REG - Carr's Group PLC - Disposal of interests in Agricultural Supplies

Carr'sAnnouncement

31/08/2022 07:00

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RNS Number : 7187X  Carr's Group PLC  31 August 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

FOR IMMEDIATE RELEASE

 

 

Carr's Group plc

("Carr's", or the "Company" and, together with its subsidiaries, the "Group")

 

Disposal of interests in Agricultural Supplies Division

 

Streamlined focus on being an international leader in manufacturing value
added products and solutions in Speciality Agriculture and Engineering

 

In line with the strategic review announced on 18 January 2022 to grow
shareholder value, Carr's (CARR.L), the Agriculture and Engineering Group, is
pleased to announce that it has entered into a conditional agreement to
dispose of its interests in the Carr's Billington Agriculture business (the
"Agricultural Supplies Division") to Edward Billington and Son Limited (the
"Purchaser") for an aggregate consideration of up to £44.5 million (the
"Disposal").

 

The Disposal will enable the Group to focus on its Speciality Agriculture and
Engineering Divisions, both of which provide a greater opportunity for growth
and historically have achieved higher profit margins.

 

A circular convening a general meeting of the Company (the "General Meeting")
to consider and approve the Disposal (the "Circular") is expected to be
published later today and posted to shareholders tomorrow. The Circular, when
published, will be made available on the Group's website (www.carrsgroup.com
(http://www.carrsgroup.com) ). It will also be submitted to the National
Storage Mechanism where it will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .

 

Highlights

 

·   Streamlining of the business, enabling resources and investments to be
focused on the Speciality Agriculture and Engineering Divisions, principally
because these divisions:

o Have recognised market-leading brands and supply an international customer
base which, combined with the anticipated market progression for each
business, gives greater opportunity for growth;

o  Deliver products and services that are differentiated from their
respective competitors with scope for development and extension in the future;
and

o  Have consistently achieved higher profit margins and have the potential
for better returns on capital employed

 

·     Conditional agreement to dispose of Agricultural Supplies Division
for an aggregate consideration of up to £44.5 million, on a cash-free,
debt-free basis and subject to customary adjustments, producing an implied
sale multiple of 6.4 times 2021 adjusted EBITDA

 

·     Expected net cash proceeds of approximately £29.6 million with
the Group expected to be in net cash position upon Completion

 

·    Net proceeds to target enhanced shareholder returns by funding
growth initiatives over the next three years, including:

o Supporting international growth in the Speciality Agriculture Division
through investments of approximately £10 million in manufacturing capacity
and plant upgrades;

o  Funding carefully targeted acquisitions in the Speciality Agriculture
Division;

 

o  Providing approximately £4 million of additional liquidity to the
Engineering Division to fund potential new larger and longer-term customer
contracts; and

o  Furthermore, following Completion, the Board intends to determine the
benefits for shareholders of arranging a full buy-out of the Group defined
benefit pension scheme for approximately £4 million

 

Commenting on today's announcement, Peter Page, Executive Chairman, said:

 

"We are today setting out a clear strategy for growth in earnings and
shareholder value. This proposed transaction 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.

The Agricultural Supplies Division, trading as Carr's Billington Agriculture,
has been a key part of the Group's growth and development over the past 20
years. Following the strategic review, the Board is confident that now is the
right time for a single owner and management team to take the business
forward. We are confident that Edward Billington and Son, with its long-term
commitment to the sector, is well placed to fulfil this role.

 

This Transaction represents a compelling and immediate realisation of value
for all of our shareholders, streamlines the business and provides the Board
with a clear strategic direction for driving future growth. We look forward to
updating on further progress in due course."

 

Enquiries:

 

 Carr's Group plc                                    +44 (0) 1228 554 600
 Peter Page (Executive Chairman)
 Neil Austin (Chief Financial Officer)

 Investec Bank plc (Sponsor and Corporate Broker)    +44 (0) 20 7597 5970
 Carlton Nelson / David Anderson / William Brinkley

 Powerscourt (Financial PR)                          +44 (0) 20 7250 1446
 Nick Dibden / Nick Hayns / Sam Austrums

 

The person responsible for arranging the release of this announcement on
behalf of the Company is Matthew Ratcliffe, Group Legal Director and Company
Secretary.

 

 

About Carr's Group plc

The Group has market leading brands and robust market positions in Agriculture
and Engineering supplying customers in over 50 countries, with manufacturing
sites in the UK, Germany and the USA, managed in three divisions. Carr's
operates a decentralised business model that empowers operating subsidiaries
enabling them to be competitive, agile, and effective in their individual
markets whilst setting overall standards and goals.

Its Speciality Agriculture Division manufactures and supplies feed blocks,
minerals and boluses containing trace elements and minerals for livestock.

Its Engineering Division designs and manufactures bespoke equipment, including
robotic and remote handling equipment, and provides technical services
primarily into nuclear, oil and gas, and defence industries.

Its Agricultural Supplies Division manufactures compound animal feed,
distributes farm machinery and fuels, and runs a UK network of rural stores,
providing a one-stop shop for the farming community.

Introduction

On 31 August 2022, the Board of Carr's announced that, in line with its
strategic review announced on 18 January 2022, it had entered into a sale and
purchase agreement with the Purchaser pursuant to which the Company would
dispose of its interests in the Agricultural Supplies Division to the
Purchaser.

As part of the Transaction, the Company (through its relevant subsidiary) has
entered into a put and call option deed with a group undertaking of the
Purchaser relating to its leasehold interest in land at the Rosehill
Industrial Estate (Carlisle) (the "Option Deed"), as well as right of first
refusal agreements relating to the Company's interests in land at Barnard
Castle, Hexham, Penrith and Milnathort (the "Right of First Refusal
Agreements").

The Company and the Purchaser formed the Carr's Billington Agriculture
business in 1999 by bringing together the agricultural interests of both
companies to establish a market leading brand in ruminant nutrition. Over the
past 20 years, the business has successfully expanded to become one of the
leading suppliers of farm inputs, machinery and fuel in the UK.

The Consideration in connection with the Disposal is payable by the Purchaser
predominantly at Completion and comprises an initial purchase price of £43
million (on a debt free, cash free basis and subject to a retention amount and
to adjustments for estimated net debt and estimated normalised working
capital) and contingent consideration of up to £1.5 million based on future
performance (the "Contingent Consideration"), giving an aggregate
Consideration of up to £44.5 million. This aggregate Consideration implies a
multiple of 6.4 times 2021 adjusted EBITDA on the basis of combined adjusted
EBITDA for the Agricultural Supplies Companies in FY 2021 of £13.8 million.

The initial purchase price of £43 million is expected to be reduced by
estimated debt of approximately £19.2 million, increased by an estimated
normalised working capital adjustment of approximately £6.5 million, and an
amount to be paid on a deferred basis of at least £4 million (comprising a
retention relating to debtors of approximately £1.35 million and a further
deferred payment of £2.65 million). Initial cash proceeds are, therefore,
expected to be £26.4 million.

A maximum of approximately £0.7 million of the Contingent Consideration is
achievable within one year. The remaining approximate £0.8 million of
Contingent Consideration, if earned, would fall due after more than one year.
The deferred consideration arrangements comprise of (i) a retention against
debtors of approximately £1.35 million, which is expected to be received in
the second year following Completion, and (ii) a further payment by way of
deferred consideration of an amount equal to £4 million minus the finally
determined retention for debtors, which (assuming a positive amount) would
fall due 12 months after Completion. On the basis that the full Contingent
Consideration is paid, the deferred consideration amount is paid and the full
debtor retention is paid, the total estimated cash proceeds are approximately
£31.9 million. Transaction costs are estimated at approximately £1.9 million
and the Company is committed to make a payment of £0.4 million to the Group's
pension scheme following the removal of the relevant employers from the scheme
through a 'Flexible Apportionment Arrangement', giving net cash proceeds from
the Disposal of approximately £29.6 million (the "Net Disposal Proceeds").

In the event the put or call option under the Option Deed is exercised in
connection with the Company's leasehold interest in land at the Rosehill
Industrial Estate (Carlisle), a further £1.3 million is receivable.
Additional proceeds may also be received in the event that Carr's elects to
sell the Group's real estate interests at Barnard Castle, Hexham, Penrith and
Milnathort and Billingtons exercises its rights under the Right of First
Refusal Agreements.

Completion is expected to occur as soon as practicable following satisfaction
of the conditions precedent to Completion as set out in the Sale and Purchase
Agreement, which include the approval of Shareholders.

Carr's Group Strategy

In January 2022, the Board announced a strategic review of all three of the
Group's divisions, (namely, the Agricultural Supplies Division, the Speciality
Agriculture Division and the Engineering Division), with a particular focus on
opportunities to increase Shareholder value. Each of the Group's divisions is
performing well and has a leading position in its respective market. However,
the Board has determined that there are limited opportunities for synergy
between the Group's divisions, varying levels of ownership and control of
businesses, competing demands for capital investment and differing returns
anticipated on future investments.

As the first step in a long-term strategy, the Board has decided to
concentrate resources and investments on the Speciality Agriculture Division
and the Engineering Division, principally because:

i.    the Speciality Agriculture Division and the Engineering Division have
consistently achieved higher profit margins and have the potential for better
returns on capital employed than the Agricultural Supplies Division;

ii.    the businesses making up the most significant parts of each of the
Speciality Agriculture Division and the Engineering Division are wholly owned
and under the complete control of the Company, whereas the Agricultural
Supplies Division is jointly owned;

iii.   the Speciality Agriculture Division and the Engineering Division each
have recognised market leading brands supplying an international customer
base, which combined with the anticipated market development for each
business, gives greater opportunity for growth, whereas the Agricultural
Supplies Division supplies a local customer base within a region of the UK,
with limited opportunity to scale up in new geographies;

iv.   the products manufactured and services supplied by the Speciality
Agriculture Division and the Engineering Division are differentiated from
their respective competitors with scope for development and extension in the
future, whereas the Agricultural Supplies Division is a manufacturer and
distributor of high volume, low margin compound feeds and fuels, and a
retailer of third party brands and own label products; and

v.   the Agricultural Supplies Division operates in a regional UK market
that has limited expectations of volume or customer growth in the future in
view of expected structural changes in the sector (as farm ownership becomes
more concentrated and dairy cow numbers reduce) and therefore has less
opportunity to improve margins as many of the inputs are commodity-based with
comparable products available from competitors.

Speciality Agriculture Division

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.

The Speciality Agriculture Division has considerable potential for growth in
sales, being well positioned for between eight per cent. and 10 per cent.
annual earnings growth, 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 growth in low input grass and pasture-based management systems,
provide opportunities for the Company'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 deliver this sales growth,
the Board estimates investment in manufacturing facility upgrades and
expansion, in the UK and internationally, of approximately £10 million is
required over the next three years. Additionally, investment in product
research and development and strengthened commercial capabilities will further
support the Board's ambitions for the Speciality Agriculture Division.

The Speciality Agriculture Division provides opportunities for diversification
in the products and services supplied to existing customers and potential
customers of existing products thus enabling growth in markets where the
Company is already well established. Four trends in ruminant agriculture will
be addressed by technical solutions and new management systems, namely data as
a management tool, the reduced use of antibiotics, reduced methane output, and
improved productivity from less intensive grass-based systems to reduce cereal
and soya consumption. The Company is exploring opportunities for investment
and acquisition to add to its existing capabilities to build a group of
businesses that will address the evolving needs of professional livestock
farmers over the next 25 years.

Engineering Division

The Engineering Division consists of long-established, specialist companies
with expertise and strong reputations in the nuclear energy and defence
sectors, providing market leading capabilities in robotics, high specification
fabrication and bespoke engineering solutions. 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 defence 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 core competencies and will invest
in developing customer relationships where cross-selling provides additional
opportunities.

The Board will support organic growth and development in the Engineering
Division to increase Shareholder value in the future. The Engineering Division
has a strong leadership team in place, a growing order book and a pipeline of
pre-qualification work and tenders. Growth in the Engineering Division
requires modestly increased liquidity and additional skilled employees to
provide the capacity for larger and longer-term contracts that the Group is
being invited to bid for by existing and potential new customers.

Summary Information on the Agricultural Supplies Division

The Carr's Billington Agriculture business, forming the Group's Agricultural
Supplies Division, has contributed to the growth of the Group's revenue and
profitability since 1999, alongside the Speciality Agriculture Division and
the Engineering Division.

From its beginnings as a ruminant feed manufacturing and distribution
business, development of Carrs Billington Agriculture Sales extended
activities to market leading brands of agricultural machinery, parts and
service, fuel supply and distribution, and a chain of 32 retail stores
supplying a full range of consumables and equipment for farm and rural
customers. The Carr's Billington Agriculture business and Bibby Agriculture
Limited are recognised brands in ruminant feed, farm machinery, fuels and
retail, serving approximately 20,000 farmers and rural dwellers in the
Midlands and north of England, Wales, and south and central Scotland.

The Carr's Billington Agriculture business operates as two separate entities.
Carrs Billington Agriculture Sales manages the sales of feeds direct to farm,
including 50 per cent. of the Bibby Agriculture Limited joint venture for feed
sales in Wales, franchises for agricultural machinery sales and service,
depots and distribution of fuel for farms and rural dwellers, and 32 retail
stores in various locations across the United Kingdom. Carrs Billington
Agriculture Sales is headquartered in Carlisle. For HY 2022, Carrs Billington
Agriculture Sales achieved £158.7 million in revenues and £2.0 million of
operating profit (both unaudited).

Carrs Billington Agriculture Operations comprises raw materials purchasing,
feed milling assets and distribution, manufacturing over 500,000 tonnes of
finished product per year. Carrs Billington Agriculture Operations is
headquartered in Lancaster. In HY 2022, Carrs Billington Agriculture
Operations achieved £70.9 million (unaudited) in revenues and £1.6 million
of operating profit (unaudited) (pre cloud configuration and customisation
costs adjustments recognised at the Group level).

As at 26 February 2022, the Agricultural Supplies Division had gross assets of
£150.8 million (unaudited).

                    FY 2019  FY 2020  FY 2021  HY 2022
                    £m       £m       £m       £m

 Total revenue      296.3    280.7    297.5    158.7
 Operating profit   5.3      4.5      4.9      2.6
 Profit before tax  4.8      4.0      4.6      2.3
 Profit for period  4.0      3.4      4.0      2.0

Background to and strategic rationale for the Transaction

Following its decision to focus its strategy on the Speciality Agriculture
Division and the Engineering Division, the Board initiated a thorough review
of the options for the Agricultural Supplies Division with a view to
optimising Shareholder value. The Board has concluded that, whilst the
Agricultural Supplies Division has performed well since formation, and has
been a key part of the development of the Company over the past 20 years, it
is now of a scale and market position that a single owner and management team
would be better placed to take the business forward through its next phase of
development.

In addition, Group resources, both in terms of executive management and
central corporate functions, are disproportionately consumed by the day-to-day
management and operation of Carrs Billington Agriculture Sales, limiting the
Group's ability to focus and drive growth in the Speciality Agriculture
Division and the Engineering Division. In financial terms, the existing
ownership structure of Carrs Billington Agriculture Sales means that the
benefits and rewards of new initiatives and investment for growth return only
a proportion of the benefit to Shareholders. Furthermore, the feed milling
business of Carrs Billington Agriculture Operations is capital intensive and
will soon require a high level of replacement capital investment at a rate of
return that will be lower than potential investments in the Speciality
Agriculture Division and the Engineering Division. The forthcoming capital
investment requirements could also potentially impact the Agricultural
Supplies Companies' ability to pay dividends up to the Company.

In light of all circumstances, the Board determined that Shareholder value
would be best achieved through an exit from the Agricultural Supplies
Division.

By undertaking the Transaction, the desired exit will be achieved, the Group
structure will be simplified, and increased focus will be given to the two
remaining divisions (namely the Speciality Agriculture Division and the
Engineering Division), both having attractive growth potential underpinned by
a favourable outlook and strong market positions. The Group has full ownership
of the larger companies within the Speciality Agriculture Division and the
Engineering Division, giving autonomy in decision making by the executive
management team and ensuring the return on growth initiatives is fully for the
benefit of Shareholders.

The Transaction also addresses Shareholder and investor concerns that the
structure of the Group's shareholding in the Agricultural Supplies Division is
opaque, thus causing difficulty in determining a fair valuation of the
individual divisions and overall Group.

Summary of the key terms of the Transaction

On 30 August 2022, Carr's entered into the Sale and Purchase Agreement,
pursuant to which the Company agreed, on the terms and subject to the
conditions of the Sale and Purchase Agreement, to sell its interests in the
Carr's Billington Agriculture business, comprising its shares in both Carrs
Billington Agriculture Sales (together with its 50 per cent. shareholding in
Bibby Agriculture Limited) and Carrs Billington Agriculture Operations, to the
Purchaser.

The aggregate consideration payable by the Purchaser in connection with the
Disposal comprises:

(i)   an initial cash purchase price of £43 million on a debt free, cash
free basis, subject to adjustments for estimated net debt and estimated
normalised working capital, minus

(ii)   a retention and deferred consideration amount of £4 million,

which is payable at Completion and is subject to adjustments after Completion
by way of a standard completion accounts mechanism, plus

(iii)  payment of up to the retention amount (estimated to be £1.35 million
but ultimately being an amount (as at Completion) that reflects 50 per cent.
of the increase in overdue debtors of the Agricultural Supplies Division as
compared to FY 2021). The first payment from the retention shall fall due in
the second week of FY 2024, with further payments due in each quarter of FY
2024 (and in each case representing a pass through of 50 pence on every £1
received by the Agricultural Supplies Division from the relevant overdue
debtors during the relevant period). Should any amount of the retention remain
payable after FY 2024, the Company shall be appointed debt collection agent on
behalf of the Agricultural Supplies Division for the purposes of obtaining due
payment of such overdue debts as equals the retention;

(iv)  payment of a lump sum by way of deferred consideration on the first
anniversary of Completion, such amount to be equal to £4 million minus the
retention against debtors (referred to in paragraph (iii) above) and to be
finally determined by the completion accounts mechanism. For the avoidance of
doubt, should the retention equal or exceed £4 million no such lump sum will
be payable; and

(v)  the potential for a further £1.5 million of Contingent Consideration
payable following the conclusion of FY 2022 and FY 2023, depending on the
performance of the Agricultural Supplies Division against an agreed earn out
criteria,

the net sum of which is the "Consideration".

Completion under the Sale and Purchase Agreement is subject to, and can only
occur upon satisfaction (or waiver, where applicable) of certain outstanding
conditions prior to the Long Stop Date, including:

(i)   approval of the Resolution by Shareholders, which is being proposed as
an ordinary resolution at the General Meeting;

(ii)   drawdown by the Purchaser of funds made available to it by Barclays
Bank plc pursuant to an acquisition funding facility agreement, in order to
facilitate the Purchaser's payment of the initial cash consideration on
Completion; and

(iii)  certain other conditions precedent which are customary for a
transaction of this nature.

There can be no assurance that the requisite approval from Shareholders will
be obtained, nor any guarantee that the Purchaser will be able to finalise
definitive financing documents with Barclays Bank plc to enable it to drawdown
sufficient funding and pay the initial cash consideration amount on
Completion.

The Sale and Purchase Agreement contains warranties as to title, authority and
capacity, solvency and anti-bribery and corruption in respect of both Carrs
Billington Agriculture Operations and Carrs Billington Agriculture Sales given
to the Purchaser by the Company.

The Sale and Purchase Agreement also contains a market standard set of general
business warranties and a tax indemnity given to the Purchaser by the Company
in respect of Carrs Billington Agriculture Sales and its business only. The
Company's potential liability in respect of these warranties and the tax
indemnity is limited in aggregate to £15 million and is further qualified by
market standard seller liability limitations.

As part of the Transaction, for a limited time following Completion, Carr's
and the Purchaser have agreed that the Company and its Group will provide
certain transitional services to the Agricultural Supplies Division pursuant
to the Transitional Services Agreement.

The Board expects that, subject to the satisfaction and/or waiver (where
applicable) of the conditions precedent to the Transaction, Completion will
occur before the end of October 2022.

On or around the date of the Sale and Purchase Agreement, the Company (through
its relevant subsidiary) entered into the Option Deed with a group undertaking
of the Purchaser in relation to its leasehold interest in land at the Rosehill
Industrial Estate (Carlisle). The Option Deed grants Carr's a put option to
sell to Billingtons the Company's leasehold interest in land at the Rosehill
Industrial Estate (Carlisle), for a period of one year, commencing from the
second anniversary of Completion, for a total cash consideration of £1.3
million (reflecting its independently assessed value). The Option Deed also
grants Billingtons a call option (on the same terms) exercisable at any time
before the second anniversary of Completion. The Option Deed contemplates
Billingtons may, in the first six months following Completion, conduct
environmental diligence on the Rosehill Industrial Estate (Carlisle) following
which, should a material issue come to light, Billingtons may ultimately
terminate the Option Deed.

Billingtons must pay a deposit of £130,000 during the option period in order
to validly exercise its call option. The deposit is then deducted from the
purchase price once the sale completes.

Completion of the sale is conditional upon the landlord providing its consent
in the form of a deed, free from unreasonable conditions, or a declaration
from a court that the landlord's consent is unreasonably withheld.

The sale of the property is subject to certain special conditions including in
relation to matters affecting the property, environmental matters and
apportionment of rent between Carr's and Billingtons. The sale of the property
is otherwise subject to the standard commercial property conditions under Part
1 of the Standard Commercial Property Conditions (Third Edition).

As part of the Transaction, the Company (through its relevant subsidiary) has
also entered into the Right of First Refusal Agreements with a group
undertaking of the Purchaser in relation to the sale of the Group's real
estate interests at Barnard Castle, Hexham, Penrith and Milnathort, all of
which are leased to and currently in use within the Agricultural Supplies
Division. The right of first refusal will require the Group to first offer
these properties to a group undertaking of the Purchaser in the event the
Group determines to dispose of them in the two year period following
Completion.

Use of proceeds and financial effects of the Transaction

The Disposal is expected to generate Net Disposal Proceeds of approximately
£29.6 million on the basis that the full Contingent Consideration is paid and
that the full debtor retention is paid. The Board anticipates that the
Transaction will produce a net cash position for the Group at Completion. The
Group intends to utilise the Net Disposal Proceeds to invest in the Group in
order to:

(i)   support international growth in the Speciality Agriculture Division
through the investment of approximately £10 million in manufacturing capacity
and plant upgrades between 2023 and 2025;

(ii)   enable growth in the Engineering Division by providing up to an
additional £4 million of liquidity over the next three years to fund
potential new larger and longer-term customer contracts; and

(iii)  fund carefully targeted acquisitions in the Speciality Agriculture
Division to diversify activity within a market sector where the Group is
already well-established.

Furthermore, following Completion, the Board intends to determine the benefits
for Shareholders of arranging a full buy-out of the Group pension scheme, a
legacy defined benefit pension scheme that, as at the Latest Practicable Date,
is in surplus, thus securing all pension liabilities in the Group and
eliminating future risk of further funding being required from the Company.
The Directors understand this process would require approximately £4 million
including the £0.4 million payment already committed.

The Transaction is expected to materially strengthen the Group's balance sheet
and the Group is expected to move to a net cash position immediately following
Completion prior to undertaking any further investments as set out above.

It is expected that the Disposal will have a dilutive effect on the earnings
per Ordinary Share in the first full year following Completion.

In the event the put or call option under the Option Deed is exercised in
connection with the Company's leasehold interest in land at the Rosehill
Industrial Estate (Carlisle), a further £1.3 million is receivable.

Class 1 Transaction and Related Party Transaction and General Meeting

Due to the size of the Agricultural Supplies Division when compared with the
Company as determined by the class tests under the Listing Rules, the
Transaction is classified under the Listing Rules as a Class 1 Transaction and
therefore requires the approval of Shareholders pursuant to Chapter 10 of the
Listing Rules.

Furthermore, the Purchaser is a Related Party of the Company by virtue of it
being a 'substantial shareholder' (as defined in the Listing Rules) of a
subsidiary undertaking. The Company holds a 51 per cent. interest in Carrs
Billington Agriculture Sales, thereby resulting in Carrs Billington
Agriculture Sales constituting a subsidiary undertaking of the Company. The
Purchaser is a 'substantial shareholder' of this subsidiary undertaking as it
is entitled to exercise more than 10 per cent. (49 per cent.) of the votes
able to be cast at a general meeting of Carrs Billington Agriculture Sales.
Therefore, the Transaction constitutes a Related Party Transaction under
Chapter 11 of the Listing Rules. As such, the approval of Shareholders is also
required pursuant to Chapter 11 of the Listing Rules.

A notice convening the General Meeting to be held at 9:30 a.m on 19 September
2022 at Hotel Sofitel London Heathrow, Terminal 5 London Heathrow Airport,
London TW6 2GD will be sent to Shareholders.

The Resolution proposes that the Transaction be approved and that the
Directors be authorised to take all such steps as may be necessary, expedient
or desirable in relation to the Transaction.

Recommendation

The Board is of the opinion that the Transaction is fair and reasonable so far
as the Shareholders are concerned and the Directors have been so advised by
Investec as sponsor. In providing advice to the Board, Investec has taken into
account the Board's commercial assessment of the Transaction.

The Board is also of the opinion that the Transaction and the Resolution are
in the best interests of the Company and its Shareholders taken as a whole.

Accordingly, the Board unanimously recommends that Shareholders vote in favour
of the Resolution, as all of the Directors intend to do (or procure to be
done), in respect of the Ordinary Shares in which they are interested, or in
relation to which they are otherwise able to control the exercise of the
voting rights, held at the time of the General Meeting, amounting to 569,703
Ordinary Shares in aggregate as at the Latest Practicable Date (representing
approximately 0.61 per cent. of the issued ordinary share capital of the
Company).

Expected timetable of principal events

 Last time and date for receipt of Forms of Proxy or electronic appointments  9:30 a.m. on 15 September 2022
 Record time for entitlement to vote at the General Meeting                   6:00 p.m. on 15 September 2022
 General Meeting                                                              9:30 a.m. on 19 September 2022

The times and dates set out in the expected timetable of principal events
above and mentioned in this announcement and in any other announcement issued
in connection with the Transaction are subject to change by the Company, in
which event details of the new times and dates will be notified to the FCA
and, where appropriate, to shareholders.

Definitions

 "Agricultural Supplies Companies"          Carrs Billington Agriculture Sales (including its 50 per cent. shareholding in
                                            Bibby Agriculture Limited) and Carrs Billington Agriculture Operations
 "Agricultural Supplies Division"           the Carr's Billington Agriculture business, comprising the Agricultural
                                            Supplies Companies
 "Agricultural Supplies Shares"             the Company's 51 per cent. interest in the issued share capital of Carrs
                                            Billington Agriculture Sales and the Company's 49 per cent. interest in the
                                            issued share capital of Carrs Billington Agriculture Operations
 "AminoMax® Arrangements"                   arrangements between the Company and Carrs Billington Agriculture Operations
                                            to manufacture AminoMax®
 "Billingtons"                              the Purchaser and/or its relevant group undertaking (as the case may be)
 "Board"                                    the board of directors of the Company
 "Carr's" or the "Group"                    the Company and its subsidiary undertakings from time to time
 "Carrs Billington Agriculture Operations"  Carrs Billington Agriculture (Operations) Limited
 "Carrs Billington Agriculture Sales"       Carrs Billington Agriculture (Sales) Limited
 "Company"                                  Carr's Group plc
 "Class 1 Transaction"                      has the meaning given to such term in the Listing Rules
 "Completion"                               the completion of the Transaction in accordance with the terms of the
                                            Transaction Documents
 "Deed of Restrictive Covenant"             the deed of restrictive covenant between the Company, the Purchaser, Carrs
                                            Billington Agriculture Sales and Carrs Billington Agriculture Operations
 "Directors"                                the directors of the Company and "Director" means any one of them
 "Disposal"                                 the proposed disposal of the Agricultural Supplies Shares on the terms and
                                            subject to the conditions set out in the Sale and Purchase Agreement
 "Distribution Agreements"                  the distribution agreement between Carrs Agriculture Limited (as supplier) and
                                            Carrs Billington Agriculture Sales (as distributor) and the distribution
                                            agreement between Animax Limited (as supplier) and Carrs Billington
                                            Agriculture Sales (as distributor)
 "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
 "Engineering Division"                     the Company's engineering division, comprising the Company's businesses across
                                            the UK, Europe and the United States which manufacture complex equipment and
                                            remote handling products, and supply specialist technical services to
                                            customers predominantly in nuclear, defence, and oil and gas industries
 "FCA"                                      the Financial Conduct Authority
 "FSMA"                                     the Financial Services and Markets Act 2000, as amended
 "FY 2019"                                  the 52 week period ended 31 August 2019
 "FY 2020"                                  the 52 week period ended 29 August 2020
 "FY 2021"                                  the 52 week period ended 28 August 2021
 "FY 2022"                                  the 53 week period ending 3 September 2022
 "FY 2023"                                  the 52 week period ending 2 September 2023
 "FY 2024"                                  the 52 week period ending 31 August 2024
 "HY 2022"                                  the 26 weeks ended 26 February 2022
 "Investec" or "Sponsor"                    Investec Bank plc
 "Latest Practicable Date"                  30 August 2022, being the latest practicable date prior to the publication of
                                            this announcement
 "Listing Rules"                            the listing rules of the FCA made pursuant to Part VI of FSMA
 "Long Stop Date"                           the date falling 60 days after the date of the Sale and Purchase Agreement, or
                                            such later date as agreed in writing by the Company and the Purchaser
 "Ordinary Shares"                          ordinary shares of 2.5 pence each in the capital of the Company
 "Purchaser"                                Edward Billington and Son Limited
 "Related Party"                            has the meaning given to such term in the Listing Rules
 "Related Party Transaction"                has the meaning given to such term in the Listing Rules
 "Resolution"                               the resolution to be proposed at the General Meeting
 "Sale and Purchase Agreement"              the sale and purchase agreement between the Company and the Purchaser
                                            governing the key terms of the Disposal
 "Shareholder"                              a holder of Ordinary Shares
 "Speciality Agriculture Division"          the Company's speciality agriculture division, comprising feed blocks, mineral
                                            supplements and animal health businesses in the UK, Europe, North America, and
                                            New Zealand
 "Transaction"                              together the Disposal, the Option Deed, the Right of First Refusal Agreements
                                            and the Transitional Services Agreement
 "Transaction Documents"                    the Sale and Purchase Agreement, the Transitional Services Agreement, the
                                            Distribution Agreements, the Option Deed, the Right of First Refusal
                                            Agreements, the AminoMax® Arrangements and the Deed of Restrictive Covenant
 "Transitional Services"                    certain IT, payroll and pension administration services to be provided by the
                                            Company to the Agricultural Supplies Companies in accordance with the terms of
                                            the Transitional Services Agreement
 "Transitional Services Agreement"          the agreement between the Company, Carrs Billington Agriculture Sales and
                                            Carrs Billington Agriculture Operations relating to the Transitional Services

Important Notice

This announcement has been issued by, and is the sole responsibility of,
Carr's Group plc. No representation or warranty, express or implied, is or
will be made by, or in relation to, and no responsibility or liability is or
will be accepted by any adviser to the Company or by any of their respective
affiliates or agents as to or in relation to the accuracy or completeness of
this announcement or any other written or oral information made available to
or publicly available to any interested party or its advisers, and any
responsibility or liability therefore is expressly disclaimed.

Investec Bank plc which is authorised by the Prudential Regulation Authority
and regulated by the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom, is acting exclusively for Carr's and for no
one else in connection with the subject matter of this announcement and will
not be responsible to anyone other than Carr's for providing the protections
afforded to its clients or for providing advice in connection with the subject
matter of this announcement.

Save for the responsibilities and liabilities, if any, of Investec under FSMA,
as amended, or the regulatory regime established thereunder, Investec  assume
no responsibility whatsoever and make no representations or warranties,
express or implied, in relation to the contents of this announcement,
including its accuracy, completeness or verification or for any other
statement made or purported to be made by the Company, or on the Company's
behalf, or by Investec  or on Investec's behalf and nothing contained in this
announcement is, or shall be, relied on as a promise or representation in this
respect, whether as to the past or the future, in connection with the Company
or the transaction. Investec disclaims to the fullest extent permitted by law
all and any responsibility and liability whether arising in tort, contract or
otherwise which it might otherwise be found to have in respect of this
announcement or any such statement.

The contents of this announcement do not constitute or form part of an offer
of or invitation to sell or issue or any solicitation of any offer to purchase
or subscribe for any securities for sale in any jurisdiction nor shall they
(or any part of them) or the fact of their distribution form the basis of, or
be relied upon in connection with, or act as an inducement to enter into, any
contract or commitment to do so.

A copy of the Circular will be available on the Company's website at
www.carrsgroup.com (http://www.carrsgroup.com) . Neither the content of the
Company's website nor any website accessible by hyperlinks on the Company's
website is incorporated in, or forms part of, this announcement. The Circular
will give further details of the transaction.

This announcement includes statements that are, or may be deemed to be,
forward-looking statements, beliefs or opinions, including statements with
respect to the Company's business, financial condition and results of
operations. These forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes", "estimates",
"plans", "anticipates", "targets", "aims", "continues", "expects", "intends",
"hopes", "may", "will", "would", "could" or "should" or, in each case, their
negative or other various or comparable terminology. These statements are made
by the Company's directors in good faith based on the information available to
them at the date of this announcement and reflect the Company's directors'
beliefs and expectations. By their nature these statements involve risk and
uncertainty because they relate to events and depend on circumstances that may
or may not occur in the future. A number of factors could cause actual results
and developments to differ materially from those expressed or implied by the
forward-looking statements. No representation or warranty is made that any of
these statements or forecasts will come to pass or that any forecast results
will be achieved. Forward-looking statements speak only as at the date of this
announcement and the Company and its advisers expressly disclaim any
obligations or undertaking to release any update of, or revisions to, any
forward-looking statements in this announcement. As a result, you are
cautioned not to place any undue reliance on such forward-looking statements.

Nothing in this announcement is intended as a profit forecast or estimate for
any period and no statement in this announcement should be interpreted to mean
that earnings or earnings per share or dividend per share for the Company for
the current or future financial years would necessarily match or exceed the
historical published earnings or earnings per share or dividend per share for
the Company.

Certain figures included in this announcement have been subjected to rounding
adjustments.

 

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