27. The results of this stress-testing showed that, due to the stability of the core business, the Group would be

able to withstand the impact of these severe but plausible downside scenarios occurring over the period of the financial forecasts.

In addition, several other mitigating measures remain available and within the control of the Directors that were not included in the

scenarios. These include withholding discretionary capital expenditure and reducing or cancelling future dividend payments.

In all the scenarios, the Group complies with its financial bank covenants, operates within its existing bank facilities, and meets its liabilities

as they fall due.

Consequently, the Directors are confident that the Group and the Company will have sufficient funds to continue to meet their liabilities as

they fall due until 31 March 2024 and therefore have prepared the financial statements on a going concern basis.

Basis of consolidation

The consolidated financial statements comprise Carr’s Group plc and all its subsidiaries, together with the Group’s share of the results

of its associate and joint ventures. The financial information of the subsidiaries, associate and joint ventures is prepared as of the same

reporting date and consolidated using consistent accounting policies. Group inter-company balances and transactions, including any

unrealised profits arising from Group inter-company transactions, are eliminated in full.

Results of subsidiary undertakings acquired or disposed of during the current and prior financial year were included in the financial

statements from the effective date of control or up to the date of cessation of control. The separable net assets, both tangible and

intangible, of the acquired subsidiary undertakings were incorporated into the financial statements on the basis of the fair value as at

the effective date of the Group acquiring control.

An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has

the ability to affect those returns through its power over the investee. Control requires power over the investee, exposure, or rights,

to variable returns and the ability to use power to affect returns. Subsidiaries are entities that meet this definition of control.

PRINCIPAL ACCOUNTING POLICIES

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

109

Basis of consolidation

continued

Associates are entities over which the Group has significant influence but not control, generally accompanied by a share of between 20%

and 50% of the voting rights. Joint ventures are entities over which the Group has joint control, established by contractual agreement.

Investments in associates and joint ventures are accounted for using the equity method. The Group’s share of its associate’s and joint

ventures’ post-tax results, together with impairment losses, are recognised in the income statement, and its share of movement in

reserves is recognised in reserves. The cumulative movements are adjusted against the carrying amount of the investment. The Group’s

investment in associate and joint ventures includes any goodwill arising on acquisition. If the Group’s share of losses in an associate or

joint venture equals or exceeds its investment in the associate or joint venture, the Group does not recognise further losses, unless it has

incurred obligations or made payments on behalf of the associate or joint venture.

All subsidiaries are accounted for by applying the purchase method. The cost of a business combination is measured as the aggregate of

the fair values, at the acquisition date, of the assets given, liabilities incurred or assumed, and equity instruments issued by the Group. The

identifiable assets, liabilities and contingent liabilities of the acquiree are measured initially at fair value at the acquisition date, irrespective

of the extent of any non-controlling interest. The excess of the cost of the business combination over the Group’s interest in the net fair

value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill. Contingent consideration is measured initially

at fair value and is revalued to fair value at each subsequent period end until the period in which it is settled.

Acquisition-related costs are expensed to the consolidated income statement in the year they are incurred.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement

of comprehensive income, balance sheet and statement of changes in equity respectively. The Group applies a policy of treating

transactions with non-controlling interests as transactions with parties external to the Group.

In accordance with IFRS 5 ‘Non-current assets held for sale and discontinued operations’, non-current assets and disposal groups are

classified as held for sale only if available for immediate sale in their present condition and a sale is highly probable and expected to be

completed within one year from the date of classification. Such assets are measured at the lower of carrying value and fair value less

costs to sell and are not depreciated or amortised. Fair value is the price that would be received to sell an asset or paid to transfer a

liability in an orderly transaction between market participants at the measurement date. The net results of the Carr’s Billington Agricultural

business are presented as discontinued operations in the consolidated income statement, with restated comparatives, and the assets and

liabilities associated with this business are presented separately in the consolidated balance sheet. Further details can be found in note 9.

Employee share trust

IFRS 10 requires that the Group consolidate a structured entity where the substance of the relationship between the parties indicates that

the Group controls the entity. The employee share trust sponsored by the Group falls within this category of structured entity and has

been accounted for as if it were, in substance, a subsidiary.

Currency translation

The financial statements for the Group’s subsidiaries, associate and joint ventures are prepared using their functional currency. The

functional currency is the currency of the primary economic environment in which an entity operates. The presentation currency of the

Group and Company is Sterling.

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions.

Exchange differences resulting from the settlement of such transactions and from the translation, at exchange rates ruling at the balance

sheet date, of monetary assets and liabilities denominated in currencies other than the functional currency, are recognised in the

consolidated income statement.

The balance sheets of foreign operations are translated into Sterling using the exchange rate at the balance sheet date and the income

statements are translated into Sterling using the average exchange rate for the year. Where this average is not a reasonable approximation

of the cumulative effect of the rates prevailing on the transaction dates, the exchange rate on the transaction date is used. Exchange

differences arising are recognised as a separate component of shareholders’ equity. On disposal of a foreign operation any cumulative

exchange differences held in shareholders’ equity are transferred to the consolidated income statement.

Revenue recognition

Revenue is recognised when the Group transfers control over a product or service to its customer.

Revenue is measured based on

the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Inter-segmental

transactions are on an arm’s length basis.

The Group recognises revenue both at a point in time and over time.

Revenues generated by the Group’s Speciality Agriculture division

and Agricultural Supplies (now classified as discontinued operations) division are recognised at a point in time.

Revenues generated by

the Group’s Engineering division are recognised over time where either the contract with the customer does not create an asset with an

alternative use and where there is an enforceable right to payment for performance completed to date or where the Group’s performance

creates or enhances an asset that the customer controls as the asset is created or enhanced. Where this is not the case revenue is

recognised at a point in time.

In respect of contracts that meet the criteria to be recognised over time, revenue is calculated on the basis of the stage of completion of

each contract.

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AnnuAl RepoRt And Accounts 2022

110

PRINCIPAL ACCOUNTING POLICIES

continued

Revenue recognition

continued

The Group applies a single method of measuring progress for each performance obligation satisfied over time and applies this method

consistently to similar performance obligations and in similar circumstances. Depending on the nature and circumstances of the

performance obligation, the stage of completion is determined with reference to either:

•

The proportion that contract costs incurred for work performed to date bear to the total estimated contract costs; or

•

The proportion that contract output is delivered towards complete satisfaction of the performance obligation with reference to certified

or valued contract works.

Revenue is recognised for a performance obligation satisfied over time only if the Group can reasonably measure its progress towards

complete satisfaction of the performance obligation. In circumstances when it cannot reasonably measure the outcome, but expects to

recover the costs incurred in satisfying the performance obligation, the Group recognises revenue only to the extent of the costs incurred.

The Group would not be able to reasonably measure its progress towards complete satisfaction of a performance obligation if it lacks

reliable information that would be required to apply an appropriate method of measuring progress.

Where it is probable that contract costs will exceed total contract revenue the expected loss is recognised immediately as an expense in

the consolidated income statement.

Contract modifications such as variations to the original order are not accounted for until they are approved by the customer. Where a

modification to an existing contract occurs, the nature of the modification is assessed to determine whether it represents a separate

performance obligation required to be satisfied by the Group or whether it is a modification to the existing performance obligation.

Variable consideration arises where revenue is recognised on a time and materials basis, as is the case under certain of the Group's contracts,

although not the majority. Revenue is estimated using the most likely amount method and is recognised as the time and materials are billed

onto the customer. Where contracts include this arrangement invoices are raised monthly to the customer. As a practical expedient, where

the Group has the right to invoice a customer based on performance to date, such as in the case where they are invoiced based on time and

materials the Group will recognise revenue on that basis. One unique contract in the Engineering division, completed in the year, also included

variable consideration as revenue could be returned to the customer in the event of the failure of a testing process performed at the end of

the contract. The Group was required to assess the extent to which revenue was constrained by the possibility that the test could fail. It is not

considered to represent a major source of estimation uncertainty in either instance due to the nature of the revenue and the contracts entered

into by the Group.

The Group does not expect to have any material contracts where the period between the transfer of the promised goods or services to

the customer and payment by the customer exceeds one year. As a consequence, the Group does not apply the time-value of money to its

transaction prices.

Incremental costs of obtaining a contract with a customer are only recognised when it is expected that these costs will be recovered. Costs to

obtain a contract that would have been incurred regardless of whether the contract was obtained are recognised as an expense when incurred,

unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained. Where the amortisation period of an

asset that would otherwise have been recognised is one year or less, the incremental costs of obtaining a contract are expensed when incurred.

Contract assets exist when the Group has a right to consideration in exchange for goods or services transferred to a customer when that

right is conditional on something other than the passage of time (e.g. future performance).

Contract liabilities exist when the Group has an

obligation to transfer goods or services to a customer for which the Group has already received consideration.

The Group recognises commission revenue on sales where the Group arranges for goods or services to be sold directly from the vendor

to the end customer, with the Group earning a sales agent fee from the vendor for arranging the sale. In these contracts the Group

does not have primary responsibility for ensuring delivery of the goods or services to the end customer and does not have discretion in

establishing the price for the goods or services. The revenue is recognised when the commission has been earned from the vendor.

Retirement beneﬁt asset/obligation

The Group offers various pension schemes to employees including a defined benefit pension scheme and several defined

contribution schemes.

The assets of the Group’s pension schemes are held separately from those of the Group and are invested with independent

investment managers.

Contributions to defined contribution schemes are charged to the consolidated income statement in the year to which they relate.

Carr’s Group Pension Scheme

The asset recognised in the consolidated and Company balance sheet at the year end is the fair value of scheme assets at the balance

sheet date less the present value of the defined benefit obligation. Independent actuaries calculate the defined benefit asset annually

using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated

future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will

be paid, and that have terms to maturity approximating to the terms of the related pension liability.

The service costs, including pension scheme administrative costs, are included in operating profit in the consolidated income statement.

A credit is made within interest which represents a net interest amount that is calculated by applying the discount rate at the beginning of

the year to the net defined benefit asset at the beginning of the year. The net interest amount also takes into account changes to the net

asset during the year.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

111

Retirement beneﬁt asset/obligation

continued

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the consolidated

and Company statement of comprehensive income. The pension scheme deficit or surplus, to the extent considered recoverable, is

recognised in full on the consolidated balance sheet.

IFRIC 14 confirms that where a company has an unconditional right to a refund of surplus from a defined benefit pension plan during the

lifetime of that plan or when it winds it up, and where there is expected to be surplus assets, there is no limit on the asset the company

can show on its balance sheet. Following a review of the Scheme’s Trust deed, the Directors believe that there is a right to recognise, and

that there is no restriction on the recognition of, the IAS 19 pension surplus. At 3 September 2022 and 28 August 2021, the consolidated

and Company balance sheet recognises the full surplus on the Carr’s Group defined benefit pension scheme. The Company does not

intend to recover the surplus through a refund.

Carr’s Billington Agriculture Pension Scheme

One of the Group’s subsidiaries is a participating employer in the Carr’s Billington Agriculture Pension Scheme, which is a multi-employer

defined benefit pension scheme. Note 29 provides further information on this scheme and how it has been accounted for in the

consolidated accounts.

Share-based payments

The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair

value at the date of the grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a

straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.

Fair value is measured by use of a valuation model. The expected life used in the model has been adjusted, based on management’s best

estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

At each balance sheet date the Group revises its estimate of the number of options that are expected to vest. Changes to the fair value

recognised as a result of this are charged or credited to the consolidated income statement with a corresponding adjustment to the

equity compensation reserve.

Interest

Interest is recognised in the consolidated income statement on an accruals basis using the effective interest method.

Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are

assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets,

until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in the consolidated income statement in the year in which they are incurred.

Operating segments

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 Executive Directors.

The CODM considers the business from a product/services perspective. Reportable operating segments have been identified as

Speciality Agriculture and Engineering. The previously reported operating segment of Agricultural Supplies has been classified as a

disposal group at the year end and is disclosed as a discontinued operation in the segmental reporting.

Adjusting items

Adjusting items that are material by size and/or by nature are presented within their relevant income statement category, but highlighted

separately on the face of the income statement. Items that management consider fall into this category are also disclosed within note

5 to the financial statements. The separate disclosure of profit before adjusting items is consistent with how business performance is

measured internally and is presented to aid comparability of performance. Events which may give rise to adjusting items include, but are

not limited to, amortisation of acquired intangible assets, strategic review costs, adjustments to contingent consideration arising from fair

value revaluation, restructuring/closure costs, gains and losses on disposal of Group businesses, acquisition-related costs, ERP system

implementation costs, impairment of goodwill, impairment of joint ventures and the effect of changes to deferred tax rates.

Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group’s interest in

the net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling

interest in the acquiree.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

112

Goodwill

continued

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or groups of CGUs,

that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents

the lowest level within the entity at which the goodwill is monitored for internal management purposes.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential

impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value

less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

Goodwill written off to reserves under UK GAAP prior to 31 August 1998 has not been reinstated and would not form part of the gain or

loss on the disposal of a business.

Other intangible assets

Other intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation commences

when assets are available for use. The expected useful lives, over which the assets are amortised, are generally as follows:

Customer relationships

1 – 10 years

Brands

6 – 25 years

Know-how

15 years

Proprietary technology

5 – 13 years

Development costs

5 – 15 years

Patents and trademarks

contractual life

Contract backlog

3 years

Software

3 – 10 years

Software costs incurred as part of a service agreement are only capitalised when it can be evidenced that the Group has control over the

resources defined in the agreement. Software customisation and configuration costs relating to software not controlled by the Group are

expensed as incurred.

The cost of intangible assets acquired in a business combination is the fair value at the acquisition date. The cost of separately acquired

intangible assets comprises the purchase price and any directly attributable costs of preparing the assets for use. Intangible assets are

amortised on a straight-line basis.

Research and development costs

All research costs are recognised in the consolidated income statement as incurred. Development costs are recognised as an asset only

to the extent that specific recognition criteria, as set out in IAS 38 ‘Intangible assets’, relevant to the proposed application are met and the

amount recognised is recoverable through future economic benefits.

Property, plant and equipment

Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses. Cost comprises

purchase price and directly attributable costs.

Freehold land and assets in the course of construction are not depreciated. For all other property, plant and equipment, depreciation is

calculated on a straight-line basis to allocate cost less residual values of the assets over their estimated useful lives as follows:

Freehold buildings

up to 50 years

Leasehold improvements

shorter of 50 years or lease term

Plant and equipment

3 to 20 years

Residual values and useful lives are reviewed, and adjusted if appropriate, at each financial year end.

Assets not fully constructed at the balance sheet date are classified as assets in the course of construction. When construction is

complete these assets are reclassified to the appropriate heading within property, plant and equipment. Depreciation commences when

the asset is ready for use.

The cost of maintenance, repairs and minor equipment is charged to the consolidated income statement as incurred; the cost of major

renovations and improvements is capitalised.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within the

consolidated income statement.

PRINCIPAL ACCOUNTING POLICIES

continued

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

113

Investment property

Investment properties are properties held for long-term rental yields. Investment properties are carried in the balance sheet at cost less

accumulated depreciation. Freehold land is not depreciated. For all other investment property, depreciation is calculated on a straight-line

basis to allocate cost less residual values of the assets over their estimated useful lives as follows:

Freehold buildings

up to 50 years

The cost of maintenance, repairs and minor equipment is charged to the consolidated income statement as incurred; the cost of major

renovations and improvements is capitalised.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within the

consolidated income statement.

Impairment of non-ﬁnancial assets

Non-financial assets are reviewed for impairment where there are any events or changes in circumstances that would indicate potential

impairment. In addition, at each reporting date, the Group assesses whether there is any indication that goodwill may be impaired. Where

an indicator of impairment exists, the Group makes an estimate of recoverable amount. Where the carrying amount of an asset exceeds its

recoverable amount the asset is written down to its recoverable amount. Recoverable amount is the higher of fair value less costs to sell

and value-in-use and is deemed for an individual asset. If the asset does not generate cash inflows that are largely independent of those

from other assets or groups of assets, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

Discount rates reflecting the asset-specific risks and the time-value of money are used for the value-in-use calculation.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour

costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Where appropriate,

cost is calculated on a specific identification basis. Otherwise inventories are valued using the first-in first-out method.

Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing,

selling and distribution.

Provision has been made, where necessary, for slow-moving, obsolete and defective inventories.

Cash and cash equivalents

Cash and cash equivalents for the purposes of the consolidated and Company statement of cash flows comprise cash at bank and in

hand, money market deposits and other short-term highly liquid investments with original maturities of three months or less and bank

overdrafts. Bank overdrafts are presented in borrowings within current liabilities in the consolidated and Company balance sheet.

Grants

Grants received on capital expenditure are recorded as deferred income and taken to the consolidated income statement in equal annual

instalments over the expected useful lives of the assets concerned.

Revenue grants and contributions are taken to the consolidated income statement in the year to which they apply.

Leases

The Group leases properties, motor vehicles, plant and machinery and other equipment. Lease terms are negotiated on an individual basis

and contain a wide range of terms and conditions.

Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the

Group. Each lease payment is allocated between the repayment of the lease liability and finance cost. The finance cost is charged to the

income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for

each period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis and

is also subject to regular impairment reviews.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of

the following lease payments:

•

Fixed payments (including in-substance fixed payments), less any lease incentives receivable;

•

Variable lease payments that are based on an index or rate;

•

Amounts expected to be payable by the lessee under residual value guarantees;

•

The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

•

Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

114

Leases

continued

The lease payments are discounted using the interest rate implicit in the lease. Where this cannot be determined, the lessee’s

incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of

similar value in a similar economic environment with similar terms and conditions.

After initial measurement the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term or a

change in the fixed lease payments. Right-of-use assets are adjusted for any remeasurement of lease liabilities.

Right-of-use assets are measured at cost comprising the following:

•

The amount of the initial measurement of the lease liability;

•

Any lease payments made at or before the commencement date less any lease incentives received;

•

Any initial direct costs incurred by the lessee; and

•

Restoration costs required by the terms and conditions of the lease.

At the commencement date of property leases the Group normally determines the lease term to be the full term of the lease, assuming

that any option to break or extend the lease is unlikely to be exercised and it is not reasonably certain that the Group will continue in

occupation for any period beyond the lease term. Leases are regularly reviewed and will be revalued if it becomes likely that a break

clause or option to extend the lease is exercised.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the

income statement. Short-term leases are leases with a lease term of 12 months or less. Low-value assets generally comprise minor office

and IT equipment.

The Group acts as lessor in certain operating lease arrangements. Rental income is recognised on a straight-line basis in the income

statement. The Group is not a lessor in any finance lease arrangements.

Tax

The tax charge comprises current tax and deferred tax.

The current tax charge represents an estimate of the amounts payable to tax authorities in respect of the Group’s taxable profits.

Deferred tax is provided on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the

consolidated and Company financial statements. Deferred tax arising from initial recognition of an asset or liability in a transaction, other

than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss, is not recognised.

Deferred tax is measured using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to

apply when the asset is realised or the liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary

differences can be utilised.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the

Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not

reverse in the foreseeable future.

Tax is recognised in the consolidated income statement or consolidated statement of comprehensive income, unless the tax relates to

items recognised directly in shareholders’ equity, in which case the tax is recognised directly in shareholders’ equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax

liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same tax authority on either the same

taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Dividends

Final equity dividends to the shareholders of the Company are recognised in the year that they are approved by the shareholders.

Interim equity dividends are recognised in the year that they are paid.

Dividends receivable are recognised in the period in which they are received.

PRINCIPAL ACCOUNTING POLICIES

continued

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

115

Classiﬁcation of ﬁnancial instruments issued by the Group and Company

Financial instruments issued by the Group and Company are treated as equity only to the extent that they meet the following two

conditions:

(a)

they include no contractual obligations upon the Group or Company to deliver cash or other financial assets or to exchange financial

assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group or Company; and

(b)

where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that includes

no obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the

Company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

To the extent that this definition is not met, the proceeds of issue are classified as a financial liability.

Where the instrument so classified

takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called-up share capital and

share premium account exclude amounts in relation to those shares.

Financial instruments

Financial assets and liabilities are recognised on the consolidated and Company balance sheet when the Group and Company becomes a

party to the contractual provisions of the instrument.

The Group and Company classifies its financial assets under the measurement categories of amortised cost, for non-derivative financial

assets, or measured subsequently at fair value through either profit or loss or comprehensive income.

Non-derivative ﬁnancial assets

Non-derivative financial assets include contract assets, trade and other receivables and non-current receivables. As these categories

of financial assets do not carry a significant financing element, expected credit losses are measured using the simplified impairment

approach. This requires expected lifetime losses to be recognised upon the initial recognition of the asset.

Non-derivative financial assets, other than trade receivables, are recognised initially at fair value and subsequently measured at amortised

cost using the effective interest method. Trade receivables are measured initially at the IFRS 15 transaction price.

Derivative ﬁnancial instruments and hedging activities

The Group primarily uses forward foreign currency contracts, options and currency swaps to manage its exposures to fluctuating foreign

exchange rates. These instruments are initially recognised at fair value and are subsequently remeasured at their fair value at each

balance sheet date.

The Group’s policy is to hedge its international assets and it has designated foreign currency loans as a hedge against net investment

in foreign operations. The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is

determined as an effective hedge is recognised directly in equity. The gain or loss on any ineffective portion of the hedge is recognised

immediately in the consolidated income statement. The Group continues to apply IAS 39 for the purposes of hedge accounting as

permitted by IFRS 9.

New standards and interpretations

From 29 August 2021 the following became effective and were adopted by the Group and Company:

•

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform – Phase 2 (effective date 1 January 2021)

Its adoption did not have a material effect on the Group or Company’s profit for the year or equity.

New standards, amendments and interpretations issued but not yet eﬀective and not early adopted

•

Annual improvements to IFRS Standards 2018-2020 (effective 1 January 2022)

•

Amendments to IAS 16 – Property, Plant and Equipment: Proceeds before intended use (effective 1 January 2022)

•

Amendments to IAS 37 – Onerous Contracts – Cost of Fulfilling a Contract (effective 1 January 2022)

•

Amendments to IFRS 3 – Reference to the Conceptual Framework (effective 1 January 2022)

•

Amendments to IAS 1 – Classification of Liabilities as Current or Non-current (effective 1 January 2023)

•

Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies (effective 1 January 2023)

•

Amendments to IAS 8 v Definition of Accounting Estimates (effective 1 January 2023)

•

Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January 2023)

•

IFRS 17 – Insurance Contracts (effective 1 January 2023)

It is not considered that the above standards and amendments will have a significant effect on the results or net assets of the Group or

Company.

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AnnuAl RepoRt And Accounts 2022

116

Signiﬁcant judgements, key assumptions and estimates

Application of certain Group accounting policies requires management to make judgements, assumptions and estimates concerning the

future as detailed below.

The following is considered to be a significant judgement:

Non-current assets held for sale and discontinued operations

In respect of the disposal of the Carr's Billington Agricultural business, the Group was required to apply IFRS 5 'Non-current assets held

for sale and discontinued operations'. Judgement is involved as to whether or not the disposal group meets the criteria for classification as

held for sale. The assets and liabilities of the disposal group are to be measured at the lower of carrying value and fair value less costs to

sell. Judgement is required to assess fair value less costs to sell by considering expected proceeds less any required adjustments for net

debt and working capital and costs of disposal. Details of discontinued operations and assets and liabilities held for sale can be found in

note 9.

The following are considered to be accounting estimates:

Valuation of pension obligations

The valuation of the Group’s defined benefit pension scheme is determined each year following advice from a qualified independent

actuary and can fluctuate based on a number of external factors. Such factors include the major assumptions as shown in the table in

note 29 and actual returns on scheme assets compared to those predicted in the previous scheme valuation. It is reasonably possible,

on the basis of existing knowledge, that outcomes within the next financial year that are different from the assumption could require a

material adjustment to the carrying amount of the assets affected. The carrying value of the defined benefit pension scheme surplus at

3 September 2022 is £6.8m (2021: £9.4m). More information on the pension scheme is given in note 29.

The associate’s defined benefit pension scheme is also subject to these estimation uncertainties. In addition, for assets falling within

the IFRS 13 fair value hierarchy level 3 inputs category, there is exposure to estimation uncertainty when estimating the asset value. The

surplus, calculated in accordance with IAS 19, is £5.6m (2021: £5.4m) of which the Group recognises 49% in its balance sheet within its

‘Investment in associate’. At 3 September 2022 the investment in associate is included within assets of disposal group held for sale (note 9).

Impairment of goodwill and non-ﬁnancial assets

Non-financial assets are reviewed for impairment where there are any events or changes in circumstances that would indicate potential

impairment. In addition the carrying value of goodwill must be assessed for impairment annually, or more frequently if there are

indications that goodwill might be impaired. This requires an estimation of the value in use of the cash-generating units to which goodwill

is allocated. Value-in-use is dependent on estimations of future cash flows from the cash-generating unit and the use of an appropriate

discount rate to discount those cash flows to their present value. The Group's precision engineering business currently operates in the oil

and gas sector, a sector in which there are longer-term risks as a result of climate change. In light of longer-term risks in this sector the

Group has been cautious in the estimation of future cash flows from this cash-generating unit.

Impairment to goodwill of £4.2m was identified in the current year (2021: £nil). The carrying value of goodwill at 3 September 2022 is

£23.6m (2021: £31.6m). Further details of cash-generating units and stress testing performed on the carrying values can be found in note 12.

During the prior year an impairment of £2.1m was recognised against the carrying value of interest in joint ventures and a loan receivable

due from joint ventures.

Revenue recognition on contracts

For contracts recognised over time the Group recognises revenue and profits based on the stage of completion. This requires

management to make an assessment of performance obligations under each contract, the ability to reasonably estimate the outcome,

and the point at which those obligations have been fulfilled. Management uses estimates and judgements when assessing the total

expected costs on a contract. The Group has controls in place to review and monitor the estimates used to ensure they are appropriate.

Disclosures relating to the disaggregation of revenue for revenues recognised at a point in time and revenues recognised over time can

be found in note 3. A prior year restatement has been recognised in respect of revenue recognition (note 39).

The following accounting estimates are significant for the years presented but, at the date of signing these financial statements, are not

expected to be material in future years.

Provision for impairment of trade receivables

The financial statements include a provision for impairment of trade receivables that is based on management’s estimation of

recoverability. There is a risk that the provision will not match the trade receivables that ultimately prove to be irrecoverable. The carrying

value of the provision for impairment of trade receivables at 3 September 2022 is £0.8m (2021: £2.0m). Further details of the provision,

including ageing profile, can be found in note 23.

Valuation of contingent consideration

IFRS 3 ‘Business Combinations’ requires contingent consideration to be measured initially at fair value and then subsequently revalued

to fair value at each period end. This involves an estimate of expected future payments based on profit forecasts and discount rates

to reflect the time-value of money. Further details in respect of contingent consideration, including movements in fair value between

opening and closing balances, is included in note 28.

PRINCIPAL ACCOUNTING POLICIES

continued

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

117

The Company has taken advantage of the exemption, under section 408 of the Companies Act 2006, from presenting its own income

statement of comprehensive income and related notes. Total comprehensive income for the year dealt with in the accounts of the

Company was £6,055,000 (2021: £7,165,000) of which £7,987,000 (2021: £6,261,000) relates to profit after tax for the year.

2 Segmental information

The chief operating decision maker (“CODM”) has been identified as the Executive Directors. Management has identified the operating

segments based on internal financial information reviewed by the CODM. The CODM considers the business from a product/services

perspective. Operating segments of continuing operations have been identified as Speciality Agriculture and Engineering. The previously

reported operating segment of Agricultural Supplies has been classified as a disposal group at the year end and is disclosed as a

discontinued operation in the segmental reporting tables below. Prior year disclosures have been restated to aid comparability. Central

comprises the central business activities of the Group’s head office, which earns no external revenues. Operating segments have not

been aggregated for the purpose of determining reportable segments. Prior year disclosures have also been restated in respect of the

recognition of revenue from customer contracts within the Engineering division and discontinued operations. Further details of the prior

year restatements can be found in Note 39.

Speciality Agriculture derives its revenue from the sale of animal feed blocks and animal health products.

Engineering derives its revenue from the provision of engineering services and the design and manufacture of bespoke equipment for

use in the nuclear, naval defence, oil and gas, and petrochemical industries. Products include manipulators, robotics, specialist fabrication

and precision machining.

Discontinued operations derives its revenue from the manufacture and sale of animal feed together with retail sales of farm equipment,

fuels and farm consumables through its network of rural stores.

Performance is assessed using adjusted operating profit. For internal purposes the CODM assesses operating profit before material

adjusting items (note 5) consistent with the presentation in the financial statements.

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

The Group has operations in the UK and overseas. In accordance with IFRS 8, entity-wide disclosures based on the geography of

operations is also presented. The geographical analysis of revenue is presented by revenue origin.

The segmental information for the year ended 3 September 2022 is as follows:

Speciality

Agriculture

£’000

Engineering

£’000

Central

£’000

Continuing

Group

£’000

Discontinued

operations

£’000

Total segment revenue

84,321

46,347

–

130,668

343,844

Inter-segment revenue

(6,244)

(184)

–

(6,428)

(6)

Revenue from external customers

78,077

46,163

–

124,240

343,838

Adjusted

EBITDA

9,869

7,693

(2,487)

15,075

7,586

Depreciation, amortisation and profit/(loss) on disposal of

non-current assets

(1,532)

(2,326)

(151)

(4,009)

(2,693)

Share of post-tax results of associate (adjusted

) and joint ventures

840

–

840

2,016

Adjusted

operating profit/(loss)

9,177

5,367

(2,638)

11,906

6,909

Adjusting items (note 5)

131

(3,351)

(454)

(3,674)

(7,735)

Operating profit/(loss)

9,308

2,016

(3,092)

8,232

(826)

Finance income

351

–

Finance costs

(1,017)

(756)

Adjusted

profit before taxation

11,240

6,153

Adjusting items (note 5)

(3,674)

(7,735)

Profit/(loss) before taxation

7,566

(1,582)

Taxation of discontinued operations

(611)

Loss for the year from discontinued operations (note 9)

(2,193)

Adjusted results are consistent with how business performance is measured internally and is presented to aid comparability of performance. Adjusting items are

disclosed in note 5.

Earnings before interest, tax, depreciation, amortisation, proﬁt/(loss) on the disposal of non-current assets and before share of post-tax results of associate and

joint ventures.

NOTES TO THE FINANCIAL STATEMENTS

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

118

NOTES TO THE FINANCIAL STATEMENTS

continued

2 Segmental information

continued

Assets and liabilities

Speciality

Agriculture

£’000

Engineering

£’000

Central

£’000

Continuing

Group

£’000

Discontinued

operations

£’000

Total

Group

£’000

Gross assets

58,972

79,821

24,379

163,172

148,531

311,703

Gross liabilities

(15,739)

(28,383)

(29,544)

(73,666)

(101,566)

(175,232)

Intangible asset additions (note 12)

337

–

342

–

342

Property, plant and equipment additions (note 13)

2,303

1,436

3,768

1,910

5,678

Right-of-use asset additions (note 14)

116

733

109

958

1,770

2,728

The segmental information for the year ended 28 August 2021 is as follows. This has been restated to present continuing operations and

discontinued operations separately. This is to aid comparability with the segmental information presented for the current year. Prior year

disclosures have also been restated in respect of the recognition of revenue from customer contracts within the Engineering division and

discontinued operations. Further details of the prior year restatements can be found in note 39.

Restated:

Speciality

Agriculture

£’000

Engineering

£’000

Central

£’000

Continuing

Group

£’000

Discontinued

operations

£’000

Total segment revenue

74,395

51,864

–

126,259

284,240

Inter-segment revenue

(5,934)

(6)

–

(5,940)

(6)

Revenue from external customers

68,461

51,858

–

120,319

284,234

Adjusted

EBITDA

9,858

6,092

(2,094)

13,856

7,025

Depreciation, amortisation and profit/(loss) on disposal of

non-current assets

(1,335)

(2,208)

(227)

(3,770)

(2,513)

Share of post-tax results of associate (adjusted

) and joint ventures

991

–

991

1,955

Adjusted

operating profit/(loss)

9,514

3,884

(2,321)

11,077

6,467

Adjusting items (note 5)

(2,847)

(127)

(2,877)

(1,684)

Operating profit/(loss)

6,667

3,981

(2,448)

8,200

4,783

Finance income

260

–

Finance costs

(925)

(307)

Adjusted

profit before taxation

10,412

6,160

Adjusting items (note 5)

(2,877)

(1,684)

Profit before taxation

7,535

4,476

Taxation of discontinued operations

(627)

Profit for the year from discontinued operations (note 9)

3,849

Adjusted results are consistent with how business performance is measured internally and is presented to aid comparability of performance. Adjusting items are

disclosed in note 5.

Earnings before interest, tax, depreciation, amortisation, proﬁt/(loss) on the disposal of non-current assets and before share of post-tax results of associate and

joint ventures.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

119

2 Segmental information

continued

Assets and liabilities (restated)

Speciality

Agriculture

£’000

Engineering

£’000

Central

£’000

Continuing

Group

£’000

Discontinued

operations

£’000

Total

Group

£’000

Gross assets

48,558

80,176

27,258

155,992

106,694

262,686

Gross liabilities

(12,251)

(28,648)

(29,381)

(70,280)

(57,855)

(128,135)

Intangible asset additions (note 12)

104

–

107

–

107

Property, plant and equipment additions (note 13)

1,712

1,056

–

2,768

824

3,592

Right-of-use asset additions (note 14)

392

380

–

772

1,881

2,653

Entity-wide disclosures

Revenues from external customers are derived from the sale of products/services by individual business segment. The breakdown of

revenue by business segment is provided above. Revenues from external customers:

2022

2021 (restated)

Continuing

operations

£’000

Discontinued

operations

£’000

Continuing

operations

£’000

Discontinued

operations

£’000

52,325

343,838

54,266

284,234

USA

56,098

–

47,621

–

Germany

9,511

–

14,469

–

Republic of Ireland

4,359

–

2,182

–

New Zealand

1,946

–

1,779

–

Other

–

124,240

343,838

120,319

284,234

Non-current assets

2022

2021

£’000

USA

£’000

Germany

£’000

Republic

of Ireland

£’000

New

Zealand

£’000

Total

£’000

USA

£’000

Germany

£’000

Republic

of Ireland

£’000

New

Zealand

£’000

Total

£’000

Goodwill

10,044

9,516

4,049

–

23,609

17,855

8,013

5,692

–

31,560

Other intangible assets

2,958

888

789

–

4,635

3,788

843

520

–

5,151

Property, plant

and equipment

14,253

11,302

7,613

–

33,204

20,271

7,950

7,938

–

36,198

Right-of-use assets

7,447

326

407

–

8,223

16,184

535

–

16,777

Investment property

–

152

–

152

Investment in associate

–

14,268

–

14,268

Interest in joint ventures

4,160

1,808

–

6,065

2,489

3,155

3,838

–

9,482

Other investments

–

Contract assets

316

–

316

312

–

312

Non-current receivables

–

35,195

26,241

14,666

76,181

75,369

20,538

17,988

113,992

Major customers

Included within Group revenue from continuing operations is £17.2m (2021: £15.9m) in respect of a customer in the Speciality Agriculture

segment. This revenue accounts for more than 10% of the continuing Group revenue in both years presented.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

120

NOTES TO THE FINANCIAL STATEMENTS

continued

3 Revenue

Disaggregation of revenue

In accordance with IFRS 15 ‘Revenue from Contracts with Customers’ the following table presents the Group’s reported revenue

disaggregated based on the timing of revenue recognition.

Timing of revenue recognition

2022

2021 (restated)

Continuing

operations

£’000

Discontinued

operations

£’000

Continuing

operations

£’000

Discontinued

operations

£’000

Over time

28,919

–

36,049

–

At a point in time

95,321

343,838

84,270

284,234

124,240

343,838

120,319

284,234

Transaction price allocated to the remaining performance obligations

As at 3 September 2022:

2023

£’000

2024

£’000

2025

onwards

£’000

Total

£’000

Total transaction price allocated to the remaining performance

obligations

31,528

5,758

3,356

40,642

As at 28 August 2021 (restated)

2022

£’000

2023

£’000

2024

onwards

£’000

Total

£’000

Total transaction price allocated to the remaining performance

obligations

27,144

9,484

3,031

39,659

The total transaction price allocated to the remaining performance obligations represents the contracted revenue to be earned by the

Group for distinct goods and services which the Group has promised to deliver to its customers. These include promises which are

partially satisfied at the period end or those which are unsatisfied but which the Group has committed to providing.

The transaction price above does not include any estimated revenue to be earned on framework contracts for which a firm order or

instruction has not been received from the customer. It also excludes secured orders at the year end where the Group acts in the capacity

of agent rather than principal under the contract.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

121

4 Operating proﬁt

2022

2021 (restated)

Continuing

operations

£’000

Discontinued

operations

£’000

Continuing

operations

£’000

Discontinued

operations

£’000

Group operating profit is stated after (crediting)/charging:

Amortisation of grants

(32)

–

(54)

–

Profit on disposal of property, plant and equipment

(17)

(9)

(73)

(71)

Profit on disposal of right-of-use leases

(5)

(15)

–

Profit on disposal of investment property

(76)

–

Depreciation of property, plant and equipment

2,778

1,067

2,576

1,246

Depreciation of right-of-use assets

1,276

1,632

1,219

1,310

Depreciation of owned investment property

–

Amortisation of intangible assets

988

1,228

Goodwill impairment

4,219

–

Foreign exchange (gains)/losses

(171)

–

200

–

Derivative financial instruments losses

–

Research and development expense (2021: restated)

6,783

1,461

7,637

1,461

Auditors’ remuneration:

Audit services (Company £17,830; 2021: £17,480)

–

Audit services – additional fees from previous auditors for 2021

–

The auditing of accounts of subsidiaries of the Company

pursuant to legislation (including overseas)

710

480

223

Total audit services

886

515

312

Reporting accountant services

–

355

–

Total non-audit services

–

355

–

Included within Group operating profit is the following in respect

of investment property leased to, and occupied by, external parties:

Rental income

(42)

–

(42)

–

Operating (income)/expenses

(35)

–

(77)

–

(14)

–

The amounts presented for research and development expense in the prior year have been restated following an exercise undertaken in

the current year to determine qualifying spend for UK tax purposes. Significant additional spend was identified and to aid comparability

the prior year has been restated to this higher amount.

The auditors’ remuneration includes a £120,000 additional fee raised in the year by the Group's previous auditors, KPMG, in respect of the

audit of the prior year.

Reporting accountant services of £355,000 in respect of discontinued operations relate to services associated with the disposal of the

Carr's Billington Agricultural business.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

122

NOTES TO THE FINANCIAL STATEMENTS

continued

5 Adjusting items

In reporting financial information, the Group presents alternative performance measures (“APMs”), which are not defined or specified under

the requirements of IFRS. These APMs are consistent with how business performance is measured internally and therefore the Group

believes that these APMs provide stakeholders with additional useful information on the performance of the business. The following

adjusting items have been added back to reported profit measures.

2022

2021

Continuing

operations

£’000

Discontinued

operations

£’000

Continuing

operations

£’000

Discontinued

operations

£’000

Amortisation of acquired intangible assets (i)

940

–

1,186

–

Adjustments to contingent consideration (ii)

(1,320)

–

(1,013)

–

Restructuring/closure costs (iii)

–

248

–

Strategic review costs (iv)

455

–

Acquisition-related costs (v)

–

Gain on acquisition of Afgritech (vi)

(733)

–

Loss on fair value measurement less costs to sell (vii)

–

6,376

–

Cloud configuration and customisation costs – Group (viii)

113

974

366

990

Cloud configuration and customisation costs – share of associate (viii)

–

365

–

515

Goodwill impairment (ix)

4,219

–

Impairment of joint venture (x)

–

2,090

–

Effect of deferred tax rate change – share of associate (xi)

–

179

Included in profit before taxation

3,674

7,735

2,877

1,684

Effect of deferred tax rate change – Group (xi)

–

1,073

(83)

Taxation effect of the above adjusting items

(342)

(186)

(340)

(188)

Included in profit for the year

3,332

7,549

3,610

1,413

(i)

Amortisation of acquired intangible assets which do not relate to the underlying proﬁtability of the Group but rather relate to costs arising on acquisition of businesses.

(ii)

Adjustments to contingent consideration arise from the revaluation of contingent consideration in respect of acquisitions to fair value at the year end.

Movements in fair value arise from changes to the expected payments since the previous year end based on actual results and updated forecasts. Any increase

or decrease in fair value is recognised through the income statement.

(iii)

Restructuring/closure costs include redundancy costs.

(iv)

Strategic review costs include external adviser fees incurred in the development of the Group’s strategy.

(v)

Acquisition-related costs relate to legal fees incurred in respect of an aborted acquisition.

(vi)

On 6 June 2022 the Group acquired the remaining 50% shareholding in Afgritech Ltd and the ﬁnancial position and performance of the business, together with

that of its 100% owned subsidiary Afgritech LLC, was fully consolidated from this date. The Group’s joint venture interest was eﬀectively disposed of at this date

with a gain of £197,000, being the diﬀerence between the carrying value and the fair value of the joint venture interest, recognised. Also included in the amount

in the table above are foreign exchange gains of £559,000 that have been recycled from the foreign exchange reserve to the income statement on disposal,

acquisition-related costs of £27,000 and negative goodwill of £4,000 (note 32).

(vii)

At 3 September 2022 the carrying value of the assets and liabilities included in the disposal group classiﬁed as held for sale exceeds the fair value less costs

to sell. As a result the net assets of the disposal group have been reduced to the fair value less costs to sell resulting in a loss of £6,376,000 being recognised.

This includes a loss attributable to the non-controlling interests of £2,603,000 together with costs to sell of £175,000 recognised within the accounts of Carrs

Billington Agriculture (Sales) Ltd.

(viii) Costs relating to material spend in relation to the implementation of the Group’s, and associate’s, ERP system that are expensed in accordance with the IFRIC

agenda decision.

(ix)

Impairment of goodwill in respect of the Chirton proﬁt centre and W

lischmiller Engineering GmbH cash-generating units. Further details of the impairment

charge can be found in note 12.

(x)

During the prior year the joint venture Afgritech LLC reported a loss and was expected to continue to underperform against budgeted information in the short

to medium term. An impairment review was undertaken which resulted in an impairment charge of £1,314,000 against the carrying amount of interest in joint

venture and an impairment charge of £776,000 against the carrying amount of a loan receivable.

(xi)

During the prior year legislation was substantively enacted in the UK to increase the corporate tax rate to 25% with eﬀect from 1 April 2023. As a result of the

change, a tax charge of £179,000 was recognised in the prior year in the Group’s share of associate results and £990,000 was recognised in the Group’s prior

year tax charge in relation to the remeasurement of deferred tax assets and liabilities. This does not relate to the underlying performance of the associate or

Group and was therefore included as an adjusting item.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

123

6 Staﬀ costs

The tables below include Executive and Non-Executive Directors.

2022

2021

Continuing

operations

£’000

Discontinued

operations

£’000

Continuing

operations

£’000

Discontinued

operations

£’000

Wages and salaries

28,737

15,286

28,926

13,943

Social security costs

3,253

1,708

3,276

1,445

Pension costs

1,651

1,123

1,504

1,238

Staff costs before share-based payments

33,641

18,117

33,706

16,626

Share-based payments

148

101

345

119

33,789

18,218

34,051

16,745

Included within pension costs is a charge of £126,000 (2021: £18,000) in respect of the defined benefit pension scheme.

The average monthly number of employees during the year was made up as follows:

2022

2021

Continuing

operations

Number

Discontinued

operations

Number

Continuing

operations

Number

Discontinued

operations

Number

Sales, office and management

233

411

252

376

Manufacture and distribution

417

111

396

117

650

522

648

493

Key management is considered to be the Directors of the Group.

The following amounts are disclosed in accordance with Schedule 5 of the Large and Medium-Sized Companies and Groups (Accounts

and Reports) Regulations 2008.

2022

£’000

2021

£’000

Aggregate Directors’ remuneration

1,035

1,414

Aggregate social security costs

145

190

Aggregate pension contributions

Aggregate amount of gains on exercise of share options

306

1,216

1,913

Salary (after salary sacriﬁce of pension), fees, bonuses, pay in lieu of pension, pay in lieu of notice and beneﬁts in kind. Includes bonuses based on amounts

accrued at the year end.

Cash contributions paid in the year into the deﬁned contribution pension scheme.

Gains realised in the year in respect of the LTIP, deferred bonus plan and share save scheme.

The number of Directors in the defined contribution pension scheme during the year was one (2021: two).

Further details of the Directors’ emoluments, pension benefits and share options are given in the Remuneration Committee Report on

pages 65 to 83.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

124

NOTES TO THE FINANCIAL STATEMENTS

continued

7 Finance income and ﬁnance costs

2022

2021

Continuing

operations

£’000

Discontinued

operations

£’000

Continuing

operations

£’000

Discontinued

operations

£’000

Finance income

Bank interest

176

–

108

–

Net interest on the net defined benefit retirement asset (note 29)

159

–

147

–

Other interest

–

Total finance income

351

–

260

–

Finance costs

Interest payable on bank overdrafts

(183)

–

(109)

–

Interest payable on bank loans and other borrowings

(569)

(420)

(520)

(27)

Interest payable on leases

(240)

(243)

(264)

(212)

Other interest

(25)

(93)

(32)

(68)

Total finance costs

(1,017)

(756)

(925)

(307)

8 Taxation

(a) Analysis of the charge in the year

2022

2021 (restated)

Continuing

operations

£’000

Discontinued

operations

£’000

Continuing

operations

£’000

Discontinued

operations

£’000

Current tax:

UK corporation tax

Current year

119

316

259

578

Adjustment in respect of prior years

164

(205)

223

Foreign tax

Current year

1,607

–

1,130

–

Adjustment in respect of prior years

(1)

–

(84)

–

Group current tax

1,889

367

1,100

801

Deferred tax:

Origination and reversal of timing differences

Current year

224

764

Adjustment in respect of prior years

(375)

(76)

(192)

Group deferred tax (note 20)

(365)

244

688

(174)

Tax on profit

1,524

611

1,788

627

Deferred tax recognised in equity is disclosed in note 20.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

125

8 Taxation

continued

(b) Factors aﬀecting tax charge for the year

The tax assessed for the year from continuing operations is higher (2021 restated: higher) than the rate of corporation tax in the UK of 19%

(2021: 19%). The differences are explained below:

2022

2021 (restated)

Continuing

operations

£’000

Discontinued

operations

£’000

Continuing

operations

£’000

Discontinued

operations

£’000

Profit/(loss) before taxation

7,566

(1,582)

7,535

4,476

Tax at 19% (2021: 19%)

1,438

(301)

1,432

850

Effects of:

Tax effect of share of results of associate and joint ventures

(160)

(314)

(188)

(240)

Tax effect of expenses that are not allowable in determining

taxable profit

1,213

1,246

436

Tax effect of non-taxable income

(1,183)

(143)

(778)

–

Effects of different tax rates of foreign subsidiaries

149

–

Effects of deferred tax rates

1,057

(67)

Unrecognised deferred tax on losses

–

Withholding taxes suffered

112

–

Adjustment in respect of prior years

(212)

(365)

Total tax charge for the year

1,524

611

1,788

627

The tax effect of expenses that are not allowable in determining taxable profit includes share-based payments, depreciation of non-

qualifying assets, disregarded foreign exchange movements and other expenses disallowable for UK corporation tax. In addition, for

current year continuing operations, it includes the goodwill impairment (notes 5 and 12) and, in respect of discontinued operations, it

includes the loss recognised on the measurement to fair value less costs to sell of the disposal group (notes 5 and 9). Prior year continuing

operations includes adjustments for impairment of joint venture (note 5).

The tax effect of non-taxable income includes adjustments to contingent consideration (note 5), the effect of income within the patent

box regime, adjustments to profit before taxation for research and development expenditure credits in respect of prior years and the 30%

benefit of the super deduction for capital allowances.

In the prior year legislation was substantively enacted in the UK to increase the corporate tax rate to 25% with effect from 1 April 2023. As a

result of the change, a tax charge of £990,000 was recognised in the prior year for the parent Company and UK tax resident subsidiaries in

relation to the remeasurement of deferred tax assets and liabilities. UK deferred tax balances at 3 September 2022 and 28 August 2021 are

provided at 25%. In the prior year the charge of £990,000 does not relate to the underlying profitability of the Group and has been treated

as an adjusting item (note 5).

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

126

NOTES TO THE FINANCIAL STATEMENTS

continued

9 Discontinued operations and non-current assets held for sale

On 31 August 2022, the Group entered into a conditional agreement to dispose of its interests in the Carr’s Billington Agricultural business

to Edward Billington & Son Limited. In accordance with IFRS 5 ‘Non-current assets held for sale and discontinued operations’, the assets

and liabilities related to the business were classified as a disposal group held for sale at 3 September 2022. The sale was conditional on

approval by the Group’s shareholders which was given at a General Meeting held on 19 September 2022. The disposal completed on 26

October 2022.

On completion, the Company received £24.7m initial cash proceeds following certain working capital adjustments since the

announcement on 31 August 2022. The consideration receivable remains subject to any final adjustments once the completion accounts

mechanism is finalised. Current estimates of fair value less costs to sell is lower than the carrying value of the disposal group’s net assets,

and accordingly a loss of £6.2m has been recognised in the loss for the year from discontinued operations.

The tables below show the results of the discontinued operations and the loss recognised on the remeasurement to fair value less costs

to sell for the year ended 3 September 2022, together with the classes of assets and liabilities comprising the operations held for sale in

the Group balance sheet as at 3 September 2022.

2022

£’000

2021

£’000

Revenue (2021: restated)

343,838

284,234

Expenses (2021: restated)

(340,870)

(281,019)

2,968

3,215

Share of post-tax results of associate

1,165

831

Share of post-tax results of joint venture

486

430

Profit before taxation of discontinued operations

4,619

4,476

Taxation (note 8)

(611)

(627)

Profit after taxation of discontinued operations

4,008

3,849

Pre-taxation loss recognised on the measurement to fair value less costs to sell

(6,201)

–

Taxation

–

After taxation loss recognised on the measurement to fair value less costs to sell

(6,201)

–

(Loss)/profit for the year from discontinued operations

(2,193)

3,849

Revenue and expenses in the table above in respect of the prior year have been reduced by £10,497,000 to remove revenues where Carrs

Billington Agriculture (Sales) Ltd acts as agent rather than principal together with £2,769,000 in respect of intra-company transactions

which had not been netted off in prior years. There is no impact on profit in respect of either of these.

The pre-taxation loss recognised on the measurement to fair value less costs to sell includes £2,603,000 in respect of the non-controlling

interest's share of the measurement impairment.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

127

9 Discontinued operations and non-current assets held for sale

continued

The net assets relating to the disposal group at 3 September 2022 in the Group and Company balance sheets are shown below:

Group

£’000

Company

£’000

Assets of the disposal group

Goodwill

5,285

–

Property, plant and equipment

8,539

–

Right-of-use assets

8,267

–

Investment in subsidiary undertakings

–

337

Investment in associate

15,218

245

Interest in joint ventures

2,870

–

Other investments

–

Deferred tax asset

177

–

Inventories

34,442

–

Trade and other receivables

65,946

–

Current tax assets

101

–

Cash and cash equivalents

12,074

–

Loss on fair value measurement before costs to sell

(4,433)

–

Total assets

148,531

582

Liabilities of the disposal group

Borrowings

(24,415)

–

Leases

(8,196)

–

Trade and other payables

(68,955)

–

Total liabilities

(101,566)

–

Net assets

46,965

582

Costs to sell of £1,768,000 have been incurred by the parent Company and are therefore excluded from the loss on fair value

measurement shown above. The loss on fair value measurement before costs to sell includes £2,603,000 in respect of the non-controlling

interest's share of the measurement impairment.

The Company has classified its investment in Ordinary Shares of Carr’s Billington Agriculture (Sales) Limited and Carr’s Billington

Agriculture (Operations) Limited as assets held for sale.

10 Dividends

Equity

2022

£’000

2021

£’000

Second interim paid for the year ended 28 August 2021 of 1.175p per 2.5p share (2020: 2.25p)

1,100

2,080

Final dividend for the year ended 28 August 2021 of 2.65p per 2.5p share (2020: 2.5p)

2,483

2,311

First interim paid for the year ended 3 September 2022 of 1.175p per 2.5p share (2021: £1.175p)

1,104

1,099

4,687

5,490

Since the year end an interim dividend of £1,103,968 being 1.175p per share, has been paid. The financial statements do not reflect the

dividend payable.

The proposed final dividend for the year ended 3 September 2022 to be considered by shareholders at the Annual General Meeting

is £2,679,614 being 2.85p per share, making a total for the year of 5.2p (2021: 5.0p). Shares held in treasury do not carry entitlement to a

dividend. The financial statements do not reflect this proposed final dividend as payable.

In the prior year the second interim dividend paid in respect of the year ended 29 August 2020 of £2,080,000 included the deferred

first interim dividend that, under normal circumstances, would have been paid in May 2020. This was deferred due to the uncertainty

associated with the COVID-19 pandemic.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

128

NOTES TO THE FINANCIAL STATEMENTS

continued

11 Earnings per ordinary share

Earnings per share are calculated by reference to a weighted average of 93,873,465 shares (2021: 93,123,043) in issue during the year.

Adjusting items disclosed in note 5 that are charged or credited to profit do not relate to the underlying profitability of the Group. The

Board believes adjusted profit before these items provides a useful measure of business performance. Therefore an adjusted earnings per

share is presented as follows:

2022

2021 (restated)

Earnings

£’000

Earnings

per share

pence

Earnings

£’000

Earnings

per share

pence

Continuing operations

Earnings per share – basic

6,042

6.4

5,747

6.2

Adjusting items:

Amortisation of acquired intangible assets

940

1.0

1,186

1.3

Adjustments to contingent consideration

(1,320)

(1.4)

(1,013)

(1.1)

Restructuring/closure costs

–

248

0.3

Strategic review costs

455

0.5

–

Gain on acquisition of Afgritech

(733)

(0.8)

–

Cloud configuration and customisation costs – Group

113

0.1

366

0.4

Goodwill impairment

4,219

4.5

–

Impairment of joint venture

–

2,090

2.2

Taxation effect of the above

(342)

(0.3)

(340)

(0.4)

Effect of increase to UK deferred tax rate – Group

–

1,073

1.2

Earnings per share – adjusted

9,374

10.0

9,357

10.1

Discontinued operations

Earnings per share – basic

(970)

(1.0)

1,909

2.1

Adjusting items:

Acquisition-related costs

–

Loss on fair value measurement less costs to sell

6,376

6.8

–

Cloud configuration and customisation costs – Group

974

1.0

990

1.1

Cloud configuration and customisation costs – share of associate

365

0.4

515

0.6

Taxation effect of the above

(186)

(0.2)

(188)

(0.3)

Effect of increase to UK deferred tax rate – Group

–

(83)

(0.1)

Effect of increase to UK deferred tax rate – share of associate

–

179

0.2

Non-controlling interest in the above

(3,085)

(3.3)

(433)

(0.5)

Earnings per share – adjusted

3,494

3.7

2,889

3.1

Total (basic)

5,072

5.4

7,656

8.3

Total (adjusted)

12,868

13.7

12,246

13.2

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

129

11 Earnings per ordinary share

continued

For diluted earnings per share, the weighted average number of Ordinary Shares in issue is adjusted to assume conversion of all dilutive

potential Ordinary Shares. The potentially dilutive Ordinary Shares, where the exercise price is less than the average market price of the

Company’s Ordinary Shares during the year, are disclosed in note 31.

2022

2021 (restated)

Earnings

£’000

Weighted

average number

of shares

Earnings

per share

pence

Earnings

£’000

Weighted

average number

of shares

Earnings

per share

pence

Continuing operations

Earnings per share

6,042

93,873,465

6.4

5,747

93,123,043

6.2

Effect of dilutive securities:

Share Save Scheme

–

933,331

–

1,145,027

(0.1)

Long Term Incentive Plan

–

326,866

–

422,112

–

Diluted earnings per share

6,042

95,133,662

6.4

5,747

94,690,182

6.1

Discontinued operations

Earnings per share

(970)

93,873,465

(1.0)

1,909

93,123,043

2.1

Effect of dilutive securities:

Share Save Scheme

–

933,331

–

1,145,027

(0.1)

Long Term Incentive Plan

–

326,866

–

422,112

–

Diluted earnings per share

(970)

95,133,662

(1.0)

1,909

94,690,182

2.0

Total (diluted)

5,072

95,133,662

5.4

7,656

94,690,182

8.1

2022

2021 (restated)

Adjusted

earnings

£’000

Weighted

average number

of shares

Earnings

per share

pence

Adjusted

earnings

£’000

Weighted

average number

of shares

Earnings

per share

pence

Continuing operations

Diluted adjusted earnings

per share

9,374

95,133,662

9.9

9,357

94,690,182

9.9

Discontinued operations

Diluted adjusted earnings

per share

3,494

95,133,662

3.7

2,889

94,690,182

3.1

Total (diluted adjusted)

12,868

95,133,662

13.6

12,246

94,690,182

13.0

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

130

NOTES TO THE FINANCIAL STATEMENTS

continued

12 Goodwill and other intangible assets

Group

Goodwill

£’000

Customer

relationships

£’000

Know-how,

technology and

development

costs

£’000

Brands,

patents and

trademarks

£’000

Contract

backlog

£’000

Software

£’000

Total

£’000

Cost

At 30 August 2020

34,582

3,392

2,739

2,978

229

783

44,703

Exchange differences

(481)

–

(23)

(53)

(7)

(33)

(597)

Additions

–

104

107

Reclassification

–

(17)

At 28 August 2021

34,101

3,392

2,716

2,928

222

837

44,196

Exchange differences

1,553

–

260

1,878

Additions

–

334

–

342

Transferred to assets held for sale

(5,610)

(156)

(143)

–

(5,909)

At 3 September 2022

30,044

3,236

2,923

3,193

264

847

40,507

Accumulated amortisation and impairment

At 30 August 2020

2,541

864

1,003

889

229

771

6,297

Exchange differences

–

(4)

(24)

(7)

(33)

(68)

Charge for the year

–

546

467

230

–

1,256

At 28 August 2021

2,541

1,410

1,466

1,095

222

751

7,485

Exchange differences

–

121

177

Charge for the year

–

295

456

235

–

1,006

Impairment

4,219

–

4,219

Transferred to assets held for sale

(325)

(156)

(143)

–

(624)

At 3 September 2022

6,435

1,549

1,785

1,451

264

779

12,263

Net book amount

At 29 August 2020

32,041

2,528

1,736

2,089

–

38,406

At 28 August 2021

31,560

1,982

1,250

1,833

–

36,711

At 3 September 2022

23,609

1,687

1,138

1,742

–

28,244

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

131

12 Goodwill and other intangible assets

continued

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to cash-generating units that are

expected to benefit from the synergies of the combination.

The carrying value of goodwill has been allocated to the following cash-generating units:

2022

£’000

2021

£’000

Carrs Billington Agriculture (Sales) Ltd

–

5,285

Carrs Agriculture Ltd – UK feed blocks

2,068

Animal Feed Supplement, Inc.

Wälischmiller Engineering GmbH

4,049

5,692

Carr’s Engineering Ltd – Chirton profit centre

–

2,526

NuVision Engineering, Inc.

9,494

7,995

Animax Ltd

1,742

NW Total Engineered Solutions Ltd

6,234

23,609

31,560

Goodwill arising on the acquisition of overseas subsidiaries has been retranslated at the balance sheet date. Goodwill in respect of Carrs

Billington Agriculture (Sales) Ltd has been transferred at 3 September 2022 to assets included in disposal group classified as held for sale

(note 9).

Goodwill is tested annually for impairment, or more frequently if there are indications that goodwill might be impaired. Goodwill is tested

for impairment by estimating future cash flows from the cash-generating units to which goodwill has been allocated and discounting

those cash flows to their present value. Each unit or group of units to which goodwill is allocated represents the lowest level within the

entity at which the goodwill is monitored for internal management purposes. The key assumptions in this calculation are the levels of

future cash flows, particularly in the perpetuity period, and the discount rate. Management estimates discount rates using pre-tax rates

that reflect current market assessments of the time-value of money and the risks specific to the cash-generating units. Cash flows

are estimated using the most recent performance information for the year to August 2023 and forecast information for the four years

to August 2027 based on medium-term business plans and an assumption for long-term growth of between 0% – 3.25%. The pre-tax

discount rates used to discount the forecast cash flows for all cash-generating units are in the range 11.76% – 14.34% (2021: 4.88% – 8.09%).

The Directors consider the assumptions adopted in calculating the cash flows to be consistent with historical performance and to be

reasonable given current market conditions.

Other than for the cash-generating units noted on the next page, significant headroom exists and, based on the stress testing performed,

reasonable possible changes in the assumptions would not cause the carrying amount of the cash-generating units to equal or to exceed

their recoverable amount.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

132

NOTES TO THE FINANCIAL STATEMENTS

continued

12 Goodwill and other intangible assets

continued

The Directors have placed specific attention on the Chirton profit centre cash-generating unit given its exposure to the oil and gas sector.

Despite modest improvements in trading this year, the Directors' current view of this sector is that it offers limited growth in future years,

and this is reflected in the forecasts for outer years. Allied to the uplift in discount rates noted above, the estimated recoverable amount

of this cash-generating unit was below the remaining carrying value of assets and therefore all remaining goodwill (£2.5m) has been

impaired in full. Given the recognition of a full impairment against goodwill, and to gain comfort that no further impairment was required

to other non-current assets, sensitivity analysis over the pre-tax discount rate and short term growth rate of earnings was performed. If the

pre-tax discount rate increased by 1% and, independently a reduction of 5% was applied to short term annual growth in earnings before

interest and tax the carrying value would exceed the estimated recoverable amount of the cash-generating unit by a further £0.5m and

£0.2m respectively, indicating a potential impairment to other non-current assets.

For the Wälischmiller Engineering GmbH cash-generating unit, the estimated recoverable amount of the cash-generating unit was

below the carrying value of assets by £1.7m and goodwill has been impaired by this value. The Directors have concluded that the long-

term prospects of the business are sufficient to hold the remaining goodwill of £4.0m. As the goodwill carrying value has not been fully

impaired, additional sensitivity analysis over the pre-tax discount rate and short term growth rate of earnings was performed. If the pre-tax

discount rate increased by 1% there would be an additional impairment of £1.6m and, independently, if the short term annual growth in

earnings before interest and tax was reduced by 5% there would be an additional impairment of £0.3m.

For the Animax Ltd cash-generating unit, the estimated recoverable amount of the cash-generating unit exceeded its carrying value by

£2.3m and therefore the Directors concluded that no impairment was required; however the calculations are sensitive to changes in key

assumptions such as reasonably possible changes to the pre-tax discount rate. If the pre-tax discount rate assumption was increased

from 11.76% to 15.70% the recoverable amount for the cash-generating unit would be reduced to a level equal to its carrying value.

A reduction of 5% to short term annual growth in earnings before interest and tax would reduce headroom from £2.3m to £2.2m.

In all instances above the short term annual growth in earnings before interest and tax is the annual forecast growth over a three year

period. The sensitivity of a 5% reduction has been applied to each year’s growth rate and the sensitised earnings have been included in

the impairment model to determine the effect on headroom.

Amortisation and impairment charges are recognised within administrative expenses and have been highlighted separately within

adjusting items (note 5) where they relate to acquired intangible assets.

There is no goodwill or other intangible assets in the Company (2021: none).

Signiﬁcant cash-generating units

The table below shows the key assumptions and inputs that have been used in the impairment testing for goodwill with a significant

carrying value together with sensitised assumptions required to eliminate the headroom:

Headroom

£m

Annual

growth in

EBIT

Pre-tax

discount rate

Pre-tax

discount rate

(sensitised)

Long-term

growth rate

Long-term

growth rate

(sensitised)

Cash flows

(sensitised)

Cash-generating unit

NuVision Engineering, Inc.

8.0

(1.7)

11.89

17.53

3.3

(4.5)

(37.0)

NW Total Engineered Solutions Ltd

5.9

63.2

12.35

17.98

3.1

(4.4)

(33.8)

Wälischmiller Engineering GmbH

–

9.8

14.34

N/A

2.9

N/A

Carr’s Engineering Ltd – Chirton profit centre

–

62.7

13.33

N/A

0.0

N/A

Carrs Agriculture Ltd – UK feed blocks

13.0

(6.1)

12.24

19.71

0.2

(11.4)

(35.7)

Animax Ltd

2.3

45.5

11.76

15.70

0.2

(5.8)

(23.8)

Earnings before interest and tax. Annual growth in EBIT is calculated as the compounded annual growth rate over a period of 3 years commencing from year

ended 3 September 2022. For the NW Total Engineered Solutions Ltd cash-generating unit this calculation excludes the initial loss making period.

Rate required to eliminate headroom.

Percentage reduction required to cash ﬂows to eliminate headroom.

As the headroom for Wälischmiller Engineering GmbH and Chirton proﬁt centre are already below break-even point at £(1.7)m and £(2.6)m respectively this

sensitivity is not applicable.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

133

13 Property, plant and equipment

Group

Company

Land and

buildings

£’000

Plant and

equipment

£’000

Assets in the

course of

construction

£’000

Total

£’000

Plant and

equipment

£’000

Cost

At 30 August 2020

33,134

41,533

4,143

78,810

639

Exchange differences

(529)

(493)

(65)

(1,087)

–

Additions

1,248

1,235

1,109

3,592

–

Transfers from right-of-use assets

–

803

–

803

–

Disposals

(21)

(5,108)

(14)

(5,143)

(365)

Reclassifications

898

1,345

(3,785)

(1,542)

–

At 28 August 2021

34,730

39,315

1,388

75,433

274

Exchange differences

1,245

2,361

3,688

–

Subsidiaries acquired

304

1,002

–

1,306

–

Additions

424

2,555

2,699

5,678

Transfers to right-of-use assets

–

(99)

–

(99)

–

Transfers from right-of-use assets

–

1,312

–

1,312

–

Transfers from inventories

–

109

–

109

–

Disposals

(1)

(610)

–

(611)

–

Reclassifications

264

407

(671)

–

Transferred to assets held for sale

(7,164)

(10,384)

(1,253)

(18,801)

–

At 3 September 2022

29,802

35,968

2,245

68,015

304

Accumulated depreciation and impairment

At 30 August 2020

9,255

31,296

–

40,551

521

Exchange differences

(122)

(386)

–

(508)

–

Charge for the year

1,046

2,776

–

3,822

Transfers from right-of-use assets

–

261

–

261

–

Disposals

(7)

(4,884)

–

(4,891)

(365)

At 28 August 2021

10,172

29,063

–

39,235

189

Exchange differences

409

1,728

–

2,137

–

Charge for the year

1,073

2,772

–

3,845

Transfers to right-of-use assets

–

(5)

–

(5)

–

Transfers from right-of-use assets

–

402

–

402

–

Disposals

–

(541)

–

(541)

–

Transferred to assets held for sale

(2,017)

(8,245)

–

(10,262)

–

At 3 September 2022

9,637

25,174

–

34,811

216

Net book amount

At 29 August 2020

23,879

10,237

4,143

38,259

118

At 28 August 2021

24,558

10,252

1,388

36,198

At 3 September 2022

20,165

10,794

2,245

33,204

Transfers from right-of-use assets represent finance leased assets that became owned assets on maturity of the lease term.

Freehold land amounting to £2,287,721 (2021: £3,435,880) has not been depreciated.

During the prior year the classification of assets was reviewed and it was concluded that £1,542,000 of asset cost was better presented as

right-of-use assets.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

134

NOTES TO THE FINANCIAL STATEMENTS

continued

13 Property, plant and equipment

continued

Under the Group’s banking facilities the lenders have legal charges over certain properties together with floating charges over

the assets of certain businesses. The net book amount of specific assets held under legal charges at the balance sheet date was

£1,342,000 (2021: £1,396,000). At 3 September 2022 these specific assets have been transferred to assets held for sale.

Included in the above table in respect of assets held under floating charges are assets with a net book amount of £7,197,000

(2021: £6,483,000). This excludes specific assets under legal charge which are separately disclosed above. At 3 September 2022

these assets held under floating charges have been transferred to assets held for sale.

Depreciation is recognised within the consolidated income statement as shown below:

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Cost of sales

1,913

1,767

–

Distribution costs

–

Administrative expenses

862

807

Discontinued operations

1,067

1,246

–

3,845

3,822

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

135

14 Right-of-use assets and lease liabilities

Amounts recognised in the balance sheet

The balance sheet shows the following amounts relating to leases:

Group

Company

Land and

buildings

£’000

Plant, equipment

and vehicles

£’000

Total

£’000

Plant, equipment

and vehicles

£’000

Cost

At 30 August 2020

9,595

8,410

18,005

491

Exchange differences

(24)

(1)

(25)

–

Additions

2,630

2,653

–

Modifications

858

(16)

842

–

Transfers to property, plant and equipment

–

(803)

–

Disposals

–

(135)

(13)

Reclassifications

–

1,559

–

At 28 August 2021

10,452

11,644

22,096

478

Exchange differences

189

196

–

Additions

315

2,413

2,728

109

Modifications

911

913

–

Transfers to property, plant and equipment

–

(1,312)

–

Transfers from property, plant and equipment

–

Disposals

(304)

(167)

(471)

(11)

Transferred to assets held for sale

(4,701)

(7,929)

(12,630)

–

At 3 September 2022

6,862

4,757

11,619

576

Accumulated depreciation

At 30 August 2020

1,091

2,058

3,149

Exchange differences

(9)

–

(9)

–

Charge for the year

1,075

1,454

2,529

105

Transfers to property, plant and equipment

–

(261)

–

Disposals

–

(89)

(7)

At 28 August 2021

2,157

3,162

5,319

132

Exchange differences

125

130

–

Charge for the year

1,192

1,716

2,908

114

Transfers to property, plant and equipment

–

(402)

–

Transfers from property, plant and equipment

–

Disposals

(113)

(88)

(201)

(6)

Transferred to assets held for sale

(1,222)

(3,141)

(4,363)

–

At 3 September 2022

2,139

1,257

3,396

240

Net book amount

At 29 August 2020

8,504

6,352

14,856

457

At 28 August 2021

8,295

8,482

16,777

346

At 3 September 2022

4,723

3,500

8,223

336

Transfers to property, plant and equipment represent finance leased assets that became owned assets on maturity of the lease term.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

136

NOTES TO THE FINANCIAL STATEMENTS

continued

14 Right-of-use assets and lease liabilities

continued

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Current liabilities

1,416

2,967

113

Non-current liabilities

6,128

12,458

231

250

7,544

15,425

344

348

The remaining contractual maturities of the lease liabilities, which are gross and undiscounted, are as follows:

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Less than one year

1,611

3,280

120

104

One to two years

1,230

2,766

112

Two to three years

1,117

2,164

111

Three to four years

720

1,675

Four to five years

515

1,221

–

More than five years

4,636

8,134

–

9,829

19,240

355

363

Amounts recognised in the income statement

The income statement shows the following amounts relating to leases:

Continuing Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Depreciation

1,276

1,219

114

105

Profit on disposal

(5)

–

(3)

–

Interest expense

240

264

Short-term leases and low-value assets

–

1,556

1,526

119

114

There is no expense recognised in the income statement in respect of variable lease payments that are not included in the measurement

of the lease liabilities.

The total continuing Group cash outflow for leases was £1,790,000 (2021: continuing Group £2,042,000). The total Company cash outflow

for leases was £113,000 (2021: £107,000).

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

137

14 Right-of-use assets and lease liabilities

continued

The Group previously received income on one right-of-use property sublease which has now been terminated. A maturity analysis of

lease payments, showing the undiscounted lease payments to be received on an annual basis, is as follows:

Group

2022

£’000

2021

£’000

Less than one year

–

One to two years

–

Two to three years

–

Three to four years

–

Four to five years

–

311

The Company has no income arising from leases.

15 Investment property

Group

Total

£’000

Cost

At 30 August 2020 and at 28 August 2021

299

Disposals

(144)

At 3 September 2022

155

Accumulated depreciation

At 30 August 2020

141

Charge for the year

At 28 August 2021

147

Charge for the year

Disposals

(71)

At 3 September 2022

Net book amount

At 29 August 2020

158

At 28 August 2021

152

At 3 September 2022

The fair value of investment properties at 3 September 2022 is £250,000 (2021: £360,000). Investment properties were valued by

independent professionally qualified valuers in October 2016. The Directors are satisfied that there has been no significant change in fair

value since that date.

There is no investment property in the Company (2021: none).

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

138

NOTES TO THE FINANCIAL STATEMENTS

continued

16 Investments

Group

Associate

£’000

Joint ventures

£’000

Other

investments

£’000

Total

£’000

Cost

At 30 August 2020

14,042

10,551

24,675

Exchange difference

–

(253)

(1)

(254)

Share of post-tax result – continuing operations

–

991

–

991

Share of post-tax result – discontinued operations

831

430

–

1,261

Share of gains/(losses) recognised within other comprehensive income

434

(64)

–

370

Dividend paid by associate and joint ventures

(1,039)

(859)

–

(1,898)

At 28 August 2021

14,268

10,796

25,145

Exchange difference

–

758

763

Share of post-tax result – continuing operations

–

840

–

840

Share of post-tax result – discontinued operations

1,165

486

–

1,651

Share of (losses)/gains recognised within other comprehensive income

(215)

153

–

(62)

Dividend paid by joint ventures

–

(2,854)

–

(2,854)

Disposals

–

(1,244)

–

(1,244)

Transferred to assets held for sale

(15,218)

(2,870)

(45)

(18,133)

At 3 September 2022

–

6,065

6,106

Accumulated provision for impairment

At 30 August 2020

–

Impairment in the year

–

1,314

–

1,314

At 28 August 2021

–

1,314

1,323

Transfer of impairment to loan receivables due from joint ventures

–

(70)

–

(70)

Disposals

–

(1,244)

–

(1,244)

At 3 September 2022

–

Net book amount

At 29 August 2020

14,042

10,551

24,666

At 28 August 2021

14,268

9,482

23,822

At 3 September 2022

–

6,065

6,097

Other investments comprise shares in several private limited companies.

On 6 June 2022 the Group acquired the remaining 50% interest in Afgritech Ltd (note 32) and the financial position and performance of this

business together with its 100% owned subsidiary Afgritech LLC was fully consolidated from this date. The Group’s joint venture interest

was effectively disposed of at this date with an exceptional gain of £197,000, being the difference between the carrying value and fair

value of the joint venture interest, recognised. This gain has been included as an adjusting item (note 5) together with foreign exchange

gains of £559,000 that have been recycled from the foreign exchange reserve to the income statement on disposal, acquisition-related

costs of £27,000 and negative goodwill of £4,000.

In the prior year an impairment of £1,314,000 was recognised in respect of Afgritech LLC. During the current period £70,000 was

transferred from this provision for impairment to the provision for impairment against the loan receivable from Afgritech Ltd prior to

acquisition of the remaining 50% shareholding.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

139

16 Investments

continued

Company

Shares in

subsidiaries

£’000

Associate

£’000

Joint

ventures

£’000

Total

£’000

Cost

At 30 August 2020

36,561

245

272

37,078

Share-based payment charge in respect of employees of subsidiary undertakings

(107)

–

(107)

At 28 August 2021

36,454

245

272

36,971

Subsidiary acquired

1,020

–

1,020

Recapitalisation

–

1,674

Transfer from joint venture to subsidiary

1,774

–

(1,774)

–

Transferred to assets held for sale

(337)

(245)

–

(582)

Share-based payment charge in respect of employees of subsidiary undertakings

101

–

101

At 3 September 2022

39,012

–

172

39,184

Accumulated provision for impairment

At 30 August 2020

3,993

–

3,993

Impairment in the year

–

100

At 28 August 2021

3,993

–

100

4,093

Transfer from loan receivables on recapitalisation

–

776

Transfer from joint venture to subsidiary

876

–

(876)

–

At 3 September 2022

4,869

–

4,869

Net book amount

At 29 August 2020

32,568

245

272

33,085

At 28 August 2021

32,461

245

172

32,878

At 3 September 2022

34,143

–

172

34,315

Subsidiary acquired of £1,020,000 is the cash paid to acquire the remaining 50% share holding in Afgritech Ltd (note 32).

The recapitalisation of £1,674,000 in the year represents the capitalisation of the loan receivable due from Afgritech Ltd prior to the

acquisition of the additional 50% shareholding. The provision for impairment of £776,000 against the loan receivable due from Afgritech

Ltd was transferred to investments on recapitalisation.

Amounts transferred to assets held for sale is the Company’s cost of investment in Carrs Billington Agriculture (Sales) Ltd and Carrs

Billington Agriculture (Operations) Ltd.

During the prior year there was an impairment of £100,000 recognised against the cost of investment in Afgritech Ltd following the

impairment review of its subsidiary Afgritech LLC. This impairment of £100,000 reduced the carrying amount in respect of Afgritech Ltd

to £nil.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

140

NOTES TO THE FINANCIAL STATEMENTS

continued

17 Investment in associate

The associated undertaking at 3 September 2022 is:

Group and Company

Name

Proportion of

shares held

Ordinary

Country of

incorporation

Country of

operation

Activity

Carrs Billington Agriculture (Operations) Ltd

England

Manufacture of animal feed

The investment in Carrs Billington Agriculture (Operations) Ltd is held directly by the Company. The registered office of the associate is

Cunard Building, Water Street, Liverpool L3 1EL.

The Group does not have the ability to control the financial and operating policies of its associate. The Group had a 49% shareholding and

a 33% representation on the Board of Directors of Carrs Billington Agriculture (Operations) Ltd prior to disposal on 26 October 2022.

The associate is accounted for using the equity method.

At the year end Carrs Billington Agriculture (Operations) Ltd had capital commitments of £2,100,000 (2021: £2,408,000). No contingent

liabilities exist within the associate.

At 3 September 2022 the investment in associate is included within assets of disposal group held for sale (note 9). The Group’s share of

its post-tax results are included within profit for the year from discontinued operations (note 9). The aggregate amounts relating to the

associate, of which the Group recognises 49% are:

2022

£’000

2021

£’000

Total assets

57,893

43,139

Total liabilities

(26,836)

(14,020)

Revenues

167,177

137,957

Profit after tax

2,378

1,696

18 Interest in joint ventures

The joint ventures at 3 September 2022 are:

Group

Name

Equity interest held

Country of

incorporation

Country of

operation

Activity

Crystalyx Products GmbH

Germany

Manufacture of animal feed blocks

Bibby Agriculture Ltd

England

Sale of agricultural products

Gold-Bar Feed Supplements LLC

USA

Manufacture of animal feed blocks

ACC Feed Supplement LLC

USA

Manufacture of animal feed blocks

Silloth Storage Company Ltd

England

Storage of molasses

Registered Oﬃce address: Industrieweg 110, 48155 Munster, Germany.

Registered Oﬃce address: 16 Montgomery Way, Rosehill Industrial Estate, Carlisle, Cumbria CA1 2UY.

Registered Oﬃce address: 783 Eagle Boulevard, Shelbyville, Tennessee 37160, USA.

Registered Oﬃce address: 5101 Harbor Drive, Sioux City, Iowa 51111, USA.

Registered Oﬃce address: 3 Filers Way, Weston Gateway Business Park, Weston-Super-Mare BS24 7JP.

On 6 June 2022 the Group acquired the remaining 50% interest in Afgritech Ltd (note 32) and the financial position and performance of this

business together with its 100% owned subsidiary Afgritech LLC was fully consolidated from this date. The Group’s joint venture interest

was effectively disposed of at this date with an exceptional gain of £197,000, being the difference between the carrying value and fair

value of the joint venture interest, recognised.

At 3 September 2022 the investment in Bibby Agriculture Ltd is included within assets of disposal group held for sale (note 9). The Group’s

share of its post-tax results are included within profit for the year from discontinued operations (note 9).

Crystalyx Products GmbH and Silloth Storage Company Ltd have a 31 December accounting year end.

The Company directly holds the interest in Crystalyx Products GmbH. Carrs Billington Agriculture (Sales) Ltd directly holds the interest

in Bibby Agriculture Ltd. Animal Feed Supplement, Inc. directly holds the interest in Gold-Bar Feed Supplements LLC and ACC Feed

Supplement LLC. Carrs Agriculture Ltd directly holds the interest in Silloth Storage Company Ltd.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

141

18 Interest in joint ventures

continued

Joint ventures are accounted for using the equity method.

At the year end the joint ventures had capital commitments of £107,000 (2021: £nil). No contingent liabilities exist within the joint ventures.

The aggregate amounts included in the financial statements relating to the Group’s share of joint ventures are:

2022

£’000

2021

£’000

Non-current assets (2022: including £705k classified as held for sale)

5,826

7,763

Current assets (2022: including £4,181k classified as held for sale)

8,164

10,176

Current liabilities (2022: including £(1,990)k classified as held for sale)

(5,046)

(6,054)

Non-current liabilities (2022: including £(26)k classified as held for sale)

(26)

(1,106)

Income

46,640

44,293

Expenses

(45,052)

(42,556)

Net finance cost

(53)

(49)

Goodwill of £17,000 arose on the investment in Silloth Storage Company Ltd. This is included in the carrying amount of the Group’s interest

in joint ventures and is not shown as a separate asset.

In the prior year an impairment of £1,314,000 was recognised against the investment in Afgritech Ltd and its subsidiary Afgritech LLC.

This is not reflected in the aggregate amounts shown in the table above.

19 Investment in subsidiary undertakings

Name

Company

registration

number

Ordinary

Shares held

Country of

incorporation

Country of

operation

Activity

Carrs Agriculture Ltd

00480342

100

England

Manufacture of animal feed/mineral

blocks and ingredients of animal feed

Carrs Billington Agriculture (Sales) Ltd

England

Agricultural retailers

Animal Feed Supplement, Inc.

100

USA

Manufacture of animal feed blocks

Carr’s Supplements (NZ) Ltd

100

New Zealand

Distributor of animal feed blocks

Carr’s Engineering Ltd

100

England

Engineering

Wälischmiller Engineering GmbH

100

Germany

Engineering

Carr’s Engineering (US), Inc.

100

USA

Holding company

NuVision Engineering, Inc.

100

USA

Engineering

Carrs Properties Ltd

00088157

100

England

Property holding

Carr’s International Finance Ltd

10888476

100

England

Finance company

Animax Ltd

01604213

100

England

Manufacture of animal health products

Animax NZ Ltd

100

New Zealand

Distributor of animal health products

Carr’s Supplements (ROI) Ltd

100

Ireland

Distributor of animal feed blocks

and health products

Afgritech Ltd

05259304

100

England

Holding company

Afgritech LLC

100

USA

Producers of ingredients of animal feed

NW Total Engineered Solutions Ltd

02953309

100

England

Engineering

Registered Oﬃce address: Old Croft, Stanwix, Carlisle, Cumbria CA3 9BAA.

Registered Oﬃce address: 16 Montgomery Way, Rosehill Industrial Estate, Carlisle, Cumbria CA1 2UY.

Registered Oﬃce address: 101 Roanoke Avenue, Poteau, Oklahoma 74953, USA.

Registered Oﬃce address: 17b Farnham Street, Parnell, Auckland, 1052, New Zealand.

Registered Oﬃce address: Schießstattweg 16, 88677 Markdorf, Germany.

Registered Oﬃce address: 2403 Sidney Street, Suite 700, Pittsburgh, Pennsylvania 15203, USA.

Registered Oﬃce address: Shepherds Grove West, Stanton, Bury St Edmunds, Suﬀolk IP31 2AR.

Registered Oﬃce address: RSM New Zealand (Auckland), Level 2, Building 5, 60 Highbrook Drive, East Tamaki, Auckland 2013, New Zealand.

Registered Oﬃce address: Trinity House, Charleston Road, Ranelagh, Dublin 6, Ireland.

Registered Oﬃce address: 810 Waterman Drive, Watertown, New York 13601, USA.

UK subsidiaries that have taken advantage of the audit exemption set out within section 479A of the Companies Act 2006 for the year ended 3 September 2022.

The Company will guarantee the debts and liabilities of the above UK subsidiary undertakings at the balance sheet date in accordance with section 479C of the

Companies Act 2006. The Company has assessed the probability of loss under the guarantee as remote.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

142

NOTES TO THE FINANCIAL STATEMENTS

continued

19 Investment in subsidiary undertakings

continued

Dormant subsidiaries are listed on page 179 of this Annual Report and Accounts.

Investments in the subsidiaries listed above are held directly by the Company with the following exceptions: Carr’s Engineering Ltd

holds 100% of the investment in Wälischmiller Engineering GmbH and NW Total Engineered Solutions Ltd; Carrs Agriculture Ltd holds

100% of the investment in Carr’s Supplements (NZ) Ltd and Animax Ltd; Carr’s Engineering (US), Inc. holds 100% of the investment in

NuVision Engineering, Inc.; Animax Ltd holds 100% of the investment in Animax NZ Ltd; and Afgritech Ltd holds 100% of the investment

in Afgritech LLC.

At 3 September 2022 the assets and liabilities of Carrs Billington Agriculture (Sales) Ltd are included within net assets of disposal group

held for sale (note 9). Results are included within profit for the year from discontinued operations (note 9).

Non-controlling interests in subsidiary undertakings

The following tables summarise the information relating to Carrs Billington Agriculture (Sales) Ltd, where there is a material non-

controlling interest. The amounts presented are before inter-company eliminations with other companies within the Group. The non-

controlling interest in the subsidiary was 49% in both the current and prior year.

Balance sheet

2022

£’000

2021

£’000

Non-current assets

24,145

21,141

Current assets

113,687

70,091

Non-current liabilities

(8,008)

(6,061)

Current liabilities

(95,621)

(53,394)

Net assets

34,203

31,777

Net assets attributable to non-controlling interest

16,759

15,571

Income statement and statement of comprehensive income

2022

£’000

2021

£’000

Revenue (2021: restated)

343,844

284,240

Profit after tax

2,330

3,530

Profit after tax allocated to non-controlling interest

1,142

1,730

Revenue in the table above in respect of the prior year has been reduced by £13.3m following prior year restatements as detailed in notes

9 and 39. There is no other comprehensive income in the current or prior year.

Statement of cash flows

2022

£’000

2021

£’000

Cash flows from operating activities

(7,323)

4,049

Cash flows from investment activities

(1,845)

155

Cash flows from financing activities

19,436

(2,880)

Net increase in cash and cash equivalents

10,268

1,324

During the year dividends of £nil (2021: £1,647,000) were paid to the non-controlling interest.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

143

20 Deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Group

2022

£’000

2021

(restated)

£’000

Accelerated tax depreciation

(3,676)

(3,201)

Employee benefits

(1,707)

(2,343)

Other

548

223

Net deferred tax

(4,835)

(5,321)

Included in:

Deferred tax assets

213

182

Deferred tax liabilities

(5,048)

(5,503)

Net deferred tax

(4,835)

(5,321)

Deferred tax net liabilities are expected to reverse after more than one year from the balance sheet date. Tax of £63,542 (2021: £17,123) in

respect of tax losses has not been recognised as a deferred tax asset in the Group balance sheet.

Other deferred tax assets and liabilities includes deferred tax on short-term timing differences, leases, rolled over capital gains, trading

losses, capital losses, business combinations and overseas deferred tax.

Movement in deferred tax during the year

At 29 August

2021

(restated)

£’000

Exchange

differences

£’000

Recognised

in income

statement

£’000

Recognised

in other

comprehensive

income

£’000

Recognised in

equity

£’000

Transferred to

disposal group

£’000

At 3 September

2022

£’000

Accelerated tax depreciation

(3,201)

(146)

(563)

–

234

(3,676)

Employee benefits

(2,343)

–

(8)

644

–

(1,707)

Other

223

692

–

(33)

(411)

548

(5,321)

(69)

121

644

(33)

(177)

(4,835)

Amounts recognised in equity comprise deferred tax related to share-based payments.

Movement in deferred tax during the prior year (restated)

At 30 August

2020

£’000

Exchange

differences

£’000

Recognised

in income

statement

£’000

Recognised

in other

comprehensive

income

£’000

Recognised in

equity

£’000

At 28 August

2021

£’000

Accelerated tax depreciation

(2,727)

(497)

–

(3,201)

Employee benefits

(1,527)

–

(515)

(301)

–

(2,343)

Other

(326)

497

–

223

(4,580)

(515)

(301)

(5,321)

Company

2022

£’000

2021

£’000

Accelerated tax depreciation

Employee benefits

(1,707)

(2,343)

Other

506

114

Net deferred tax

(1,181)

(2,201)

Included in:

Deferred tax liabilities

(1,181)

(2,201)

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

144

NOTES TO THE FINANCIAL STATEMENTS

continued

20 Deferred tax assets and liabilities

continued

Other deferred tax assets and liabilities includes deferred tax on short-term timing differences, leases and trading losses. The Company

has no unrecognised tax losses (2021: none).

Movement in deferred tax during the year

At 29 August

2021

£’000

Recognised

in income

statement

£’000

Recognised

in other

comprehensive

income

£’000

Recognised

in equity

£’000

At 3 September

2022

£’000

Accelerated tax depreciation

(8)

–

Employee benefits

(2,343)

(8)

644

–

(1,707)

Other

114

415

–

(23)

506

(2,201)

399

644

(23)

(1,181)

Amounts recognised in equity comprise deferred tax related to share-based payments.

Movement in deferred tax during the prior year

At 30 August

2020

£’000

Recognised

in income

statement

£’000

Recognised

in other

comprehensive

income

£’000

Recognised

in equity

£’000

At 28 August

2021

£’000

Accelerated tax depreciation

–

Employee benefits

(1,527)

(515)

(301)

–

(2,343)

Other

140

(52)

–

114

(1,365)

(561)

(301)

(2,201)

21 Inventories

Group

2022

£’000

2021

£’000

Raw materials and consumables

15,352

13,374

Work in progress

3,074

1,110

Finished goods and goods for resale

8,564

28,742

26,990

43,226

Inventories are stated after a provision for impairment of £807,000 (2021: £2,202,000). The amount recognised as an expense in the year

in respect of the write-down of inventories is £294,000 (2021 continuing operations: £126,000). The amount recognised as a credit in the

year in respect of reversals of write-downs of inventories is £117,000 (2021 continuing operations: £29,000) and the amount utilised in the

year was £49,000 (2021 continuing operations: £68,000).

The cost of inventories recognised as an expense and included in cost of sales is £94,392,000 (2021 continuing operations: £88,869,000).

The Company has no inventories (2021: none).

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

145

22 Contract balances

The timing of revenue recognition, billings and cash collection results in trade receivables (billed amounts), contract assets (unbilled

amounts) and customer advances and deposits (contract liabilities) on the Group’s balance sheet. For services in which revenue is earned

over time, amounts are billed in accordance with contractual terms, either at periodic intervals or upon achievement of contractual

milestones. The timing of revenue recognition is measured in accordance with the progress of delivery on a contract which could either

be in advance or in arrears of billing, resulting in either a contract asset or a contract liability.

Contract assets

2022

£’000

2021

(restated)

£’000

At the beginning of the year

7,514

7,765

Exchange differences

227

(119)

Transfers from contract assets recognised at the beginning of the year to receivables

(6,358)

(6,516)

Increase related to services provided in the year

6,497

6,384

At the end of the year

7,880

7,514

Included within:

Current assets

7,564

7,202

Non-current assets

316

312

7,880

7,514

Contract liabilities

2022

£’000

2021

(restated)

£’000

At the beginning of the year

3,312

2,179

Exchange differences

215

(64)

Revenue recognised against contract liabilities at the beginning of the year

(2,889)

(1,598)

Increase due to cash received, excluding any amounts recognised as revenue during the year

1,788

2,795

At the end of the year

2,426

3,312

The Group has assessed expected credit losses and the loss allowance for contract balances as immaterial. The Company has no

contract assets or contract liabilities (2021: none).

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

146

NOTES TO THE FINANCIAL STATEMENTS

continued

23 Trade and other receivables

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Current:

Trade receivables

14,397

58,007

–

Less: provision for impairment of trade receivables

(817)

(2,003)

–

Trade receivables – net

13,580

56,004

–

Amounts owed by Group undertakings (note 37)

–

1,336

458

Amounts owed by other related parties (note 37)

194

1,646

871

Other taxes and social security receivable

1,071

1,460

481

–

Other receivables

2,708

1,073

863

476

Prepayments

1,462

1,552

397

474

19,015

61,735

3,128

2,279

Non-current:

Amounts owed by Group undertakings (note 37)

–

34,208

33,494

Other receivables

–

34,208

33,494

The movement in the provision for impaired trade receivables consists of increases for additional provisions offset by receivables written

off and unused provision released back to the consolidated income statement. The provision is utilised when there is no expectation of

recovering additional cash.

During the year, for continuing operations, a credit of £136,000 (2021 continuing operations: a charge of £80,000) has been recognised

within administrative expenses in the consolidated income statement in respect of the movement in provision for impairment of trade

receivables.

During the prior year an impairment of £776,000 was recognised in both the Group and Company against a loan receivable due from its

joint venture Afgritech Ltd. This is included in the amounts owed by other related parties in the table above.

For all other receivables presented above, the Group has assessed expected credit losses and the loss allowance as immaterial.

There are no interest-bearing, non-trading amounts owed by Group undertakings within current trade and other receivables in either the

current or prior period.

Interest-bearing, non-trading amounts owed by Group undertakings within non-current receivables carry interest at 4.50%, 6.25% or Bank

of England base rate + 2.50%. Such amounts are unsecured and have remaining terms of 1.3 – 1.5 years.

Group

2022

2021

Gross

£’000

Impairment

£’000

Gross

£’000

Impairment

£’000

The ageing of trade receivables is as follows:

Not past due

11,799

(9)

38,878

(116)

Past due 1 – 30 days

839

–

8,791

(39)

Past due 31 – 60 days

390

(13)

3,531

(65)

Past due 61 – 90 days

185

(12)

1,684

(43)

Past due 91 – 120 days

146

(26)

954

(40)

Past 121 days

1,038

(757)

4,169

(1,700)

14,397

(817)

58,007

(2,003)

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

147

23 Trade and other receivables

continued

The Company has no trade receivables (2021: £nil).

In relation to trade receivables, the major source of estimation uncertainty is the recoverable value of those receivables. The judgements

applied to this include the credit quality of customers, taking into account their financial positions, past experiences and other relevant

factors. Individual customer credit limits are imposed based on these factors, and provisions for impairment are made using those

judgements. Provisions for impairment are reviewed monthly by divisional management.

Trade receivables are assessed by management for credit risk and are considered past due when a counterparty has failed to make a

payment when that payment was contractually due. Management assesses trade receivables that are past the contracted due date by

the ageing periods as presented in the tables above, consistent with how it views the credit risk of trade receivables.

A default is determined to have occurred if the Group becomes aware of evidence that it will not receive all contractual cash flows that

are due.

The maximum exposure to credit risk at the year end is the carrying value, net of provision for impairment, of each receivable. The Group

and Company do not hold any significant collateral as security (2021: none).

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

The carrying value of trade receivables is denominated in the following currencies:

Sterling

7,857

48,934

–

US Dollar

2,556

3,086

–

Euro

2,369

2,850

–

New Zealand Dollar

798

1,134

–

13,580

56,004

–

24 Current tax assets

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Corporation tax recoverable

3,866

2,669

2,550

1,851

Group taxation relief

–

735

3,866

2,669

2,550

2,586

25 Cash and cash equivalents and bank overdrafts

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Cash and cash equivalents per the balance sheet

22,515

24,309

12,726

11,063

Cash and cash equivalents of disposal group classified as assets held for sale

(note 9)

12,074

–

Bank overdrafts (note 27)

(9,734)

(4,613)

–

Cash and cash equivalents per the statement of cash flows

24,855

19,696

12,726

11,063

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

148

NOTES TO THE FINANCIAL STATEMENTS

continued

26 Trade and other payables

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Current:

Trade payables

10,886

16,269

778

744

Amounts owed to Group undertakings (note 37)

–

393

Amounts owed to other related parties (note 37)

105

23,144

–

Other taxes and social security payable

1,019

1,697

538

409

Contingent cash consideration

–

1,320

–

Other payables

1,393

2,823

116

Accruals

7,592

24,268

2,437

1,114

Deferred income

–

21,000

69,526

4,193

2,395

Non-current:

Other payables

313

–

Deferred income

–

336

–

Amounts owed to Group undertakings and other related parties are interest free, unsecured and repayable on demand.

Prior year trade and other payables includes contingent consideration on a prior year acquisition. This has been released to the income

statement during the current year and has also been included as an adjusting item (note 5).

Deferred income comprises government grants as follows:

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

At the beginning of the year

114

–

Amortisation in the year

(32)

(54)

–

At the end of the year

–

Included within:

Current liabilities

–

Non-current liabilities

–

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

149

27 Borrowings

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Current:

Bank overdrafts

9,734

4,613

–

Bank loans and other borrowings

3,000

6,500

1,153

2,341

Loans from Group undertakings (note 37)

–

260

–

12,734

11,113

1,413

2,341

Non-current:

Bank loans

23,805

23,159

22,757

21,906

23,805

23,159

22,757

21,906

Borrowings are repayable as follows:

On demand or within one year

12,734

11,113

1,413

2,341

In the second year

1,704

1,570

1,154

1,153

In the third to fifth years inclusive

22,101

21,589

21,603

20,753

36,539

34,272

24,170

24,247

Group and Company borrowings are shown in the balance sheet net of arrangement fees of £100,000 (2021: £121,000) of which £48,000

(2021: £60,000) is deducted from current liabilities and £52,000 (2021: £61,000) is deducted from non-current liabilities.

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

The net borrowings are:

Borrowings as above

36,539

34,272

24,170

24,247

Cash and cash equivalents

(22,515)

(24,309)

(12,726)

(11,063)

Net borrowings

14,024

9,963

11,444

13,184

Bank loans and other borrowings includes an amount of £nil (2021: £2,456,000) which is secured on trade receivables and represents the

amount drawn down on an invoice discounting facility with The Royal Bank of Scotland PLC. In addition, The Royal Bank of Scotland PLC

has legal charges over certain properties. At 3 September 2022 the invoice discounting facility is included within liabilities of disposal

group classified as held for sale.

The Company, together with certain subsidiaries, acts as guarantor on the bank loans.

Loans from Group undertakings are non-interest-bearing. Such amounts are unsecured and repayable on demand. The bank loans are

repayable by instalments and the overdraft is repayable on demand.

Non-current bank loans includes a drawn down revolving credit facility of £21.6m (2021: £19.6m) which is repayable in December 2024.

At the year end the Group had £7.0m, including £2.0m in respect of the disposal group, of undrawn revolving credit facilities (2021: £9.0m).

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

150

NOTES TO THE FINANCIAL STATEMENTS

continued

28 Derivatives and other ﬁnancial instruments

The Group’s activities expose it to a variety of financial risks. The Board reviews and agrees policies for managing its risk. These policies

have remained unchanged throughout the year.

Currency rate risk – ﬁnancial instruments by currency

The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar and the

Euro. Foreign exchange risk arises when future commercial transactions, or recognised assets or liabilities, are denominated in a currency

that is not the entity's functional currency.

The table below discloses balances across the Group that are denominated in a currency other than that entity's functional currency.

Inter company balances have been excluded from the table.

Group

2022

2021

Sterling

£’000

Dollar

£’000

Euro

£’000

Dollar

£’000

Total

£’000

Sterling

£’000

Dollar

£’000

Euro

£’000

Dollar

£’000

Total

£’000

Assets

Current trade and other receivables

–

174

343

433

234

–

1,010

Cash and cash equivalents

584

445

554

1,586

969

1,759

864

3,595

614

502

641

1,760

1,312

2,192

1,098

4,605

Liabilities

Current derivatives

–

Current trade and other payables

–

Non-current borrowings

–

4,609

–

4,609

–

4,568

–

4,568

–

4,630

4,701

–

4,603

–

4,608

The table below discloses balances in the Company's balance sheet that are denominated in a currency other than the Company's

functional currency.

Company

2022

2021

US Dollar

£’000

Euro

£’000

Total

£’000

US Dollar

£’000

Euro

£’000

Total

£’000

Assets

Non-current receivables

17,308

5,708

23,016

14,574

6,728

21,302

Current trade and other receivables

736

–

736

399

–

399

Cash and cash equivalents

374

234

608

1,191

260

1,451

18,418

5,942

24,360

16,164

6,988

23,152

Liabilities

Current borrowings

260

–

260

–

Non-current borrowings

–

4,609

–

4,568

260

4,609

4,869

–

4,568

Other taxes and social security receivable and prepayments are excluded from trade and other receivables in the tables above as they

are not financial instruments. For this same reason, other taxes and social security payable is excluded from trade and other payables.

Deferred income in respect of government grants is excluded as it is not a financial liability.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

151

28 Derivatives and other ﬁnancial instruments

continued

Sensitivity analysis

The impact of a 10% weakening or strengthening in Sterling against balances across the Group that are denominated in a currency other

than that entity's functional currency is shown in the table below.

2022

2021

10%

weakening

£’000

10%

strengthening

£’000

10%

weakening

£’000

10%

strengthening

£’000

Impact on profit after taxation

218

(221)

(10)

Impact on total equity

218

(221)

(10)

This sensitivity analysis is not an indication of actual results, which may materially differ. For the purposes of this sensitivity analysis all

other variables have been held constant.

Interest rate risk

The Group finances its operations through a mixture of retained earnings and bank borrowings. The Group borrows in the desired

currencies at fixed and floating rates of interest.

Group borrowings

2022

2021

Weighted

average

effective

interest rate

£’000

Weighted

average

effective

interest rate

£’000

Bank overdrafts

3.55

9,734

1.84

4,613

Bank loans and other borrowings

3.12

26,805

1.74

29,659

36,539

34,272

Fixed rate

1,265

1,671

Floating rate

35,274

32,601

36,539

34,272

The Group’s floating rate financial liabilities bear interest determined as follows:

Bank overdrafts

US prime rate + 1.0% margin; US prime rate + 0.5% margin; Bank of England base rate + 1.7% margin

Bank loans and other borrowings

Bank of England base rate + 1.67%; Bank of England base rate + 1.77%; Euribor + 1.7%;

Bank of England base rate + 1.15% margin; Wall Street Journal prime rate – 1%

Company borrowings

2022

2021

Weighted

average

effective

interest rate

£’000

Weighted

average

effective

interest rate

£’000

Bank loans

3.25

23,910

1.79

24,247

Loans from Group undertakings

–

260

–

24,170

24,247

Floating rate

23,910

24,247

Interest free

260

–

24,170

24,247

The Company’s floating rate financial liabilities bear interest determined as follows:

Bank loans

Bank of England base rate + 1.67%; Bank of England base rate + 1.77%; Euribor + 1.7%

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

152

NOTES TO THE FINANCIAL STATEMENTS

continued

28 Derivatives and other ﬁnancial instruments

continued

Sensitivity analysis

The impact of a 1% decrease or increase in interest rates during the year is shown in the table below.

2022

2021

1% decrease

£’000

1% increase

£’000

1% decrease

£’000

1% increase

£’000

Impact on profit after taxation

228

(228)

396

(396)

Impact on total equity

228

(228)

396

(396)

This sensitivity analysis is not an indication of actual results, which may materially differ. For the purposes of this sensitivity analysis all

other variables have been held constant.

Liquidity risk

The Group’s policy throughout the year has been to maintain a mix of short and medium-term borrowings. Short-term flexibility is

achieved by overdraft facilities. In addition, it is the Group’s policy to maintain committed undrawn facilities in order to provide flexibility

in the management of the Group’s liquidity. The Group monitors daily cash balances and forecasts, together with net debt, to ensure

adequate headroom exists under its committed facilities.

The tables below analyse the Group and Company’s financial liabilities which will be settled on a net basis into relevant maturity

groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the tables

are the contractual undiscounted cash flows which have been calculated using spot rates at the relevant balance sheet date.

Group

2022

2021

Total

£’000

Within

one year

£’000

One to

two years

£’000

Two to

five years

£’000

Total

£’000

Within

one year

£’000

One to

two years

£’000

Two to

five years

£’000

Bank overdrafts

9,734

–

4,613

–

Bank loans and other borrowings

28,655

3,825

2,477

22,353

30,651

6,975

1,990

21,686

Derivatives

–

Trade and other payables

19,976

–

67,824

–

Other non-current liabilities

313

–

313

–

58,740

33,597

2,790

22,353

103,088

79,412

1,990

21,686

Company

2022

2021

Total

£’000

Within

one year

£’000

One to

two years

£’000

Two to

five years

£’000

Total

£’000

Within

one year

£’000

One to

two years

£’000

Two to

five years

£’000

Bank loans

25,710

1,956

1,913

21,841

25,167

2,785

1,551

20,831

Loans from Group undertakings

260

–

Trade and other payables

3,655

–

1,986

–

29,625

5,871

1,913

21,841

27,153

4,771

1,551

20,831

The above tables exclude leases accounted for under IFRS 16. Details of the contractual undiscounted cash flows for leases under IFRS 16

can be found in note 14.

Trade and other payables in the tables above exclude other taxes and social security which do not meet the definition of financial liabilities

under IFRS 7. Deferred income in respect of government grants has also been excluded as it does not give rise to a contractual obligation

to pay cash.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

153

28 Derivatives and other ﬁnancial instruments

continued

Borrowing facilities

The Group has various undrawn facilities. The undrawn facilities available at 3 September 2022, in respect of which all conditions

precedent had been met, were as follows:

2022

Floating rate

£’000

2021

Floating rate

£’000

Expiring in one year or less

20,720

6,379

Expiring within two and five years inclusive

5,391

29,617

26,111

35,996

Included in the table above for facilities expiring in one year or less is £13,051,000 (2021: £nil) in respect of discontinued operations and

included within facilities expiring within two and five years inclusive is £2,000,000 (2021: £24,185,000) in respect of discontinued operations.

Undrawn facilities include overdraft facilities of £2.5m (2021: £2.5m) that are renewable on an annual basis.

The Company’s overdraft is within a Group facility and it is therefore not possible to determine the Company’s undrawn facilities at the

balance sheet date.

Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide

returns for shareholders and benefits for other stakeholders and to maintain an efficient capital structure to optimise the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to

shareholders, issue new shares or sell assets to reduce debt.

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt, excluding leases, divided by total equity.

Net debt is calculated as total borrowings (including current and non-current borrowings) as shown in the consolidated balance sheet

less cash and cash equivalents. Total equity is as shown in the consolidated balance sheet. At 3 September 2022, the Group had net debt

of £14.0m (2021: £10.0m). Based on net debt (note 34), and for the current year excluding net assets within the disposal group, gearing was

15.7% at the year end (2021: 7.4%).

The Group monitors cash balances and net debt on a daily basis to ensure adequate headroom exists on banking facilities and that it is

compliant with banking covenants.

Fair value hierarchy

IFRS 13 requires financial instruments that are measured at fair value to be classified according to the valuation technique used:

•

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities

•

Level 2 – inputs, other than level 1 inputs, that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e.,

derived from prices)

•

Level 3 – unobservable inputs

Transfers between levels are deemed to have occurred at the end of the reporting period. There were no transfers between levels in the

above hierarchy in the period.

All derivative financial instruments are measured at fair value using level 2 inputs. The Group’s bankers provide the valuations for the

derivative financial instruments at each reporting period end based on mark to market valuation techniques.

Contingent consideration is measured at fair value using level 3 inputs. Fair value is determined considering the expected payment, which

is discounted to present value. The expected payment is determined separately in respect of each individual earn-out agreement taking

into consideration the expected level of profitability of each acquisition.

Carr's Group plc

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154

NOTES TO THE FINANCIAL STATEMENTS

continued

28 Derivatives and other ﬁnancial instruments

continued

The significant unobservable inputs are the projections of future profitability, which in the prior year were based on the budget for the

year to August 2022, and the discount rate, which was based on the incremental borrowing rate. At 28 August 2021, all of the remaining

contingent consideration payable was included within current liabilities and was therefore not discounted. The range of possible

outcomes for the contingent consideration payable at 28 August 2021 was between £nil and £1,320,000. During the current year all of the

fair value recognised at the beginning of the year has been released to the income statement.

The following table presents a reconciliation of the contingent consideration liability measured at fair value on a recurring basis using

significant unobservable inputs (level 3).

2022

£’000

2021

£’000

Fair value at the beginning of the year

1,320

3,422

Exchange differences

–

(12)

Payments made to vendors (including legal costs)

–

(1,077)

Change in fair value

(1,320)

(1,013)

Fair value at the end of the year

–

1,320

The change in fair value has been included as an adjusting item (note 5).

Fair values of ﬁnancial assets and liabilities

The fair values of Group and Company financial assets and liabilities are not materially different to book value.

Derivative ﬁnancial instruments

Hedge of net investment in foreign subsidiaries

The Group hedges foreign denominated loans against its investment in foreign subsidiaries. A foreign exchange pre-tax gain of £101,000

(2021: pre-tax loss of £36,000) was recognised in equity during the year on translation of US Dollar denominated loans with a carrying

value of $1,608,000 (2021: $1,608,000) to Sterling. A foreign exchange pre-tax loss of £41,000 (2021: pre-tax gain of £201,000) was

recognised in equity during the year on translation of Euro denominated loans with a carrying value of €5,330,000 (2021: €5,330,000)

to Sterling. The Group’s net investment hedge was fully effective in both the current and prior year and therefore no gain or loss is

recognised in the consolidated income statement.

Currency derivatives

The Group and Company use forward foreign currency contracts to manage exchange risk exposure. At the balance sheet date, the fair

value of outstanding forward foreign currency contracts are as below:

Group

2022

2021

Fair

value

£’000

Contractual or

notional amount

£’000

Fair

value

£’000

Contractual or

notional amount

£’000

At the beginning of the year

–

105

Exchange differences

(2)

–

Losses during the year

(60)

(557)

(3)

(105)

At the end of the year – included within current liabilities

(62)

(557)

–

The Company has no forward foreign currency contracts (2021: none).

Fair value has been determined by reference to the value of equivalent forward foreign currency contracts at the balance sheet date.

Gains and losses on currency-related derivatives are included within administrative expenses.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

155

29 Retirement beneﬁts

The Group participates in two defined benefit pension schemes: Carr’s Group Pension Scheme and Carrs Billington Agriculture Pension

Scheme.

Carr’s Group Pension Scheme (Group and Company)

The Company sponsors the Carr’s Group Pension Scheme and offered a defined contribution and a defined benefit section. The assets of

the scheme are held separately from those of the Group and are invested with independent investment managers.

From 1 September 2015 the defined contribution section was closed. Members of that section were enrolled in a new defined contribution

scheme, the Carr’s Group Retirement Savings Scheme (“Carr’s Group RSS”), set up under a Master Trust arrangement.

The defined benefit section of the scheme was previously closed to new members, and has closed to future accrual with effect from

31 December 2015. Members of this section became entitled to become members of the Carr’s Group RSS from 1 January 2016. There

were no pension contributions made by the Group over the year to the defined benefit section (2021: £nil).

The following disclosures relate to the defined benefit section of the Carr’s Group Pension Scheme. The last full actuarial valuation of

this scheme was carried out by a qualified independent actuary as at 31 December 2020 and updated on an approximate basis to 3

September 2022 by a qualified independent actuary.

Major assumptions:

2022

2021

Inflation (RPI)

3.50

3.30

Inflation (CPI)

2.80

2.60

Rate of discount

4.50

1.70

Pension in payment increases:

RPI or 5.0% per annum if less

3.20

3.30

RPI or 5.0% per annum if less, minimum 3.0% per annum

3.80

3.70

The assumption for CPI has been derived by making an adjustment for the expected long-term gap between RPI and CPI. This has

generally been viewed as more credible than fixing the assumption based on the Bank of England CPI inflation target. This may change

going forward, especially from 2030, when RPI will be aligned with CPIH.

The assumed RPI/CPI gap as at 3 September 2022 and at 28 August 2021 is 0.7%. This broadly reflects retention of a 0.9% p.a. assumed

gap before 2030 and 0% p.a. gap thereafter, suitably weighted to reflect the scheme’s exposure to CPI liabilities in the period before non-

pensioner members’ retirement and, given the maturity of the population, is significantly weighted to the period before 2030.

The mortality tables used in the valuation as at 3 September 2022 are 100% of 2019 Vita Curves for males and females with allowance

for mortality improvements using CMI_2021 with a 1.25% p.a. underpin. The mortality assumptions adopted imply the following life

expectancies at age 65 as at 3 September 2022:

3 September

2022

28 August

2021

Males currently age 45

23.2 years

23.1 years

Females currently age 45

25.6 years

Males currently age 65

21.9 years

21.8 years

Females currently age 65

24.2 years

24.1 years

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

156

NOTES TO THE FINANCIAL STATEMENTS

continued

29 Retirement beneﬁts

continued

No adjustments have been made to mortality assumptions at the year end to reflect the potential effects of COVID-19 as the actual plan

experience is not yet available and it is too soon to make a judgement on the impact of the pandemic on future mortality improvements.

The mortality experience analysis for the scheme will be carried out in the future as part of the 31 December 2023 funding valuation for

the Carr’s Group Pension Scheme.

Amounts recognised in the Income Statement in respect of deﬁned beneﬁt schemes:

2022

£’000

2021

£’000

Administrative expenses

126

Net interest on the net defined benefit asset

(159)

(147)

Total income

(33)

(129)

The (income)/expense is recognised within the Income Statement as shown below:

2022

£’000

2021

£’000

Within operating profit:

Administrative expenses

126

Within interest:

Finance income

(159)

(147)

Total income

(33)

(129)

Remeasurements of the net deﬁned beneﬁt asset to be shown in the Statement of Comprehensive Income:

2022

£’000

2021

£’000

Actual gains and losses arising from changes in:

Financial assumptions

18,433

(3,265)

Demographic assumptions

(467)

314

Experience adjustments

(2,120)

(220)

Return on assets, excluding interest income

(18,422)

4,376

Total remeasurement of the net defined benefit asset

(2,576)

1,205

Amounts included in the Balance Sheet:

2022

£’000

2021

£’000

Present value of funded defined benefit obligations

(48,578)

(66,254)

Fair value of scheme assets

55,406

75,625

Surplus in funded scheme

6,828

9,371

Reconciliation of opening and closing balances of the present value of the deﬁned beneﬁt obligation:

2022

£’000

2021

£’000

Benefit obligation at the beginning of the year

66,254

65,834

Interest cost

1,101

1,150

Net measurement (gains)/losses – financial

(18,433)

3,265

Net measurement losses/(gains) – demographic

467

(314)

Net measurement losses – experience

2,120

220

Benefits paid

(2,931)

(3,901)

Benefit obligation at the end of the year

48,578

66,254

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

157

29 Retirement beneﬁts

continued

Beneﬁt obligation by participant status:

2022

£’000

2021

£’000

Vested deferred

12,450

19,602

Retirees

36,128

46,652

48,578

66,254

Reconciliation of opening and closing balances of the fair value of scheme assets:

2022

£’000

2021

£’000

Fair value of scheme assets at the beginning of the year

75,625

73,871

Interest income on scheme assets

1,260

1,297

Return on assets, excluding interest income

(18,422)

4,376

Benefits paid

(2,931)

(3,901)

Scheme administrative cost

(126)

(18)

Fair value of scheme assets at the end of the year

55,406

75,625

Analysis of the scheme assets and actual return:

Fair value of assets

2022

£’000

2021

£’000

Equity instruments

5,723

10,247

Property

3,109

2,561

Bonds

43,578

57,759

Cash

1,014

2,625

Other

1,982

2,433

55,406

75,625

Actual return on scheme assets

(17,162)

5,673

Equity instruments, bonds and ‘other’ assets are held in unquoted Mercer fund portfolios and are not held directly by the Pension Scheme.

These Mercer portfolios in turn invest in a mix of quoted and unquoted underlying assets. Property assets are held by Legal & General

Investment Management. ‘Other’ assets relate to assets held in the Mercer’s Alternative Strategies funds within the Scheme’s growth

portfolio. Cash includes investments in UK Cash Funds within the Mercer fund portfolios.

In accordance with IAS 19, Scheme assets must be valued at the fair value at the balance sheet date. The following applies to the assets in

the Scheme:

Asset

Valuation

Equity instruments

Fair value being the net asset value provided by the investment manager

Property

Closing bid price for unit holdings in managed property fund

Bonds

Fair value being the net asset value provided by the investment manager

Other

Fair value being the net asset value provided by the investment manager

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

158

NOTES TO THE FINANCIAL STATEMENTS

continued

29 Retirement beneﬁts

continued

Sensitivity analysis

A sensitivity analysis of the principal assumptions used to measure the scheme liabilities:

Change in assumption

Present value of defined

benefit obligation

£’000

Discount rate

-25 basis points

50,022

+25 basis points

47,195

Price inflation rate

-25 basis points

47,463

+25 basis points

49,737

Post-retirement mortality assumption

-1 year age rating

50,553

+1 year age rating

46,636

The sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. It is not an indication of

actual results which may materially differ, for example, changes in some assumptions may actually be correlated. When calculating the

sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit

obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the

defined benefit liability recognised in the balance sheet.

The methodology and principal assumptions used in preparing the sensitivity analysis did not change compared to the prior year.

The weighted average duration of the defined benefit obligation is approximately 12 years (2021: 14 years).

Expected cash flows for the following year:

£’000

Expected employer contributions

–

Expected contributions to reimbursement rights

–

Expected total benefit payments by the scheme:

Year 1

3,021

Year 2

3,114

Year 3

3,210

Year 4

3,309

Year 5

3,411

Next 5 years

18,696

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

159

29 Retirement beneﬁts

continued

Characteristics and the risks associated with the Scheme

Information about the characteristics of the Scheme:

The Scheme provides pensions in retirement and death benefits to members. Pension benefits are linked to a member’s final salary at

31 December 2015 (or date of leaving, if earlier) and their length of service. Since 31 December 2015 the Scheme has been closed to

future accrual.

The Scheme is a registered scheme under UK legislation.

The Scheme is subject to the scheme funding requirements outlined in UK legislation. As at 31 December 2020, being the date of the

most recent finalised actuarial valuation, the scheme funding valuation of the Scheme revealed a surplus of £2.3m equating to a funding

level of 103%.

On a solvency basis the scheme had a deficit of £10.0m, equating to a funding level of 88%.

The purpose of the scheme

funding valuation is to monitor the progress towards achieving the Trustees’ funding objectives and to determine the past service

contributions and future service contributions that may be required.

The solvency valuation provides an indication of the financial impact

on members were the scheme to wind up with no money recoverable from the employer.

The Trustees agreed that deficit contributions

were not required and therefore contributions to the Scheme by the Group and Company in the year ending August 2023 are expected

to be £nil, with the exception of a one-off contribution of £0.4m made on completion of the disposal of the discontinued operations on

26 October 2022.

The next full triennial actuarial valuation will be as at 31 December 2023, at which point the funding requirements will

be revisited.

The Scheme was established under trust and is governed by the Scheme’s trust deed and rules dated June 2008. The Trustees are

responsible for the operation and the governance of the Scheme, including making decisions regarding the Scheme’s funding and

investment strategy in conjunction with the Company.

Risk exposure and investment strategy

The Scheme’s investment strategy is to invest in return-seeking assets and lower risk assets, such as bonds. This strategy reflects the

Scheme’s liability profile and the Trustees’ attitude to risk. The objective is to achieve a 110% funding level on a gilts +0.25% p.a. basis

by 2024–2028. The Trustees have a fiduciary management arrangement with Mercer who have certain delegated responsibilities over

investment decisions within parameters set by the Trustees. These parameters are reviewed on a regular basis to ensure they are still

appropriate.

Assets are invested in Mercer portfolios and in respect of property, Legal & General Investment Management.

The Scheme

aims to reduce risks such as market (investment) risk, interest rate risk, inflation risk, currency risk and longevity risk through liability

hedging, diversification and de-risking triggers. Where de-risking triggers are met, assets are transferred from growth asset portfolios to

matching asset portfolios. The objective of the matching asset portfolio is to manage the impact on the funding level of interest rate risk

and inflation risk such that the majority of the Scheme’s risk is allocated to the growth portfolio.

Carr’s Group Retirement Savings Scheme ("RSS")

The Company offers membership in a Master Trust arrangement, Carr’s Group RSS, following the closure of both sections of the Carr’s

Group Pension Scheme. The pension expense for this scheme for the year including discontinued operations was £1,900,000 (2021:

£1,909,000).

Carrs Billington Agriculture Pension Scheme

One of the Group’s subsidiaries, Carrs Billington Agriculture (Sales) Ltd, is a participating employer in the Carrs Billington Agriculture

Pension Scheme, which is a multi-employer defined benefit pension scheme. For the reasons explained below this scheme is accounted

for as a defined contribution scheme.

The scheme is closed to new entrants and has been closed to future accrual since 1 December 2007. There is currently a surplus,

calculated in accordance with IAS 19, of £5.6m (2021: £5.4m).

Under the rules of the scheme, any employer wishing to exit the scheme would trigger a partial wind-up of the scheme and would

therefore be responsible for their s75 debt. A full wind-up of the plan would also trigger s75 debts for each participating employer.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

160

NOTES TO THE FINANCIAL STATEMENTS

continued

29 Retirement beneﬁts

continued

The history of the scheme is that it was brought together from many other pension schemes and employers following multiple

acquisitions over several years. Many of those acquisitions had little or no records of employee histories. Because of this, approximately

85% of the scheme liabilities are ‘orphan liabilities’. For the purposes of estimating an allocation of these orphan liabilities over the current

participating employers, they have been split in the same proportion as their calculated share of non-orphan liabilities. At the last finalised

actuarial valuation, the buy-out deficit was £5.3m and the Group’s estimated liability on the wind-up of the scheme was £2.6m. In the

actual event of a wind-up of the scheme the Trustees, with assistance from the actuary and legal counsel, would need to determine

how the orphan liabilities should be allocated.

Because of the scheme history described above, it is not possible to calculate the Group’s share of the assets and liabilities of the

scheme, and consequently despite it being a defined benefit pension scheme, the Group treats it as a defined contribution pension

scheme for accounting purposes. The Group does not expect to pay any contributions to the scheme in the next reporting period (2021:

£nil). Previously the deficit repair contributions have been funded solely by the sponsoring employer. The last finalised triennial valuation

of the scheme as at 31 December 2021 showed that the scheme had a surplus of £4.1m on a technical provisions basis. As the scheme is

in surplus, a recovery plan is not required. The sponsoring employer will meet the cost of administrative expenses up to an allowance of

£100k per annum.

The Group’s level of participation in the scheme is estimated at 48.5%, which is based on its estimated share of the total buy-out liabilities.

The Group has a 49% shareholding in its associate company which is the sponsoring company of the pension scheme. As a result of equity

accounting for its share of the net assets of the associate, the Group recognises 49% of the surplus calculated on an IAS 19 accounting

basis within ‘Investment in associate’ in its consolidated balance sheet.

At 3 September 2022 the investment in associate is included within assets of a disposal group held for sale (note 9).

Other pension schemes

The pension expense in respect of defined contribution pension arrangements in foreign subsidiaries during the year was £551,000

(2021: £565,000).

Pension contributions into NEST during the year, including discontinued operations, amounted to £103,000 (2021: £92,000).

The Group also pays contributions into various defined contribution schemes acquired through business combinations. The pension

expense during the year in respect of these schemes, including discontinued operations, was £nil (2021: £16,000).

Other pension-related expenses

During the year the Group, including discontinued operations, incurred expenses associated with pension schemes, including death in

service insurance policy premiums, of £94,000 (2021: £142,000).

30 Share capital

Group and Company

2022

2021

£’000

Allotted and fully paid Ordinary Shares of 2.5p each:

At the beginning of the year

93,720,125

2,343

92,465,833

2,312

Allotment of shares

279,471

1,254,292

At the end of the year

93,999,596

2,350

93,720,125

2,343

The table above includes no (2021: nil) shares held in Treasury.

The consideration received on the allotment of shares during the year was £352,071 (2021: £1,010,438).

For details of share-based payment schemes see note 31.

Since the year end 21,937 shares have been allotted with a nominal value of £548 due to the exercise of share options.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

161

31 Share-based payments

Group

The Group operates three active share-based payment schemes at 3 September 2022.

The Executive Directors participate in a deferred bonus share plan under which 25% of any bonus earned will be deferred into awards over

shares in the Company, with awards subject to a two-year post-vesting holding period.

Under the Long Term Incentive Plan, shares will be awarded to eligible individuals subject to an earnings per share (“EPS”) target

measured against average annual increases over a three-year period. For the awards granted in November 2019, November 2020 and

December 2021 an average annual growth of EPS must exceed 3.0% for 25% of the awards to vest and 100% vest at 10.0%, with a straight-

line calculation between 25% and 100% of the award.

All employees, subject to eligibility criteria, may participate in the Share Save Scheme. Under this scheme, employees are offered savings

contracts for three-year vesting period plans. The exercise period is six months from the vesting date.

The fair value per option granted and the assumptions used in the calculation of fair values for Long Term Incentive Plans and Share Save

Schemes are as follows:

Long Term

Incentive Plan

December 2021

Long Term

Incentive Plan

November 2019

Long Term

Incentive Plan

November 2019

Share Save

Scheme

(3-Year Plan

2022)

Share Save

Scheme

(3-Year Plan

2021)

Share Save

Scheme

(3-Year Plan

2020)

Grant date

10/12/21

23/11/20

11/11/19

06/06/22

21/12/20

16/12/19

Share price at grant date

(weighted average)

£1.51

£1.25

£1.43

£1.355

£1.275

£1.565

Exercise price (weighted average)

£0.00

£1.15

£1.02

£1.223

Fair value per option at grant

£1.368

£1.102

£1.277

£0.38

£0.37

£0.46

Number of employees at grant

150

216

157

Shares under option at grant

529,766

721,437

610,464

492,231

1,176,886

508,407

Vesting period (years)

Model used for valuation

Market value*

Black-Scholes

Expected volatility

–

40.0%

41.3%

36.4%

Option life (years)

3.55

3.65

Expected life (years)

6.5

3.3

3.4

Risk-free rate

–

1.78%

-0.07%

0.61%

Expected dividends expressed

as a dividend yield

1.08%

1.81%

2.33%

3.80%

3.73%

3.04%

Expectations of vesting

56%

26%

95%

100%

Discounted for dividends forgone over the three-year vesting period.

The fair value of the deferred bonus plan offered to the Executive Directors is calculated with reference to the market value of the shares

under award discounted to reflect illiquidity during the post-vesting two-year period.

The expected volatility has been calculated using historical daily data over a term commensurate with the expected life of each option.

The expected life is the midpoint of the exercise period. The risk-free rate of return is the implied yield of zero-coupon UK Government

bonds with a remaining term equal to the expected term of the award being valued.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

162

NOTES TO THE FINANCIAL STATEMENTS

continued

31 Share-based payments

continued

Number of options (LTIP and Share Save)

Long Term

Incentive Plan

December 2021

Number ’000

Long Term

Incentive Plan

November 2020

Number ’000

Long Term

Incentive Plan

November 2019

Number ’000

Long Term

Incentive Plan

December 2018

Number ’000

Share Save

Scheme (3-Year

Plan 2022)

Number ’000

Share Save

Scheme (3-Year

Plan 2021)

Number ’000

Share Save

Scheme (3-Year

Plan 2020)

Number ’000

Share Save

Scheme (3-Year

Plan 2019)

Number ’000

Outstanding:

At 30 August 2020

–

610

580

–

451

326

Granted in the year

–

721

–

1,177

–

Exercised in the year

–

(1)

Forfeited in the year

–

(55)

(52)

–

(95)

(62)

At 28 August 2021

–

721

555

528

–

1,082

355

263

Granted in the year

530

–

492

–

Exercised in the year

–

(5)

(10)

(234)

Forfeited in the year

(28)

(272)

–

(528)

(9)

(160)

(62)

(23)

At 3 September 2022

502

449

555

–

483

917

283

Exercisable:

At 28 August 2021

–

At 3 September 2022

–

Weighted average:

Remaining contractual life

(years)

3.3

2.07

1.07

0.07

Remaining expected life

(years)

5.50

4.50

3.50

2.50

3.05

1.82

0.82

–

The total charge recognised for the year arising from share-based payments are as follows:

2022

£’000

2021

£’000

Deferred Bonus Share Plan 2022

–

Deferred Bonus Share Plan 2021

(44)

119

Deferred Bonus Share Plan 2020

–

Deferred Bonus Share Plan 2018

–

(11)

Long Term Incentive Plan December 2021

120

–

Long Term Incentive Plan November 2020

(27)

105

Long Term Incentive Plan December 2017

–

Share Save Scheme (3-Year Plan 2022)

–

Share Save Scheme (3-Year Plan 2021)

114

Share Save Scheme (3-Year Plan 2020)

Share Save Scheme (3-Year Plan 2019)

Share Save Scheme (3-Year Plan 2018)

–

249

464

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

163

31 Share-based payments

continued

Company

The movement in the number of outstanding options under the share schemes for the Company is shown below.

Number of options (LTIP and Share Save)

Long Term

Incentive Plan

December 2021

Number ’000

Long Term

Incentive Plan

November 2020

Number ’000

Long Term

Incentive Plan

November 2019

Number ’000

Long Term

Incentive Plan

December 2018

Number ’000

Share Save

Scheme (3-Year

Plan 2022)

Number ’000

Share Save

Scheme (3-Year

Plan 2021)

Number ’000

Share Save

Scheme (3-Year

Plan 2020)

Number ’000

Share Save

Scheme (3-Year

Plan 2019)

Number ’000

Outstanding:

At 30 August 2020

–

443

470

–

Granted in the year

–

588

–

157

–

Exercised in the year

–

Forfeited in the year

–

(52)

–

(8)

(18)

At 28 August 2021

–

588

443

418

–

157

Granted in the year

326

–

Exercised in the year

–

(17)

Forfeited in the year

(28)

(272)

–

(418)

–

(17)

–

At 3 September 2022

298

316

443

–

140

–

Exercisable:

At 28 August 2021

–

At 3 September 2022

–

Weighted average:

Remaining contractual life (years)

3.3

2.07

1.07

0.07

Remaining expected life (years)

5.50

4.50

3.50

2.50

3.05

1.82

0.82

–

The total charge recognised for the year arising from share-based payments are as follows:

2022

£’000

2021

£’000

Deferred Bonus Share Plan 2022

–

Deferred Bonus Share Plan 2021

(44)

119

Deferred Bonus Share Plan 2020

–

Deferred Bonus Share Plan 2018

–

(11)

Long Term Incentive Plan December 2021

–

Long Term Incentive Plan November 2020

(30)

Long Term Incentive Plan December 2017

–

(2)

Share Save Scheme (3-Year Plan 2022)

–

Share Save Scheme (3-Year Plan 2021)

Share Save Scheme (3-Year Plan 2020)

Share Save Scheme (3-Year Plan 2019)

Share Save Scheme (3-Year Plan 2018)

–

240

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

164

NOTES TO THE FINANCIAL STATEMENTS

continued

31 Share-based payments

continued

Share-based payments awarded to employees of subsidiary undertakings and recognised as an investment in subsidiary undertakings in

the Company are as follows:

2022

£’000

2021

£’000

Long Term Incentive Plan December 2021

–

Long Term Incentive Plan November 2020

Share Save Scheme (3-Year Plan 2022)

–

Share Save Scheme (3-Year Plan 2021)

138

Share Save Scheme (3-Year Plan 2020)

Share Save Scheme (3-Year Plan 2019)

–

Total carrying amount of investments

320

219

32 Acquisition

Afgritech Ltd

On 6 June 2022 Carr’s Group plc acquired the remaining 50% of Afgritech Ltd taking its interest from 50% to 100%. Afgritech Ltd is a holding

company with a 100% owned subsidiary Afgritech LLC. Afgritech LLC is a manufacturer of an animal feed ingredient. Cash consideration

paid was £1.0m.

The following amounts were recognised within the consolidated income statement for the year ended 3 September 2022 in respect of

acquisitions made in that year:

Total

£’000

Revenue

2,349

Profit before taxation

133

There were no other recognised gains and losses other than the results shown above.

Total acquisition-related costs amounted to £27,000, which have been recognised within administrative expenses in the consolidated

income statement in the year and have been included in the gain on acquisition of Afgritech within adjusting items (note 5).

The assets and liabilities recognised in the acquisition accounting are set out below.

Fair value

£’000

Property, plant and equipment

1,306

Inventories

441

Receivables

817

Cash at bank

594

Payables

(814)

Bank loans

(331)

Taxation

Net assets acquired

2,048

Fair value of existing interest held in joint venture

(1,024)

Negative goodwill

(4)

1,020

Satisfied by:

Cash consideration

1,020

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

165

32 Acquisition

continued

Pro forma full-year information

IFRS 3 (revised) requires disclosure of information as to the impact on the financial statements if the acquisitions had occurred at the

beginning of the accounting year.

The pro forma summary below presents the Group as if the acquisitions had been acquired on 29 August 2021.

The pro forma amounts include the results of the acquisition and the interest expense on the increase in net debt as a result of the

acquisition. The pro forma amounts do not include any possible synergies from the acquisition. The pro forma information is provided for

comparative purposes only and does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of

future results.

Continuing operations

£’000

Revenue

132,884

Profit before taxation

7,027

33 Cash generated from/(used in) continuing operations

Group

Company

2022

£’000

2021

(restated)

£’000

2022

£’000

2021

£’000

Profit for the year from continuing operations

6,042

5,747

7,987

6,261

Adjustments for:

Tax

1,524

1,788

(144)

(8)

Tax credit in respect of R&D

(1,553)

(260)

–

Dividends received from subsidiaries

–

(7,090)

(8,248)

Dividends received from associate and joint ventures

–

(2,250)

(1,039)

Depreciation of property, plant and equipment

2,778

2,576

Depreciation of right-of-use assets

1,276

1,219

114

105

Depreciation of investment property

–

Intangible asset amortisation

988

1,228

–

Goodwill impairment

4,219

–

Profit on disposal of property, plant and equipment

(17)

(73)

–

Profit on disposal of right-of-use assets

(5)

–

(3)

–

Profit on disposal of investment property

(76)

–

Gain on acquisition of Afgritech

(764)

–

Adjustments to contingent consideration

(1,320)

(1,013)

–

Net fair value charge on share-based payments

148

345

240

Other non-cash adjustments

(119)

(606)

(2,818)

637

Finance costs:

Interest income

(351)

(260)

(1,723)

(1,593)

Interest expense and borrowing costs

1,077

985

580

531

Share of results of joint ventures

(840)

(991)

–

Impairment of joint venture (Company: impairment of loan receivable)

–

2,090

–

876

IAS 19 income statement charge (excluding interest):

Administrative expenses (note 29)

126

Changes in working capital (excluding the effects of acquisitions):

(Increase)/decrease in inventories

(6,153)

568

–

Increase in receivables

(218)

(1,509)

(297)

(471)

(Decrease)/increase in payables

(2,294)

6,273

1,761

749

Cash generated from/(used in) continuing operations

4,473

18,131

(3,685)

(1,909)

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

166

NOTES TO THE FINANCIAL STATEMENTS

continued

34 Analysis of net debt and leases

Group

At 29 August

2021

£’000

Cash flow

£’000

Other

non-cash

changes

£’000

Acquired with

subsidiaries

£’000

Exchange

movements

£’000

Transferred

to liabilities of

disposal group

£’000

At 3 September

2022

£’000

Cash and cash equivalents

24,309

9,354

–

594

332

(12,074)

22,515

Bank overdrafts

(4,613)

(5,121)

–

(9,734)

19,696

4,233

–

594

332

(12,074)

12,781

Loans and other borrowings:

– Current

(6,500)

(20,849)

(117)

(26)

24,415

(3,000)

– Non-current

(23,159)

(322)

(48)

(214)

(62)

–

(23,805)

Net debt

(9,963)

(16,938)

263

244

12,341

(14,024)

Leases:

– Current

(2,967)

–

(181)

–

1,732

(1,416)

– Non-current

(12,458)

3,186

(3,212)

–

(108)

6,464

(6,128)

Leases

(15,425)

3,186

(3,393)

–

(108)

8,196

(7,544)

Net debt and leases

(25,388)

(13,752)

(3,364)

263

136

20,537

(21,568)

Group

At 30 August

2020

£'000

Cash flow

£'000

Other

non-cash

changes

£'000

Exchange

movements

£'000

At 28 August

2021

£'000

Cash and cash equivalents

17,571

7,034

–

(296)

24,309

Bank overdrafts

(7,267)

2,654

–

(4,613)

10,304

9,688

–

(296)

19,696

Loans and other borrowings:

– Current

(4,153)

(3,920)

1,514

(6,500)

– Non-current

(25,021)

900

685

277

(23,159)

Net debt

(18,870)

6,668

2,199

(9,963)

Leases:

– Current

(2,778)

–

(189)

–

(2,967)

– Non-current

(11,171)

3,252

(4,556)

(12,458)

Leases

(13,949)

3,252

(4,745)

(15,425)

Net debt and leases

(32,819)

9,920

(2,546)

(25,388)

Company

At 29 August

2021

£’000

Cash flow

£’000

Other

non-cash

changes

£’000

Exchange

movements

£’000

At 3 September

2022

£’000

Cash and cash equivalents

11,063

1,592

–

12,726

Loans and other borrowings:

– Current

(2,341)

853

–

(1,413)

– Non-current

(21,906)

(763)

(48)

(40)

(22,757)

Net debt

(13,184)

904

805

(11,444)

Leases:

– Current

(98)

–

(15)

–

(113)

– Non-current

(250)

105

(86)

–

(231)

Leases

(348)

105

(101)

–

(344)

Net debt and leases

(13,532)

1,009

704

(11,788)

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

167

34 Analysis of net debt and leases

continued

Company

At 30 August

2020

£'000

Cash flow

£'000

Other

non-cash

changes

£'000

Exchange

movements

£'000

At 28 August

2021

£'000

Cash and cash equivalents

7,984

3,116

–

(37)

11,063

Loans and other borrowings:

– Current

(2,450)

110

–

(1)

(2,341)

– Non-current

(22,947)

900

(60)

201

(21,906)

Net debt

(17,413)

4,126

(60)

163

(13,184)

Leases:

– Current

(97)

–

(1)

–

(98)

– Non-current

(354)

–

(250)

Leases

(451)

–

(348)

Net debt and leases

(17,864)

4,224

(55)

163

(13,532)

Other non-cash changes in net debt for both the Group and Company relate to the release of deferred borrowing costs to the income

statement. Additionally, for the Group, it includes amounts reclassified as leases in the year and, in respect of the Company, the

settlement of a loan from a subsidiary with a non-cash dividend from the subsidiary . For leases, these relate to new leases entered into

during the year net of liabilities extinguished on exit of leases.

The table below shows a reconciliation of cash flows shown in the tables above to the consolidated and Company statements of

cash flows.

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Net increase in cash and cash equivalents per cash flow statement

5,159

9,392

1,663

3,079

Cash acquired with subsidiaries

(594)

–

Effects of exchange rate differences

(332)

296

(71)

Cash flows from cash and cash equivalents less bank overdrafts in tables above

4,233

9,688

1,592

3,116

Cash flows from/(used in) financing activities per cash flow statement

13,650

(6,469)

(3,752)

(5,698)

Proceeds from issue of ordinary share capital

(352)

(1,010)

(352)

(1,010)

Purchase of own shares held in trust

–

110

–

110

Dividends paid to shareholders

4,687

5,490

4,687

5,490

Dividend paid to related party (included within discontinued operations)

–

1,647

–

Cash flows from loans and other borrowings and leases per tables above

17,985

(232)

583

(1,108)

Cash flow from net debt and leases per tables above

(13,752)

9,920

1,009

4,224

35 Capital commitments

Group

2022

£’000

2021

£’000

Capital expenditure that has been contracted for but has not been provided for in the accounts:

Property, plant and equipment

521

1,164

Right-of-use assets

301

–

822

1,164

The Company has no capital commitments (2021: none).

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

168

NOTES TO THE FINANCIAL STATEMENTS

continued

36 Financial guarantees and contingent liabilities

The Company, together with certain subsidiary undertakings, has entered into a guarantee with Clydesdale Bank PLC (trading as Virgin

Money) in respect of the Group loans, overdraft, asset finance and guarantee facilities with that bank, which at 3 September 2022

amounted to £8,474,000 (2021: £2,674,000).

Certain subsidiary undertakings utilise guarantee facilities with financial institutions which include their own bankers. These financial

institutions in the normal course of business enter into certain specific guarantees with some of the subsidiaries’ customers. All these

guarantees allow the financial institutions to have recourse to the subsidiaries if a guarantee is enforced. The total outstanding of such

guarantees at 3 September 2022 was £2,963,000 (2021: £3,098,000).

The Company has provided specific guarantees to certain customers of subsidiaries. These are in place to guarantee the completion of

the contract in any event. The contracts under these guarantees had a total contract value of £33,447,000 (2021: £14,788,000) and as at

3 September 2022 £17,766,000 (2021: £359,000) remained uncompleted.

The Company has provided a guarantee over the lease of a premises occupied by a subsidiary. The guarantee is in respect of prompt and

full payment of rents due throughout the term of the lease. As at 3 September 2022, the cumulative rent payable over the remaining term

of the lease is £520,000 (2021: £728,000).

The Company has entered into a guarantee with the Trustees of the Carrs Billington Agriculture Pension Scheme in respect of the

punctual payment of obligations due to the pension scheme by the participating employers of the scheme. The Company’s total liability

shall not exceed £1,500,000 (2021: £1,500,000). This guarantee has been extinguished on completion of the sale of the disposal group on

26 October 2022.

One of the Group’s subsidiary undertakings is a participating employer in the Carrs Billington Agriculture Pension Scheme. On a wind-up of

the scheme the buy-out deficit would be split between the participating employers with the Group’s level of participation in the scheme

estimated at 48.5%. At the last actuarial valuation, the Group’s estimated liability on the wind-up of the scheme was £2.6m (2021: £6.6m).

This contingent liability has been extinguished on completion of the sale of the disposal group on 26 October 2022.

Certain UK subsidiaries have taken advantage of the audit exemption set out within section 479A of the Companies Act 2006 for the

year ended 3 September 2022. The Company will guarantee the debts and liabilities of these subsidiaries at the balance sheet date in

accordance with section 479C of the Companies Act 2006. Details of the subsidiaries taking audit exemption are included in Note 19.

The Company has assessed the probability of loss under the guarantee as remote.

The Group and Company do not expect any of the above to be called in.

37 Related parties

Group and Company

Identity of related parties

The Group has a related party relationship with its subsidiaries, associate and joint ventures and with its Directors.

Transactions with key management personnel

Key management personnel are considered to be the Directors and their remuneration is disclosed within the Remuneration Committee

Report and note 6.

Group

Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Balances reported in the Balance Sheet

Amounts owed by businesses controlled by key

management personnel (in a trading capacity):

Trade and other receivables

–

379

–

Trade and other payables

–

(1)

–

(1)

Transactions reported in the Income Statement

Revenue

182

405

–

Purchases

–

(5)

–

(5)

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

169

37 Related parties

continued

Transactions with subsidiaries

Company

2022

£’000

2021

£’000

Balances reported in the Balance Sheet

Amounts owed by subsidiary undertakings:

Non-current loans receivable

34,208

33,494

Other receivables

1,336

458

35,544

33,952

Amounts owed to subsidiary undertakings:

Current loans payable

(260)

–

Other payables

(393)

(11)

(653)

(11)

Transactions reported in the Income Statement

Management charges receivable

2,824

3,400

Dividends receivable

7,090

8,248

Interest receivable

1,428

1,372

Purchases

–

(1)

Included within other receivables is £848,000 (2021: £nil) in respect of loans owed by subsidiary undertakings.

Transactions with associate

Group

Company

2022

£’000

2021 (restated)

£’000

2022

£’000

2021

£’000

Balances reported in the Balance Sheet

Amounts owed by associate:

Trade and other receivables

205

Assets included in disposal group classified as held for sale

922

–

1,016

205

Amounts owed to associate:

Trade and other payables

(67)

(23,128)

–

Liabilities included in disposal group classified as held for sale

(33,486)

–

(33,553)

(23,128)

–

Transactions reported in the Income Statement (continuing operations)

Revenue

604

441

–

Rental income

–

Management charges receivable

110

109

110

109

Dividends receivable

–

1,039

Management charges payable

–

Purchases

–

(190)

–

Amounts presented for transactions reported in the income statement are in respect of continuing operations only. Transactions between

Carrs Billington Agriculture (Sales) Ltd and the associate are excluded as they are both within the disposal group. The prior year amounts

presented for transactions reported in the income statement have been restated to aid comparability.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

170

NOTES TO THE FINANCIAL STATEMENTS

continued

37 Related parties

continued

Transactions with joint ventures

Group

Company

2022

£’000

2021 (restated)

£’000

2022

£’000

2021

£’000

Balances reported in the Balance Sheet

Amounts owed by joint ventures:

Trade and other receivables

100

1,062

801

Assets included in disposal group classified as held for sale

–

106

1,062

801

Amounts owed to joint ventures:

Trade and other payables

(38)

(15)

–

Liabilities included in disposal group classified as held for sale

(20)

–

(58)

(15)

–

Transactions reported in the Income Statement (continuing operations)

Revenue

208

853

–

Management charges receivable

–

Dividends receivable

–

2,250

–

Purchases

(804)

(404)

–

Included within Group and Company trade and other receivables is £nil (2021: £793,000) in respect of loans owed by joint ventures. A

provision for impairment of £776,000 has been recognised in the prior year by both the Group and Company against the loan receivable.

The amounts included in the table above for the prior year are net of this provision for impairment.

Amounts presented for transactions reported in the income statement are in respect of continuing operations only. Transactions between

Carrs Billington Agriculture (Sales) Ltd and Bibby Agriculture Ltd are excluded as they are both within the disposal group. The prior year

amounts presented for transactions reported in the income statement have been restated to aid comparability.

Other related parties

NW Total Engineered Solutions Ltd occupies its premises under a 15-year lease with Ironworks Properties LLP.

The owners of Ironworks

Properties LLP were employed by NW Total Engineered Solutions Ltd until 31 March 2022. This lease is accounted for under IFRS 16 and at

the year end the lease liability included in the consolidated balance sheet was £979,000 (2021: £1,047,000). Lease payments made in the

year were £98,000 (2021: £98,000).

38 Post balance sheet event

On 31 August 2022, the Group entered into a conditional agreement to dispose of its interests in the Carr’s Billington Agricultural business

to Edward Billington & Son Limited. The sale was conditional on approval by the Group’s shareholders which was given at a General

Meeting held on 19 September 2022. The disposal completed on 26 October 2022.

On completion, the Company received £24.7m initial cash proceeds following certain working capital adjustments since the

announcement on 31 August 2022. The consideration receivable remains subject to any final adjustments once the completion accounts

mechanism is finalised.

39 Prior year restatements

The Board has made two prior year restatements to continuing operations, both related to revenue recognised under IFRS15 (Revenue

from Contracts with Customers). The first restatement relates to the timing of revenue recognition for a small number of contracts with a

single customer in China, where an adjustment to correct the accounting treatment in previous years has been made, to adhere to IFRS15

requirements on enforceable rights to payment in the event of termination of contract by the customer. This restatement of prior years

has resulted in shareholders’ equity at 30 August 2020 being reduced by £254,000 and increases to revenue (£951,000) and adjusted profit

after tax (£249,000) in the year to 28 August 2021.

The second case relates to contracts directly related to Mechanical Stress Improvement Process technology and specifically whether

these contracts contained two performance obligations (the conclusion reached in prior years) or one. This is an area which requires

significant judgement and after careful consideration, the Board decided to account for the contracts as having one rather than

two performance obligations. The impact of this change has been reflected on previous years’ results as a prior year restatement.

Shareholders’ equity at 30 August 2020 was reduced by £392,000 as a result of this change. For the year to 28 August 2021, revenue was

reduced by £386,000 and adjusted profit after tax decreased by £305,000 as a result of this change.

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

171

39 Prior year restatements

continued

The Board has also made two prior year restatements to discontinued operations, both related to revenue recognition. Firstly, in prior

years the Group had incorrectly identified itself as acting as a principal when recognising revenue related to fertiliser sales, made through

one specific supplier. A review of this transaction highlighted that the Group was acting as an agent, rather than principal, under IFRS 15

guidance, which means the net proceeds from the transaction, rather than gross sales, should be recognised as revenue. A correction to

reduce both revenue and cost of sales in the year to 28 August 2021 by £10,497,000 has been made. There is no impact on profit.

A further correction to reduce both revenue and cost of sales of £2,769,000 has also been made in respect of intra-company transactions

which had not been netted off in prior years. There is no impact on profit.

The prior year restatements to discontinued operations are reflected in note 9.

The affected financial statement line items for the continuing operations of the Group are as follows.

28 August 2021

(previously reported

– Group)

£’000

28 August 2021

(previously reported

– continuing

operations only)

£’000

Restatement

in respect of

enforceable rights

to payment

£’000

Restatement

in respect of

performance

obligations

£’000

28 August

2021 (restated

– continuing

operations only)

£’000

Income Statement

Revenue

417,254

119,754

951

(386)

120,319

Cost of sales

(365,174)

(88,589)

(606)

–

(89,195)

Gross profit

52,080

31,165

345

(386)

31,124

Adjusted operating profit

17,585

11,118

345

(386)

11,077

Reported operating profit

13,024

8,241

345

(386)

8,200

Adjusted profit before taxation

16,613

10,453

345

(386)

10,412

Reported profit before taxation

12,052

7,576

345

(386)

7,535

Taxation

(2,400)

(1,773)

(96)

(1,788)

Adjusted profit for the year

14,675

9,413

249

(305)

9,357

Reported profit for the year

9,652

5,803

249

(305)

5,747

Basic EPS (pence)

8.3

6.2

0.3

(0.3)

6.2

Diluted EPS (pence)

8.1

6.1

0.3

(0.3)

6.1

28 August 2021

(previously

reported)

£’000

Restatement

in respect of

enforceable rights

to payment

£’000

Restatement

in respect of

performance

obligations

£’000

28 August 2021

(restated)

£’000

Balance Sheet

Deferred tax asset

–

182

Total non-current assets

123,363

–

182

123,545

Total assets

262,504

–

182

262,686

Contract liabilities

(2,447)

–

(865)

(3,312)

Total current liabilities

(86,095)

–

(865)

(86,960)

Total liabilities

(127,270)

–

(865)

(128,135)

Net assets

135,234

–

(683)

134,551

Other reserves

2,578

–

2,606

Retained earnings

103,006

–

(711)

102,295

Total shareholders’ equity

118,082

–

(683)

117,399

Total equity

135,234

–

(683)

134,551

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

172

NOTES TO THE FINANCIAL STATEMENTS

continued

39 Prior year restatements

continued

In accordance with IAS 1, a third balance sheet has been presented to show the impact to the opening balance sheet for the prior year.

The affected financial statement line items are as follows.

Group

30 August 2020

(previously

reported)

£'000

Restatement

in respect of

enforceable rights

to payment

£’000

Restatement

in respect of

performance

obligations

£’000

30 August 2020

(restated)

£'000

Balance Sheet

Inventories

40,961

618

–

41,579

Contract assets

8,114

(349)

–

7,765

Total current assets

120,403

269

–

120,672

Total assets

244,805

269

–

245,074

Contract liabilities

(1,061)

(622)

(496)

(2,179)

Total current liabilities

(70,814)

(622)

(496)

(71,932)

Deferred tax liabilities

(4,783)

104

(4,580)

Total non-current liabilities

(42,360)

104

(42,157)

Total liabilities

(113,174)

(523)

(392)

(114,089)

Net assets

131,631

(254)

(392)

130,985

Other reserves

4,436

(5)

4,445

Retained earnings

98,907

(249)

(406)

98,252

Total shareholders’ equity

114,831

(254)

(392)

114,185

Total equity

131,631

(254)

(392)

130,985

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

173

FIVE-YEAR STATEMENT

Continuing operations

Revenue and results

(Restated)

1,2

2018

£’000

(Restated)

1,2

2019

£’000

(Restated)

1,2

2020

£’000

(Restated)

2021

£’000

2022

£’000

Revenue

104,781

107,607

113,493

120,319

124,240

Operating profit

9,528

10,801

7,160

8,200

8,232

Analysed as:

Adjusted operating profit

10,485

13,152

9,794

11,077

11,906

Adjusting items

(957)

(2,351)

(2,634)

(2,877)

(3,674)

Operating profit

9,528

10,801

7,160

8,200

8,232

Finance income

358

463

311

260

351

Finance costs

(801)

(841)

(1,184)

(925)

(1,017)

Profit before taxation

9,085

10,423

6,287

7,535

7,566

Analysed as:

Adjusted profit before taxation

10,042

12,774

8,921

10,412

11,240

Adjusting items

(957)

(2,351)

(2,634)

(2,877)

(3,674)

Profit before taxation

9,085

10,423

6,287

7,535

7,566

Taxation

(906)

(1,767)

(581)

(1,788)

(1,524)

Profit for the year from continuing operations

8,179

8,656

5,706

5,747

6,042

Discontinued operations

Profit/(loss) for the year from discontinued operations

5,261

3,994

3,299

3,849

(2,193)

Profit for the year

13,440

12,650

9,005

9,596

3,849

Earnings per share – basic (continuing operations)

9.0p

9.4p

6.2p

6.4p

– adjusted (continuing operations)

9.9p

11.4p

8.3p

10.1p

10.0p

Dividends per ordinary share

4.5p

4.75p

5.0p

5.2p

Restated for the change in accounting policy for conﬁguration and customisation costs incurred in implementing Software-as-a-Service ("SaaS").

Restated in relation to the recognition of revenue from customer contracts within the Engineering division.

Revenue and results included in the table above have been restated to reflect the separate disclosure of continuing operations and

discontinued operations following the disposal of the Carr’s Billington Agricultural businesses.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

174

Net assets employed

(Restated)

1,3

2018

£’000

(Restated)

1,2,3

2019

£’000

(Restated)

1,3

2020

£’000

(Restated)

2021

£’000

2022

£’000

Non-current assets

Goodwill

24,272

32,877

32,041

31,560

23,609

Other intangible assets

1,895

7,878

6,365

5,151

4,635

Property, plant and equipment

38,484

37,325

38,259

36,198

33,204

Right-of-use assets

–

16,086

14,856

16,777

8,223

Investment property

170

164

158

152

Investments

21,207

23,076

24,666

23,822

6,097

Contract assets

–

312

316

Financial assets

– Non-current receivables

Retirement benefit asset

10,146

7,769

8,037

9,371

6,828

Deferred tax assets

–

410

–

182

213

96,195

125,607

124,402

123,545

83,222

Current assets

Inventories

42,371

46,270

42,197

43,226

26,990

Contract assets

–

9,466

7,416

7,202

7,564

Trade and other receivables

67,516

55,573

51,686

61,735

19,015

Current tax assets

181

–

2,068

2,669

3,866

Financial assets

– Derivative financial instruments

–

– Cash and cash equivalents

24,632

28,649

17,571

24,309

22,515

Assets included in disposal group classified as held for sale

–

148,531

134,726

139,958

120,941

139,141

228,481

Total assets

230,921

265,565

245,343

262,686

311,703

Current liabilities

Financial liabilities

– Borrowings

(34,994)

(22,673)

(11,420)

(11,113)

(12,734)

– Leases

–

(2,801)

(2,778)

(2,967)

(1,416)

– Derivative financial instruments

–

(62)

Contract liabilities

–

(1,334)

(3,297)

(3,312)

(2,426)

Trade and other payables

(64,337)

(62,424)

(55,522)

(69,526)

(21,000)

Current tax liabilities

(175)

(736)

(33)

(42)

(711)

Liabilities included in disposal group classified as held for sale

–

(101,566)

(99,506)

(89,968)

(73,050)

(86,960)

(139,915)

Non-current liabilities

Financial liabilities

– Borrowings

(4,997)

(26,846)

(25,021)

(23,159)

(23,805)

– Leases

–

(12,777)

(11,171)

(12,458)

(6,128)

Deferred tax liabilities

(3,971)

(4,707)

(4,377)

(5,503)

(5,048)

Other non-current liabilities

(1,784)

(2,999)

(1,385)

(55)

(336)

(10,752)

(47,329)

(41,954)

(41,175)

(35,317)

Total liabilities

(110,258)

(137,297)

(115,004)

(128,135)

(175,232)

Net assets

120,663

128,268

130,339

134,551

136,471

Restated for the change in accounting policy for conﬁguration and customisation costs incurred in implementing Software-as-a-Service ("SaaS").

Restated for the adoption of IFRS 16 ‘Leases’.).

Restated in relation to the recognition of revenue from customer contracts within the Engineering division.

FIVE-YEAR STATEMENT

continued

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

175

ALTERNATIVE PERFORMANCE MEASURES GLOSSARY

The Annual Report and Accounts includes alternative performance measures (“APMs”), which are not defined or specified under the

requirements of IFRS. These APMs are consistent with how business performance is measured internally and are also used in assessing

performance under the Group’s incentive plans. Therefore the Directors believe that these APMs provide stakeholders with additional

useful information on the Group’s performance.

Alternative performance measure

Definition and comments

EBITDA

Earnings before interest, tax, depreciation, amortisation, profit/(loss) on the disposal of non-current

assets and before share of post-tax results of the associate and joint ventures. EBITDA allows the user

to assess the profitability of the Group's core operations before the impact of capital structure, debt

financing and non-cash items such as depreciation and amortisation.

Adjusted EBITDA

Earnings before interest, tax, depreciation, amortisation, profit/(loss) on the disposal of non-current

assets, before share of post-tax results of the associate and joint ventures and excluding items regarded

by the Directors as adjusting items. This measure is reconciled to statutory operating profit and

statutory profit before taxation in note 2. EBITDA allows the user to assess the profitability of the Group's

core operations before the impact of capital structure, debt financing and non-cash items such as

depreciation and amortisation.

Adjusted operating profit

Operating profit after adding back items regarded by the Directors as adjusting items. This measure

is reconciled to statutory operating profit in the income statement and note 2. Adjusted results are

presented because if included, these adjusting items could distort the understanding of the Group's

performance for the year and the comparability between the years presented.

Adjusted profit before

taxation

Profit before taxation after adding back items regarded by the Directors as adjusting items. This measure

is reconciled to statutory profit before taxation in the income statement and note 2. Adjusted results are

presented because if included, these adjusting items could distort the understanding of the Group's

performance for the year and the comparability between the years presented.

Adjusted profit for the year

Profit after taxation after adding back items regarded by the Directors as adjusting items. This measure

is reconciled to statutory profit after taxation in the income statement. Adjusted results are presented

because if included, these adjusting items could distort the understanding of the Group's performance

for the year and the comparability between the years presented.

Adjusted earnings per share

Profit attributable to the equity holders of the Company after adding back items regarded by the

Directors as adjusting items after tax divided by the weighted average number of Ordinary Shares in

issue during the year. This is reconciled to basic earnings per share in note 11.

Adjusted diluted earnings

per share

Profit attributable to the equity holders of the Company after adding back items regarded by the

Directors as adjusting items after tax divided by the weighted average number of Ordinary Shares in

issue during the year adjusted for the effects of any potentially dilutive options. Diluted earnings per

share is shown in note 11.

Net debt

The net position of the Group's and Company’s cash at bank and borrowings as per the balance sheet.

Details of the movement in net debt is shown in note 34.

Underlying sales

growth/decline

Year-on-year increase/(decrease) in sales revenue excluding the impact of acquisitions and disposals.

This performance measure allows the user to have a clearer understanding of the organic sales growth/

decline of the Group. A reconciliation of underlying sales growth/decline to reported revenue is

shown below.

Operating cash flow

Cash generated from operating activities. This measure is shown on the face of the consolidated

statement of cash flows and is shown below. Operating cash flow demonstrates how much cash is

available for the Group to utilise for capital investment, paying dividends, or financing/repaying borrowings.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

176

Alternative performance measure

Definition and comments

Gross margin

Reported gross profit as a percentage of reported revenue. Gross margin is a reflection of how

successfully the Group manages raw material price volatility and its selling prices in competitive markets.

A calculation of gross margin is shown below.

Adjusted Group

operating margin

Operating profit after adding back items regarded by the Directors as adjusting items as a percentage

of revenue. Adjusted Group operating margin excluding adjusting items is presented because if

included, these items could distort the understanding of the Group’s performance for the year and the

comparability between the years presented. The calculation of adjusted Group operating margin to the

statutory equivalent is shown below.

Return on net assets

Profit before tax after adding back items regarded by the Directors as adjusting items as a percentage of

net assets. This financial performance metric allows users to understand how effectively and efficiently

the Group is using its assets to generate earnings. The calculation of return on net assets is shown below.

Ratio of net debt to EBITDA

The ratio of net debt to EBITDA is a measurement of leverage and reflects the Group’s ability to service

its debt. The calculation of net debt to EBITDA is shown below.

ALTERNATIVE PERFORMANCE MEASURES GLOSSARY

continued

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

177

The following tables show reconciliations and calculations that are not presented elsewhere in this Annual Report and Accounts.

Underlying sales growth/decline

Continuing operations

2022

£’000

2021

£’000

Change

Reported and underlying revenue

124,240

120,319

+3.3%

Operating cash ﬂow

Continuing operations

2022

£’000

2021

£’000

Change

Cash generated from operating activities per the consolidated statement of cash flows

2,861

16,031

-82.2%

Gross margin

Continuing operations

2022

£’000

2021

£’000

Change

Reported revenue

124,240

120,319

+3.3%

Reported gross profit

29,608

31,124

Gross profit as a percentage of revenue

23.8%

25.9%

Adjusted Group operating margin

Continuing operations

2022

£’000

2021

£’000

Change

Reported operating profit

8,232

8,200

+0.4%

Adjusting items (note 5)

3,674

2,877

Adjusted operating profit

11,906

11,077

+7.5%

Reported revenue

124,240

120,319

Adjusted operating profit as a percentage of reported revenue

9.6%

9.2%

Return on net assets

2022

£’000

2021

£’000

Reported profit before taxation (2022: continuing operations only)

7,566

12,011

Adjusting items (2022: continuing operations only) (note 5)

3,674

4,561

Adjusted profit before taxation (2022: continuing operations only)

11,240

16,572

Net assets per the consolidated balance sheet

136,470

134,551

Net assets of disposal group classified as held for sale (note 9)

(46,965)

–

Adjusted net assets (2022: continuing operations only)

89,505

134,551

Adjusted profit before taxation as a percentage of adjusted net assets

12.6%

12.3%

Ratio of net debt to EBITDA

2022

£’000

2021

£’000

Adjusted EBITDA (2022: continuing operations only) (note 2)

15,075

20,881

Net debt (2022: continuing operations only) (note 34)

14,024

9,963

Ratio of net debt to adjusted EBITDA

0.93

0.48

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

178

Carr’s Group plc

Old Croft, Stanwix, Carlisle,

Cumbria

CA3 9BA

Tel: 01228 554600

Web: www.carrsgroup.com

SPECIALITY AGRICULTURE

ACC Feed Supplement LLC*

5101 Harbor Drive,

Sioux City, Iowa 51111 USA

Tel: 001 712 255 6927

Afgritech LLC

810 Waterman Drive,

Watertown,

New York 13601 USA

Tel: 001 315 785 3625

AminoMax

Lansil Way, Lancaster

LA1 3QY

Tel: 01524 597 200

Animal Feed Supplement,

Inc

East Highway 212, PO Box 188,

Belle Fourche, South Dakota

57717 USA

Tel: 001 605 892 3421

Animal Feed Supplement,

Inc

PO Box 105, 101 Roanoke

Avenue, Poteau, Oklahoma

74953 USA

Tel: 001 918 647 8133

Animal Feed Supplement,

Inc

PO Box 569, 1700 US,

50 East, Silver Springs,

Nevada 89429 USA

Tel: 001 775 577 2002

Animax Limited

Shepherds Grove West,

Stanton,

Bury St Edmund’s, Suffolk

IP31 2AR

Tel: 01359 252 181

Animax NZ Limited

86 Highbrook Drive,

Auckland 2013,

New Zealand

Caltech

Solway Mills, Silloth,

Wigton, Cumbria

CA7 4AJ

Tel: 016973 32592

Carr’s Supplements (NZ)

Limited

515a Wairakei Road,

Burnside, Christchurch,

8053, New Zealand

Tel: 0064 03 974 9274

Carr’s Supplements (ROI)

Limited

Unit 1, Old Creamery Enterprise

Centre, Creamery Road,

Piltown, County Kilkenny,

E32 FK57, Ireland

Tel: 00 353 87 063 5950

Crystalyx Products GmbH*

Am Stau 199-203, 26122,

Oldenburg, Germany

Tel: 00 49 441 2188 92142

Gold-Bar Feed

Supplements LLC*

783 Eagle Boulevard,

Shelbyville TN 37160, USA

Tel: 001 877 618 6455

Scotmin

13 Whitfield Drive,

Heathfield Industrial Estate,

Ayr KA8 9RX

Tel: 01292 280 909

Silloth Storage Company*

Station Road, Silloth,

Wigton, Cumbria

CA7 4JQ

ENGINEERING

Bendalls Engineering

Brunthill Road, Kingstown

Industrial Estate, Carlisle

CA3 0EH

Tel: 01228 815 350

Carr’s MSM

Unit 1, Oak Tree Business Centre,

Spitfire Way, Hunts Rise,

South Marston Park,

Swindon, Wiltshire

SN3 4TX

Tel: 01793 824 891

Chirton Engineering

Unit 4A, Tyne Tunnel Trading

Estate, High Flatworth,

North Shields, Tyne and Wear

NE29 7SW

Tel: 0191 296 2020

NuVision Engineering, Inc.

2403 Sidney Street,

Suite 700,

Pittsburgh,

Pennsylvania 15203, USA

Tel: 001 888 748 8232

NuVision Engineering, Inc.

184 B Rolling Hill Road,

Mooresville,

North Carolina 28117, USA

Tel: 001 704 799 2707

NW Total Engineered

Solutions Limited

Unit 2 Andrews Way, Barrow

in Furness, Cumbria

LA14 2UE

Tel: 01229 811000

Wälischmiller

Engineering GmbH

Schießstattweg 16, 88677

Markdorf, Germany

Tel: 0049 7544 95140

joint venture company.

DIRECTORY OF OPERATIONS

Financial statements

Shareholder information

Governance

Strategic report

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

179

DORMANT SUBSIDIARIES AT 3 SEPTEMBER 2022

Company Name

Registered and Located

Ownership

Carr’s Group Corporate Trustee Ltd

England and Wales

100%

Chirton Engineering Ltd

England and Wales

100%

Conegar S.A.

Uruguay

100%

Horse and Pet Warehouse Ltd

Scotland

51%

Paul Chuter Agricultural Services Ltd

England and Wales

51%

Pearson Farm Supplies Ltd

England and Wales

51%

Phoenix Feeds Ltd

England and Wales

51%

Registered Oﬃce address: Old Croft, Stanwix, Carlisle, Cumbria CA3 9BA.

Registered Oﬃce address: Juncal 1305, Piso 18, Montevideo, Uruguay.

Registered Oﬃce address: Unit 1a, Whitﬁeld Drive, Heathﬁeld Industrial Estate, Ayr KA8 9RX.

Registered Oﬃce address: 16 Montgomery Way, Rosehill Industrial Estate, Carlisle, Cumbria CA1 2UY.

100% owned by Carrs Billington Agriculture (Sales) Ltd which is a 51% subsidiary of Carr’s Group plc. Carrs Billington Agriculture (Sales) Ltd and its subsidiaries were

disposed of on 26 October 2022.

Carr's Group plc

AnnuAl RepoRt And Accounts 2022

180

REGISTERED OFFICE AND ADVISERS

Registered Oﬃce

Carr’s Group plc

Old Croft, Stanwix,

Carlisle

CA3 9BA

Registered No. 98221

Chartered Accountants and Statutory Auditors

Grant Thornton UK LLP

Landmark,

St Peter’s Square,

1 Oxford Street,

Manchester

M1 4PB

Bankers

Clydesdale Bank (Trading as Virgin Money)

82 English Street,

Carlisle

CA3 8HP

Financial Adviser and Broker

Investec Bank plc

30 Gresham Street,

London

EC2V 7QP

Financial Advisers

Lazard & Co Limited

50 Stratton Street

London

W1J 8LL

Financial and Corporate PR Advisers

FTI Consulting

200 Aldersgate,

Aldersgate Street,

London

EC1A 4HD

Solicitors

Ashurst LLP

London Fruit & Wool Exchange,

1 Duval Square,

London

E1 6PW

Registrar

Link Group

10th Floor,

Central Square,

29 Wellington Street,

Leeds

LS1 4DL

CBP00019082504183028

Printed by a CarbonNeutra

l®

Company certiﬁed to ISO 14001

environmental management system.

Printed on material from well-managed, FSC™ certiﬁed forests

and other controlled sources. 100% of the inks used are HP Indigo

ElectroInk which complies with RoHS legislation and meets the

chemical requirements of the Nordic Ecolabel (Nordic Swan) for

printing companies, 95% of press chemicals are recycled for further

use and, on average 99% of any waste associated with this production

will be recycled and the remaining 1% used to generate energy. The

paper is Carbon Balanced with World Land Trust, an international

conservation charity, who oﬀset carbon emissions through the

purchase and preservation of high conservation value land. Through

protecting standing forests, under threat of clearance, carbon is

locked-in, that would otherwise be released.

Carr's Group plc

Old Croft

Stanwix

Carlisle CA3 9BA

United Kingdom