DELIVERING
GROW TH
Annual Report and Accounts 2018
CARR’S GROUP PLC
IS FOCUSED ON THE
PRINCIPAL ACTIVITIES
OF AGRICULTURE
AND ENGINEERING
Carr’s Group plc is an international
business operating across the
Agriculture and Engineering sectors
which supplies products and services
to over 50 countries around the world.
The Agriculture division includes a
livestock supplementation business
which manufactures feed blocks,
boluses and other trace element
supplements from locations across
the UK, USA and Europe. These
products are supplied through an
extensive distribution network to
farming customers across the globe.
In the UK the division also sells
animal feed, fertiliser, animal health
products, oil, farm machinery and
rural supplies from a network of
43 country stores and depots.
The Engineering division designs
and manufactures specialist
precision components, equipment,
robotic goods and remote handling
equipment, and provides technical
services, from three sites in the UK,
one site in Germany and, two sites
in the USA. These highly specialised
products and services are supplied
predominately into the nuclear,
pharmaceutical and oil and gas markets.
The Group is listed on the London
Stock Exchange.
02
Carr’s Group plcAnnual Report and Accounts 2018 Financial Highlights
Continuing operations only
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Revenue
£403.2m
16.5% up from 2017
Pre-Tax Profit
£15.5m
55.0% up from 2017
Contents
Strategic Report
01 Financial Highlights
02 The Group at a Glance
04 Chairman’s Statement
06 Group Strategy
07 Business Strategies
08 Chief Executive’s Review
14 Risk Management
17 Viability Statement
18 Financial Review
20 Key Performance Indicators
21 The Board
22 Corporate Responsibility
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Corporate Governance
26 Corporate Governance Report
30 Audit Committee Report
33 Remuneration Committee Report
44 Nominations Committee Report
46 Directors’ Report
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Earnings Per Share*
13.0p
68.8% up from 2017
Dividend Per Share*
4.5p
12.5% up from 2017
*Restated for the effect of the 10:1 share split in January 2015
View this report online
www.carrsgroup.com
Financial Statements
49
Independent Auditors’ Report to the
members of Carr’s Group plc
55 Consolidated Income Statement
56 Consolidated and Company
Statements of Comprehensive Income
57 Consolidated and Company
Balance Sheets
58 Consolidated Statement
of Changes in Equity
59 Company Statement
of Changes in Equity
60 Consolidated and Company
Statements of Cash Flows
61 Principal Accounting Policies
66 Notes to the Financial Statements
104 Five Year Statement
106 Directory of Operations
107 Registered Office and Advisers
01
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements The Group at a Glance
Carr’s is an international group focused on
developing innovative products and solutions
for its diverse customer base which spans
over 50 countries globally. Its broad
geographic spread and depth of divisional
activity are central to its strategy and provide
strength in an increasingly volatile global
economic environment.
STRENGTH
THROUGH
DIVERSITY
The Group continues to concentrate upon
growth, both organically and through
acquisition, within its core markets of
Agriculture and Engineering.
Agriculture
OVERVIEW AND MARKETS
The Agriculture division develops, manufactures and
distributes a range of innovative livestock supplementation
products under highly regarded brands. The division also
services the UK farming and rural communities through
a network of retail stores and fuel businesses.
Its branded product ranges include feed blocks sold under
the Crystalyx®, Horslyx®, SmartLic® and Megastart® brands
and boluses sold under the Tracesure® and Allsure® brands.
Operational Locations
The division’s products are manufactured in the USA, Germany
and the UK and are sold through a vast distribution network
across the UK, Europe, North America, South America
and Australasia.
Customer Base
Leading livestock farmers across the globe in the dairy, beef,
sheep, pig and equine sectors.
Total Employees*: 678
467
211
Engineering
OVERVIEW AND MARKETS
The Engineering division designs and manufactures
bespoke equipment, and provides specialist technology
and engineering solutions, for the nuclear, oil and gas, and
petrochemical industries.
Its diverse range of products and services includes
manipulators and robotics (including TELBOT®), patented
technologies (including MSIP®), radiation protection
and decontamination, specialist fabrication and
precision machining.
Operational Locations
The division is spread across a number of key sites in the UK,
Germany, and in the USA. Products and services are supplied
worldwide across Europe, North and South America, Asia,
Africa and Australasia.
Customer Base
Leading companies and government bodies across
the worldwide nuclear, research, oil and gas, and
pharmaceutical industries.
Total Employees*: 366
297
69
*As at 1 September 2018. Figures exclude Head Office.
02
Carr’s Group plcAnnual Report and Accounts 2018 International Distribution
CANADA
RUSSIA
ICELAND
UK
USA
FRANCE
SPAIN
GERMANY
CYPRUS
EGYPT
KAZAKHSTAN
TURKEY
JORDAN
KUWAIT
PAKISTAN
QATAR
UNITED ARAB
EMIRATES
CHINA
JAPAN
SOUTH KOREA
TAIWAN
Our Engineering and Agriculture
divisions distribute to customers
all over the world.
BRAZIL
URUGUAY
ARGENTINA
UK
Locations
Head Office
Engineering
Agriculture
INDONESIA
MAURITIUS
SOUTH AFRICA
AUSTRALIA
NEW ZEALAND
AGRICULTURE
European Distribution
NORWAY
SWEDEN
UK
DENMARK
NETHERLANDS
IRELAND
BELGIUM
GERMANY
POLAND
CZECH
REPUBLIC
FINLAND
ESTONIA
LATVIA
LITHUANIA
BELARUS
SLOVAKIA
UKRAINE
ROMANIA
AUSTRIA
HUNGARY
FRANCE SWITZERLAND
SERBIA
PORTUGAL
SPAIN
CROATIA
ITALY
GREECE BULGARIA
ENGINEERING
European Distribution
NORWAY
SWEDEN
NETHERLANDS
UK
BELGIUM
GERMANY
FRANCE
SWITZERLAND
CZECH
REPUBLIC
AUSTRIA
ITALY
03
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Chairman’s Statement
The Group remains committed to delivering on its strategic
objectives of investing in its people and its asset base,
whilst continuing to drive innovation and delivering growth
across our two divisions, with a focus on broadening
our geographic footprint.
During the year we have continued to invest
in our people. Due to the retirement
of a number of key, long-standing senior
managers, we have recruited high calibre
successors for a number of our businesses,
including the appointment of a new
Managing Director for our USA feed blocks
business and a new Managing Director for
our UK feed blocks business. In addition,
the appointment of a new Divisional
Managing Director for the Engineering
division in November 2017 is driving the
strategic focus and growth of that division.
In line with our strategy, we have continued
to invest in technology and innovation to
grow the business internationally. Following
the commissioning of the new low moisture
feed block plant in Tennessee, the site is
now fully operational, and volumes continue
to build. We also expanded our remote
handling facility in Markdorf, Germany
which has enabled us to complete the full
integration of the STABER business, acquired
in October 2016, within Wälischmiller.
Following the year end we acquired Animax
Limited, a producer of market-leading trace
element supplements, for a total cash
consideration of up to £8.5m. This acquisition
is highly complementary to our global feed
blocks business and aligns with our stated
strategy of investing in growing agriculture
markets in the UK and internationally.
We will continue to appraise new
opportunities in line with our strategy.
REVIEW OF THE YEAR
For the year ended 1 September 2018,
the Group has delivered a performance
ahead of the Board’s expectations and
significantly ahead of the prior year.
Both our Agriculture and Engineering
divisions have benefitted from the
investments made in previous years,
particularly the acquisition of NuVision,
as well as a recovery in our UK
Manufacturing business and continued
improvements in our underlying markets.
In our Agriculture division, UK Agriculture
continued to perform strongly reflecting
improved farm incomes and higher levels
of farmer confidence. In the USA, cattle
prices improved steadily during the year
supporting a recovery in USA feed block
volumes, which were significantly ahead
of the prior year. UK feed blocks performed
in line with expectations. In Europe, feed
block sales volumes through our joint
venture business based in Germany,
Crystalyx Products GmbH, continued to
grow. Our plans to develop the feed block
business internationally remain on track.
Our Engineering division delivered a
significantly improved financial result
compared to the prior year. We saw a strong
recovery in our UK Manufacturing business,
with the significant contract announced in
July 2017 performing as expected and the
benefit of improved controls over contract
profitability. Our Remote Handling business
also performed strongly, benefiting from
the delivery of substantial contracts into
the Chinese market. NuVision, acquired
in August 2017, performed well in its first
full year as part of the Group, securing
several significant contracts to be delivered
over the next three years. The business was
also successfully integrated into the wider
Engineering division.
CHRIS HOLMES
CHAIRMAN
04
Carr’s Group plcAnnual Report and Accounts 2018 FINANCIAL REVIEW
DIVIDEND
OUTLOOK
Revenue for the year increased by 16.5%
to £403.2m (2017: £346.2m). Adjusted
operating profit, which is before
amortisation of acquired intangible assets
and non-recurring items, was up 44.4%
to £17.5m (2017: £12.1m), with Agriculture
contributing £13.4m (2017: £11.4m) and
Engineering £4.1m (2017: £0.6m). Reported
operating profit was up 53.5% at £16.4m
(2017: £10.7m). Non-recurring items include
certain acquisition related costs totalling
£0.3m and a write-off of goodwill relating
to the UK Manufacturing business, Bendalls,
totalling £0.5m.
Adjusted profit before tax was up 45.2%
to £16.6m (2017: £11.4m) and reported
profit before tax was up 55.0% at £15.5m
(2017: £10.0m). Basic earnings per share
were up by 68.8% to 13.0 pence (2017: 7.7
pence), with fully diluted earnings per
share of 12.7 pence (2017: 7.6 pence) and
adjusted earnings per share, excluding
amortisation of acquired intangible assets
and non-recurring items, of 13.9 pence
(2017: 8.9 pence).
Net debt at 1 September 2018 was £15.4m
(2017: £14.1m). The movement included
£11.5m generated from operations, £7.1m
used in investing activities and £3.8m paid
in dividends.
The Board is proposing a final dividend
of 2.35 pence per ordinary share, which
together with the two interim dividends
of 1.075 pence per ordinary share paid
on 21 May 2018 and 5 October 2018, make
a total of 4.5 pence per share for the year
(2017: 4.0 pence per share). The final
dividend, if approved by the Shareholders,
will be paid on 11 January 2019, to
Shareholders on the register on close of
business 30 November 2018, and the shares
will go ex-dividend on 29 November 2018.
CORPORATE GOVERNANCE
During the year, we have continued to
review our governance framework following
a number of changes implemented in 2017,
including changing the membership of our
Audit and Remuneration Committees and
revising our policy on executive remuneration
following a consultation with certain major
shareholders. We were pleased to receive
overwhelming support for these changes
at our AGM in January 2018 and our
Remuneration Committee will continue to
consult with major shareholders on specific
policy matters as and when appropriate.
In July this year, the Financial Reporting
Council published its revised Corporate
Governance Code 2018 which will apply
to the Group from September 2019
onwards. The revised Code introduces
some important changes to UK corporate
governance. During the course of the current
financial year, we will continue to review
our governance practices to ensure that we
are well placed moving into the new regime.
As a Group, we remain committed to
promoting a robust and transparent
governance framework which will continue
to serve the interests of all our stakeholders.
The Group remains committed to
delivering on its strategic objectives
of investing in its people and its
asset base, whilst continuing to
drive innovation and delivering
growth across our two divisions,
with a focus on broadening our
geographic footprint.
The Board remains confident in the
prospects of the UK Agriculture
business in the near term following
the sustained recovery in farm
incomes. While we now have
greater visibility in relation to
farming support post Brexit, we
remain cautious over the nature of
future trade agreements with the
EU and the rest of the world. We
expect the gradual recovery in USA
cattle prices to continue in the
current financial year, which,
together with the acquisition of
Animax and expansion into other
geographic markets, provides
a solid base for growth in the
Agriculture division.
In Engineering, order books remain
strong across most of the businesses
and the recovery in the division’s
financial performance is expected
to continue. We continue to invest
in product development and
improved production methods to
support the future growth of the
division. While uncertainty remains
over the potential impact of Brexit
on certain supply chains, we remain
encouraged by the growth
opportunities available, particularly
in the USA and Asia, which we
continue to develop.
Trading in the new financial year
has started in line with the Board’s
expectations. We remain confident
that our investments in acquisitions,
research and product innovation
position the Group well for
sustained growth.
CHRIS HOLMES DL
Chairman
19 November 2018
05
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Group Strategy
Vision
To be recognised as a truly international business at the forefront
of technology and innovation in our chosen markets.
Investment in assets
to ensure long term
competitive advantage
Seen and recognised
as leaders in innovation
T
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I N N OVATION
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AGRICULTURE
ENGINEERING
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VEST M
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D V
U ISITIO
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Investing in people that
will shape the business
in ten years’ time
International
expansion in high value
growing market sectors
Strategic Objectives
• Build business value by
• Differentiate ourselves through
focusing on markets with
innovation and technology
growth potential
• Grow and diversify our
international footprint
• Lead in our chosen markets
06
Carr’s Group plcAnnual Report and Accounts 2018
Business Strategies
Building on a strong core
Our business strategy is centred upon:
growing our international footprint;
building value in growth markets;
differentiating through innovation
and technology; and, consequently,
leading in our chosen markets.
We continue to build on the strong core established across
our Agriculture and Engineering divisions through carefully
chosen investments and strategic acquisitions which
enhance our market position and value-adding capability.
Of key strategic importance is that Carr’s operates in the
right markets with future growth potential. We continually
review current and future growth opportunities which align
with our strategy.
OUR KEY STRENGTHS
GLOBAL MARKETS
Wide range of export markets
across the globe supplied from
key manufacturing plants in UK,
mainland Europe and across
the USA.
CORE COMPETENCIES
Deep industry knowhow delivering
market leading solutions backed
up with world leading capability.
MARKET LEADING PRODUCTS
Leading branded products such as
Crystalyx®, Horslyx®, SmartLic®,
Tracesure® and Allsure® in Agriculture
and MSIP®, Powerfluidics™, TELBOT®
and A1000 in Engineering.
DOING THE RIGHT THING
Management style that
encourages entrepreneurial
drive and innovation
backed up by key values –
respect, trust and integrity.
Agriculture
Farm incomes improved in early 2018 and, although milk prices
pulled back a little, they have since stabilised. Dry weather has
negatively impacted farmers through the summer months and
Brexit continues to create uncertainty. Nonetheless, global sales
of Feed Blocks across the Group are significantly increased over
our last financial year.
The Group’s strategic ambition across the Agriculture
division remains to strengthen its global position through
the enhancement and development of its international
supplementation business. In the UK, the division aims
to continue to build its presence and depth of offering;
supporting our core farming customers in chosen locations.
KEY STRATEGIC DEVELOPMENTS
• Continuing to fill capacities and optimise the use of our
plants in core markets such as the USA and Germany.
• Building production levels in our recently commissioned low
moisture feed block plant in Shelbyville, Tennessee which
provides improved geographic reach in the USA.
• Driving our expansion into New Zealand and South America
through the establishment of key relationships and
completing local research to demonstrate the efficacy
of our products.
• Enhancing our international supplementation business
through the acquisition of Animax Limited.
Engineering
Global opportunities across the nuclear industry continue to
offer a good platform on which to continue to develop and
strengthen our Engineering division. Our UK Manufacturing
business recovered significantly during the financial year and is
now well positioned in the medium term. The integration of
NuVision, since its acquisition in August 2017, has been
completed according to plan. The acquisition has not only
brought further innovation, technology and services into the
Group, but it has provided a foothold for our Remote Handling
offering in the USA which represents a significant opportunity.
The Group’s strategic ambition for the Engineering division is to
maximise the benefits of synergies to enhance its offering of
proven technologies to its global customer base in the nuclear,
oil and gas and pharmaceutical sectors, and to continue to grow
and strengthen the division through complementary acquisition.
KEY STRATEGIC DEVELOPMENTS
• Appointment of new Divisional Managing Director to drive
focus and growth in Engineering.
• Strengthening of management team in UK Manufacturing.
• Continuing to invest in innovation and technology, with
product development programme in Remote Handling
progressing well.
• Extension of premises at Markdorf, Germany complete
together with full integration of the STABER business,
acquired in October 2016.
• Showroom of Wälischmiller products under construction
at Charlotte, North Carolina.
07
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Chief Executive’s Review
We recognise the enormous contribution of our people across
the businesses which has enabled the Group to deliver a strong
result for the year.
A YEAR OF DELIVERING GROWTH
The year has seen significant progress
for the Group, with our financial
performance ahead of the Board’s
expectations and significantly
improved upon the prior year across
both Agriculture and Engineering.
We continued to deliver our strategic
objectives, which are consistent with
our vision to be recognised as a truly
international business at the forefront
of innovation and technology.
During the year we were also able
to make significant progress with senior
management succession plans for a
number of key leadership roles across
the Group, as well as continuing to invest
in our own programmes to develop
our next generation of leaders. People
remain fundamental to our businesses;
we recognise the enormous contribution
of our people across the businesses which
has enabled the Group to deliver a strong
result for the year. Another key driver is
keeping everyone safe, and we have
continued to focus on safety throughout
the financial year, improving our reporting
mechanisms and further embedding our
safety culture.
Agriculture
The Agriculture division has performed
strongly this year, as a result of
improvements in underlying markets
as well as the investments made in
recent years.
During the year, revenue was up
13.8% to £359.6m (2017: £315.9m).
Adjusted operating profit was up
16.9% to £13.4m (2017: £11.4m) and
reported operating profit was up
20.1% to £13.0m (2017: £10.8m).
FEED BLOCKS
Total global feed block sales volumes
were up 15.0% compared to last year.
Our USA feed blocks business was
significantly ahead of last year with sales
volumes up 17.7%. This performance was
driven by the ongoing recovery in cattle
prices in the USA. Our new low moisture
feed block plant in Tennessee is now
fully operational and provides additional
capacity and access to new markets
across the Eastern and South Eastern
states of the USA.
UK feed blocks sales volumes were up
8.9%, in line with expectations.
Our joint venture business based in
Germany, Crystalyx Products GmbH,
performed strongly during the period
with sales volumes up 12.4%, due to
improved farm incomes following a
recovery in the milk price across Europe.
Our plans to grow our feed blocks
business internationally continue to
progress well. In New Zealand, our direct
sales operation distributing to farmers
through merchants has continued to
grow, with supply agreements now in
place with several of the country’s
leading agricultural merchants. In South
America, we are now supplying products
through our chosen distributors and
made our first commercial sales during
the year. Farm trials continue to
demonstrate the efficacy of our
products, providing local evidence which
we will use in support of our plans to
develop our market in South America.
The strength of our brands, including
Crystalyx®, SmartLic®, Megastart®, FlaxLic®
and Horslyx®, continue to enable us to
drive growth and expand internationally
and we remain focused on investment
in new product development.
TIM DAVIES
CHIEF EXECUTIVE OFFICER
OPERATING PROFIT*
BY SECTOR
AGRICULTURE
£13.4m
16.9% UP from 2017
ENGINEERING
£4.1m
533.5% UP from 2017
*Before amortisation of acquired intangible
assets and non-recurring items
08
Carr’s Group plcAnnual Report and Accounts 2018 UK AGRICULTURE
UK Agriculture continued to perform
well across all areas of the business,
reflecting improved farm incomes and
ongoing farmer confidence.
Manufactured feed volumes were up
8.7%, in line with the national average.
Key drivers for the increased volumes
were the late Spring and the dry
weather during the summer months.
Our retail business delivered a strong
performance during the period, with the
country store network reporting an
increase of 4.4% in like-for-like sales and
a 12.1% increase in total sales. The
increase in total sales was primarily
driven by the acquisition of Pearson
Farm Supplies, an agricultural retail
business with locations across Yorkshire,
Lancashire and North West Wales, which
was completed in October 2017. This
business has now been successfully
integrated and as expected the
acquisition has enabled synergies to be
achieved with our existing retail business
and the team has settled in well. Our
retail footprint currently stands at 43
locations.
Machinery sales revenues were ahead of
the prior year, up 7.8%, a new record
level of sales, as the business continued
to benefit from an improved trading
environment. We also invested in the
expansion of our machinery branch at
Morpeth, Northumberland, during the
year to provide additional workshop
capacity, improving our after-sales
service capability.
The oil distribution business delivered
sales volumes that were 4.6% ahead of
the prior year. The business saw higher
demand for heating oil in the colder
months earlier in the year, partially offset
by a reduction in on-farm activity during
the drier summer months.
STRATEGIC ACQUISITION
On 21 September 2018 we acquired
Animax Limited, a producer of
market-leading trace element
supplementation products for livestock,
for an initial cash consideration of £6m.
Additional cash consideration of up to
a maximum of £2.5m is payable over the
period to November 2020, based on the
achievement of agreed financial targets.
Animax, based in Suffolk in the UK, is at
the forefront of innovation in the field of
livestock trace element supplementation.
Its patent-protected leaching boluses
are proven to release trace elements in
a controlled and consistent manner over
prolonged periods, resulting in improved
animal performance. The boluses are
currently sold in the UK and overseas
under the Tracesure® and Allsure® brands.
Animax also produces other leading
animal health and trace element
supplementation products sold under
well-known brands including Copasure®,
Copinox®, Coprac®, Easycal® and Pardevit®.
Animax broadens the Group’s animal
health and supplementation product
ranges that deliver added value to
farmers. Its products are highly
complementary to the established Carr’s
Group feed block business across the USA,
New Zealand, Europe, UK and Ireland.
Carr’s will support the growth and
development of Animax through
investment in research to develop
new products and by investing in
manufacturing efficiencies. In addition,
Carr’s expects significant manufacturing,
distribution and sales synergy benefits to
be realised as a result of the acquisition.
AGRICULTURE OUTLOOK
We remain confident in the prospects
of UK Agriculture in the near term
following the sustained recovery in farm
incomes. We now have greater visibility
on the impact of Brexit on farming
support in the near term, although
uncertainty remains over future trade
agreements with the EU and the rest
of the world.
Internationally, the gradual recovery
in the USA cattle market seen through
the course of the year is expected
to be sustained, which will contribute
to the future growth of this business.
We remain focused on developing
our global supplements business. The
acquisition of Animax is in line with that
strategy; it builds on our established
global feed blocks business and provides
a broader platform for the next phase
of international growth across the
Agriculture division. We also remain alert
to other suitable acquisition opportunities
where we believe there is a strong
commercial and strategic rationale.
09
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Chief Executive’s Review (continued)
Case Study: Animax Limited
1 The bolus is inserted orally using a
specially designed Animax applicator.
2 The bolus enters the rumen/
reticulum and lodges there.
Its optimum density minimises
the chance of regurgitation.
3
Trace elements leach out from the bolus
to give the optimum daily supplementation
for approximately 6 months.
4 Spent boluses eventually
become enlarged and are
shed, by being regurgitated
or excreted, usually
after about 12 months.
1
4
2
3
Animax Bolus Technology
On 21 September 2018, Carr’s Group plc was delighted to announce
its acquisition of Animax Limited, a producer of market-leading trace
element supplementation products for livestock.
Animax was founded in 1982 by veterinarian Les Porter who
recognised that technology designed to increase yields and
production, optimise fertility and support animal health would
become increasingly important in modern farming around the world.
Over the years, and through sustained investment in research,
Animax has developed world renowned expertise in manufacturing
bolus products which effectively release trace elements into
livestock consistently and over periods of up to six months.
Animax’s product ranges, including its patent-protected leaching
boluses sold under the Tracesure® and Allsure® brands, are
manufactured in the UK from its premises in Suffolk and supplied
to farming customers globally through a wide distribution network.
Other well respected Animax brands and licensed medicinal products
include Copasure®, Copinox®, Coprac®, Easycal® and Pardevit®.
These products are highly complementary to the Group’s existing
global supplementation business and broaden the Group’s range
of products which bring added value to farmers.
For more information on Animax and its product ranges,
please visit www.animax-vet.com.
10
Carr’s Group plcAnnual Report and Accounts 2018 Engineering
The Engineering division has seen
a significant improvement in financial
performance during the year, following the
challenges experienced in 2017 which were
largely attributable to one major contract
delay in the UK Manufacturing business.
That contract is back on track and
performing in line with our expectations.
During the year, revenue was up 43.6%
to £43.6m (2017: £30.4m). Adjusted
operating profit was up 533.5% to £4.1m
(2017: £0.6m) and reported operating profit
was up to £3.4m (2017: loss of £0.1m).
UK MANUFACTURING
Our UK Manufacturing business recovered
strongly during the year generating
revenues of £18.4m (2017: £13.0m). Work
on the significant contract announced
in July 2017 continues to progress and
the order book remains strong. Although
there has been a significant improvement
in the trading performance during the
year, goodwill of £0.5m was written
off as a result of an impairment review
undertaken.
During the year we strengthened the
management team in our fabrication
business with the appointment
of a new Managing Director and
Commercial Director.
In our precision engineering business,
the continued recovery of the oil
price, together with strengthened
management, more effective business
development and enhanced
manufacturing efficiencies, has delivered
a significant uplift in revenues.
orders into China, awarded in 2017, have
all now been successfully delivered during
the year. As expected, following the
successful completion of these contracts,
the order book in the near term is softer
than last year, but this is not expected to
impact on overall divisional performance
and medium-term prospects for our
Remote Handling business remain positive.
The extension of our facility in Markdorf,
Germany has now been completed,
including the full relocation of people and
machinery from STABER following its
acquisition in October 2016. Operating
from a single site should enable efficiency
improvements in the medium-term.
REMOTE HANDLING
Our Remote Handling business has
performed well during the year and in
line with the Board’s expectations.
Revenues for the financial year totalled
£19.5m (2017: £17.2m). The substantial
Our plans to enter the USA market
with Wälischmiller remote handling
equipment continue to progress with
our first contracts being won earlier
than expected during the second half
of the year.
11
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Chief Executive’s Review (continued)
USA ENGINEERING
Carr’s established an engineering
presence in the USA through the
acquisition of NuVision Engineering, Inc.
in August 2017. The business has
performed well in its first year of
ownership, generating revenues
of £5.7m (2017: £0.2m). During the year
we completed the integration of
NuVision into our wider Engineering
division and successfully completed
a planned reorganisation of its
management and leadership teams.
NuVision has secured a good level of work
during the year, including two significant
Mechanical Stress Improvement Process
(MSIP®) contracts, which substantially
strengthen the order book through to FY21.
During the year, we also disposed of
NuVision’s 49% stake in Mid-Columbia
Engineering, Inc (MCE), a non-core
loss-making business based in Richland,
Washington, to enable greater strategic
focus on the development of the USA
Engineering business.
ENGINEERING OUTLOOK
Prospects for the Engineering Division
remain good over the medium term.
The order books in the UK Manufacturing
and USA Engineering businesses remain
strong. We remain confident in the
long-term outlook for the Remote
Handling business with the forecast
lower sales in 2019, due to contract
phasing, not expected to impact upon
the performance of the division.
While uncertainty remains around Brexit
and the impact this could have on certain
supply chains within our engineering
businesses, we believe our geographically
diverse operations position the Group
well to deliver growth in the medium
term. We remain focused on identifying
suitable value enhancing acquisitions,
which complement our existing operations,
and will continue to invest in technology
and innovation across the division.
TIM DAVIES
Chief Executive Officer
19 November 2018
12
Carr’s Group plcAnnual Report and Accounts 2018 Case Study: Wälischmiller Engineering
High resistance manipulator
In 2018, Wälischmiller Engineering, working jointly with Mitsui
E&S Machinery, successfully completed the development
of a prototype robotic manipulator capable of resisting more
than double the radiation levels of conventional systems.
The project, which has taken three years to complete,
was aimed at achieving the high levels of radiation resistance
required in order to deliver decommissioning services at the
Fukushima Daiichi Nuclear Power Station following the 2011
disaster. Not only did the design successfully achieve the
required resistance, demonstrating that it would operate
effectively at the site, but the development of a new control
system has significantly improved operating manoeuvrability
through the reduction of wiring. The new design is also constructed
in a modular fashion which will allow customisation and changes
to use.
It is anticipated that high resistance manipulators will become
available for production during 2019 in what represents an
important step for the Group’s remote handling offering to the
nuclear decommissioning industry.
For more information on Wälischmiller Engineering GmbH,
please visit www.hwm.com.
13
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Risk Management
Our risk appetite and approach to risk management.
Our success as a Group depends on the 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.
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 may change as the Group develops
over the year. 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. If the
circumstances in these risks occur or are
not successfully mitigated, our cash flow,
operating results, financial position,
business and reputation could be
materially adversely affected.
This is overseen by the Executive
Directors, who have an active
responsibility for focusing on the
principal areas of risk to the Group. The
Board reviews these risk areas, including
consideration of environmental, social,
and governance matters. This review
is undertaken quarterly.
For each of our principal risks we have
a risk management framework detailing
our assessment of the risk, the controls
we have in place, who is responsible for
managing the risk, as well as any further
mitigating actions required.
BOARD’S ASSESSMENT OF
COMPLIANCE WITH THE RISK
MANAGEMENT FRAMEWORK
The Board reviews the principal risks
quarterly. This is supported by an annual
review of the risk management system
undertaken by the Audit Committee.
Details of the activities of the Audit
Committee in relation to this can be
found in the Audit Committee Report
on pages 30-32. Decisions that could
have a material impact on the Group
are reviewed as and when required
at Board meetings.
The Group adopts a risk profile aligned
to our vision to be recognised as a truly
international business at the forefront
of technology and innovation.
Our available capital and resources are
applied to underpin our four strategic
pillars: acquisitions, people, investment
and innovation.
The Board believes that in carrying out
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. Our approach
to risk management is designed to
provide reasonable assurance that our
assets are safeguarded. The risks facing
the business are assessed and, where
possible, mitigated and all relevant
information is disclosed and reported
to the Board.
ORGANISATION AND PROCESS
The Board assumes overall responsibility
for the management of risk and for
reviewing the effectiveness of the
Group’s risk management and internal
control systems.
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.
14
Carr’s Group plcAnnual Report and Accounts 2018
KEY RISKS
DESCRIPTION OF THE RISK
WHAT WE ARE DOING TO MANAGE THE RISK
BREXIT
The UK’s impending exit from the European Union (EU)
highlights a number of risks for the Group.
Part of our customer base is inherently reliant on
agricultural subsidies from the EU, and therefore future
government policy and support for the agricultural sector
will potentially impact on our customers with a knock
on effect to our agricultural business.
Similarly, for some areas of the business the Group imports
raw materials from within the EU. The imposition of tariffs
or other related cost increases, together with any issues
relating to availability of raw materials, could impact the
cost base of the Group or its ability to service customers.
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 a financial loss and threat to the overall confidentiality
and availability of data in systems.
ACQUISITIONS
The Group is acquisitive and is therefore 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.
The Group benefits from its operational and geographic
diversity and is not substantially dependent on the EU
for either raw materials or revenues.
We will continue to monitor developments in the Brexit
process and incorporate steps into our future business
planning where these might be required in order to
mitigate any potentially adverse consequences including
the imposition of any tariffs.
The Group has a comprehensive suite of IT security solutions
in place, which are reviewed and tested by specialist third
parties where appropriate.
From a system development perspective, major projects are
subject to appropriate project governance arrangements.
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.
MANAGING COSTS
Margins may be affected by fluctuations in raw material
prices due to factors such as harvest and weather
conditions, crop disease, crop yields, alternative crops,
and by-product values.
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 price increases or higher energy, freight or other
operating costs.
The Group has a number of strategies in place to manage
this risk. These include:
• strategic long term relationships with suppliers;
• multiple-source suppliers for key ingredients;
• raw material and forward energy purchasing policies
to provide security of supply and cost; and
• close monitoring of contract execution to ensure supply
is within agreed terms.
Continued overleaf
15
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Risk Management (continued)
KEY RISKS
DESCRIPTION OF THE RISK
WHAT WE ARE DOING TO MANAGE THE RISK
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 is constantly investing
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.
PEOPLE
Performance, knowledge and skills of 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,
retain and reward 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 roles are reviewed by the
Nominations Committee annually.
STRATEGIC PARTNERS
The Group has a number of strategic partners, particularly
in the Agriculture division, who are involved either as joint
venture partners or significant minority shareholders.
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.
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
provide 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.
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.
The level of facilities are regularly reviewed by the Group
Finance Director, 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. Additionally,
translational hedging instruments are used to limit the
potential impact of fluctuating currencies on reported
earnings from foreign subsidiaries.
For interest rate risk on floating rate debt, we maintain
a mix of fixed rate debt, primarily finance lease, and
floating rate debt. These levels are monitored and assessed
against forecast changes in interest rates and forward
guidance from interest rate setting authorities.
BUSINESS CONTINUITY
The operation of manufacturing plants involves many
risks that could cause a temporary or permanent stoppage
in production and could have a material adverse effect
on the Group.
The Group has Business Continuity arrangements in place
to enable continuity of supply, as quickly as practicable,
of product to customers in the event of a natural disaster
or major equipment or plant failure. A programme
of insurance is also in place to protect against the cost
of major business interruptions.
16
Carr’s Group plcAnnual Report and Accounts 2018 Viability Statement
The Group’s business model and strategy are central to an understanding of its prospects,
and details can be found on pages 6-7. The Group is very diverse both operationally and
geographically. The Group set down a strategic plan a number of years ago, which is subject
to ongoing monitoring and development as described below.
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.
The Group also considered a number of
scenarios that would represent serious
threats to its liquidity. None of these was
considered to be plausible.
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 2021.
The Directors also considered it
appropriate to prepare the financial
statements on the going concern basis,
as explained in the Basis of Accounting
paragraph in the principal accounting
policies on pages 61-65 of the accounts.
The Group’s focus is particularly on
developing its supplements business,
because of the opportunities for
international expansion and product
development, and its nuclear
engineering business 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 led by the Chief
Executive across all aspects of the Group.
The Board participates fully in the
process through an annual strategy day,
detailed strategic presentations on all
areas of the business by 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 May 2018
following this year’s review. This
considered the Group’s current position
for the development of the business as
a whole over the next three years.
Given the nature of the business cycles
in both Agriculture and Engineering,
it was decided that a period of three
years to 31 August 2021 was the most
appropriate for the purpose of a viability
assessment. The Group has prepared
detailed financial forecasts for the 3 year
period to 31 August 2021, so that 2 years
10 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 14 to 16. The purpose of the
principal risks table is primarily to
summarise 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:
1. Brexit;
2. Managing costs;
3. Reliance on key customers;
4. Strategic partners;
5. Customer demand; and
6. Treasury.
It was determined that none of these
individual risks would, in isolation,
compromise the Group’s viability.
Although the strategic plan reflects
the Board’s best estimate of the future
prospects of the business, it has
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 cashflows associated
with the risks highlighted above, with
consumer demand affecting all
business units and additional impacts
on Agriculture business units from
commodity costs, and from strategic
partners; and
• Interest costs increasing by a factor
of two.
17
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Financial Review
The key features of the year have been the recovery in
performance in parts of the UK Manufacturing and USA
Agriculture businesses, together with the strong performance
in Remote Handling and the impact of the acquisition
of NuVision Engineering, Inc.
Current and Future Development
and Performance
REVENUE
Reported revenues from continuing
operations were £403.2m, 16.5% ahead
of last year (2017: £346.2m).
Revenues have increased primarily as
a result of higher sales volumes across the
business, and also the first full year of
inclusion of NuVision, which was acquired
in August 2017.
on last year (2017: £12.1m). As a percentage
of revenues, Group operating margin
before amortisation of acquired intangible
assets and non-recurring items is 4.3%
compared to 3.5% in 2017.
These increases are principally due to the
recoveries in trading performances in UK
Manufacturing and in USA Feed Blocks,
and the first full year of NuVision.
OPERATING PROFIT
Group operating profit before amortisation
of acquired intangible assets and
non-recurring items of £17.5m is up 44.4%
Operating profits, before amortisation
of acquired intangible assets and
non-recurring items, per division and
as a percentage of divisional revenues
are as follows:
NEIL AUSTIN
GROUP FINANCE DIRECTOR
Operating Profit
Agriculture
Engineering
Total
2018
%
3.7
9.4
2018
£m
13.4
4.1
17.5
2017
£m
11.4
0.7
12.1
2017
%
3.6
2.1
This year the Group has amended its
presentation of the results of associates
and joint ventures so that they are above,
and therefore included within, operating
profit. The Board’s view is that the
inclusion of these results within operating
profit better reflects the nature of these
investments as integral to the Group’s
trading activities. The comparative figures
have been restated accordingly.
The Group’s share of the post-tax result
in its associates and joint ventures was
£3.2m, compared to £2.8m in 2017.
The result reflected both an increase
in its associates’ profitability and an
increase in joint venture profitability,
primarily driven by a recovery in the
European dairy market which assisted
feed block performance.
AMORTISATION AND
NON-RECURRING ITEMS
The Group incurred £0.8m in respect
of non-recurring items in the year.
This included acquisition costs of £0.1m,
primarily related to the acquisitions
of Pearson Farm Supplies Limited and
Animax Limited, and a charge of £0.2m
related to contingent consideration
payable dependent, in part, on continued
employment, which is required to be
expensed under IFRS rather than included
within goodwill. There was also a write-off
of goodwill of £0.5m in the UK
Manufacturing part of the Engineering
division, relating to the Bendalls business.
This was following a detailed impairment
review and reflected a more cautious
view in relation to future growth
assumptions in this particular business.
18
Carr’s Group plcAnnual Report and Accounts 2018 FINANCE COSTS
Net finance costs of £0.9m were higher than
the previous year (2017: £0.7m), reflecting
higher borrowings throughout the year.
Interest cover was 18.2 times based on
reported profit (19.3 times on an underlying
profit basis) compared to 15.5 times in 2017.
PROFIT BEFORE TAX
Adjusted profit before tax, which is before
amortisation of acquired intangible assets
and non-recurring items, at £16.6m was
45.2% higher than in the previous year
(2017: £11.4m). Reported profit before
taxation was £15.5m (2017: £10.0m).
TAXATION
The Group’s effective tax charge on profit
from activities after net finance costs and
excluding results from associates and joint
ventures, which are recorded after tax,
was 15.1% (2017: 23.7%). A reconciliation
of the actual total tax charge to the
standard rate of corporation tax in the
UK of 19% is given in note 7 to the
financial statements. The reduction is
primarily due to the reduction in US tax
rates that reduce deferred tax balances
in businesses based in the USA.
EARNINGS PER SHARE
The profit attributable to the equity
holders of the Company amounted to
£11.9m (2017: £7.0m), and basic earnings
per share was 13.0p (2017: 7.7p), an
increase of 68.8%.
Adjusted earnings per share of 13.9p
(2017: 8.9p) is calculated by dividing
the profit attributable to equity holders
for the year, before amortisation of acquired
intangible assets and non-recurring
items, by the weighted average number
of shares in issue during the year.
ACQUISITIONS
The Group has made one acquisition in the
year, and one acquisition since the year end.
Pearson Farm Supplies Limited was
acquired by the Group on 31 October 2017
for a cash consideration of £1.2m, including
deferred consideration of £0.2m. Pearson
has since been fully integrated into Carrs
Billington Agriculture (Sales) Limited.
Since the year end, on 21 September
2018 the Group acquired the entire
issued share capital of Animax Limited
and Clinimax Limited. The initial cash
consideration payable was £6.0m, with
additional contingent consideration
of up to £2.5m payable based on future
financial performance in the period
to 30 November 2020.
Further details on the acquisition
of Pearson are given in note 28 to the
financial statements and in respect
of Animax and Clinimax in note 35
to the financial statements.
Cash flow and net debt
Operating profit
Depreciation and loss on disposal
Amortisation and impairment of goodwill
Associates and joint ventures
EBITDA (excluding associates and joint ventures)
Increase in inventories
Increase in receivables
Increase in payables
Other
Net operating cash flow
Net interest
Taxation
Cash flow from continuing operations
Maintenance capex
Free cash flow
Expansionary capex
Acquisitions
Dividends received
Dividends paid to Company shareholders
Loans, finance leases and financing costs
Other
Cash flows
Opening net debt
Closing net debt
2018
£’000
16,405
4,397
913
(3,215)
18,500
(5,106)
(7,015)
7,449
1,152
14,980
(984)
(2,511)
11,485
(1,962)
9,523
(2,851)
(4,139)
704
(3,770)
76
(763)
(1,220)
(14,139)
(15,359)
CASH FLOW AND NET DEBT
A free cash flow of £9.5m was generated
in the year, representing a decrease of
15.4% on £11.3m in the previous year.
The decrease was substantially due
to a higher level of working capital
which is mainly attributable to higher
levels of activity in UK Agriculture over
the summer months. After payment of
£3.8m of dividends to Shareholders of
the Company and £4.1m on acquisitions,
the cash outflow for the year was £1.2m,
resulting in closing net debt of £15.4m.
Headroom against existing facilities was
£27.2m at the year end. The Group’s banking
facilities were due for renewal in June 2019,
however, these have been renewed since
the year end for a five year period.
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 96 deferred members and
223 current pensioners.
The valuation on an IAS 19 accounting
basis showed a surplus before the related
deferred tax liability in the scheme at
1 September 2018 of £10.1m (2017: £5.2m).
This is after an actuarial gain of £4.8m
(2017: £5.0m) which has been recognised
in the Consolidated Statement of
Comprehensive Income.
Since the year end, the High Court has
ruled on the case of Lloyds Banking Group
Pensions Trustees Ltd v Lloyds Bank plc and
others. The ruling that Lloyds Bank Group
must amend its three defined benefit
pension schemes to equalise Guaranteed
Minimum Pensions (GMPs) between males
and females will impact how companies
account for pension schemes under IAS 19.
The Group are currently working with
advisers to understand the accounting
impact and this will be reflected in the
Group’s interim results for 2019. This is not
expected to be material to the Group’s
net assets.
NEIL AUSTIN
Group Finance Director
19 November 2018
19
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Key Performance Indicators
We monitor our performance against the strategy by means
of key performance indicators (‘KPIs’):
Underlying sales
growth/decline
+13.6%
Financial Review
Pages 18-19
Gross margin
13.2%
6
1
0
2
Financial Review
Pages 18-19
Adjusted Group
operating margin
4.3%
6
1
0
2
Financial Review
Pages 18-19
Free cash flow
£9.5m
6
1
0
2
Financial Review
Pages 18-19
Definition
Comments
Year on year increase/
(decrease) in sales
revenue excluding the
impact of acquisitions
and disposals.
Revenues are monitored by the Board. 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.
Definition
Comments
Gross profit as
a percentage of
sales revenue.
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 from continuing operations
increased to 13.2% in the current year, which reflects the
improvement in market conditions in USA Agriculture
and also improved performance in UK Manufacturing.
Definition
Comments
Operating profit
before non-recurring
items and amortisation,
as a percentage
of revenue.
The underlying Group operating margin reflects the
gross margin achieved, which is described above,
but also indicates the efficiency of our operations from
both an administrative and distribution perspective.
The increase in underlying operating margin to 4.3%
reflects the factors described in gross margin, and also
the impact from the acquisition of NuVision at the end
of the previous financial year.
Definition
Comments
Cash generated from
operating activities less
maintenance capital
expenditure.
This KPI indicates how much cash is available for the
Group to utilise for expansionary capital investment,
paying dividends, or financing/repaying borrowings.
The decrease in FY18 is predominantly due to working
capital changes across the business.
Return on net assets
Definition
Comments
13.7%
Profit before tax,
non-recurring items
and amortisation
as a percentage
of net assets.
Return on net assets increased to 13.7% this year.
This increase reflects the improved financial performance
across the Group, and in particular the performances in
USA Agriculture and UK Manufacturing described above.
Financial Review
Pages 18-19
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20
Carr’s Group plcAnnual Report and Accounts 2018 The Board
TIM DAVIES
CHIEF EXECUTIVE OFFICER
NEIL AUSTIN
GROUP FINANCE DIRECTOR
Tim joined Carr’s in March 2013 as Chief
Executive. Tim was formerly the Group
Managing Director at Openfield. Prior to
this, he progressed from Sales Director
to Managing Director of Grainfarmers
plc in 2005. He subsequently led the
successful merger of Grainfarmers plc
and Centaur Grain Ltd in 2008, forming
Openfield, the largest farmer-owned
grain marketing business in the UK. Tim
continued in his role as Group Managing
Director until 2013. He was a Director of
the Agricultural Industries Confederation
between 2003-2016.
Neil joined Carr’s in January 2013 and
became Group Finance Director in April
2013. Neil was formerly a Director at
PwC, having joined as a graduate in
their Newcastle office in 1997. He was
appointed as a Director of the Newcastle
office in 2007 with lead responsibility for
part of the Assurance practice, and has
experience with FTSE 350 companies
and multi-nationals.
CHRIS HOLMES
NON-EXECUTIVE CHAIRMAN
NOMINATIONS COMMITTEE CHAIRMAN
Chris joined Carr’s in 1991 as the
Managing Director of the Agriculture
business, having previously worked for
J Bibby & Sons. Chris was appointed
Chief Executive in 1994, and remained
in that role until he was appointed
Chairman in 2013. He is currently
Chairman of Carlisle Youth Zone, having
been appointed in 2013.
JOHN WORBY
SENIOR INDEPENDENT
DIRECTOR
AUDIT COMMITTEE
CHAIRMAN
John was appointed
a Non-Executive Director in
April 2015. John is currently
Senior Independent Director
and Chairman of the Audit
Committee of Hilton food
Group plc. John was
previously the Finance
Director of Genus plc and a
Non-Executive Director of
Cranswick plc and Fidessa
Group plc. John is a chartered
accountant and a member
of the Financial Reporting
Review Panel.
ALISTAIR WANNOP
NON-EXECUTIVE DIRECTOR
Alistair was appointed a
Non-Executive Director in
2005. Alistair has been the
Chairman of both the County
NFU and the MAFF northern
regional advisory panel.
He has served as a Director
of The English Farming and
Food Partnership, Rural
Regeneration Cumbria, and
Cumbria Vision. Alistair is a
fellow of the Royal
Agricultural Society of
England and between
2017-2018 held office as
High Sheriff of Cumbria.
IAN WOOD
NON-EXECUTIVE DIRECTOR
REMUNERATION
COMMITTEE CHAIRMAN
Ian was appointed to the
Board on 1 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 Chief
Executive of Cumbria
County Holdings Ltd.
MATTHEW RATCLIFFE
COMPANY SECRETARY
Matthew joined Carr’s in
November 2016 as Company
Secretary and Legal Counsel.
Matthew is a solicitor with
a breadth of experience
working alongside both
international and local
businesses in corporate,
commercial and contentious
matters. He began his career
with Pinsent Masons before
joining a Cumbrian law firm
in 2009 and being appointed
a Director in 2014.
21
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Corporate Responsibility
Carr’s places great emphasis on social responsibility and in maintaining high ethical
standards. The Group takes pride in the safety and wellbeing of its people, in the
steps taken to reduce its environmental impact and in ensuring that it plays its part
in the community.
22
Carr’s Group plcAnnual Report and Accounts 2018 PEOPLE
People are fundamental to every
business and our employees are critical
to the successful delivery of our strategic
objectives. One of our four key pillars
is “investing in people, who are vital to
the long-term success of the business”.
Our values of trust, respect, and integrity
run throughout all our businesses.
Our high levels of teamwork and
co-operation are a major contributing
factor to our success.
Continuing to identify talent and develop
our people will remain key priorities for us
going forward. We remain committed
to providing a working environment that:
• is consistent and fair;
• is free from discrimination;
• aids development and skills;
• supports employee engagement.
Engagement
We strive to ensure that employees across
the Group are kept informed about
business performance through the issue
of regular briefing notes by the Executive
Directors or Senior Management. These
are circulated as a matter of routine at
regular intervals and also whenever there
are significant developments across the
Group or which affect a particular division
or business unit. Management within the
Group are also kept informed on issues
that may affect employees which enables
effective, transparent communication,
and consultation where appropriate.
During the year we were pleased to
launch “Carr’s Connect”, an employee
intranet for the Group. This represents
another step forward and one which
enables us to communicate with our
workforce more easily. Carr’s Connect not
only ensures that our employees are aware
of developments across the Group, but it
also provides access to up to date resources.
The Board remains committed to
workforce engagement, and in
promoting a healthy and open culture
which aligns with its strategy. The Board
will continue to review its engagement
practices during the current financial year
to ensure that these are effective and
appropriate as we move towards the 2018
Corporate Governance Code, which will
apply to the Group from September 2019.
Sharesave
The Group operates a Sharesave scheme,
in which all UK-based employees are
entitled to participate. The Group recognises
that the scheme is a well-established
method of employee engagement,
facilitating ownership in the Group.
Equal opportunities
The Group is committed to an active
equal opportunities policy promoting
an environment free from discrimination,
harassment and victimisation, where
everyone will receive equal treatment
regardless of gender, colour, ethnic
or national origin, disability, age, marital
status, sexual orientation or religion.
All decisions relating to employment
practices will be objective, free from bias
and based solely upon work criteria and
individual merit. The Group is responsive
to the needs of its employees, customers
and the community at large. We are an
organisation which uses everyone’s talents
and abilities and where diversity is valued.
Employees with disabilities
It is our policy that people with disabilities
should have full and fair consideration
for all vacancies. We remain committed
to maintaining the current open, fair and
non-discriminatory recruitment process
operated throughout the Group, and
seek to have full engagement with any
employee who becomes disabled during
their employment.
Year overview
This has been another good year in
developing our people at all levels.
We are pleased to report that our
Group-wide induction training, which
was launched last year, has been hugely
successful and now forms part of our
onboarding process for all new
employees at all levels. We believe that
an employee’s first impressions of an
organisation have a significant impact
on their integration within the team and
their level of job satisfaction.
27%
73%
The Group
employs,
1,082 people*.
which is split
as follows:
786 Men
296 Women
27%
73%
Senior Managers
and Executives,
male and female*:
11 Men
4 Women
*As at 1 September 2018.
It is important to us that induction is not
just treated as a ‘tick box’ exercise, but is
seen as a great opportunity to introduce
new employees to the culture and ways
of working of the business. We all
need to invest time in inducting new
employees to help them settle in,
become productive more quickly and
take our business forward.
The course covers the following areas:
• Company History;
• Company Structure;
• Vision, Strategy and Values;
• The Way We Work;
• Introduction to Health & Safety; and
• Customer Service.
In addition to induction training, we
have been able to produce a full Training
Calendar covering a 12 month period for
all levels. The calendar, which is accessible
to employees through Carr’s Connect,
includes a range of development courses
which can be selected to meet a variety
of training needs. Uptake across the
Group has been very strong with many
employees taking an active interest in the
development of their skills. We continue
to encourage employees to consider their
own development and incorporate
learning into their roles across the Group.
As part of our ongoing commitment
to supporting professional development,
we ran two Management Development
Programmes during 2018 for Line
Managers to enhance their leadership skills.
The programme includes essential
modules that help managers increase
their level of knowledge and implement
effective workplace principles and practices.
Module 1 Roles and responsibilities in
leadership and management
Module 2 Problem solving and decision
making
Module 3 Communication and crucial
conversations
Module 4 Conflict and conducting
disciplinary meetings
Module 5 Performance management
Module 6 Communication and
effective behaviours
in meetings
23
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Corporate Responsibility (continued)
We have also developed a new Leadership
Development Programme which builds upon
the Management Development Programme.
Module 1 Differentiating self as leader
Module 2 Common language and
behaviours
Module 3 Uncertainty and ambiguity
Module 4 Success and sustainability
During 2017-2018 there have been several
Health and Safety initiatives in both the UK
and overseas. Certain UK businesses within
the Engineering division have achieved
ISO 18001 accreditation. In the Agriculture
division, we have rolled out further IOSH
accredited training at both supervisory
and senior management level and
appointed a Health and Safety specialist
to work across the UK businesses.
HEALTH AND SAFETY
The Group remains fully committed to the
maintenance of high standards of health
and safety for all of its employees, visitors,
customers, and any others who may be
affected by the activities of its businesses.
Health and safety is continually monitored
and the Group strives to make
progressive improvements.
The CEO, Group FD and Group Risk
Manager meet monthly in advance of each
Board meeting to review health and safety
which is a permanent high-agenda item.
Every Board meeting involves
a detailed review of statistics, auditing
activity and other initiatives as well as
ensuring the Board are alerted to key
risk management and legislative changes.
The Board also endorses an ongoing
programme of improvements.
Since 2015, Non-Executive Director Ian
Wood has closely overseen health and
safety across the Group at Board level
providing support to the Executive
Directors and Group Risk Manager.
This has helped the Group deliver its
programme of improvements and ensure
that policies and practices are in line with
the recommendations of the Institute
of Directors and HSE.
The Group Risk Manager continuously
monitors safety performance to ensure
there is a high standard of health and
safety management across all Group
businesses. This includes a rolling
programme of site audits.
The overall number of accidents for the
Group as a whole, including the overseas
businesses, was 56, an increase of 12
on the 44 accidents recorded during
the previous year.
This increase, whilst on the face of it
disappointing, is largely attributable to
an increase in the number of minor injury
accidents in the UK Agriculture Division
which reflects the increased emphasis
being afforded across the Group to
near-miss and accident reporting.
The number of RIDDOR reportable injuries
and overseas equivalents has however
remained constant from the previous year
at 4. The number of days lost in the year
arising from these was 71, an increase from
57 in the previous year.
24
The Board remains committed to
continuously improving standards of
health and safety across the Group and
is confident that its policy of increased
awareness and appropriate training will
best ensure the safety and wellbeing
of the workforce.
SUSTAINABILITY
As a Group, we are committed to improving
our environmental impact and continue
to make progress towards our target
of achieving a 25% reduction in our carbon
footprint by 2020 (against our 2012
baseline). The Group’s Environmental
Committee meets four times each year
with active representation from UK
subsidiaries across the Group.
Through continued investment in
state-of-the-art equipment, energy
efficient lighting and in improving
processes, the Group continues to reduce
its carbon generation. The Group wide
Environmental Reporting System is fully
operational for both UK and overseas
subsidiaries. Each subsidiary and business
location reports the following monthly
data and performance against pre-set
benchmarks:
• Energy and Carbon Generation;
• Water Utilisation;
• Waste Generation and Recycling;
• Transport Fuels; and
• Environmental Legislation/Compliance.
During 2015 the Group undertook a full
Energy Audit in accordance with the
mandatory Energy Savings Opportunity
Scheme (ESOS), and the findings and
energy saving opportunities identified
from the audit were presented to the
CEO and duly signed off as required by
law. We have already adopted many of
the recommendations highlighted in that
report, and will continue with our
programme of implementation, which
has resulted in progressive improvements
to the Group’s environmental impact.
A second ESOS Energy Audit is currently
being planned for early 2019 and will be
completed before December 2019.
During 2017, and in light of the results
from our ESOS Energy Audit, we carried
out a comprehensive review of how
energy data is collected across the Group
in order to ensure that the data we
collect is accurate, readily comparable
and consistently recorded. That review
has helped improve the manner in which
data is collected and can be reported.
All Engineering and Manufacturing sites
across the UK within the Group now
purchase their energy from Haven Power
Limited which, during the 12 months
ended 31 March 2017, sourced 84.3%
of its electricity from renewable sources.*
*Haven Power Limited Annual Disclosure
Statement 2018
Carbon Generation Report
The Group did not generate any additional
greenhouse gases other than Carbon
Dioxide (CO2) from the utilisation of grid
supplied electricity and natural gas during
the year ended 1 September 2018. The
energy intensive UK feed blocks business
continued to be in receipt of Climate
Change Discount Agreements in exchange
for target carbon reductions. Those targets
were met by the business during the year.
The table below details the CO2 generation
of each of the Group’s divisions and
compares volumes against the previous year.
The total amount of CO2 generated
across the Group during the year ended
1 September 2018 was 18,806 tonnes,
an increase from 16,692 tonnes in the
previous year. This increase is largely
due to increased levels of activity in
Agriculture and also the acquisition of
NuVision in September 2017.
Carr’s Group – Carbon CO2
Generation 2017/18 v 2016/17
Division
CO2
Tonnes
2017/18
CO2
Tonnes
2016/17
UK Agriculture
2,406
1,815
Overseas
Agriculture
UK Engineering
Overseas
Engineering
Head Office
Sub Total
Transport
Total
11,627
996
476*
55
15,560
3,246
18,806
*Includes NuVision Engineering, Inc.
10,789
944
234
52
13,834
2,858
16,692
Carr’s Group plcAnnual Report and Accounts 2018 Energy Utilisation
The table below details overall electricity and gas consumption across the Group
in the year ended 1 September 2018.
Annual UK Group Electricity Consumption
Group Overseas Electricity Consumption
Annual UK Group Gas Consumption
Group Overseas Gas Consumption
Total Other Fossil Fuel Consumption
4,446,191 kWh
5,233,313 kWh
7,559,714 kWh
50,953,986 kWh
12,046,644 kWh
Total UK Electricity by Trading Division
Environmental Protection
1.5%
6.1%
0.6%
18.1%
8.5%
27.4%
16.9%
20.9%
CBAS
Carrs MSM
Caltech Crystalyx®
Hinds Bendalls
Scotmin Nutrition
Head Office
Bendalls Engineering
Chirton Engineering
Total 4,446,191 kWh
Transport Fuels
During the year ended 1 September 2018
the Group utilised 1,212,765 litres of diesel
and petrol fuel for fleet vehicles and
company cars throughout its UK
operations. The amount of CO2
generated from this fuel consumption
was 3,246 tonnes, up from 2,858 tonnes
in the previous year.
Intensity Metric
Due to the diverse nature of the Group’s
operations, we measure our relative
carbon footprint by reference to the
Group’s overall size and activities. During
the 2017/18 financial year, the Group
generated 18,806 tonnes of CO2 against
its overall turnover of £403.2m which
equates to 46.6 tonnes per £m turnover.
This represents an improvement of 3.5%
against our 2016/17 financial year during
which the Group generated 48.2 tonnes
per £m turnover.
The CO2 emissions data is reported
in metric tonnes. The CO2 emissions
data has been calculated on the basis
of measured energy and fuel use and
multiplied by relevant CO2 conversion
factors, as approved by the Department
of Energy. Fuel and energy use are based
on direct measurement verified through
purchase invoices for the vast majority
of our sites and collected centrally for the
entire Group.
We remain committed to protecting
the environment and reducing the
impact of our business through best
practice. Large manufacturing sites
across the Group continue to operate
within the emission levels set by the UK
Environment Agency and their current
permit conditions. All sites operate
within the framework of a full
Environmental Management System.
All employees across the Group are
actively encouraged to reduce waste
and improve energy efficiencies and
we carefully monitor waste and recycling
across the businesses. We have a strict
Group Environmental Policy which is
managed by the Group’s Environmental
Committee. Waste and energy
consumption targets are set for each
business across the Group annually
which are monitored as part of our
commitment to reducing our
environmental impact.
COMMUNITY
Carr’s takes an active role in supporting
the communities in which it operates.
During 2018, that support has taken
a variety of forms including charitable
monetary donations, fundraising and
voluntary work.
Carrs Billington Agriculture (Sales) Ltd
continues to be part of Zeus Packaging
Group’s global initiative to support
children’s charities in Ireland, the UK,
Spain, Portugal, New Zealand and
Australia. This has seen Carrs Billington
be provided with the exclusive
distribution rights of Zeus Purple Silage
wrap and Purple Netwrap in the UK to
support WellChild, the national charity
for sick children.
In addition to the proceeds Carrs
Billington raised, it ran a competition
to support WellChild requiring farmers
to create eye-catching displays from
their purple hay bales which could be
customised with accessories. Farmers
taking part submitted their photos of
their creations, which were then displayed
on social media.
In August 2018, a team of 32 Carr’s
employees successfully completed the
Total Warrior Lakes challenge, together
raising over £2,400 to be shared between
the Adult Brain Tumour Fund at The
Christie and Macmillan Cancer Support.
During the year, Carr’s participated in the
Dream Placement Programme, developed
by the Centre for Leadership
Performance, designed to give young
people industry experience and an insight
into the work of senior management and
leaders of leading Cumbrian businesses.
Carr’s also maintains its relationship
with Carlisle Youth Zone, which
continues to serve the social, recreational
and emotional needs of young people
in the Carlisle area.
25
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Corporate Governance Report
Good governance is central to the integrity, reputation and
performance of the Group. The Board remains committed
to maintaining high standards.
CHAIRMAN’S OVERVIEW
The Group’s governance framework
is designed to safeguard its long-term
success for the benefit of shareholders
and other stakeholders. It continues
to evolve as the Group develops and
promotes transparency, respect and
accountability. It ensures that the Board
can operate in a culture of openness
which, coupled with its wealth of
expertise and the collaborative attitude
which permeates the Group, optimises
its effectiveness.
The Board is pleased to describe its
approach to governance in the following
report, which describes how the Group
has integrated the main principles of the
UK Corporate Governance Code (the
“Code”). In 2017, the Board reviewed its
membership of the Audit and Remuneration
Committees. As a result, I stood down
from both Committees to ensure that
they are comprised exclusively of
Non-Executive Directors considered
by the Board to be independent. I am
pleased to report that as a result of this
change in 2017, the Board considers that
it is in full compliance with the Code.
During the year, the Board and its
Committees considered the FRC’s
Consultation on the Proposed Revisions
to the UK Corporate Governance Code
and, subsequently, the 2018 Corporate
Governance Code which was published
on 16 July 2018. The 2018 Code will apply
to the Group from September 2019.
During the current financial year, the
Board will continue its review of the 2018
Code with a view to taking any steps
required to ensure that the Group’s
governance framework remains robust,
effective and reflective of good
governance practice.
STATEMENT OF COMPLIANCE
WITH UK CORPORATE
GOVERNANCE CODE
The UK Corporate Governance Code
dated April 2016 and issued by the
Financial Reporting Council sets out
standards of good practice in relation
to issues such as:
• Board composition and effectiveness;
• the role of Board committees;
• risk management;
• remuneration; and
• relationships with shareholders.
We are required to state how we have
applied the principles contained in the
Code and explain any areas where
compliance has not been possible during
the year.
The Board considers that the Company
has, during the year ended 1 September
2018, complied with the requirements of
the Code in their entirety.
THE BOARD
The Directors have a collective duty to
promote the long term success of the
Company for its shareholders. In
determining long-term strategy and
objectives of the Group, the Board is
mindful of its duties and responsibilities
to shareholders as well as employees
and other stakeholders. The Board
reviews management and financial
performance, and monitors strategic
delivery and achievement of business
objectives.
The Board’s time can be grouped into
six key areas as outlined opposite.
A portion of their time is also spent
on administrative matters.
CHRIS HOLMES DL
Chairman
19 November 2018
CHRIS HOLMES
CHAIRMAN
26
Carr’s Group plcAnnual Report and Accounts 2018 OUTLINE OF MATTERS FOR BOARD
Strategy
• Setting strategic targets.
• Reviewing new business
developments and opportunities
including potential acquisitions.
• Research and technology.
Risk
• Group’s risk and internal
control framework.
Governance
• Legal updates and new
disclosure requirements.
• Internal Board review.
• Succession planning.
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 the Companies
Act 2006.
During the year ended 1 September
2018, the Board comprised two
Executive Directors, a Non-Executive
Chairman, and three Non-Executive
Directors. There is a Company Secretary
to the Board. The biographies of the
Board can be found on page 21.
The Board met 11 times throughout the
year. In addition to the regular scheduled
meetings, unscheduled supplementary
meetings may also take place as and
when necessary. During this financial
year it was not necessary for any
unscheduled meetings to take place.
Directors who are unable to attend
a particular meeting receive relevant
briefing papers and are given the
opportunity to discuss any issues with
the Chairman, the Chief Executive or the
Group Finance Director.
To enable the Directors of the Board to
carry out their responsibilities all Directors
have full and timely access to all relevant
information. The Board maintains a
schedule of matters reserved for the
Board which is reviewed against best
practice. A summary of those matters is
set out below and a full schedule is
available on the Company’s website.
The Board is responsible for:
• the Group’s strategy;
• acquisitions and divestment policy;
• corporate governance, risk and
environment policy and management;
• approval of budgets;
• general treasury policy;
• major capital expenditure projects;
• dividend policy; and
Finance
• Budget approval.
• Monitoring financial performance.
• Oversight of the preparation
and management of the
financial statements.
• Dividend policy.
• Pensions strategy.
Stakeholder engagement
• AGM and other shareholder feedback.
• Investor calls, meetings
and roadshows.
Safety
• Health and Safety monthly updates
and management review.
• monitoring the Group’s profit and
cash flow performance.
The Board has delegated its authority
to the Audit, Remuneration, and
Nominations Committees to carry out
certain tasks as defined in their written
terms of reference approved by the
Board; these are also available on the
Company’s website.
The Code stipulates that there should
be a clear division of responsibility
between Board governance and
executive management.
The Chairman is responsible for:
• providing effective leadership of
the Board;
• promoting ethical behaviours and high
standards of corporate governance;
• ensuring the effectiveness of the
Board in fulfilling its responsibilities;
• setting the Board agenda;
• ensuring that members of the Board
are well informed to enable the Board
to make sound and effective decisions
and ensure constructive discussion;
• ensuring effective communication
with shareholders and
other stakeholders;
MEETING ATTENDANCE
• identifying and meeting (in
conjunction with the Company
Secretary) the development needs of
the Board and for each Director; and
• providing strategic insight and
a sounding board for the
Chief Executive on key business
decisions, and challenging proposals
where appropriate.
The Chief Executive is responsible for:
• the day-to-day management of the
Group’s business;
• leading the business and the rest of
the management team in accordance
with the strategy agreed by the Board;
• leading the development of the
Group’s strategy with input from the
rest of the Board;
• leading the management team in the
implementation of the Group’s
strategy; and
• bringing matters of particular
significance to the Chairman for
discussion and consideration by the
Board if appropriate.
Elections
The Company’s Articles of Association
provide that one third of the Directors
retire by rotation each year at the
Annual General Meeting, however, the
Company considers it best practice to
require all the Directors to retire and
stand for re-election annually.
Attendance and Agenda
In advance of all Board meetings the
Directors are supplied with detailed and
comprehensive papers covering the
Group’s strategy, performance and
operations. Members of the executive
management team attend and make
presentations as appropriate at meetings
of the Board. The Company Secretary is
responsible to the Board for the
timeliness and quality of information.
Details of the number of meetings of,
and members’ attendance at, the Board,
Audit, Remuneration and Nominations
Committees during the period are set
out in the table below.
Board
Audit
Committee
Remuneration
Committee
Nominations
Committee
No. of meetings
Chris Holmes
Tim Davies
Neil Austin
Alistair Wannop
John Worby
Ian Wood
11
11
11
11
11
11
11
*Attended meeting in full or part by invitation
3
3*
3*
3*
3
3
3
6
6*
N/A
N/A
6
6
6
1
1
1*
1*
1
1
1
27
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Corporate Governance Report (continued)
Support
Directors can obtain independent
professional advice at the Company’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.
In addition to these formal roles, the
Non-Executive Directors have access to
senior management across the Group
either by telephone or via involvement
at informal meetings.
DIRECTORS’ CONFLICTS
OF INTEREST
The Companies Act 2006 and the
Company’s Articles of Association
require the Board to consider any
potential conflicts of interest. The Board
has a policy and procedures for
managing and, where appropriate,
authorising actual or potential conflicts
of interest. Under those procedures,
Directors are required to declare all
Directorships or other appointments to
organisations that are not part of the
Group and which could result in actual
or potential conflicts of interest, as well
as other situations which could result in
a potential conflict of interest.
The Board is required to review
Directors’ actual or potential conflicts of
interest at least annually. Directors are
required to disclose proposed new
appointments to the Chairman before
taking them on, 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 this financial year
there have been no declared conflicts
of interest.
BOARD EVALUATION
Each year the Board undertakes a review
of its effectiveness. During 2017 the
Board conducted an independent
external review which was facilitated by
Independent Audit Limited. That review
covered the whole Board, together
with its Audit, Nominations and
Remuneration Committees which were
each considered separately. Particular
focus was given to the effectiveness and
appropriateness of the composition of
the Board and of the Committees.
Scrutiny was also applied to the question
of the continued independence of Non-
Executive Directors.
The review commenced with discussions
between Independent Audit and the
Chairman and Company Secretary.
Those discussions led to the design of
28
detailed and bespoke questionnaires
which were subsequently disseminated
to the Board, certain other senior
executives and, in the case of the
evaluation of the Audit Committee, the
Company’s auditors (PwC). The
questionnaires were completed, entirely
in confidence, and a draft report was
produced by Independent Audit
analysing the feedback provided.
Following further discussions between
Independent Audit and the Chairman
and Company Secretary, a full report
was produced and presented to the
Board by Independent Audit which drew
positive conclusions including that the
Board and its Committees were
performing effectively and are
appropriately constituted. The report
went on to make certain further
recommendations including the
planning of agendas to include further
business-specific reviews and increasing
the focus on succession planning and
people issues more generally.
During 2018, the Board carried out an
internal review which built upon the
2017 external review. The internal review
was led by the Chairman with the
assistance of the Company Secretary. It
commenced with discussions between
the Chairman and the Company
Secretary, a review of the findings of the
2017 external review and of progress
made during the year against its
recommendations. The discussions led to
the design of a questionnaire which was
disseminated to members of the Board.
Responses to the questionnaires were
collated by the Company Secretary and
a report presented to the Board detailing
any views expressed by members of the
Board together with progress made to
date against previous recommendations.
That report was the subject of a detailed
and constructive discussion by the Board.
The 2018 review demonstrated that
progress had been made towards
implementing the recommendations
made in 2017. In particular, the Board
agenda continues to include a number of
site visits each year and greater focus has
been placed on succession and people
issues both by the Board and the
Nominations Committee. The review
confirmed the conclusions drawn in 2017
that the Board and its Committees were
performing effectively and were
appropriately constituted. Further actions
agreed by the Board following the 2018
review included continuing to place
further emphasis on succession planning,
continuing the Board’s review of the
Group’s corporate governance framework
in the light of the 2018 Code, increasing
internal audit activity during this financial
year and further developing the
information reported to the Board in
respect of KPIs in the Engineering division.
During the year, the Chairman also
evaluated the performance of the
Directors through informal discussions
and observations. The Senior
Independent Non-Executive Director
and the other Non-Executive Directors
have met, without the Chairman
present, to appraise his performance.
Overall the Board considered the
performance of each Director to be
effective and concluded that the Board
and its Committees provide effective
leadership and that appropriate
governance and controls are in place.
The Board will continue to review its
procedures, effectiveness and
development in the future.
NON-EXECUTIVE
DIRECTOR INDEPENDENCE
The outcomes from the external review
in 2017 and the internal review in 2018
also enabled the Board to confirm its
views in relation to Non-Executive
Director independence. This was given
greater focus due to the tenure of Alistair
Wannop being more than nine years.
The reports did not highlight or give rise
to any issues or concerns in relation to
the independence of any Directors and
confirmed the Board’s view that
independence cannot be determined
solely by reference to the tenure of any
Director, particularly in the absence of
any other circumstances or matters
(including those detailed at paragraph
B.1.1. of the Code) which could give rise
to independence being questioned.
The Board noted that Alistair Wannop
had no material business relationships
with the Company, does not hold
a significant shareholding, does
not represent any shareholder, does
not have any family connections with
the Company, and has not served the
Company in any capacity other than
as a Non-Executive Director. The Board
was entirely satisfied that Alistair
Wannop continued to exercise the level
of objectivity and challenge that would
be expected of an independent
Non-Executive Director and that his
knowledge of the Company and the
markets in which it operates was of
enormous benefit to the Board. The
Board has therefore determined that
Alistair Wannop, Ian Wood and John
Worby are independent. The question
of Non-Executive Director independence
is a matter which is kept under review
and thoroughly assessed by the Board.
Carr’s Group plcAnnual Report and Accounts 2018 BOARD COMMITTEES
Audit Committee
The Audit Committee’s key function
is to review the effectiveness of the
Company’s financial reporting and
performance of the external auditor.
The Audit Committee comprises three
independent Non-Executive Directors:
John Worby (Chairman), Ian Wood and
Alistair Wannop. The Board considers
that the Committee meets the
requirements of the Code and is
appropriate for a company its size.
In particular, the three members bring
financial, agricultural and engineering
experience to the Committee together
with a good understanding of the
businesses within the Group and the
risks that they face. The work,
responsibilities and governance of the
Audit Committee are set out on pages
30-32. The Chairman of the Audit
Committee will be available at the AGM
to answer any shareholder questions on
the Committee and its activities.
Remuneration Committee
The Remuneration Committee
comprises three independent Non-
Executive Directors: Ian Wood
(Chairman), John Worby and Alistair
Wannop. The work, responsibilities and
governance of the Remuneration
Committee are set out on pages 33-43.
The Chairman of the Remuneration
Committee will be available at the AGM
to answer any shareholder questions on
the Committee and its activities.
Nominations Committee
During the year the Nominations
Committee comprised Chris Holmes
(Chairman), Alistair Wannop, John Worby
and Ian Wood. The work, responsibilities
and governance of the Nominations
Committee are set out on page 44-45.
The Chair of the Nominations
Committee will be available at the AGM
to answer any shareholder questions on
the Committee and its activities.
RELATIONS WITH SHAREHOLDERS
The Board recognises and values the
importance of good communications
with all shareholders. The Group
maintains dialogue with substantial
and institutional shareholders and
analysts, and hosts presentations on
the preliminary and interim results.
Shareholders have access to the
Company’s website
at www.carrsgroup.com.
We engage with our shareholders
through our regular communications.
Significant matters relating to trading or
development of the business are
disseminated to the market by way of
Stock Exchange announcements. We
announce our financial results on a six
monthly basis with all shareholders
receiving a half year statement, and we
produce trading updates during the
year. All reports and updates are
made available on the Company’s
website.
The AGM provides all shareholders with
the opportunity to develop further their
understanding of the Group. It is the
principal forum for all the Directors to
engage in dialogue with private
investors. All shareholders are given the
opportunity to raise questions on any
matter at the meeting. The Company
aims to send notices of AGMs to
shareholders at least 20 working days
before the meeting, as required by the
Code, and it is the Company’s practice
to indicate the proxy voting results on
all resolutions at the meetings. Following
the AGM the voting results for each
resolution are published and are
available on the Company’s website.
FAIR, BALANCED AND
UNDERSTANDABLE
The Directors have also reviewed the
financial statements and taken as a
whole consider them to be fair, balanced
and understandable, and provide the
information necessary for shareholders
to assess the Group’s performance,
business model and strategy.
INTERNAL CONTROL
The Board of Directors has overall
responsibility for the Group’s system of
internal control and for reviewing its
effectiveness, including: financial,
operational and compliance controls
and risk management, which safeguard
the shareholders’ investment and the
Group’s assets. Such systems can only
provide reasonable and not absolute
assurance against material misstatement
or loss, being designed to manage rather
than eliminate the risk of failure to
achieve business objectives.
The Board of Directors is not aware of
any significant losses caused by breaches
of internal control in the year.
The Group operates within a clearly
defined organisational structure with
established responsibilities, authorities
and reporting lines to the Board. The
organisational structure has been
designed in order to plan, execute,
monitor and control the Group’s
objectives effectively and to ensure that
internal control becomes embedded in
the operations. The Board confirms that
the key on-going processes and features
of the Group’s internal risk based control
system, which accord with the Turnbull
guidance, have been fully operative
throughout the year and up to the date
of the Annual Report being approved.
These include: a process to identify and
evaluate business risk; a strong control
environment; an information and
communication process; a monitoring
system and a regular Board review for
effectiveness. The Group Finance
Director is responsible for overseeing
the Group’s internal controls.
The Group’s internal controls systems
cover controls over the financial
reporting process, including monthly
reporting from subsidiaries, its associates
and joint ventures. This reporting is
subject to detailed review by the Chief
Executive and the Group Finance
Director, and 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 auditors.
The management of the Group’s
businesses identified the key business
risks within their operations, considered
the financial implications and assessed
the effectiveness of the control
processes in place to mitigate these risks.
The Board reviewed a summary of the
findings and this, along with direct
involvement in the strategies of the
businesses, investment appraisal and
budgeting process, enabled the Board
to report on the effectiveness of
internal control. A summary of the risk
management framework and
key risks to the business are set out
on pages 14-16.
By order of the Board
MATTHEW RATCLIFFE
Company Secretary
Carlisle
CA3 9BA
19 November 2018
29
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Audit Committee Report
During the year, the Committee conducted an audit tender
whilst continuing its focus on contract accounting and the
enhancement of controls within the Engineering division.
I would also like to welcome KPMG
to the role from next year and we look
forward to working alongside them
in 2019.
RESPONSIBILITIES
The key responsibility of the Committee
is to provide effective governance over
the appropriateness of the Company’s
financial reporting.
Under its terms of reference, the
Committee is required, amongst other
things, to:
• monitor the integrity of the financial
statements of the Company including
the appropriateness of the accounting
policies adopted and whether the
Annual Report was fair, balanced and
understandable;
• review, understand and evaluate the
Company’s internal financial risk, and
other internal controls and risk
management systems;
• appraise the Board on how the
Company’s prospects are assessed;
• oversee the relationship with the
external auditors, making
recommendations to the Board
in relation to their appointment,
remuneration and terms of
engagement;
• monitor and review the effectiveness
of the external audit including the
external auditors’ independence,
objectivity and effectiveness and
to approve the policy on the
engagement of the external auditors
to supply non-audit services; and
• monitor and review the internal audit
activities in the Company.
The Committee’s terms of reference
can be found on the Company’s website
www.carrsgroup.com.
COMPOSITION OF COMMITTEE
AND MEETINGS
The Audit Committee comprises the three
Non-Executive Directors, John Worby,
who is Chairman of the Committee,
Ian Wood and Alistair Wannop. The
Chairman of the Committee has recent
and relevant financial experience and
collectively the members of the
Committee have experience of the
agricultural and engineering industries.
Details of Committee members’
qualifications can be found on page 21.
The Audit Committee met three times
during the year, and has an agenda
linked to the Group financial calendar.
It invites the Chairman, the Chief
Executive, the Group Finance Director,
the Head of Group Finance, the Head
of Business Finance and the external
auditors to attend its meetings.
The Committee met with the external
auditors at the conclusion of the
audit without the Executive Directors
being present.
The Committee has met once since the
end of the financial year to consider the
results and the Annual Report for the
year ended 1 September 2018.
MAIN ACTIVITIES DURING THE YEAR
Set out below is a summary of the key
areas considered by the Committee
during the year and up to the date
of this report.
FINANCIAL REPORTING
During the year the Audit Committee
reviewed reports and information
provided by both the Group Finance
Director and the external auditors in
respect of the half year and annual
financial report.
An important responsibility of the Audit
Committee is to review and agree
significant estimates and judgements
made by management. To satisfy this
responsibility, the Committee reviewed
a written formal update from the Group
Finance Director on such issues at the
two meetings that reviewed the half
year and year end results, as well as
reports from the external auditors. The
Committee carefully considered the
content of these reports in evaluating
the significant issues and areas of
judgement across the Group.
JOHN WORBY
CHAIRMAN OF THE AUDIT COMMITTEE
INTRODUCTION
On behalf of the Audit Committee, I am
pleased to present this report to
shareholders. The purpose of the report
is to highlight the areas that the
Committee has reviewed and how we
have discharged our responsibilities
effectively during the year. This has been
a significant year for the Committee,
having conducted an external audit
tender process during the spring.
The report sets out full details of the
external audit tender and selection
process which resulted in KPMG LLP
(‘KPMG’) being selected as auditors
subject to approval at the AGM in
January 2019.
Given the historic association with the
Group, having first been appointed
in 1909, and in the spirit of the UK
corporate governance framework,
PwC were not invited to re-tender
for the audit.
On behalf of the Board and the Audit
Committee, I would like to thank
PwC for their level of diligent service
to the Group over what has been
a remarkable period.
30
Carr’s Group plcAnnual Report and Accounts 2018 The key areas of judgement in the year
were as follows:
• The assumptions adopted for the
accounting valuation of our defined
benefit pension scheme. The
Committee concluded that the
assumptions used were appropriate;
• Potential impairment of assets
including goodwill particularly
in relation to the UK Engineering
businesses of Bendalls and Chirton,
given the performances of these
businesses in the prior year.
The Committee noted that the
performance of Chirton was
significantly better than the prior
year and ahead of expectations.
The Committee also noted that
there had been improvements made
to the controls in operation across
both businesses. Whilst the
performance of Bendalls was much
improved, it was below original
expectations. In the light of this, the
Committee determined that an
impairment of the goodwill associated
with Bendalls should be made
totalling £0.5m. The Committee was
satisfied that the remaining carrying
value of the Bendalls business was
recoverable. In relation to Chirton,
it was determined that, given its
financial performance during the year,
no further impairment of goodwill
was required over and above that
made in 2017;
• Provisioning policies in relation to
accounts receivable, particularly in the
Agriculture division, and for certain
disputes and potential claims/
liabilities. The Committee determined
that the judgments made were
appropriate to justify the provisions
held at 1 September 2018;
• Accounting for long term contracts.
The Committee reviewed
performance on certain contracts in
the Engineering division which were
only part complete at the year end
and agreed with management’s
judgements; and
• Finalisation of the valuation of certain
intangible assets of NuVision following
its acquisition in August 2017. The
Committee concluded the valuations
were appropriate.
The Committee, further to the Board’s
request, has reviewed the annual report
and financial statements with the
intention of providing advice to the
Board on whether, as required by the
Code, ‘the annual report and accounts,
taken as a whole, is fair, balanced and
understandable and provides the
information necessary for shareholders
to assess the company’s performance,
business model and strategy’.
audit plan to us each year identifying
their assessment of these key risks.
To make this assessment, the Committee
reviewed a report prepared by the
Group Finance Director outlining the
relevant key matters worthy of
consideration. The Committee was
satisfied that, where relevant, all the
key events and issues which have been
reported to the Board in the CEO’s
monthly reports during the year, both
good and bad, have been adequately
referenced or reflected within the
annual report.
The Committee has also reviewed the
Group’s going concern and viability
statement disclosures. It received a
written report prepared by the Group
Finance Director which enabled it to
review the base assumptions and various
sensitised scenarios throughout the
forecast period. The Committee was
comfortable with the disclosures made.
INTERNAL CONTROL AND RISK
MANAGEMENT
During the year the Committee
continued to review the effectiveness
of the Group’s internal control and risk
management systems. The Committee
noted that work done by internal
audit, as discussed below, confirmed
that recommendations made in the
prior year to improve controls
in the UK Engineering business had
been implemented.
The Committee reported to the
Board that it had reviewed, and was
satisfied with, the effectiveness of the
Company’s internal control and risk
management systems.
EXTERNAL AUDIT
PwC and its predecessor firms have
been the external auditors for Carr’s
Group plc since 1909. The Audit
Committee annually assesses the
qualification, expertise and
independence of the auditors and the
effectiveness of the audit process.
PwC’s current engagement partner
is Bill MacLeod, and he has been
in place since being appointed for the
Group’s 2014 year end.
Following approval by shareholders
to re-appoint PwC at last year’s AGM,
the Audit Committee reviewed and
approved the terms of engagement
and remuneration of the external
auditors for the 2018 financial year.
AUDIT EFFECTIVENESS
The effectiveness of the external audit
process is dependent on appropriate
audit risk identification at the start of the
audit cycle. PwC present their detailed
Our assessment of the effectiveness
and quality of the audit process and
addressing these key risks is formed by,
amongst other things, the reporting
from the auditors. In addition, each year,
the Audit Committee assesses its
performance and the effectiveness
of the external auditor through a
questionnaire completed by Audit
Committee members and members
of the Group’s senior finance team.
The output of that review was
considered in detail, discussed by the
Audit Committee and discussed with
the external auditors. The Committee
was satisfied with the review process,
the performance of the Committee and
the effectiveness of the external audit.
EXTERNAL AUDIT TENDER
The Audit Committee is responsible
for recommendations for the
appointment, reappointment or removal
of external auditors and for approval
of their remuneration.
As indicated in our 2017 Annual Report
and Accounts, and in accordance with
regulatory requirements, the Committee
initiated and supervised a tender process
with a view to appointing a new
external auditor for the 2019 year end
following the conclusion of the five year
term of the current audit partner.
As explained above, PwC were not
invited to tender due to their length
of service to the Group. Following a
detailed shortlisting process, three audit
firms were selected which were
considered to have suitable experience
across both of the Group’s divisions and
in each of the Group’s geographies.
The process was overseen by the Audit
Committee Chair, who also chaired the
selection panel.
The tender process commenced in
December 2017 with the establishment
of a secure data room accessible to
tendering firms. Invitations to tender
were issued in January 2018 and
meetings with the Chairman of the
Company, Audit Committee Chairman
and key management across the Group
took place during February and March
2018. Tender proposals were submitted
in March 2018 which were followed
by presentations being delivered by
tendering firms to the selection panel,
which comprised the Audit Committee
Chairman and key Group management
in April 2018.
31
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Audit Committee Report (continued)
audit work was focused on reviewing
the controls in the UK Engineering
business and ensuring appropriate
implementation of the controls
recommendations from the 2017 review.
In view of its establishment during the year,
no formal review of internal audit was
undertaken in the year but it is planned
this will be undertaken in the year ahead
when the internal audit function is
anticipated to be in full operation.
OTHER ACTIVITIES
The Committee also reviewed its terms
of reference, its effectiveness, the
Group’s policies on whistleblowing,
business ethics and on the prevention
of bribery and modern slavery.
As Chairman of the Committee, I will
be available at the Annual General
Meeting to respond to any shareholder
questions that might be raised on the
Committee’s activities.
JOHN WORBY
Audit Committee Chairman
19 November 2018
In accordance with the Auditing
Practices Board Ethical Standards, the
Group’s external auditor must implement
rules and requirements which include
that none of their employees working
on our audit can hold any shares in Carr’s.
The external auditor is also required to
tell us about any significant facts and
matters that may reasonably be thought
to bear on their independence or on the
objectivity of the lead partner and the
audit team. The lead partner in the audit
team must change every five years.
The Audit Committee reviewed and
approved the non-audit services policy,
the objective of which is to ensure that
the provision of such services does not
impair, or is not perceived to impair, the
external auditors’ independence or
objectivity. The policy imposes guidance
on the areas of work that the external
auditors may be asked to undertake and
those assignments where the external
auditors should not be involved. There is
a further category of services for which
a case-by-case decision is necessary. The
policy can be viewed on the Company’s
website www.carrsgroup.com.
In order to ensure that the policy is
effective and the level of non-audit fees
is kept under review, major work to
be awarded to the audit firm must
be agreed in advance by the Audit
Committee Chairman. For the 2018
financial year end, there was no
non-audit work undertaken by the
Group’s auditors.
INTERNAL AUDIT
Following the acquisitions of NuVision
Engineering, Inc and STABER GmbH
it was determined in 2017 by the
Committee to be appropriate, given the
increased diversity and geographic
spread of the Group’s engineering
division, for an internal audit function
to be established.
During the year, the Group appointed
an individual to the position of Head
of Internal Audit and established the
framework under which internal audit
will operate, including an internal audit
charter and a risk assessed internal
audit plan which was approved by the
Committee. During the year, the internal
The selection process was carried
out using rigorous scoring criteria
determined at the outset of the
tendering process which included
consideration of each firm’s:
• quality of service, approach and
expertise;
• independence, effectiveness and
efficiency;
• commitment and proactivity;
• culture and the potential for
relationship building;
• clarity of communication;
• audit quality procedures; and
• proposed fees, and ability to deliver
value.
The respective merits of the tendering
firms were subsequently debated by the
Committee and each of the members
of the selection panel. Ultimately, the
Committee recommended KPMG, with
Nick Plumb as lead audit partner, to the
Board as the Group’s new external
auditors as it was considered that they
were best placed to fulfil the selection
criteria and deliver an effective audit
service to the Group.
The Board’s proposed appointment of
KPMG to act as the Group’s auditors for
the 2019 financial year was announced
on 27 April 2018. KPMG’s appointment
will be put to shareholders at the AGM
which will take place on 8 January 2019.
As part of KPMG’s preparations for their
engagment as external auditors, KPMG
attended the 2018 year end Audit
Commitee meeting.
AUDITOR INDEPENDENCE
The Group meets its obligations for
maintaining an appropriate relationship
with the external auditors through the
Audit Committee, whose terms of
reference include an obligation to
consider and keep under review the
degree of work undertaken by the
external auditor other than the statutory
audit, to ensure such objectivity and
independence is safeguarded.
32
Carr’s Group plcAnnual Report and Accounts 2018 Remuneration Committee Report
Performance and Remuneration
in 2017/18
How the policy will be implemented
in 2018/19
The Remuneration Committee
continually reviews the Directors’
Remuneration Policy to ensure it
promotes the attraction, retention and
incentivisation of high calibre executives
to deliver the Group’s strategy.
For 2018/19, the maximum annual bonus
for the Executive Directors’ will remain
100% of salary, with 25% of any bonus
being deferred for two years in the form
of shares. The Committee also intends
to grant LTIP awards of 100% of salary,
which will be based upon stretching
EPS targets.
Salary increases were awarded to the
Executive Directors effective
1 September 2018 of 2.5%. This is
consistent with the rest of the workforce.
I hope that you are able to support
the Remuneration Committee’s Report
at the forthcoming AGM.
IAN WOOD
Chairman of the
Remuneration Committee
19 November 2018
As described in the Strategic report,
the Group’s financial performance in the
year under review was better than the
Board’s original expectations. Overall,
reported profit before tax was up 55.0%
to £15.5m (2017: £10.0m) and adjusted
earnings per share was up 56.2% to 13.9p
(2017: 8.9p). In addition to this strong
financial performance, good progress
was made towards achieving the
Group’s strategic targets and in
positioning the business well for future
growth. The financial and strategic
targets set by the Remuneration
Committee, together with the resulting
remuneration payable to the Executive
Directors, are detailed in the
Remuneration Committee’s Report
which follows.
Key matters for consideration
in 2017/2018
The current Directors’ Remuneration
Policy was approved by shareholders at
the AGM which took place on 9 January
2018. As promised in the Remuneration
Report for 2017, which was also approved
at that AGM, the Committee has spent
time during the last year considering the
performance measures currently used
by the Committee in relation to LTIP. In
particular, the Committee has considered
a number of financial and market
performance measures with a view
to ensuring that the long-term incentives
offered to Executive Directors and Senior
Management best align with the interests
of the Group and its shareholders.
After a detailed consideration, involving
independent advice from remuneration
consultants and consultation with certain
shareholders, the Committee determined
that growth in adjusted earnings per
share (EPS) remained the most
appropriate measure against which the
long-term performance of the Group
should be assessed. This is because
growth in adjusted EPS directly measures
improvement in the Group’s underlying
financial performance and is visible to
shareholders. No changes to the
Committee’s Remuneration Policy are
therefore proposed this year.
33
IAN WOOD
CHAIRMAN OF THE
REMUNERATION COMMITTEE
ANNUAL STATEMENT
FROM THE CHAIR OF THE
REMUNERATION COMMITTEE
On behalf of the Remuneration
Committee and the Board, I am pleased
to present the Report of the
Remuneration Committee for the year
ended 1 September 2018.
The Committee’s report is presented
in the following sections:
1. This Annual Statement, which
summarises the key considerations
of the Committee during the year
and forms part of the Annual Report
on Remuneration.
2. The Directors’ Remuneration Policy,
which sets out the Policy for the
Executive Directors, Chairman and
Non-Executive Directors. The
Directors’ Remuneration Policy was
approved at the AGM which took
place on 9 January 2018. There are
no changes to the Directors’
Remuneration Policy for 2018/19.
3. The Annual Report on Remuneration,
which sets out how the Remuneration
Policy has been applied in 2017/18, the
remuneration received by Directors for
the year and how the policy will be
applied in 2018/19. The Annual Report
on Remuneration will be subject to an
advisory shareholder vote at the AGM.
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Remuneration Committee Report (continued)
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
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 account guidance
issued by shareholders and proxy
agencies. During both 2017 and 2018,
detailed discussions took place with
certain major shareholders and proxy
agencies with a view to formulating this
policy and any changes that might be
required to be made to it. The
Committee continues to welcome
feedback from shareholders received at
each AGM in addition to any feedback
received throughout the year.
REMUNERATION POLICY
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 delivering rewards to shareholders.
The remuneration policy is ultimately
designed to appropriately incentivise
Executive Directors with a view
to maximising shareholder value.
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, benefit
and pension; and
• a performance related element in the
form of an annual bonus and a Long
Term Incentive Plan.
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 policy was approved by the
shareholders at the AGM which took
place on 9 January 2018 and is therefore
currently in effect. No changes to the
policy are proposed for approval at the
forthcoming AGM on 8 January 2019.
The role of the Committee
The primary role of the Remuneration
Committee is to make recommendations
to the Board on the Company’s policy for
executive remuneration. The Committee
also has delegated responsibility for
determining the remuneration and
benefits of the Chairman, the Executive
Directors and the Secretary.
Key responsibilities include:
• determining the framework for the
remuneration of the Group’s Executive
Directors and Chairman;
• determining the total remuneration
packages, authorise terms and
conditions, and issue contracts
for the Board;
• approving the design and determining
the targets for performance related pay
schemes of the Executive Directors;
• reviewing the ongoing appropriateness
and relevance of the Remuneration
Policy to ensure that is it aligned with
the strategy of the Group;
• ensuring that the Group rewards
fairly and responsibly, with clear links
to both corporate and individual
performance; and
• reviewing the design of any share
incentive plans for approval by the
Board and shareholders.
34
Carr’s Group plcAnnual Report and Accounts 2018 REMUNERATION POLICY TABLE
Element
Base salary
Purpose and
link to strategy
To attract and
retain the best
talent.
Reflects an
individual’s
experience,
performance
and
responsibilities
within the
Group.
Policy and approach
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.
Opportunity
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
Benefits
Provides a
competitive
and appropriate
pension
package.
Executive Directors are entitled to participate in a defined
contribution pension arrangement or to receive a cash
alternative to those contributions.
Up to 15%
of base salary.
Company contributions are up to 15% of base salary.
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.
To aid retention
and remain
competitive
in the
market place.
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.
35
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Remuneration Committee Report (continued)
Element
Annual bonus
Purpose and
link to strategy
Policy and approach
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.
Opportunity
Maximum of 100%
of base salary.
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.
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.
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. These provisions apply
to both the cash and deferred elements of the bonus.
A 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.
Annual awards of performance shares which normally vest after
three years subject to performance conditions.
Maximum of 100%
of base salary.
Award levels and performance conditions required for vesting
are reviewed annually to ensure they continue to support the
Group’s strategy. Awards are capped at the equivalent of 100%
of base salary at the date of award.
Awards are based upon an EPS growth measure. During 2018
the Committee considered the potential introduction of one
or more additional LTIP performance measures in consultation
with certain major shareholders. Following such consultation,
it was determined that EPS remained the most appropriate
measure for assessing performance for the purpose of the
LTIP and so no changes to the LTIP are proposed this year.
25% vests at threshold performance. There is straight line
vesting between threshold and maximum.
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.
Save As You
Earn (SAYE)
Long Term
Incentive
Plan (LTIP)
To encourage
employee
involvement
and encourage
greater
shareholder
alignment.
To motivate and
incentivise
delivery of
sustained
performance
over the longer
term, and to
support and
encourage
greater
shareholder
alignment.
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
36
Carr’s Group plcAnnual Report and Accounts 2018 CHAIRMAN AND NON-EXECUTIVE DIRECTORS REMUNERATION
Element
Non-
Executive
Director fees
Purpose and
link to strategy
To attract
and retain
a high-calibre
Chairman and
Non-Executive
Directors by
offering
market-
competitive
fee levels.
Policy and approach
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 Chairman. The Chairman’s remuneration
is reviewed annually by the Remuneration Committee.
The Chairman 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.
Opportunity
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.
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
and these include (but are not limited to)
the following:
• the participants;
• the timing of grant 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 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.
37
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Remuneration Committee Report (continued)
EXECUTIVE 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 and
will be available at the Company’s AGM.
Effective dates of service contracts and
first appointment to the Board for all
Directors are given below.
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 pro-rated 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.
Executive Directors
Tim Davies
Neil Austin
Non-Executive Directors
Chris Holmes
Alistair Wannop
John Worby
Ian Wood
Effective date of service
contract/letter of
appointment
Date first appointed
to the Board
18 October 2012
1 January 2013
1 March 2013
1 May 2013
2 September 2018
7 January 1992
2 September 2018
1 September 2005
2 September 2018
1 April 2015
2 September 2018
1 October 2015
APPROACH TO RECRUITMENT
REMUNERATION
The remuneration package for a new
Executive Director would be set in
accordance with the terms of the
Company’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 be limited
to the maximum Long Term Incentive
Plan limit of 100% of base salary.
Therefore the maximum initial level of
overall variable pay that may be offered
will be 200% of base salary (i.e. 100%
annual bonus plus 100% 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 Chairman
or Non-Executive Director, the fee
arrangement would be set in accordance
with the approved remuneration policy
in force at that time.
38
Carr’s Group plcAnnual Report and Accounts 2018 ESTIMATES OF TOTAL FUTURE POTENTIAL REMUNERATION FROM 2018/2019 PAY PACKAGES
The tables below and opposite provide estimates of the potential future
remuneration of each Executive Director based on the remuneration opportunity
granted in the 2018/2019 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.
Base salaries are as at 1 September 2018.
Benefits are valued using the figures in the total remuneration
for the 2018 financial year table, adjusted for any benefits that will not
be provided during 2019.
Pensions are valued by applying the appropriate percentage to the
base salary.
Base
£’000
Benefits
£’000
Pension
£’000
Total
£’000
Tim Davies
Neil Austin
280
207
1
1
42
31
323
239
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 are achieved, and
maximum performance is obtained under the annual bonus scheme
against both financial and non-financial measures.
ANNUAL REPORT
ON REMUNERATION
This part of the Directors’ Remuneration
Report sets out a summary of how the
Directors’ Remuneration Policy was
applied during 2017/18.
Remuneration Committee
The Remuneration Committee comprises
Ian Wood (Chairman), John Worby and
Alistair Wannop. The Committee met
on 6 occasions during the year with all
members in attendance (see page 27).
The greater frequency of meetings
in the current year can be attributed
to the implementation of changes which
were introduced to the Committee’s
Remuneration Policy and approved at the
January 2018 AGM.
The Executive Directors and the
Chairman 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 Chairman and the
Executive Directors determine the
remuneration of the other Non-Executive
Directors. The Chair of the Committee will
be available at the AGM to answer any
shareholder questions on the Committee
and its activities.
During the year the Committee
considered:
• levels of basic pay for Executive
Directors, the Chairman and senior
management;
• financial and strategic bonus targets
for the Executive Directors;
• the outcome of bonus arrangements
for Executive Directors and senior
management;
• the award, and vesting, of long term
incentives for Executive Directors and
senior management;
• overall remuneration of Executive
Directors; and
• shareholder feedback in relation to
long term incentive performance
measures and remuneration policy
generally.
2018 Remuneration
In this section we summarise the pay
packages awarded to our Executive
Directors for performance in the 2018
financial year versus 2017. The table on
the next page shows all remuneration
that was earned by each individual
during the year and includes a single
total remuneration figure for the year.
Tim Davies, Chief Executive Officer
Total:
£883,000
1000
800
600
400
200
0
Total:
£544,000
Total:
£323,000
Fixed
On target
Maximum
Neil Austin, Group Finance Director
800
600
400
200
0
Total:
£653,000
Total:
£395,000
Total:
£239,000
Fixed
On target
Maximum
LTIP
Annual bonus
Salary and benefits
2018 ANNUAL BONUS PAYOUT
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.
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
1 September 2018, the PBT targets were
set in accordance with the table below.
Threshold
target
£’000
Maximum
target
£’000
Group
14,700
15,800
Payments are adjusted on a straight line
basis between the threshold and
maximum PBT targets.
39
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Remuneration Committee Report (continued)
DIRECTOR REMUNERATION 2017/2018 (AUDITED INFORMATION)
Salary/Fees
Benefits 1
Bonus 2
LTIP 3
Pension
Total
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
Executive Directors
Tim Davies
Neil Austin
Non-Executive Directors
Chris Holmes
Alistair Wannop
John Worby
Ian Wood
274
202
267
197
80
38
38
38
78
37
37
37
1
1
—
—
—
—
1
1
—
—
—
—
274
202
—
—
—
—
0
0
—
—
—
—
271
200
—
—
—
—
0
0
—
—
—
—
41
30
—
—
—
—
40
30
861
635
308
228
—
—
—
—
80
38
38
38
78
37
37
37
1 Benefits consist of private medical insurance.
2 25% of the bonus awarded in 2018 was deferred in the form of shares.
3 The performance period for the 2014 LTIP awards ending during 2017 with no shares vesting owing to the performance threshold not being met.
2018 ANNUAL BONUS STRATEGIC TARGETS
Tim Davies
Target
Details
Delivering growth
Implementing the Board’s strategy in relation to the development of the Group’s international feed
blocks/supplements business in select new territories.
Identification of suitable acquisition opportunities, delivery of strategic acquisitions and successful business
integration within the Group’s wider divisions.
Enhancing structure
within Engineering
Division
Strengthening of management teams across UK Manufacturing business and implementing planned
management succession within NuVision Engineering, Inc.
Developing the Group’s Remote Handling business in the USA in accordance with the Board’s strategy.
Neil Austin
Target
Details
Developing controls
in new territories
Ensuring that new overseas businesses are established with appropriate controls and reporting mechanisms
to support the Growth of the Group’s international feed blocks/supplements businesses.
Developing Group
IT systems
Developing and implementing the Board’s IT strategy across the Group including a new Enterprise
Resource Planning system.
Enhancing existing
controls and
reporting
mechanisms
Enhancing KPI reporting within the Engineering division to enable better review and assessment
of performance and forecasts.
Developing further cash flow reporting of business units to enable clearer review and assessment
of business performance and forecasts.
In addition to the above strategic performance indicators, the Committee has discretion to consider matters such as good
corporate governance which can include environmental, social and governance considerations.
40
Carr’s Group plcAnnual Report and Accounts 2018 For the year ending 1 September 2018,
adjusted PBT for the Group was £16.6m.
This performance was ahead of the
maximum bonus target and therefore
the full 80% was payable in connection
with the Group’s financial targets.
Strategic targets, which account for 20%
of the bonus, were set at the start of the
year. Details of certain targets and their
performance against them is summarised
on page 40.
At the end of the financial year, the
Committee noted that substantial
progress had been made against the
strategic targets. A decision was therefore
made to pay the full 20% bonus in relation
to this element of the scheme.
In accordance with the Remuneration
Policy, 25% of the bonus payable for
2018 was deferred for two years in the
form of shares.
LONG TERM INCENTIVE PLAN
The awards made to Executive Directors
in 2015 were subject to Average EPS
growth targets over three year period
ending on 1 September 2018. Threshold
vesting was set at 3% average annual
growth. The Average EPS growth over
the three year period was 13.6% and,
accordingly, 100% of shares under the
long-term awards made to Executive
Directors in 2015 vested.
LONG TERM INCENTIVE PLAN AWARDS DURING THE YEAR (AUDITED)
Long-term awards for 2018 were made to the Executive Directors in line with the
remuneration policy.
Number
of shares
Basis on which
the award
was made
Face Value
of the award
(£’000)
Threshold
vesting
End of
performance
period
Tim Davies
220,398
100% of salary
Neil Austin
163,095
100% of salary
274
202
25%
August 2020
25%
August 2020
The performance conditions which govern the vesting of those shares are based on
annual average growth in adjusted EPS over a three year period.
Average annual growth %
% vesting
3
10
25
100
Nothing is payable below 3%, and a sliding scale operates between this and the
maximum available.
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
Tim Davies
Neil Austin
67
67
–
30
41
–
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. Pension contributions and/or cash allowances are capped at 15% of salary.
TEN YEAR HISTORICAL TSR PERFORMANCE
500
Carr’s Group plc
FTSE All-Share Price Index
Source: Thomson Datastream
450
400
350
300
250
200
150
100
50
0
8
0
/
8
0
/
9
2
8
0
/
1
1
/
9
2
9
0
/
2
0
/
8
2
9
0
/
5
0
/
1
3
9
0
/
8
0
/
1
3
9
0
/
1
1
/
0
3
0
1
/
2
0
/
8
2
0
1
/
5
0
/
1
3
0
1
/
8
0
/
1
3
0
1
/
1
1
/
0
3
1
1
/
2
0
/
8
2
1
1
/
5
0
/
1
3
1
1
/
8
0
/
1
3
1
1
/
1
1
/
0
3
2
1
/
2
0
/
9
2
2
1
/
5
0
/
1
3
2
1
/
8
0
/
1
3
2
1
/
1
1
/
0
3
3
1
/
2
0
/
8
2
3
1
/
5
0
/
1
3
3
1
/
8
0
/
1
3
3
1
/
1
1
/
0
3
4
1
/
2
0
/
8
2
4
1
/
5
0
/
1
3
4
1
/
8
0
/
1
3
4
1
/
1
1
/
0
3
5
1
/
2
0
/
8
2
5
1
/
5
0
/
1
3
5
1
/
8
0
/
1
3
5
1
/
1
1
/
0
3
6
1
/
2
0
/
9
2
6
1
/
5
0
/
1
3
6
1
/
8
0
/
1
3
6
1
/
1
1
/
0
3
7
1
/
2
0
/
8
2
7
1
/
5
0
/
1
3
7
1
/
8
0
/
1
3
7
1
/
1
1
/
0
3
8
1
/
2
0
/
8
2
8
1
/
5
0
/
1
3
41
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements 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 who served
during the year is given below.
Vested
LTIP
Unvested
LTIP
Total
number
of interests
in shares
SAYE
(unvested
without
performance
conditions)
Unvested
deferred
bonus
shares
% of
share-
holding
guideline
achieved*
Executive Directors
Tim Davies
Neil Austin
150,354
180,814
405,557
131,329
133,802
300,113
16,965
16,965
43,312
35,051
69.0%
77.0%
Non-Executive Directors
Chris Holmes
778,000
Alistair Wannop
John Worby
Ian Wood
22,610
25,000
10,000
*Excluding all unvested shares.
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
n/a
n/a
n/a
n/a
ASSESSING PAY AND PERFORMANCE
In the table below we summarise the Chief Executive’s single remuneration figure
over the past 5 years, as well as how variable pay plans have paid out in relation
to the maximum opportunity.
2014
Tim
Davies
2015
Tim
Davies
2016
Tim
Davies
2017
Tim
Davies
2018
Tim
Davies
Single figure of total remuneration
559
911
531
308
861
Annual variable element
(actual award versus
maximum opportunity)
Long-term incentive (vesting
versus maximum opportunity)
100%
100%
55%
0%
100%
N/A
100% 37.45%
0%
100%
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 a 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
table opposite.
PAYMENTS TO PAST DIRECTORS
(AUDITED INFORMATION)
No payments to past Directors have
been made during the year.
PAYMENTS FOR LOSS OF OFFICE
(AUDITED INFORMATION)
No payments for loss of office have been
made to Directors during the year.
PERFORMANCE SHARES
(AUDITED INFORMATION)
The maximum number of outstanding
shares that have been awarded to Directors
under the LTIP are currently as follows:
2015/16
award
2016/17
award
2017/18
award
Tim Davies
180,814 185,159 220,398
Neil Austin
133,802
137,018
163,095
CHANGE IN CHIEF
EXECUTIVE’S REMUNERATION
In the table below we show the
percentage change in the Chief
Executive’s remuneration between 2017
and 2018 financial years compared to the
other employees.
Tim
Davies
Other UK
employees
Base pay
Benefits
2.5%
0%
Annual bonus
100%*
2.5%
0%
21.9%
*No bonus was payable in the 2017 financial year.
42
Carr’s Group plcAnnual Report and Accounts 2018 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 Head
of HR in relation to employee pay. The outcome of that exercise, and any changes to employee pay levels, are considered when
determining the appropriateness to changes in Executive Director pay.
RELATIVE SPEND ON PAY
The table shows the relative importance of spend on pay compared to distributions to shareholders.
Employee costs
Dividends paid to shareholders
EXTERNAL APPOINTMENTS
EXTERNAL ADVISORS
2018
£’000
43,251
3,770
2017
£’000
36,520
3,471
% change
18.4
8.6
The Executive Directors did not receive
any remuneration in respect of any
external appointments in 2017/18.
IMPLEMENTATION
OF THE POLICY IN 2018/19
For 2018, 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%. Targets will be disclosed respectively
in next year’s report.
The Committee intends to grant LTIP
awards of 100% of salary, with future
vesting conditional upon stretching
targets based upon an adjusted EPS
growth measure. Awards will vest at
a threshold of 25% for average growth
of 3% per annum and will rise on a
straight line basis to the maximum
100% for average growth of 10% per
annum during the performance period.
Salary increases were awarded to the
Executive Directors effective
1 September 2018 of 2.5%. This is
consistent with the rest of the workforce.
During the year, New Bridge Street
(a part of Aon plc) was appointed
as an external consultant to advise
the Committee. The total fees incurred
in FY2017/18 amounted to £19,980.
Such fees were largely attributed
to services provided in relation to
changes to remuneration policy which
were approved at the January 2018 AGM.
New Bridge Street is a signatory to the
Remuneration Consultants’ Code of
Conduct, which requires that its advice
be objective and impartial. New Bridge
Street has no other connection with the
Group and provides no other services
to the Group.
2018 AGM
At our AGM in January 2018, the
Committee’s Annual Report on
Remuneration received a 99.8% vote
in favour (48,320,745 votes), with 0.1%
against (93,548 votes) and 0.1% withheld
(73,308 votes). The Directors’
Remuneration Policy, which was
approved at that AGM, received a 99.7%
vote in favour (48,274,652 votes), with
0.2% against (138,890 votes) and 0.1%
withheld (74,059 votes).
By Order of the Board
IAN WOOD
Chairman of the Remuneration
Committee
19 November 2018
43
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Nominations Committee Report
Effective leadership and succession planning is critical
to the continued success of the Group.
ACTIVITIES OF THE COMMITTEE
The Committee met once during the
year to consider the following matters:
• the Committee’s Terms of Reference
to ensure they reflect the Committee’s
remit;
• the succession plans in place for the
Board and senior management across
the Group;
• the structure, size, composition and
diversity of the Board, its committees
and senior management across the
Group;
• the Group’s talent management,
training and development
programmes; and
• the FRC’s Consultation on Proposed
Changes to the Corporate Governance
Code.
Since 1 September 2018, the
Nominations Committee has also
considered the Corporate Governance
Code 2018, which was published on 16
July 2018 and will apply to the Group
from September 2019. The Nominations
Committee will continue to evaluate the
effect of the changes introduced by the
2018 Code during the course of the
current financial year.
INTRODUCTION
The Nominations Committee has an
important role to play in ensuring that
the Board has the right balance of
experience and skills to develop and
support the Group’s strategy. Its primary
responsibility is the nomination of
suitable candidates to fill vacancies on
the Board. This involves careful planning
for timely and smooth succession. This
year the Committee has been active in
developing its succession strategies for
both Board members and senior
management across the Group.
COMPOSITION AND
CONSTITUTION
The Nominations Committee comprises
the Chairman of the Company and all
other Non-Executive Directors.
ROLE OF THE COMMITTEE
The Committee meets at least once a
year. It reviews the structure, size and
composition of the Board and considers
the optimal level of independence,
diversity of skills, knowledge and
experience required for the Board to
operate effectively. It oversees Board
succession planning and is responsible
for considering and making
recommendations on the appointment
of Executive and Non-Executive
Directors.
The Committee also evaluates
succession planning and recruitment
strategy for senior management
throughout the Group, taking into
account the challenges and
opportunities facing the Group and the
skills, experience and leadership required
across its diverse range of businesses.
In performing its responsibilities, the
Committee gives full consideration to
the benefits of diversity (whether
cultural, ethnic, gender or otherwise)
both within the Board and across the
Group’s leadership teams. Working
closely with the Board, the Committee is
focused upon ensuring that the Board
and the management teams are able to
deliver Group strategy.
CHRIS HOLMES
CHAIR OF THE NOMINATIONS COMMITTEE
44
Carr’s Group plcAnnual Report and Accounts 2018 RE-ELECTION
At the Annual General Meeting on 8
January 2019, all the Directors will stand
for re-election in accordance with best
practice under the UK Corporate
Governance Code 2016.
The Board will set out in the Notice of
Annual General Meeting its reasons for
supporting the re-election of the
Directors at the forthcoming Annual
General Meeting. Their biographical
details on page 21 demonstrate
the range of experience and skills
which each brings to the benefit of
the Company.
The Chair of the Nominations
Committee will attend the Annual
General Meeting to respond to any
Shareholder questions that might be
raised on the Committee’s activities.
On behalf of the Board
CHRIS HOLMES DL
Chair of the Nominations Committee
19 November 2018
CHANGES TO THE BOARD
AND ITS COMMITTEES
SUCCESSION PLANNING
AND DEVELOPMENT
There have been no changes in the
membership of the Board during the
year which remains comprised of two
Executive Directors and four Non-
Executive Directors.
BOARD REVIEW
In 2017, the size, composition and
effectiveness of the Board and its
Committees were the subject of an
external review facilitated by corporate
governance specialists, Independent
Audit Limited. That review, which
generated positive feedback, confirmed
that the Board and its Committees were
appropriately constituted and provided
effective management of the Group as a
whole. The review also involved a
consideration of the continued
independence of the Non-Executive
Directors and the commitment required
from each in order to properly fulfil their
duties. Following the review, and in
consideration of all circumstances, it
was determined by the Board that all
Directors committed sufficient time to
properly fulfil their responsibilities and
that John Worby, Ian Wood and
Alistair Wannop were considered to
be independent.
During 2018, the Board conducted an
internal review building upon the 2017
external review. Similarly to the 2017
review, the internal review placed
particular emphasis upon the
appropriateness and effectiveness of the
Board together with its Committees and
upon the continued independence of
the Non-Executive Directors. That
review concluded that the Board and its
Committees are indeed appropriately
constituted, and that John Worby, Ian
Wood and Alistair Wannop remain
independent.
The Group’s succession strategy was
developed in 2014. Efforts have since
focused upon ensuring that appropriate
and sufficient employees are recruited or
developed internally to meet the future
management needs of the Group taking
into account continued growth and
overall Group strategy.
Both 2017 and 2018 represented years
of significant change in senior
management across the Group. In our
Engineering Division, we appointed a
Divisional Managing Director to oversee
global Engineering operations and
strengthened the management team in
our UK Manufacturing business. We also
oversaw the planned succession of the
management team in our USA
Engineering business following the
acquisition of NuVision in 2017. In our
Agriculture division, we saw a number of
significant changes due to the
retirement of key personnel. In particular,
we oversaw the succession of the
Managing Directors in each of our UK
feed blocks business, our USA feed
blocks business and our joint venture
feed blocks business in Germany. We are
pleased to report that all of the above
succession has proceeded smoothly, and
that our new management teams have
settled in very well.
Across the Group we have established
career pathway and employee
development initiatives which are
designed to attract, retain and develop
the best talent. Further details of those
initiatives are described on page 23.
DIVERSITY
The company has a strict equal
opportunities policy and ensures that
appropriate consideration is given to
diversity in determining the
requirements of the Group and in
making recruitment decisions. The
Group’s principal concern when making
appointments 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 are made on the basis of
merit regardless of race, colour,
nationality, religion, gender, marital
status, family status, sexual orientation,
disability or age.
45
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Directors’ Report
The Directors submit their report and the audited accounts of
the Company for the year ended 1 September 2018.
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, CA3 9BA.
RESULTS AND DIVIDENDS
PENSIONS
SHARE CAPITAL
A review of the results can be found on
pages 18-19.
2018
2017
First Interim dividend
per share paid on
21 May 2018
Second Interim
dividend per share paid
on 5 October 2018
Final dividend
per share proposed
1.075p
0.95p
1.075p
0.95p
2.350p
2.10p
Subject to approval at the Annual
General Meeting, the final dividend will
be paid on 11 January 2019 to members
on the register at the close of business
on 30 November 2018. Shares will be
ex-dividend on 29 November 2018.
The Group profit from continuing
activities before taxation was £15.5
million (2017: £10.0 million). After
taxation charge of £1.9 million (2017:
£1.7 million), the profit for the year is
£13.6 million (2017: £8.3 million).
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 26 to the financial
statements.
At the last Annual General Meeting the
Directors received authority from the
shareholders to:
Allot shares – this gives Directors the
authority to allot shares and maintains
the flexibility in respect of the
Company’s financing arrangements. The
nominal value of ordinary shares which
the Directors may allot in the period up
to the next Annual General Meeting to
be held on 8 January 2019, is limited to
£761,687.91 which is equal to 33 percent
of the nominal value of the issued share
capital on 13 November 2017. The
directors do not have any present
intention 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 will expire at the end of the
Annual General Meeting to be held on
8 January 2019.
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 25 in the Notes to the Financial
Statements.
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 Corporate
Responsibility Report on pages 22-25.
ENVIRONMENT
The Company’s report on sustainability
including carbon footprint and energy
usage is on page 24-25.
POLITICAL AND CHARITABLE
DONATIONS
During the period ended 1 September
2018 the Group contributed £28,800
(2017: £26,300) in the UK for charitable
purposes. Further details have been
included with the Corporate
Responsibility statement on page 25.
There were no political donations during
the year (2017: £Nil).
46
Carr’s Group plcAnnual Report and Accounts 2018
Disapplication of rights of pre-emption
– this disapplies rights of pre-emption
on the allotment of shares by the
Company and the sale by the Company
of treasury shares. The authority will
allow 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, up to an
aggregate nominal amount of
£114,253.30, representing 5 percent of
the Company’s issued share capital as at
13 November 2017. This authority will
expire at the end of the Annual General
Meeting to be held on 8 January 2019.
To buy own shares – this authority
allows 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 9,140,264
Ordinary shares being 10 per cent of the
Company’s issued share capital at 13
November 2017. The price to be paid for
any share must not be less than 0.25p,
being the nominal value of a share, and
must not exceed 105 percent 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
5 business days immediately preceding
the day on which the ordinary shares
are purchased. The Directors have no
immediate plans to exercise the powers
of the Company to purchase its own
shares and undertaken 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.
This authority will expire at the end of
the Annual General Meeting to be held
on 8 January 2019. The Directors would
consider holding any of its own shares
that it purchases pursuant to this
authority as treasury shares.
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 Directors’ Remuneration Report
on pages 33-43, are set out in the
table above.
T J Davies
N Austin
C N C Holmes
A G M Wannop
J G Worby
I Wood
At 1 September 2018
Ordinary Shares
At 2 September 2017
Ordinary Shares
150,354
131,329
778,000
22,610
25,000
10,000
150,354
116,422
778,000
22,610
25,000
10,000
All the above interests are beneficial.
There have been no other changes to
the above interests in the period from
1 September 2018 to 16 November 2018.
To enable the vesting of shares under
the Group’s long term incentive plan,
on 16 November 2018 a total of 520,315
ordinary shares of 2.5 pence each were
held in treasury.
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 they 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
to be considered at the Annual General
Meeting to be held on 8 January 2019
will be set out in the Notice of Annual
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.
MAJOR SHAREHOLDERS
The Company has been informed of the
interests set out in the table below at
16 November 2018 in the 91,410,652
ordinary shares of the Company
(excluding treasury shares), as required
by the Companies Act 2006.
CHANGE OF CONTROL
There are no agreements that the
Company considers significant and to
which the Company is party that would
take effect, alter or terminate upon
change of control of the Company
following a takeover bid, other than a
number of banking agreements which,
upon a change of control of the
Company, are terminable by the bank
immediately.
Shareholder
Shares
% issued share capital
Heygate & Sons Limited
12,652,870
BBHISL Nominees Limited
4,270,320
HSBC Global Custody Nominee
(UK) Limited
2,968,940
Nortrust Nominees Limited
2,952,628
Rathbone Nominees Limited
2,864,666
13.84%
4.67%
3.25%
3.23%
3.13%
47
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Directors’ Report (continued)
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
The Directors consider that the Annual
Report and Accounts, taken as a whole
are fair, balanced and understandable
and provide the information necessary
for shareholders to assess the company’s
performance, business model and
strategy.
DIRECTORS’ STATEMENT AS TO
DISCLOSURE OF INFORMATION TO
AUDITORS
The Directors who were members of the
Board at the time of approving the
Directors’ Report are shown on page 21.
Having made enquiries of fellow
Directors, each of the Directors at the
date of this report confirms that:
• he is aware there is no relevant audit
information of which the Company’s
auditors are unaware; and
• he has taken all the steps that he
ought to have taken as a Director in
order to make himself aware of any
relevant audit information and to
establish that the Company’s auditors
are aware of that information.
RESPONSIBILITY STATEMENT
Each of the Directors, whose names and
functions are set out on page 21 confirm
that, to the best of their knowledge:
• the Group financial statements, which
have been prepared in accordance
with IFRSs as adopted by the EU, give
a true and fair view of the assets,
liabilities, financial position and profit
of the Group;
• the Chief Executive’s Review includes
a fair review of the development and
performance of the business and the
position of the Group; and
• the Risk management review provides
a description of the principal risks and
uncertainties that the Company faces.
By order of the Board
MATTHEW RATCLIFFE
Company Secretary
19 November 2018
DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for
preparing the Annual Report, the
Directors’ Remuneration Report and the
financial statements in accordance with
applicable law and regulations.
RESPONSIBILITY FOR PREPARING
FINANCIAL STATEMENTS
Company law requires the Directors to
prepare financial statements for each
financial period. The Directors have
elected to prepare the Group and parent
company financial statements in
accordance with International Financial
Reporting Standards (IFRSs) as adopted
by the European Union. 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 of the Group
and the Company and of the profit or
loss of the Group for that period. In
preparing those 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;
• state whether applicable IFRSs as
adopted by the European Union have
been followed, subject to any material
departures disclosed and explained in
the financial statements;
• prepare the financial statements on
the going concern basis, unless it is
inappropriate to presume that the
Company will continue in business.
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 of
the Group and enable them to ensure
that the financial statements and
Directors’ Remuneration Report comply
with the Companies Act 2006 and, as
regards the Group financial statements,
Article 4 of the IAS Regulation. They are
also responsible for safeguarding the
assets of the Company and the Group
and hence for taking reasonable steps
for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the
maintenance and integrity of the
Company website. Legislation in the
United Kingdom governing the
48
Carr’s Group plcAnnual Report and Accounts 2018
Independent Auditors’ Report to the members of Carr’s Group plc
Report on the audit of the financial statements
OPINION
In our opinion, Carr’s Group plc’s Group
financial statements and Company
financial statements (the “financial
statements”):
• give a true and fair view of the state
of the Group’s and of the Company’s
affairs as at 1 September 2018 and
of the Group’s profit and the Group’s
and the Company’s cash flows for the
year then ended;
• have been properly prepared in
accordance with International Financial
Reporting Standards (IFRSs) as adopted
by the European Union and, as regards
the Company’s financial statements, as
applied in accordance with the provisions
of the Companies Act 2006; and
• have been prepared in accordance
with the requirements of the
Companies Act 2006 and, as regards
the Group financial statements,
Article 4 of the IAS Regulation.
We have audited the financial statements,
included within the Annual Report and
Accounts (the “Annual Report”), which
comprise: the Consolidated and Company
balance sheets as at 1 September 2018;
the Consolidated income statement and
Consolidated and Company statements
of comprehensive income, the
Consolidated and Company statements
of cash flows, and the Consolidated
and Company statements of changes
in equity for the year then ended;
the accounting policies; and the notes
to the financial statements.
Our opinion is consistent with our
reporting to the Audit Committee.
BASIS FOR OPINION
We conducted our audit in accordance
with International Standards on Auditing
(UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK)
are further described in the Auditors’
responsibilities for the audit of the
financial statements section of our
report. We believe that the audit
evidence we have obtained is sufficient
and appropriate to provide a basis
for our opinion.
Independence
We remained independent of the
Group in accordance with the ethical
requirements that are relevant to our
audit of the financial statements in the
UK, which includes the FRC’s Ethical
Standard, as applicable to listed public
interest entities, and we have fulfilled
our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and
belief, we declare that non-audit
services prohibited by the FRC’s Ethical
Standard were not provided to the
Group or the Company.
We have provided no non-audit
services to the Group or the Company
in the period from 3 September 2017
to 1 September 2018.
OUR AUDIT APPROACH
Materiality
Audit scope
Overview
• Overall Group materiality: £825,000 (2017: £565,000), based on 5% of profit before tax
and before amortisation of acquired intangible assets and non-recurring items.
• Overall Company materiality: £400,000 (2017: £400,000), based on 0.5% of total assets.
• We identified seven reporting units within the Agriculture and Engineering divisions
alongside the Company, which in our view required an audit of their complete financial
information. Four of these reporting units were deemed financially significant and the other
four were selected for particular risk characteristics, which included coverage of the risks
relating to pension assumptions, fraud in revenue, and of the profit from the associate.
• Specific audit procedures on certain balances and transactions were performed on a further
reporting unit in the UK, in order to gain coverage of individual material financial statement
line items.
Key audit
matters
• Goodwill impairment.
• Defined benefit pension scheme surplus.
• Receivable provisioning.
• Assumptions made within contract accounting.
• Fraud risk in revenue recognition.
49
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Independent Auditors’ Report to the members of Carr’s Group plc (continued)
The scope of our audit
As part of designing our audit, we
determined materiality and assessed
the risks of material misstatement
in the financial statements. In particular,
we looked at where the Directors made
subjective judgements, for example
in respect of significant accounting
estimates that involved making
assumptions and considering future
events that are inherently uncertain.
We gained an understanding of the legal
and regulatory framework applicable
to the Group and the industries in which
it operates, and considered the risk
of acts by the Group which were contrary
to applicable laws and regulations,
including fraud. We designed audit
procedures at Group and significant
component level to respond to the risk,
recognising that the risk of not detecting
a material misstatement due to fraud
is higher than the risk of not detecting
one resulting from error, as fraud may
involve deliberate concealment by,
for example, forgery or intentional
misrepresentations, or through collusion.
We focused on laws and regulations that
could give rise to a material misstatement
in the Group and Company financial
statements, including, but not limited
to, the Companies Act 2006, the Listing
Rules, Pensions legislation, UK tax
legislation and equivalent local laws
and regulations applicable to significant
component teams. Our tests included,
but were not limited to, review of the
financial statement disclosures to
underlying supporting documentation,
review of correspondence with and
reports to the regulators, review of
correspondence with legal advisors,
enquiries of management, review
of significant component auditors’ work
and review of internal audit reports
in so far as they related to the financial
statements. There are inherent limitations
in the audit procedures described above
and the further removed non-compliance
with laws and regulations is from
the events and transactions reflected
in the financial statements, the less likely
we would become aware of it.
We did not identify any key audit matters
relating to irregularities, including fraud.
As in all of our audits we also addressed
the risk of management override
of internal controls, including testing
journals and evaluating whether there
was evidence of bias by the Directors
that represented a risk of material
misstatement due to fraud.
Key audit matters
Key audit matters are those matters that,
in the auditors’ professional judgement,
were of most significance in the 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) identified
by the auditors, including those which
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,
and any comments we make on the
results of our procedures thereon, 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. This is not
a complete list of all risks identified
by our audit.
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED
THE KEY AUDIT MATTER
GOODWILL IMPAIRMENT
The Group has a goodwill balance in respect of the historic
acquisitions.
The Directors’ assessment of the ‘value in use’ of the
Cash Generating Unit involves judgements about the
future results of the business and the discount rates
applied to future cash flow forecasts.
We reviewed the composition of future cash flows
to ensure that all relevant elements were included or
excluded as appropriate. We compared current year actual
results with the FY18 figures included in the prior year
forecast to assess the accuracy of management’s historic
forecasts. We challenged management’s assumptions
within the forecasts for short and mid-term growth by
comparing to the previous performance of the business
and understanding and validating the measures
implemented by management to achieve this growth.
We considered the suitability of the discount rate
by assessing the cost of capital for the Company and
comparable businesses. We assessed the sensitivity
analysis performed by management and determined that
the calculations were most sensitive to the assumptions
regarding profits in the terminal period. We reviewed the
adequacy of the disclosures given in note 10 in respect
of the impairment assessment performed by management.
DEFINED BENEFIT PENSION SCHEME SURPLUS
The Group has a defined pension scheme with post-
retirement assets of £70.6m and post-retirement liabilities
of £60.5m. The valuation of the Group surplus is sensitive
to changes in key assumptions such as the discount rate,
inflation and mortality estimates.
The setting of these assumptions is complex and an area
of judgement. Changes in any of these assumptions could
lead to a material movement in the net surplus.
We tested the membership census data used in the
valuation of the scheme to payroll information.
We benchmarked and performed sensitivity analysis
on key variables in the valuation model including salary
increases, mortality rates, inflation and discount rates.
We obtained third party confirmation over ownership and
valuation of pension scheme assets. We ensured that the
Company is entitled to recognise any surplus by examining
the Trust Deed and Rules documentation.
50
Carr’s Group plcAnnual Report and Accounts 2018 KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED
THE KEY AUDIT MATTER
RECEIVABLE PROVISIONING
Within the Agriculture division there are material amounts of
trade receivables that are past due and there has historically
been a slower collection pattern within this division.
Management’s provisions in respect of these amounts
are an area of subjectivity with respect to the recoverability
of balances.
ASSUMPTIONS MADE WITHIN
CONTRACT ACCOUNTING
Long term contract accounting is inherently judgemental
as assumptions are made about future costs and events
at each balance sheet date.
There is a risk that the assumptions made by management
in respect of costs forecast to complete contracts are
not accurate.
FRAUD RISK IN REVENUE RECOGNITION
ISAs (UK) presume there is a risk of fraud in revenue
recognition. We have determined this to apply specifically
to the occurrence of revenue in all divisions because of the
pressure management may feel to achieve the planned
results. Within the Agriculture division this is specifically
in relation to whether a sale has occurred, and within the
Engineering division this is in relation to the judgements
involved in long term contract accounting.
We understood management’s receivables provisioning policy
and tested the accuracy of the aging of balances in order
to recalculate management’s provision. We analysed the
provision to identify significant balances for which the
methodology had not been applied and understood and
validated any such exceptions.
We performed testing over the operating effectiveness of
controls with respect to approval of credit limits and monthly
reviews of the receivables ledger. For individually significant
aged receivables balances, we understood the rationale for
management’s provision by considering historic payment
patterns and other supporting information. We tested the
levels of cash received after the year end on overdue receivables
balances to assess the adequacy of the provision made.
We focused on the judgements required to account
for long term contracts. This involved a detailed review
of contracts in place at the year end in order to understand
the nature of the services provided. As part of this review
we conducted an assessment of the costs to completion on
the contract, and an evaluation of the stage of completion
of the contract based on the evidence available.
We discussed each contract with members of management
outside of the finance function to understand how
forecasts of cost to come have been built up, and the
accuracy of these forecasts.
We also evaluated management’s assessment of the
stage of completion through performing a look back test
to assess management’s previous estimations as well as
on a sample basis agreeing the inputs into the calculation
of the revenue to supporting documentation and
reperforming the calculation.
From the work we performed no material exceptions
were noted.
For the Agriculture division this involved testing the
operating effectiveness of controls around dispatches and
invoicing in certain components, as well as substantively
testing that revenue agrees to accounts receivable and
cash received. Where revenue did not directly agree to
accounts receivable or cash further work was performed
to understand and substantively test those transactions.
In addition to the work described above specifically in
relation to long term contracts we performed additional
procedures in the Engineering division to substantively test
that revenue agreed to accounts receivable and cash
received. Where revenue did not directly agree to accounts
receivable or cash further work was performed to
understand and substantively test those transactions.
We determined that there were no key audit matters applicable to the Company to communicate in our report.
51
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Independent Auditors’ Report to the members of Carr’s Group plc (continued)
How we tailored the audit scope
Materiality
We tailored the scope of our audit to
ensure that we performed enough work
to be able to give an opinion on the
financial statements as a whole, taking
into account the structure of the Group
and the Company, the accounting
processes and controls, and the industry
in which they operate.
The Group is split into two principal
divisions, Agriculture and Engineering.
Within these divisions there are a number
of UK subsidiary companies. There are
also a number of overseas subsidiary
companies, in the US and Germany,
which report separately to these divisions.
Group management are based in the UK,
along with the Group finance function.
Carrs Billington Agriculture (Sales) Limited
and Carrs Agriculture Limited, which
form part of the UK Agriculture division,
have been selected as full scope audit
components as a result of their
contribution to Group profits. Wälischmiller
Engineering GmbH, a German subsidiary
which operates within the engineering
market, has also been selected as a full
scope component for this reason, as has
Animal Feed Supplement Inc., a US
subsidiary which operates within the
Agriculture division. Carr’s Group plc has
been selected as a full scope component
due to its significant net assets balance,
and the fact that the Group pension
scheme is recognised within its accounts,
which is a key audit matter as noted above.
Carr’s Engineering Limited and NuVision
Engineering Inc. have also been selected as
full scope components due to the greater
judgement involved in determining its
contribution to group revenue, which is a
significant risk for our audit.
Carrs Billington Agriculture (Operations)
Limited, a joint venture which the Group
owns 49% of, has been selected for full
scope reporting. Mitchell Charlesworth,
a component auditor, undertake the
audit of this component. Carrs Properties
Limited has been selected for limited
scope reporting over fixed assets, as a
result of its contribution to this financial
statement line item.
We have held planning calls with the
component auditors for both Carrs
Billington Agriculture (Operations) Limited
and Wälischmiller Engineering GmbH, to
understand their planned audit approach
and ensure that it provides the comfort
we require as part of our Group audit.
We have been involved in the clearance
meeting between management and
the component auditors for both
components, and have carried out
a review of the working papers which
support the reporting provided.
52
The scope of our audit was influenced
by our application of materiality. We set
certain quantitative thresholds for
materiality. These, together with qualitative
considerations, helped us to determine the
scope of our audit and the nature, timing
and extent of our audit procedures on the
individual financial statement line items
and disclosures and in evaluating the effect
of misstatements, both individually and
in aggregate on the financial statements
as a whole.
Based on our professional judgement, we
determined materiality for the financial
statements as a whole as follows:
For each component in the scope of our
Group audit, we allocated a materiality
that is less than our overall Group
materiality. The range of materiality
allocated across components was
between £185,000 and £475,000.
Certain components were audited
to a local statutory audit materiality
that was also less than our overall
Group materiality.
Overall
materiality
How we
determined it
Rationale for
benchmark
applied
Group financial statements
Company financial statements
£825,000 (2017: £565,000).
£400,000 (2017: £400,000).
5% of profit before tax and
before amortisation of
acquired intangible assets
and non-recurring items.
Based on the benchmarks used
in the annual report, profit
before tax and before
amortisation of acquired
intangible assets and
non-recurring items is the
primary measure used by the
shareholders in assessing the
performance of the Group,
and is a generally accepted
auditing benchmark.
0.5% of total assets.
The Company is a holding
company, and as such we
believe total assets is the primary
measure used to assess the
performance of the entity,
and is a generally accepted
auditing benchmark.
We agreed with the Audit Committee
that we would report to them
misstatements identified during our
audit above £41,250 (Group audit)
(2017: £28,250) and £20,000 (Company
audit) (2017: £20,000) as well as
misstatements below those amounts
that, in our view, warranted reporting
for qualitative reasons.
Going concern
In accordance with ISAs (UK) we report
as follows:
Reporting obligation
Outcome
We are required to report if we have anything
material to add or draw attention to in respect
of the Directors’ statement in the financial
statements about whether the Directors
considered it appropriate to adopt the going
concern basis of accounting in preparing the
financial statements and the Directors’
identification of any material uncertainties to the
Group’s and the Company’s ability to continue
as a going concern over a period of at least
twelve months from the date of approval of the
financial statements.
We are required to report if the Directors’
statement relating to Going Concern
in accordance with Listing Rule 9.8.6R(3) is
materially inconsistent with our knowledge
obtained in the audit.
We have nothing material to
add or to draw attention to.
However, because not all
future events or conditions can
be predicted, this statement is
not a guarantee as to the
Group’s and Company’s ability
to continue as a going concern.
We have nothing to report.
Carr’s Group plcAnnual Report and Accounts 2018
REPORTING ON
OTHER INFORMATION
The other information comprises all
of the information in the Annual Report
other than the financial statements
and our auditors’ report thereon. The
Directors are responsible for the other
information. Our opinion on the financial
statements does not cover the other
information and, accordingly, we do not
express an audit opinion or, except to the
extent otherwise explicitly stated in this
report, any form of assurance thereon.
In connection with our audit of the
financial statements, 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 an apparent
material inconsistency or material
misstatement, we are required to
perform procedures to conclude whether
there is a material misstatement of the
financial statements or a material
misstatement of the other information.
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
based on these responsibilities.
With respect to the Strategic Report and
Directors’ Report, we also considered
whether the disclosures required by
the UK Companies Act 2006 have
been included.
Based on the responsibilities described
above and our work undertaken in the
course of the audit, the Companies
Act 2006 (CA06), ISAs (UK) and the
Listing Rules of the Financial Conduct
Authority (FCA) require us also to
report certain opinions and matters
as described below (required by ISAs
(UK) unless otherwise stated).
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and
Directors’ Report for the year ended 1 September 2018 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course
of the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report. (CA06)
The Directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency
or liquidity of the Group
We have nothing material to add or draw attention to regarding:
• The Directors’ confirmation on pages 14-16 of the Annual Report that they have carried out a robust assessment of the
principal risks facing the Group, including those that would threaten its business model, future performance, solvency
or liquidity.
• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
• The Directors’ explanation on page 17 of the Annual Report as to how they have assessed the prospects of the Group,
over what period they have done so and why they consider that period to be appropriate, and their statement as to
whether 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 period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
We have nothing to report having performed a review of the Directors’ statement that they have carried out a robust
assessment of the principal risks facing the Group and statement in relation to the longer-term viability of the Group.
Our review was substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’
process supporting their statements; checking that the statements are in alignment with the relevant provisions of the
UK Corporate Governance Code (the “Code”); and considering whether the statements are consistent with the knowledge
and understanding of the Group and Company and their environment obtained in the course of the audit. (Listing Rules)
Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
• The statement given by the Directors, on page 29, that they consider the Annual Report taken as a whole to be fair,
balanced and understandable, and provides the information necessary for the members to assess the Group’s and
Company’s position and performance, business model and strategy is materially inconsistent with our knowledge of the
Group and Company obtained in the course of performing our audit.
• The section of the Annual Report on pages 30-32 describing the work of the Audit Committee does not appropriately
address matters communicated by us to the Audit Committee.
• The Directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure
from a relevant provision of the Code specified, under the Listing Rules, for review by the auditors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance
with the Companies Act 2006. (CA06)
53
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Independent Auditors’ Report to the members of Carr’s Group plc (continued)
these opinions, accept or assume
responsibility for any other purpose or to
any other person to whom this report is
shown or into whose hands it may come
save where expressly agreed by our prior
consent in writing.
OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
Under the Companies Act 2006
we are required to report to you if,
in our opinion:
• we have not received all the
information and explanations we
require for our audit; or
• adequate accounting records have not
been kept by the Company, or returns
adequate for our audit have not been
received from branches not visited by
us; or
• certain disclosures of Directors’
remuneration specified by law are not
made; or
• the Company financial statements and
the part of the Directors’ Remuneration
Report to be audited are not in
agreement with the accounting
records and returns.
We have no exceptions to report arising
from this responsibility.
Appointment
Following the recommendation of the
Audit Committee, we were appointed
by the members since at least 1909 to
audit the financial statements for the
year ended 31 March 1909 and
subsequent financial periods. The period
of total uninterrupted engagement is
110 years, covering the years ended
31 March 1909 to 1 September 2018.
Following a tender, new auditors will be
appointed for the next financial period.
BILL MACLEOD
(Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants
and Statutory Auditors
Newcastle upon Tyne
19 November 2018
RESPONSIBILITIES FOR THE
FINANCIAL STATEMENTS
AND THE AUDIT
Responsibilities of the Directors
for the financial statements
As explained more fully in the Directors’
Responsibilities Statement, the Directors
are responsible for the preparation
of the financial statements in accordance
with the applicable framework and
for being satisfied that they give a true
and fair view. The Directors are also
responsible for such internal control
as they 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 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 Company or to cease
operations, or have no realistic
alternative but to do so.
Auditors’ 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 auditors’
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.
A further description of our
responsibilities for the audit of the
financial statements is located on the
FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms part of our auditors’ report.
Use of this report
This report, including the opinions, has
been prepared for and only for the
Company’s members as a body in
accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no
other purpose. We do not, in giving
54
Carr’s Group plcAnnual Report and Accounts 2018 Consolidated Income Statement For the year ended 1 September 2018
Continuing operations
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Share of post-tax results of associates
Share of post-tax results of joint ventures
Adjusted1 operating profit
Amortisation of acquired intangible assets and non-recurring items
Operating profit
Finance income
Finance costs
Adjusted1 profit before taxation
Amortisation of acquired intangible assets and non-recurring items
Profit before taxation
Taxation
Profit for the year
Profit attributable to:
Equity shareholders
Non-controlling interests
Earnings per ordinary share (pence)
Basic
Diluted
Notes
2
2018
£’000
(Restated)2
2017
£’000
403,192
(349,864)
346,224
(307,543)
53,328
(18,950)
(21,188)
1,634
1,581
17,464
(1,059)
16,405
358
(1,261)
16,561
(1,059)
15,502
(1,855)
13,647
11,892
1,755
13,647
13.0
12.7
38,681
(16,391)
(14,413)
1,609
1,204
12,091
(1,401)
10,690
176
(864)
11,403
(1,401)
10,002
(1,707)
8,295
7,005
1,290
8,295
7.7
7.6
2
4
2, 3
6
6
2
4
2
7
9
9
1 Adjusted results are after adding back amortisation of acquired intangible assets and non-recurring items including acquisition costs.
2 Restated for the inclusion of share of post-tax results of associates and joint ventures within operating profit. The basis of accounting policy on
page 61 provides further details.
55
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Consolidated and Company Statements
of Comprehensive Income For the year ended 1 September 2018
Group
Company
Notes
25
17
Profit for the year
Other comprehensive income/(expense)
Items that may be reclassified subsequently
to profit or loss:
Foreign exchange translation (losses)/gains arising
on translation of overseas subsidiaries
Net investment hedges
Taxation (charge)/credit on net investment hedges
Items that will not be reclassified subsequently
to profit or loss:
Actuarial gains on retirement benefit asset/obligation:
– Group
– Share of associate
Taxation charge on actuarial gains on retirement
benefit asset/obligation:
– Group
– Share of associate
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Equity shareholders
Non-controlling interests
2018
£’000
13,647
(505)
111
(21)
4,836
1,194
(822)
(203)
4,590
18,237
16,482
1,755
18,237
2017
£’000
8,295
1,835
(70)
14
4,951
1,070
(842)
(211)
6,747
15,042
13,752
1,290
15,042
2018
£’000
2,541
2017
£’000
3,349
—
—
—
4,836
—
(822)
—
4,014
6,555
6,555
—
6,555
—
—
—
4,951
—
(842)
—
4,109
7,458
7,458
—
7,458
56
Carr’s Group plcAnnual Report and Accounts 2018
Consolidated and Company Balance Sheets
As at 1 September 2018 (Company Number 00098221)
Group
Company
Assets
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment property
Investment in subsidiary undertakings
Investment in associates
Interest in joint ventures
Other investments
Financial assets
– Non-current receivables
Retirement benefit asset
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Financial assets
– Derivative financial instruments
– Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Financial liabilities
– Borrowings
– Derivative financial instruments
Trade and other payables
Current tax liabilities
Non-current liabilities
Financial liabilities
– Borrowings
Deferred tax liabilities
Other non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Share premium
Other reserves
Retained earnings:
At beginning of the year
Profit attributable to the equity shareholders
Other changes in retained earnings
Total shareholders’ equity
Non-controlling interests
Total equity
Notes
10
10
11
12
13,16
13,14
13,15
13
19
25
17
18
19
20
24
21
23
24
22
23
17
22
26
2018
£’000
24,272
2,223
38,484
170
—
13,129
8,004
74
21
10,146
—
96,523
42,371
67,516
119
26
24,632
134,664
231,187
(34,994)
—
(64,290)
(175)
(99,459)
(4,997)
(3,981)
(1,784)
(10,762)
(Restated)
2017
£’000
24,293
2,266
37,149
176
—
11,443
6,590
73
444
5,209
—
87,643
37,023
59,723
297
13
23,887
120,943
208,586
(17,060)
(18)
(56,181)
(673)
(73,932)
(20,966)
(4,010)
(3,755)
(28,731)
(110,221)
(102,663)
120,966
105,923
2,285
9,141
5,888
74,802
11,892
1,273
87,967
105,281
15,685
120,966
2,285
9,130
5,265
81,540
7,005
(13,743)
74,802
91,482
14,441
105,923
2018
£’000
—
328
155
—
26,561
245
272
—
15,405
10,146
233
53,345
—
22,515
1,360
—
4,955
28,830
82,175
(18,839)
—
(2,461)
—
(21,300)
(3,564)
(1,725)
—
(5,289)
(26,589)
55,586
2,285
9,141
1,537
39,814
2,541
268
42,623
55,586
—
55,586
The financial statements set out on pages 55-103 were approved by the Board on 19 November 2018 and signed on its behalf by:
Tim J Davies
Neil Austin
2017
£’000
—
—
—
—
26,192
245
272
—
18,007
5,209
59
49,984
—
21,391
464
—
8,494
30,349
80,333
(7,154)
—
(1,537)
(85)
(8,776)
(19,018)
(886)
—
(19,904)
(28,680)
51,653
2,285
9,130
424
51,217
3,349
(14,752)
39,814
51,653
—
51,653
57
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Consolidated Statement of Changes in Equity
Consolidated Statement
For the year ended 1 September 2018
Share
Capital
£’000
Share
Premium
£’000
At 4 September 2016
2,280
9,111
Profit for the year
Other comprehensive
income
Total comprehensive
income
Dividends paid
Equity settled share-
based payment
transactions
Allotment of shares
Purchase of own shares
held in trust
Transfer
—
—
—
—
—
5
—
—
—
—
—
—
—
19
—
—
At 2 September 2017
2,285
9,130
At 3 September 2017
2,285
9,130
Profit for the year
Other comprehensive
(expense)/income
Total comprehensive
(expense)/income
Dividends paid
Equity settled share-
based payment
transactions
Excess deferred
taxation on share-
based payments
Allotment of shares
Transfer
—
—
—
—
—
—
—
—
—
—
—
—
—
—
11
—
At 1 September 2018
2,285
9,141
Treasury
Foreign
Equity
Share Compensation Exchange
Reserve
Reserve
£’000
£’000
Reserve
£’000
Non-
Other Retained Shareholders’ controlling
Interests
£’000
Earnings
£’000
Equity
£’000
Reserve
£’000
Total
Total
Equity
£’000
(8)
—
—
—
—
—
—
(4)
12
—
—
—
—
—
—
—
—
—
—
706
2,895
207
81,540
96,731
13,357
110,088
—
—
—
—
(320)
—
—
—
—
1,779
1,779
—
—
—
—
—
—
—
—
—
—
—
—
(2)
7,005
7,005
1,290
8,295
4,968
6,747
—
6,747
11,973
(19,467)
13,752
(19,467)
1,290
(245)
15,042
(19,712)
766
—
—
(10)
446
24
(4)
—
39
—
—
—
485
24
(4)
—
386
4,674
205
74,802
91,482
14,441
105,923
386
4,674
205
74,802
91,482
14,441
105,923
—
—
—
—
—
—
—
—
(415)
(415)
—
—
—
—
—
—
—
—
—
—
—
—
(3)
11,892
11,892
1,755
13,647
5,005
4,590
—
4,590
16,897
(3,770)
16,482
(3,770)
1,755
(588)
18,237
(4,358)
8
1,049
76
1,125
27
—
3
27
11
—
1
—
—
28
11
—
1,427
4,259
202
87,967
105,281
15,685
120,966
—
1,041
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 £8,000
(2017: £766,000) 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.
58
Carr’s Group plcAnnual Report and Accounts 2018
Company Statement of Changes in Equity
For the year ended 1 September 2018
At 4 September 2016
2,280
9,111
Share
Capital
£’000
Share
Premium
£’000
Profit for the year
Other comprehensive income
Total comprehensive income
Dividends paid
Equity settled share-based payment
transactions
Allotment of shares
Purchase of own shares held in trust
Transfer
At 2 September 2017
At 3 September 2017
Profit for the year
Other comprehensive income
Total comprehensive income
Dividends paid
Equity settled share-based payment
transactions
Excess deferred taxation on share-
based payments
Allotment of shares
—
—
—
—
—
5
—
—
—
—
—
—
—
19
—
—
2,285
2,285
9,130
9,130
—
—
—
—
—
—
—
—
—
—
—
—
—
11
At 1 September 2018
2,285
9,141
Treasury
Equity
Share Compensation
Reserve
£’000
Reserve
£’000
Retained
Earnings
£’000
51,217
3,349
4,109
7,458
(19,467)
618
—
—
(12)
Total
Equity
£’000
63,359
3,349
4,109
7,458
(19,467)
283
24
(4)
—
39,814
51,653
39,814
51,653
2,541
4,014
6,555
(3,770)
2
22
—
2,541
4,014
6,555
(3,770)
1,115
22
11
759
—
—
—
—
(335)
—
—
—
424
424
—
—
—
—
1,113
—
—
1,537
42,623
55,586
(8)
—
—
—
—
—
—
(4)
12
—
—
—
—
—
—
—
—
—
—
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 £2,000 (2017: £618,000) was transferred
from the equity compensation reserve to retained earnings and £9,000 (2017: £201,000) was transferred from the equity compensation reserve
to investment in subsidiaries in respect of options exercised in the year.
59
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Consolidated and Company Statements
of Cash Flows
For the year ended 1 September 2018
Group
Company
Cash flows from operating activities
Cash generated from/(used in) continuing operations
Interest received
Interest paid
Tax (paid)/recovered
Notes
29
Net cash generated from/(used in) operating activities
Cash flows from investing activities
Acquisition of subsidiaries (net of overdraft/cash acquired)
Contingent/deferred consideration paid
Net costs of disposal of associate
Dividends received from subsidiaries
Net receipt/(payment) of loans to subsidiaries
Investment in subsidiaries
Dividend received from associate and joint ventures
Loan repaid by associates
Other loans
Purchase of intangible assets
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Purchase of own shares held in trust
Redemption of preference shares in joint venture
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Proceeds from issue of ordinary share capital
New bank loans and movement on RCF
Finance lease principal repayments
Repayment of borrowings
Increase/(decrease) in other borrowings
Dividends paid to shareholders
Dividends paid to related party
Net cash used in financing activities
Effects of exchange rate changes
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
13
26
8
2018
£’000
14,980
226
(1,210)
(2,511)
11,485
(1,522)
(2,617)
(90)
—
—
—
704
1,008
59
(325)
189
(4,488)
—
20
(7,062)
11
(2,076)
(997)
(3,241)
8,934
(3,770)
(588)
(1,727)
(305)
2,391
18,614
21,005
2017
£’000
15,094
175
(896)
(1,179)
13,194
(12,640)
(549)
—
—
—
—
1,212
22
80
(371)
691
(2,854)
(4)
150
(14,263)
24
6,000
(846)
(3,110)
(2,804)
(19,467)
(245)
(20,448)
344
(21,173)
39,787
18,614
2018
£’000
(2,124)
1,711
(513)
(473)
(1,399)
—
—
—
4,625
787
—
588
—
—
(328)
—
(229)
—
—
5,443
11
(2,076)
—
(1,750)
—
(3,770)
—
(7,585)
2
(3,539)
8,494
4,955
2017
£’000
(2,939)
1,855
(323)
551
(856)
—
—
—
2,303
(8,037)
(8,759)
1,097
—
—
—
—
—
(4)
—
(13,400)
24
6,000
—
(1,758)
—
(19,467)
—
(15,201)
6
(29,451)
37,945
8,494
60
Carr’s Group plcAnnual Report and Accounts 2018
Principal Accounting Policies
BASIS OF ACCOUNTING
The consolidated and Company financial statements are prepared on a
going concern basis in accordance with International Financial Reporting
Standards (IFRSs) and International Financial Reporting Standards
Interpretation Committee (IFRS IC) interpretations endorsed by the
European Union (EU) and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
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 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.
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 financial
assets and financial liabilities (including derivative financial instruments)
at fair value through profit or loss.
The prior year consolidated income statement has been restated for the
reclassification to operating profit of the share of post-tax results of the
associates and joint ventures. The inclusion of these results in operating
profit better reflects the Board’s view that these businesses are integral
to the Group’s operations and strategy. Comparatives at 2 September
2017 have been restated by £2,813,000, increasing operating profit with
no impact to profit before tax.
The prior year consolidated balance sheet has been restated for
the finalisation of the fair value acquisition accounting for NuVision
Engineering, Inc which was acquired on 4 August 2017. See note 36 for
details of the restatement. There has been no impact to net assets as
at 1 September 2017.
The accounting policies for the Group and Company are as follows:
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 associates and joint ventures. The financial information of the
subsidiaries, associates 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. Profits and losses on transactions with the associates
and joint ventures are recognised in the consolidated income statement.
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.
IFRS 10 introduced a new definition of control which could affect
whether an entity is consolidated into the Group accounts. An investor
controls an investee when it is exposed, or has right, 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 the new definition of control.
Subsidiaries are consolidated from the date on which control is
transferred to the Group and are included until the date on which
the Group ceases to control them.
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 associates’ and joint
ventures’ post-tax profits or 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 associates
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.
Acquisition related costs are expensed to the consolidated income
statement in the year they are incurred.
The Group applies a policy of treating transactions with non-controlling
interests as transactions with parties external to the Group.
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, associates 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.
61
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Principal Accounting Policies (continued)
REVENUE RECOGNITION
Revenue from the sale of goods or services is measured at the fair value
of the consideration, net of rebates and excluding value added tax.
Revenue from the sale of goods or services is recognised when the
Group has transferred the significant risks and rewards of ownership of
the goods to the buyer, when the amount of revenue can be measured
reliably and when it is probable that the economic benefits associated
with the transaction will flow to the Group. Inter segmental transactions
are on an arm’s length basis.
In respect of construction contracts, revenue is calculated on the basis
of the stage of completion and the total sales value of each contract.
The stage of completion is determined as the proportion that contract
costs incurred for work performed to date bear to the total estimated
total contract costs. No profit is recognised until a contract is at least
30% complete. Amounts invoiced for work completed are deducted
from the selling price, while amounts invoiced in excess of work
completed are recognised as current liabilities.
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.
RETIREMENT BENEFIT ASSET/OBLIGATIONS
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.
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 that they are considered recoverable,
are 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. At 1 September 2018 and 2 September 2017 the
consolidated and Company balance sheet recognises the full surplus
on the Carr’s Group defined benefit pension scheme.
Carrs Billington Agriculture Pension Scheme
One of the Group’s subsidiaries is a participating employer in the Carrs
Billington Agriculture Pension Scheme, which is a multi-employer defined
benefit pension scheme. Note 25 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.
Operating segments have been identified as Agriculture and Engineering.
NON-RECURRING ITEMS
Non-recurring 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
a note to the financial statements. The separate disclosure of profit
before non-recurring items helps provide a better indication of the
Group’s underlying business performance. Events which may give rise to
non-recurring items include, but are not limited to, gains or losses on the
disposal of subsidiaries/businesses, derivative gains or losses in respect
of capital expenditure, gains or losses on the disposal of properties,
gains or losses on the disposal of material investments, the restructuring
of businesses, the integration of new businesses, acquisition related
costs, contingent consideration linked to continued employment of key
personnel and asset impairments including impairment of goodwill.
62
Carr’s Group plcAnnual Report and Accounts 2018 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.
Freehold buildings
Leasehold buildings
Plant and equipment
up to 50 years
shorter of 50 years or lease term
3 to 20 years
Residual values and useful lives are reviewed, and adjusted
if appropriate, at each financial year-end.
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
Brands
Know-how
Proprietary technology
Development costs
Patents and trademarks
Contract backlog
Software
1 – 5 years
15 – 25 years or indefinite life
5 years
13 years
5 – 15 years
contractual life
3 years
3 – 10 years
Customer relationships and brands are amortised in line with the profit
and income streams they are respectively expected to generate over
their expected useful life.
Other intangible assets are amortised on a straight-line basis.
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.
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 IAS38 ‘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.
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.
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 flows 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.
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:
Net realisable value represents the estimated selling price less all
estimated costs to completion and costs to be incurred in marketing,
selling and distribution.
63
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Principal Accounting Policies (continued)
Provision has been made, where necessary, for slow moving, obsolete
and defective inventories.
Contract work in progress is measured at the selling price of the work
performed at the balance sheet date. The selling price is measured by
reference to the stage of completion at the balance sheet date and total
expected income from the contract work.
Progress payments received are deducted from the value of work in
progress except to the extent that payments on account exceed the
value of work in progress on any contract where the excess is included
in trade and other payables.
Directly attributable, and separately identifiable, costs of bidding for
contracts are included in contract costs after the point in time at which
it is considered probable that the contract will be obtained.
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
Leases are classified as finance leases at inception where substantially
all of the risks and rewards of ownership are transferred to the Group.
Assets classified as finance leases are capitalised on the consolidated
balance sheet and are depreciated over the shorter of the useful life
of the asset and the term of the lease. The interest element of the rental
obligations is charged to the consolidated income statement over the
period of the lease using the actuarial method.
Rentals paid under operating leases are charged to the consolidated
income statement on a straight-line basis over the term of the lease.
Leasehold land is normally classified as an operating lease. Payments
made to acquire leasehold land are included in prepayments at cost
and are amortised over the life of the lease. Any incentives to enter
into operating leases are recognised as a reduction of rental expense
over the lease term on a straight-line basis.
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 in full, using the liability method, 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.
64
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, unless the
tax relates to items recognised directly in shareholders’ equity, in which
case the tax is recognised directly in shareholders’ equity through the
consolidated and Company statement of comprehensive income.
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.
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.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less
provision for impairment. A provision for impairment of trade receivables
is established when there is objective evidence that the Group will not
be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor, probability that
the debtor will enter bankruptcy or financial reorganisation, and default
or delinquency in payments are considered indicators that the trade
receivable is impaired. The amount of the provision is the difference
between the asset’s carrying amount and the present value of estimated
future cash flows, discounted at the original effective interest rate.
The carrying amount of the asset is reduced through the use of
a provision for impairment, and the amount of the loss is recognised
in the consolidated income statement. The provision is utilised when
a trade receivable is uncollectible.
Investments
Investments are initially measured at cost, including transaction costs.
Equity investments that do not have a quoted market price in an active
market and whose fair value cannot be reliably measured by other
means are held at cost.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into.
An equity instrument is any contract that evidences a residual interest
in the assets of the Group after deducting all of its liabilities.
Bank borrowings
Interest-bearing loans and overdrafts are recognised initially at fair value
net of direct issue costs and are subsequently stated at amortised cost.
Finance charges, including premiums payable on settlement
or redemption and direct issue costs, are accounted for on an effective
interest method and are added to the carrying amount of the instrument
to the extent that they are not settled in the year in which they arise.
Trade payables
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method.
Carr’s Group plcAnnual Report and Accounts 2018 Equity instruments
Equity instruments issued by the Company are recorded at the proceeds
received, net of direct issue costs.
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 re-measured 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.
NEW STANDARDS AND INTERPRETATIONS
From 3 September 2017 the following became effective and were
adopted by the Group and Company:
Amendment to IAS 7 on disclosure initiative
Amendment to IAS 12 on recognition of deferred tax assets for
unrealised losses
Annual improvements 2014-2016 – IFRS 12 ‘Disclosure of interests
in other entities’ regarding clarification of the scope of the standard
The adoption of these standards and interpretations has had no impact
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
IFRIC 23 Uncertainty over income tax treatments
IFRIC 22 Foreign currency transactions and advance consideration
Amendments to IAS 28 ‘investment in associates’, on long term
interests in associates and joint ventures
Amendment to IAS 40 ‘Investment property’ relating to transfers
of investment property
Amendments to IFRS 2 Share-based payments on clarifying
share based payment transactions
Amendments to IFRS 4 ‘Insurance contracts’ regarding the
implementation of IFRS 9 ‘Financial instruments’
IFRS 9 ‘Financial instruments’
Amendment to IFRS 9 Financial instruments on prepayment
features with negative compensation
IFRS 15 ‘Revenue from contracts with customers’
Amendment to ‘Revenue from contracts with customers’ – clarifications
IFRS 16 ‘Leases’
IFRS 17 ‘Insurance contracts’
It is considered that the above amendments and interpretations, will not
have a significant effect on the results or net assets of the Group
or Company.
IFRS 9, “Financial instruments”, is effective for accounting periods
beginning on or after 1 January 2018, and will therefore first apply to
Carr’s in the year ending August 2019. IFRS 9 requires entities to provide
for possible future credit losses on loans and receivables, including trade
receivables, even if it is highly likely that the loan or receivable will be
fully collectible. The standard introduces an “expected credit loss”
model that focuses on the risk that a loan or receivable will default rather
than whether a loss has been incurred. The financial impact of IFRS 9
is not material.
IFRS 15, “Revenue from contracts with customers”, is effective for
accounting periods beginning on or after 1 January 2018, and will
therefore first apply to Carr’s in the year ending August 2019.
IFRS 15 introduces the requirement to identify the separate performance
obligations within a contract, allocate the revenue to those performance
obligations and to recognise that revenue when the performance
obligations has been satisfied. Following a review of contracts within the
Engineering businesses, including whether there is an enforceable right
to payment for performance completed to date within those contracts,
together with reviews of controls in place over accounting practices, there
will be no change to amounts previously recognised at implementation.
In addition, for businesses where long term contract accounting exists,
the contracts would not typically create assets with an alternative use
due to their bespoke nature and design specifications tailored to the
requirements of the customer, therefore revenue will still be recognised
over time. There are robust controls in place to identify contracts and the
performance obligations within those contracts.
A review of the impact to the Agriculture segment has concluded that
there was no impact to the accounting within those businesses on
transition to the new standard.
IFRS 16, “Leases”, is effective for period beginning on or after 1 January
2019, and will therefore first apply to Carr’s in the year ending August
2020. The Group continues to assess the impact of the accounting
changes that will be required; in particular, leases currently treated
as operating leases such as property leases, company cars and some IT
equipment are likely to be recorded as an asset and a lease liability.
At the date of signing the financial statements the Directors are
not yet in a sufficiently advanced stage of their review to be able
to quantify any financial impact from IFRS 16. However, as a broad
indicator of the magnitude of the Group’s operating lease commitments,
note 32 shows commitments under non-cancellable operating leases
at 1 September 2018 of £11,071,000.
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.
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
25 and actual returns on scheme assets compared to those predicted
in the previous scheme valuation.
Impairment of goodwill
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.
An impairment was identified in both the current and prior year (note 10).
Provision for impairment of trade receivables
The financial statements include a provision for impairment of trade
receivables (note 19) 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.
Revenue recognition on construction contracts
Under long term contracts, the Group recognises revenue and
profits based on the percentage completion method. This requires
management to make an assessment of the overall profitability and
the stage of completion of the entire contract in order to determine
the level of revenue and profit to recognise.
65
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements Notes to the Financial Statements
1 The Company has taken advantage of the exemption, under section 408 of the Companies Act 2006, from presenting its own income statement.
The profit after tax for the year dealt with in the accounts of the Company was £2,541,000 (2017: £3,349,000).
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 have been identified as Agriculture and Engineering. Operating segments have not been aggregated for the purpose
of determining reportable segments.
Agriculture aims to provide for all farming requirements. It derives its revenue from the sale of animal feed and feed blocks together with retail sales
of farm equipment, fuels and farm consumables.
Engineering derives its revenue from the provision of engineering services and the design and manufacture of bespoke equipment for use
in the nuclear, oil and gas, and petrochemical industries. Products include manipulators, robotics, specialist fabrication and precision machining.
Performance is assessed using operating profit. For internal purposes the CODM assesses operating profit before material non-recurring items
consistent with the presentation in the financial statements.
Inter-segmental transactions are all undertaken on an arm’s length basis.
As segment liabilities are not reviewed by the CODM they are not required to be disclosed under IFRS 8.
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 1 September 2018 is as follows:
Total segment revenue
Inter segment revenue
Revenue from external customers
Adjusted3 EBITDA4
Depreciation, amortisation and profit/(loss) on disposal of property, plant and equipment
Share of post-tax results of associates and joint ventures
Adjusted3 operating profit
Amortisation of acquired intangible assets and non-recurring items
Operating profit
Finance income
Finance costs
Adjusted3 profit before taxation
Amortisation of acquired intangible assets and non-recurring items
Profit before taxation
Agriculture
£’000
Engineering
£’000
Group
£’000
359,620
(12)
43,618
(34)
403,238
(46)
359,608
43,584
403,192
12,751
(2,769)
3,396
13,378
(386)
6,000
(1,733)
(181)
4,086
(673)
18,751
(4,502)
3,215
17,464
(1,059)
12,992
3,413
16,405
358
(1,261)
16,561
(1,059)
15,502
3 Adjusted results are after adding back amortisation of acquired intangible assets and non-recurring items including acquisition costs (note 4).
4 Earnings before interest, tax, depreciation, amortisation, profit/(loss) on the disposal of property, plant and equipment and share of post-tax results of associates and joint ventures.
66
Carr’s Group plcAnnual Report and Accounts 2018
2 Segmental information (continued)
Assets
Segment gross assets
The segmental information for the year ended 2 September 2017 (restated) is as follows:
Total segment revenue
Inter segment revenue
Revenue from external customers
Adjusted5 EBITDA6
Depreciation, amortisation and profit/(loss) on disposal of property, plant and equipment
Share of post-tax results of associates and joint ventures
Adjusted5 operating profit
Amortisation of acquired intangible assets and non-recurring items
Operating profit
Finance income
Finance costs
Adjusted5 profit before taxation
Amortisation of acquired intangible assets and non-recurring items
Profit before taxation
Agriculture
£’000
Engineering
£’000
Group
£’000
159,305
71,882
231,187
Agriculture
£’000
Engineering
£’000
Group
£’000
315,876
(9)
30,390
(33)
346,266
(42)
315,867
30,357
346,224
11,302
(2,690)
2,834
11,446
(630)
10,816
2,084
(1,418)
(21)
645
(771)
13,386
(4,108)
2,813
12,091
(1,401)
(126)
10,690
176
(864)
11,403
(1,401)
10,002
5 Adjusted results are after adding back amortisation of acquired intangible assets and non-recurring items including acquisition costs (note 4).
6 Earnings before interest, tax, depreciation, amortisation, profit/(loss) on the disposal of property, plant and equipment and share of post-tax results of associates and joint ventures.
Assets
Segment gross assets (restated)
Agriculture
£’000
Engineering
£’000
Group
£’000
136,545
72,041
208,586
Entity wide disclosures
Revenues from external customers are derived from the sale of products by individual business segment. The breakdown of revenue by business
segment is provided above.
Revenues from external customers:
UK
Europe
USA
New Zealand
Other
2018
£’000
341,905
17,201
42,897
1,178
11
403,192
2017
£’000
296,905
14,666
34,457
196
—
346,224
67
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
2 Segmental information (continued)
Non-current assets
UK
£’000
Europe
£’000
2018
New
USA Zealand
£’000
£’000
(Restated)
2017
Total
£’000
UK
£’000
Europe
£’000
USA
£’000
New
Zealand
£’000
Goodwill
Other intangible assets
Property, plant and equipment
Investment property
Investment in associates
Interest in joint ventures
Other investments
Non-current receivables
Retirement benefit asset
9,856
430
22,524
170
13,129
2,101
50
—
10,146
5,946
447
8,463
—
—
2,644
1
—
—
8,470
1,346
7,448
—
—
3,259
23
21
—
58,406
17,501
20,567
—
—
49
—
—
—
—
—
—
49
24,272
2,223
38,484
170
13,129
8,004
74
21
10,146
9,714
241
21,764
176
10,911
1,771
50
50
5,209
6,081
491
7,302
—
—
2,175
—
—
—
8,498
1,534
8,055
—
532
2,644
23
394
—
96,523
49,886
16,049
21,680
—
—
28
—
—
—
—
—
—
28
Major customers
There are no revenues from transactions with individual customers which amount to ten percent or more of Group revenue.
3 Operating profit
2018
£’000
(54)
19
4,372
6
397
516
251
—
—
178
(31)
1,953
1,575
78
169
247
—
—
(44)
48
4
Group operating profit is stated after (crediting)/charging:
Amortisation of grants
Loss on disposal of property, plant and equipment
Depreciation of property, plant and equipment
Depreciation of owned investment property
Amortisation of intangible assets
Goodwill impairment (note 4)
Business combination expenses (note 4)
Release of contingent consideration (note 4)
Restructuring costs (note 4)
Foreign exchange losses/(gains)
Derivative financial instruments gains
Operating lease charges
Research and development expense
Auditors’ remuneration:
Audit services (Company £16,391; 2017: £15,914)
The auditing of accounts of subsidiaries of the Company pursuant to legislation
(including overseas)
Total audit services
Other non-audit services
Total non-audit services
Included within Group operating profit is the following in respect
of investment property leased to, and occupied by, external parties:
Rental income
Operating expenses
68
Total
£’000
24,293
2,266
37,149
176
11,443
6,590
73
444
5,209
87,643
2017
£’000
(53)
215
4,093
6
124
1,700
1,349
(2,090)
112
(152)
(17)
1,446
1,258
77
119
196
10
10
(41)
42
1
Carr’s Group plcAnnual Report and Accounts 2018
4 Amortisation of acquired intangible assets and non-recurring items
Amortisation of acquired intangible assets
Goodwill impairment
Business combination expenses
Release of contingent consideration
Restructuring costs
Loss on property disposal
2018
£’000
292
516
251
—
—
—
1,059
2017
£’000
124
1,700
1,349
(2,090)
112
206
1,401
An impairment of £516,000 was recognised in the year against the carrying value of goodwill in respect of the Bendalls Engineering business (note 10).
Business combination expenses relate to acquisition costs incurred in the period as well as contingent consideration in relation to prior year acquisitions
of Phoenix Feeds Limited and the business and certain assets of Mortimer Feeds Limited which is explained further below.
Phoenix Feeds Limited was acquired on 1 June 2016. The consideration paid included £490,000 of contingent consideration linked to the continued
employment of key personnel and therefore in accordance with IFRS 3 this was not recognised as consideration in the acquisition accounting in the
53 weeks ended 3 September 2016. It is instead being recognised in the income statement over a two year period with £184,000 (2017: £306,000)
recognised in the current year. Given the nature of the payment it has been recognised as a non-recurring item.
Mortimer Feeds was acquired on 5 June 2017. The consideration paid included £30,000 of contingent consideration linked to the continued employment
of key personnel and therefore in accordance with IFRS 3 this was not recognised as consideration in the acquisition accounting in the prior year. It is
instead being recognised in the income statement over a one year period with £30,000 (2017: £nil) recognised in the current year. Given the nature
of this payment it has been recognised as a non-recurring item.
The goodwill impairment and release of contingent consideration recognised in the prior year relate to the acquisition of Chirton Engineering Limited
which was acquired in year ended 2014.
Restructuring costs in the prior year comprise redundancy costs.
The loss on property disposal recognised in the prior year was in respect of the disposal of a property that was no longer required following the
relocation of one of the Group’s Agricultural branches.
5 Staff costs
The tables below include Executive Directors but exclude Non-Executive Directors.
Wages and salaries
Social security costs
Pension costs
Share based payments
Group
Company
2018
£’000
36,061
3,893
2,172
1,125
43,251
2017
£’000
30,543
3,458
2,034
485
36,520
2018
£’000
2,463
349
220
746
3,778
2017
£’000
1,286
276
277
348
2,187
Included within pension costs for both Group and Company is a charge of £24,000 (2017: £59,000) in respect of the defined benefit pension scheme (note 25).
The average monthly number of employees during the year was made up as follows:
Group
Company
2018
Number
2017
Number
2018
Number
2017
Number
Sales, office and management
Manufacture and distribution
532
466
998
507
429
936
27
—
27
Key management are considered to be the Directors of the Group.
Full details of the Directors’ emoluments, pension benefits and share options are given in the Remuneration Committee Report on pages 33-43.
26
—
26
69
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
6 Finance income and finance costs
Finance income
Bank interest
Net interest on the net defined benefit retirement asset (note 25)
Interest on loan with associate
Other interest
Total finance income
Finance costs
Interest payable on bank overdrafts
Interest payable on bank loans and other borrowings
Interest payable on finance leases
Other interest
Total finance costs
7 Taxation
(a) Analysis of the charge in the year
Current tax:
UK corporation tax
Current year
Adjustment in respect of prior years
Foreign tax
Current year
Adjustment in respect of prior years
Group current tax
Deferred tax:
Origination and reversal of timing differences
Current year
Adjustment in respect of prior years
Group deferred tax (note 17)
Tax on profit from ordinary activities
70
2018
£’000
2017
£’000
145
125
71
17
358
(177)
(832)
(75)
(177)
(1,261)
127
6
6
37
176
(115)
(551)
(73)
(125)
(864)
2018
£’000
2017
£’000
1,352
(228)
1,549
—
2,673
(796)
(22)
(818)
1,855
887
(144)
591
(8)
1,326
442
(61)
381
1,707
Carr’s Group plcAnnual Report and Accounts 2018
7 Taxation (continued)
(b) Factors affecting tax charge for the year
The tax assessed for the year is lower (2017: lower) than the rate of corporation tax in the UK of 19% (2017: 19.58%). The differences are explained below:
Profit before taxation
Tax at 19% (2017: 19.58%)
Effects of:
Tax effect of share of results of associates and joint ventures
Tax effect of expenses that are not allowable in determining taxable profit
Tax effect of non-taxable income
Effects of different tax rates of foreign subsidiaries
Effects of changes in deferred tax rates
Unrecognised deferred tax on losses
Adjustment in respect of prior years
Total tax charge for the year
2018
£’000
15,502
2,945
(611)
300
(310)
227
(490)
44
(250)
1,855
2017
£’000
10,002
1,958
(551)
494
(418)
473
(36)
—
(213)
1,707
The tax effect of expenses that are not allowable in determining taxable profit includes the non-recurring items of business combination expenses
and goodwill impairment (note 4). These have been treated as disallowable for tax purposes.
The tax effect of non-taxable income includes the effect of income within the patent box regime and in respect of the prior year the release of
contingent consideration in respect of the Chirton Engineering acquisition in 2014 (note 4).
The effect of changes in deferred tax rates in the current year includes the effect to deferred tax balances following the reduction in US Federal tax
rates during the year.
(c) Factors affecting future tax charges
The main rate of UK corporation tax has been reduced from 19% to 17% with effect from 1 April 2020. This rate reduction was substantively enacted
before the year end and as the Directors consider the deferred tax balances are expected to reverse after 1 April 2020 the tax rate used for deferred
tax at the year end is 17%.
8 Dividends
Equity
Second interim paid for the year ended 2 September 2017 of 0.95p per 2.5p share (2016: 0.95p)
Special dividend of 17.54p per 2.5p share
Final dividend for the year ended 2 September 2017 of 2.1p per 2.5p share (2016: 1.9p)
First interim paid for the year ended 1 September 2018 of 1.075p per 2.5p share (2017: 0.95p)
2018
£’000
868
—
1,919
983
3,770
2017
£’000
866
15,996
1,736
869
19,467
A special dividend of £15,996,351, being 17.54p per share, was paid in the prior year following the disposal of Carr’s Flour Mills Ltd.
Since the year end a second interim dividend of £982,583, being 1.075p per share, has been paid. The financial statements do not reflect the
dividend payable.
The proposed final dividend for the year ended 1 September 2018 to be considered by shareholders at the Annual General Meeting is £2,148,150
being 2.35p per share, making a total for the year of 4.5p (2017: excluding the special dividend 4.0p). Shares held in treasury do not carry entitlement
to a dividend. The financial statements do not reflect this proposed final dividend as payable.
71
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
9 Earnings per ordinary share
Earnings per share are calculated by reference to a weighted average of 91,402,338 shares (2017: 91,355,427) in issue during the year.
Amortisation of acquired intangible assets and non-recurring items 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:
Earnings per share – basic
Amortisation and non-recurring items:
Amortisation of acquired intangible assets
Goodwill impairment
Business combination expenses
Release of contingent consideration
Restructuring costs
Loss on property disposal
Taxation effect of the above
Non-controlling interest in the above
Earnings per share – adjusted
2018
2017
Earnings
per share
pence
Earnings
£’000
Earnings
per share
pence
13.0
7,005
0.3
0.6
0.3
—
—
—
(0.1)
(0.2)
13.9
124
1,700
1,349
(2,090)
112
206
(88)
(175)
8,143
7.7
0.1
1.9
1.5
(2.3)
0.1
0.2
(0.1)
(0.2)
8.9
Earnings
£’000
11,892
292
516
251
—
—
—
(60)
(145)
12,746
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 27.
2018
Weighted
average number
of shares
Earnings
£’000
Earnings
per share
pence
2017
Weighted
average number
of shares
Earnings
£’000
Earnings
per share
pence
Earnings per share
11,892
91,402,338
13.0
7,005
91,355,427
Effect of dilutive securities:
Share save scheme
Long term incentive plan
—
—
405,079
1,631,190
Diluted earnings per share
11,892
93,438,607
(0.1)
(0.2)
12.7
—
—
227,605
542,288
7,005
92,125,320
7.7
—
(0.1)
7.6
Adjusted
earnings
£’000
2018
Weighted
average number
of shares
Earnings
per share
pence
Adjusted
earnings
£’000
2017
Weighted
average number
of shares
Earnings
per share
pence
Diluted adjusted
earnings per share
12,746
93,438,607
13.6
8,143
92,125,320
8.8
72
Carr’s Group plcAnnual Report and Accounts 2018
10 Goodwill and other intangible assets
Cost
At 3 September 2016
Exchange differences
Subsidiaries/businesses acquired
Additions
Disposals
At 2 September 2017
Exchange differences
Subsidiaries acquired
Additions
Transfers from group companies
Disposals
At 1 September 2018
Accumulated amortisation
and impairment
At 3 September 2016
Exchange differences
Charge for the year
Impairment
Disposals
At 2 September 2017
Exchange differences
Charge for the year
Impairment
Disposals
At 1 September 2018
Net book amount
At 3 September 2016
At 2 September 2017
At 1 September 2018
(Restated)
Goodwill
£’000
11,765
320
14,233
—
—
26,318
(163)
658
—
—
—
26,813
325
—
—
1,700
—
2,025
—
—
516
—
2,541
11,440
24,293
24,272
Customer
Know-how,
technology and
relationships development costs
£’000
£’000
Group
Brands,
patents and
trademarks
£’000
Contract
back-log
£’000
Company
Software
£’000
Total
£’000
Software
£’000
1,316
—
36
—
(1,316)
36
—
53
—
—
—
89
1,316
—
—
—
(1,316)
—
—
89
—
—
89
—
36
—
240
7
216
219
(240)
442
(7)
—
95
—
—
530
240
1
21
—
(240)
22
—
54
—
—
76
—
420
454
448
50
1,195
12
—
1,705
(11)
—
6
—
(1)
1,699
293
18
32
—
—
343
(1)
120
—
(1)
461
155
1,362
1,238
—
4
232
—
—
236
(1)
—
—
—
—
235
—
—
7
—
—
7
2
76
—
—
85
—
229
150
691
63
5
140
(6)
893
(17)
—
224
—
—
14,460
444
15,917
371
(1,562)
29,630
(199)
711
325
—
(1)
1,100
30,466
560
56
64
—
(6)
674
(13)
58
—
—
2,734
75
124
1,700
(1,562)
3,071
(12)
397
516
(1)
719
3,971
131
219
11,726
26,559
—
—
—
—
—
—
—
—
199
129
—
328
—
—
—
—
—
—
—
—
—
—
—
—
—
381
26,495
328
During the year goodwill of £658,000 arose on acquisitions (note 28). An impairment of £516,000 was recognised in the year which is discussed later
in this note.
During the prior year cost and accumulated amortisation of £1,316,000 in respect of customer relationships and cost and accumulated amortisation
of £240,000 in respect of know-how were disposed from the table above. These intangible assets have been fully amortised and have therefore
been removed.
During the prior year goodwill totalling £14,233,000 arose on acquisitions. Goodwill represented the excess of the consideration paid over the Group’s
interest in the net fair value of the net identifiable assets, liabilities and contingent liabilities acquired.
During the prior year an impairment of £1,700,000 was recognised in respect of the goodwill related to the acquisition of Chirton Engineering Limited
which was acquired in year ended 2014.
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.
73
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
10 Goodwill and other intangible assets (continued)
The carrying value of goodwill has been allocated to the following cash generating units:
Carrs Billington Agriculture (Sales) Ltd – Johnstone Wallace Oils profit centre
Carrs Billington Agriculture (Sales) Ltd – Borders profit centre
Carrs Billington Agriculture (Sales) Ltd – Wooler profit centre
Carrs Billington Agriculture (Sales) Ltd – Safe at Work profit centre
Carrs Billington Agriculture (Sales) Ltd – Laycocks/Pearsons profit centre
Carrs Billington Agriculture (Sales) Ltd – Wales profit centre
Carrs Billington Agriculture (Sales) Ltd – Reid and Robertson profit centre
Carrs Billington Agriculture (Sales) Ltd – Morpeth profit centre
Carrs Billington Agriculture (Sales) Ltd – Phoenix profit centre
Carrs Billington Agriculture (Sales) Ltd – Mortimer profit centre
Carrs Agriculture Ltd – Scotmin profit centre
Animal Feed Supplement, Inc. – Silver Springs profit centre
Wälischmiller Engineering GmbH
Carr’s Engineering Ltd – Bendalls Engineering profit centre
Carr’s Engineering Ltd – Chirton profit centre
NuVision Engineering, Inc.
1 September
2018
£’000
(Restated)
2 September
2017
£’000
781
264
369
568
783
626
873
80
703
215
2,068
19
5,946
—
2,526
8,451
781
264
369
568
125
626
873
80
703
215
2,068
19
6,081
516
2,526
8,479
24,272
24,293
Goodwill arising on the acquisition of overseas subsidiaries has been retranslated at the balance sheet date.
The restatement of the prior year carrying value of NuVision Engineering, Inc. goodwill is detailed further in note 36.
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 budget information for the year to August 2019, which has been approved by the Board and forecast
information for the four years to August 2023 based on medium term business plans and an assumption for long term growth of between 1-3% excluding
inflation. The pre-tax discount rates used to discount the forecast cash flows for all cash generating units is 5.23 %– 10.82% (2017: 4.86% – 10.32%).
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.
Impairment testing on the goodwill allocated to the Bendalls Engineering profit centre showed that although business plans demonstrate the profit
centre to be cash generative the headroom during stress testing was sensitive to changes in future cash flows. An impairment of £516,000 against the
full carrying value of goodwill has been recognised in the consolidated income statement.
Significant headroom exists in each of the other cash generating units 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.
Amortisation and impairment charges are recognised within administrative expenses and have been highlighted separately within amortisation and
non-recurring items (note 4) where they relate to acquired intangible assets.
There is no goodwill in the Company (2017: none).
Significant cash generating units
The following key assumptions have been used in the impairment testing for goodwill with a significant carrying value:
Goodwill
carrying value
£’000
Pre-tax
discount rate
%
Long term average annual
change in cash flows
%
Long term
growth rate
%
Cash generating unit
NuVision Engineering, Inc.
Wälischmiller Engineering GmbH
Carr’s Engineering Ltd – Chirton profit centre
Carrs Agriculture Ltd – Scotmin profit centre
8,451
5,946
2,526
2,068
10.82
10.82
10.82
5.23
—
—
8
9
2
2
2
2
Stress testing of the future cash flows generated from these cash generating units shows that an impairment of goodwill would potentially arise
should cash flows fall by 46% in NuVision Engineering Inc, by 28% in Wälischmiller Engineering GmbH, by 30% in the Chirton profit centre and by 92%
in the Scotmin profit centre.
74
Carr’s Group plcAnnual Report and Accounts 2018
11 Property, plant and equipment
Cost
At 3 September 2016
Exchange differences
Subsidiaries/businesses acquired
Additions
Disposals
Reclassifications
At 2 September 2017
Exchange differences
Subsidiaries acquired
Additions
Transfers from group companies
Disposals
Reclassifications
At 1 September 2018
Accumulated depreciation
At 3 September 2016
Exchange differences
Charge for the year
Disposals
At 2 September 2017
Exchange differences
Charge for the year
Transfers from group companies
Disposals
Reclassifications
At 1 September 2018
Net book amount
At 3 September 2016
At 2 September 2017
At 1 September 2018
Group
Land and
buildings
£’000
Plant and
equipment
£’000
Assets in the
course of
construction
£’000
25,672
689
8
449
(691)
116
26,243
(166)
—
755
—
—
1,393
28,225
5,677
89
759
(92)
6,433
(11)
823
—
—
127
7,372
19,995
19,810
20,853
38,432
521
1,584
3,032
(1,553)
975
42,991
(117)
267
3,163
—
(1,136)
201
45,369
24,459
306
3,334
(1,246)
26,853
(28)
3,549
—
(827)
(127)
29,420
13,973
16,138
15,949
1,843
33
10
406
—
(1,091)
1,201
(9)
—
1,581
—
—
(1,091)
1,682
—
—
—
—
—
—
—
—
—
—
—
1,843
1,201
1,682
Company
Plant and
equipment
£’000
—
—
—
—
—
—
—
—
—
—
713
(108)
—
605
—
—
—
—
—
—
15
483
(48)
—
450
—
—
155
Total
£’000
65,947
1,243
1,602
3,887
(2,244)
—
70,435
(292)
267
5,499
—
(1,136)
503
75,276
30,136
395
4,093
(1,338)
33,286
(39)
4,372
—
(827)
—
36,792
35,811
37,149
38,484
Freehold land amounting to £2,979,029 (2017: £2,938,879) has not been depreciated.
The net book amount of plant and equipment includes £3,673,849 (2017: £2,829,604) in respect of assets held under finance leases. This consists of cost
of £5,351,435 (2017: £4,241,494) less accumulated depreciation of £1,677,586 (2017: £1,411,890). The finance lease lessors hold security over the assets held
under finance leases.
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 £1,558,000 (2017: £1,613,000).
Included in the above table in respect of assets held under floating charges are assets with a net book amount of £7,507,000 (2017: £6,702,000).
This excludes specific assets under legal charge and assets secured under finance leases both of which are separately disclosed above.
75
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
11 Property, plant and equipment (continued)
Depreciation is recognised within the Consolidated Income Statement as shown below:
Cost of sales
Distribution costs
Administrative expenses
12 Investment property
Group
Cost
At 3 September 2016, 2 September 2017 and 1 September 2018
Accumulated depreciation
At 3 September 2016
Charge for the year
At 2 September 2017
Charge for the year
At 1 September 2018
Net book amount
At 3 September 2016
At 2 September 2017
At 1 September 2018
2018
£’000
3,594
16
762
4,372
Group
2017
£’000
3,536
—
557
4,093
2018
£’000
Company
2017
£’000
—
—
15
15
—
—
—
—
Total
£’000
299
117
6
123
6
129
182
176
170
The fair value of investment properties at 1 September 2018 is £360,000 (2017: £360,000). Investment properties were valued by independent
professionally qualified valuers in October 2016.
There is no investment property in the Company (2017: none).
76
Carr’s Group plcAnnual Report and Accounts 2018
13 Investments
Group
Cost
At 3 September 2016
Exchange difference
Acquisitions
Redemption of preference shares
Share of post-tax result
Share of gains recognised directly in equity
Dividend paid by associate and joint ventures
At 2 September 2017
Exchange difference
Disposals
Redemption of preference shares
Share of post-tax result
Share of gains recognised directly in equity
Dividend paid by associate and joint ventures
At 1 September 2018
Associates
£’000
Joint
ventures
£’000
Other
investments
£’000
8,667
9
544
—
1,609
859
(245)
11,443
(18)
(333)
—
1,634
991
(588)
13,129
6,257
209
—
(150)
1,204
37
(967)
6,590
(34)
—
(20)
1,581
3
(116)
8,004
Total
£’000
15,005
219
544
(150)
2,813
896
(1,212)
18,115
(51)
(333)
(20)
3,215
994
(704)
21,216
9
14,996
18,106
21,207
81
1
—
—
—
—
—
82
1
—
—
—
—
—
83
9
72
73
74
Accumulated provision for impairment
At 3 September 2016, 2 September 2017 and 1 September 2018
—
—
Net book amount
At 3 September 2016
At 2 September 2017
At 1 September 2018
8,667
11,443
13,129
6,257
6,590
8,004
During the prior year Mid Columbia Engineering, Inc. was brought into the Group as an associate following the acquisition of NuVision Engineering,
Inc., which held 49% of the issued share capital of Mid Columbia Engineering, Inc. During the current year NuVision Engineering, Inc., disposed of its
investment in Mid Columbia Engineering, Inc.
Other investments comprise shares in several private limited companies. These investments have been classified as unquoted investments for which
fair value cannot be reliably measured and are held at cost less accumulated impairment.
77
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
13 Investments (continued)
Company
Cost
At 3 September 2016
Investment in subsidiaries
Share based payment credit in respect
of employees of subsidiary undertakings
At 2 September 2017
Share based payment credit in respect
of employees of subsidiary undertakings
At 1 September 2018
Accumulated provision for impairment
At 3 September 2016, 2 September 2017 and 1 September 2018
Net book amount
At 3 September 2016
At 2 September 2017
At 1 September 2018
Shares in
subsidiaries
£’000
Associate
£’000
Joint
ventures
£’000
16,272
14,780
(66)
30,986
369
31,355
4,794
11,478
26,192
26,561
245
—
—
245
—
245
—
245
245
245
272
—
—
272
—
272
—
272
272
272
Total
£’000
16,789
14,780
(66)
31,503
369
31,872
4,794
11,995
26,709
27,078
Investment in subsidiaries of £14,780,000 in the prior year represents the increased shareholding in a subsidiary following the capitalisation of
inter-company debt together with the investment in two new subsidiaries Carr’s International Finance Limited and Carr’s Engineering (US), Inc.
14 Investment in associates
The associated undertakings at 1 September 2018 are:
Group
Name
Proportion
of shares held
Ordinary
%
Country of
incorporation
Country of
operation
Activity
Carrs Billington Agriculture (Operations) Ltd
49
England
UK
Manufacture of animal feed
The investment in Carrs Billington Agriculture (Operations) Ltd is held directly by the Company. During the year the investment in Mid Columbia
Engineering, Inc. which was held directly by NuVision Engineering, Inc. was disposed.
The Group does not have the ability to control the financial and operating policies of its associate. The Group has a 49% shareholding and a 43%
representation on the Board of Directors of Carrs Billington Agriculture (Operations) Ltd.
Associates are accounted for using the equity method.
At the year end Carrs Billington Agriculture (Operations) Ltd had capital commitments of £70,000 (2017: £308,000). No contingent liabilities exist within
the associate.
The aggregate amounts relating to the associates, of which the Group recognises 49% in the net investment in associates, are:
2018
£’000
44,818
(18,024)
138,401
3,335
2017
£’000
39,878
(16,525)
115,797
3,284
Total assets
Total liabilities
Revenues
Profit after tax
78
Carr’s Group plcAnnual Report and Accounts 2018
15 Interest in joint ventures
The joint ventures at 1 September 2018 are:
Group
Name
Crystalyx Products GmbH
Bibby Agriculture Ltd
Afgritech Ltd
Afgritech LLC
Gold-Bar Feed Supplements LLC
ACC Feed Supplement LLC
Silloth Storage Company Ltd
Interest held
Equity
%
50
26
50
50
50
50
50
Country of
incorporation
Country of
operation
Germany
Germany
England
England
USA
USA
USA
England
UK
UK
USA
USA
USA
UK
Activity
Manufacture of animal
feed blocks
Sale of agricultural products
Holding company
Producers of ingredients
of animal feed
Manufacture of animal
feed blocks
Manufacture of animal
feed blocks
Storage of molasses
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 and Afgritech Ltd. Afgritech Ltd has 100% control of Afgritech LLC. 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. The preference shares
in Bibby Agriculture Ltd were fully redeemed during the year.
Joint ventures are accounted for using the equity method.
At the year end the joint ventures had capital commitments of £54,000 (2017: £461,000). 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:
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Income
Expenses
Net finance cost
2018
£’000
8,195
7,662
(6,987)
(883)
38,656
(36,514)
(119)
2017
£’000
7,658
6,343
(5,200)
(2,248)
30,175
(28,567)
(73)
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.
Included within interest in joint ventures is an amount of £nil (2017: £20,000) which relates to the Group’s interest in the preference share capital
of Bibby Agriculture Ltd.
79
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
16 Investment in subsidiary undertakings
Name
Proportion
of shares held
Ordinary
%
Country of
incorporation
Country of
operation
Carrs Agriculture Ltd
100
England1
Carrs Billington Agriculture (Sales) Ltd
Animal Feed Supplement, Inc.
Carr’s Supplements (NZ) Ltd
Conegar S.A.
Carr’s Supplements (Brasil) Nutrição Animal Ltda
Carr’s Engineering Ltd
Wälischmiller Engineering GmbH
Carr’s Engineering (US), Inc.
NuVision Engineering, Inc.
B.R.B. Trust Ltd
Carrs Properties Ltd
Carr’s International Finance Ltd
Carr’s Group Corporate Trustee Ltd
51
100
100
100
100
100
100
100
100
100
100
100
100
England1
USA2
New Zealand3
Uruguay6
Brazil7
England1
Germany4
USA5
USA5
England1
England1
England1
England1
UK
UK
USA
New Zealand
Uruguay
Brazil
UK
Germany
USA
USA
UK
UK
UK
UK
Activity
Manufacture of
animal feed/mineral blocks and
ingredients of animal feed
Agricultural retailers
Manufacture of
animal feed blocks
Distributor of animal feed blocks
Distributor of animal feed blocks
Distributor of animal feed blocks
Engineering
Engineering
Holding Company
Engineering
Financial services
Property holding
Finance Company
Corporate Trustee
1 Registered Office address: Old Croft, Stanwix, Carlisle, Cumbria CA3 9BA
3 Registered Office address: 515a Wairakei Road, Burnside, Christchurch 8053, New Zealand 4 Registered Office address: Schießstattweg 16, 88677 Markdorf, Germany
5 Registered Office address: 2403 Sidney Street, Suite 700, Pittsburgh, Pennsylvania 15203, USA
6 Registered Office address: Juncal 1305, Piso 18, Montevideo, Uruguay
7 Registered Office address: Avenida Bernardino de Campos, 98, Andar 7, Sala 47, Paraiso, São Paulo – SP, 04.004-040, Brasil
2 Registered Office address: 101 Roanoke Avenue, Poteau, Oklahoma 74953, USA
Dormant subsidiaries are listed on page 107 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; Carrs Agriculture Ltd holds 100% of the investment in Carr’s Supplements (NZ) Ltd, Conegar S.A. and
Carr’s Supplements (Brasil) Nutrição Animal Ltda; and Carr’s Engineering (US), Inc. holds 100% of the investment in NuVision Engineering, Inc.
During the year ESI Holding Company, Inc. was merged with NuVision Engineering, Inc. and Horslyx LLC was dissolved.
17 Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Group
Accelerated tax depreciation
Employee benefits
Other
Tax liabilities
Liabilities
2018
£’000
(1,604)
(1,725)
(652)
(3,981)
2017
£’000
(2,118)
(886)
(1,006)
(4,010)
Deferred tax liabilities are expected to reverse after more than one year from the balance sheet date.
Movement in deferred tax during the year
Liabilities:
Accelerated tax depreciation
Employee benefits
Other
At
3 September
2017
£’000
Exchange
differences
£’000
In respect of
acquisitions
£’000
Recognised
in income
£’000
Recognised
in equity
£’000
At
1 September
2018
£’000
(2,118)
(886)
(1,006)
(4,010)
28
—
17
45
(35)
—
(5)
(40)
521
(17)
314
818
—
(822)
28
(794)
(1,604)
(1,725)
(652)
(3,981)
Other deferred tax assets and liabilities includes deferred tax on short term timing differences, rolled over capital gains, trading losses, capital losses,
business combinations and overseas deferred tax.
80
Carr’s Group plcAnnual Report and Accounts 2018
17 Deferred tax assets and liabilities (continued)
Movement in deferred tax during the prior year
At
4 September
2016
£’000
Exchange
differences
£’000
In respect of
acquisitions
£’000
Recognised
in income
£’000
Recognised
in equity
£’000
At
2 September
2017
£’000
Liabilities:
Accelerated tax depreciation
Employee benefits
Other
,
Company
Accelerated tax
depreciation
Employee benefits
Other
Tax assets/(liabilities)
(1,230)
(56)
(531)
(1,817)
2017
£’000
8
—
51
59
Assets
2018
£’000
16
—
217
233
Movement in deferred tax during the year
Assets:
Accelerated tax depreciation
Other
Liabilities:
Employee benefits
Net liabilities
Movement in deferred tax during the prior year
Assets:
Accelerated tax depreciation
Other
Liabilities:
Employee benefits
Net liabilities
(23)
—
(46)
(69)
2018
£’000
—
(1,725)
—
(1,725)
(968)
—
67
(901)
103
12
(496)
(381)
—
(842)
—
(842)
Liabilities
Net
2017
£’000
—
(886)
—
(886)
2018
£’000
16
(1,725)
217
(1,492)
(2,118)
(886)
(1,006)
(4,010)
2017
£’000
8
(886)
51
(827)
At
3 September
2017
£’000
Recognised
in income
£’000
Recognised
in equity
£’000
At
1 September
2018
£’000
8
51
59
(886)
(886)
(827)
8
144
152
(17)
(17)
135
—
22
22
(822)
(822)
(800)
16
217
233
(1,725)
(1,725)
(1,492)
At
4 September
2016
£’000
Recognised
in income
£’000
Recognised
in equity
£’000
At
2 September
2017
£’000
2
—
2
(56)
(56)
(54)
6
51
57
12
12
69
—
—
—
(842)
(842)
(842)
Tax of £53,000 (2017: £90,000) in respect of tax losses has not been recognised as a deferred tax asset in the Group balance sheet.
Tax of £nil (2017: £37,000) in respect of tax losses has not been recognised as a deferred tax asset in the Company balance sheet.
8
51
59
(886)
(886)
(827)
81
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
18 Inventories
Group
Raw materials and consumables
Work in progress
Finished goods and goods for resale
2018
£’000
10,536
3,414
28,421
42,371
2017
£’000
10,082
3,174
23,767
37,023
Inventories are stated after a provision for impairment of £588,000 (2017: £366,000). The amount recognised as an expense in the year in respect of the
write down of inventories is £75,000 (2017: £nil). The amount recognised as a credit in the year in respect of reversals of write downs of inventories
is £nil (2017: £127,000).
The cost of inventories recognised as an expense and included in cost of sales is £347,585,000 (2017: £305,977,000).
The Company has no inventories (2017: none).
Construction contracts disclosures
Contract costs incurred plus recognised profits less recognised losses to date
Contract advances received
Work in progress on construction contracts
2018
£’000
2,406
(383)
2,023
2017
£’000
2,623
(804)
1,819
Revenue from construction contracts
32,406
20,521
19 Trade and other receivables
Current:
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Amounts recoverable on contracts
Amounts owed by Group undertakings (note 34)
Amounts owed by other related parties (note 34)
Loans receivable
Other taxes and social security receivable
Other receivables
Prepayments and accrued income
Non-current:
Amounts owed by Group undertakings (note 34)
Amounts owed by other related parties (note 34)
Other receivables
Group
Company
2018
£’000
58,261
(1,747)
56,514
4,711
—
1,963
79
1,109
1,299
1,841
67,516
—
—
21
21
(Restated)
2017
£’000
49,904
(1,675)
48,229
4,408
—
2,257
47
872
1,188
2,722
59,723
—
394
50
444
2018
£’000
98
(98)
—
—
20,185
1,677
—
328
98
227
22,515
15,405
—
—
15,405
2017
£’000
—
—
—
—
18,865
1,686
—
248
164
428
21,391
18,007
—
—
18,007
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.
82
Carr’s Group plcAnnual Report and Accounts 2018
19 Trade and other receivables (continued)
During the year a credit of £84,000 (2017: £111,000) has been recognised within administrative expenses in the consolidated income statement in
respect of the movement in provision for impairment of trade receivables.
No impairment of other receivables has been recognised in the current or preceding year.
Interest bearing, non-trading amounts owed by Group undertakings within current trade and other receivables carry interest at Bank of England
base rate + 2.50% or 4.50%. Such amounts are unsecured and repayable on demand.
Interest bearing, non-trading amounts owed by Group undertakings within non-current receivables carry interest at 6.25%. Such amounts are
unsecured and have a term of 5 years.
Group
The ageing of trade
receivables is as follows:
Not past due
Past due 1 – 30 days
Past due 31 – 60 days
Past due 61 – 90 days
Past due 91 – 120 days
Past 121 days
Company
The ageing of trade
receivables is as follows:
Past due 91 – 120 days
Past 121 days
2018
2017
Gross
£’000
Impairment
£’000
Past due but
not impaired
£’000
Gross
£’000
Impairment
£’000
Past due but
not impaired
£’000
34,810
10,650
4,282
2,500
1,592
4,427
58,261
(101)
(37)
(77)
(75)
(47)
(1,410)
(1,747)
2018
N/A
10,613
4,205
2,425
1,545
3,017
21,805
32,683
7,393
2,905
1,649
928
4,346
49,904
N/A
7,355
2,859
1,603
880
3,003
15,700
(154)
(38)
(46)
(46)
(48)
(1,343)
(1,675)
2017
Gross
£’000
Impairment
£’000
Past due but
not impaired
£’000
Gross
£’000
Impairment
£’000
Past due but
not impaired
£’000
17
81
98
(17)
(81)
(98)
—
—
—
—
—
—
—
—
—
—
—
—
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.
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 (2017: none).
Group
Company
2018
£’000
2017
£’000
2018
£’000
2017
£’000
The carrying value of trade receivables are denominated
in the following currencies:
Sterling
US Dollar
Euro
New Zealand Dollar
45,853
860
9,385
416
56,514
38,150
1,169
7,994
916
48,229
—
—
—
—
—
—
—
—
—
—
83
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
20 Current tax assets
Corporation tax recoverable
Group taxation relief
21 Cash and cash equivalents and bank overdrafts
Cash and cash equivalents per the balance sheet
Bank overdrafts (note 23)
Cash and cash equivalents per the statement of cash flows
22 Trade and other payables
Current:
Trade payables
Payments on account
Amounts owed to Group undertakings (note 34)
Amounts owed to other related parties (note 34)
Other taxes and social security payable
Contingent, deferred and unpaid cash consideration
Other payables
Accruals and deferred income
Non-current:
Contingent consideration
Accruals and deferred income
Group
Company
(Restated)
2017
£’000
297
—
297
2018
£’000
886
474
1,360
Group
Company
2017
£’000
23,887
(5,273)
18,614
2018
£’000
4,955
—
4,955
2017
£’000
464
—
464
2017
£’000
8,494
—
8,494
Group
Company
(Restated)
2017
£’000
2018
£’000
2017
£’000
16,215
5,809
—
19,371
1,090
2,396
6,764
4,536
56,181
3,492
263
3,755
—
—
9
—
691
—
438
1,323
2,461
—
—
—
—
—
31
—
637
—
318
551
1,537
—
—
—
2018
£’000
119
—
119
2018
£’000
24,632
(3,627)
21,005
2018
£’000
13,793
5,023
—
25,084
1,431
2,371
9,771
6,817
64,290
1,576
208
1,784
Amounts owed to Group undertakings and other related parties are interest free, unsecured and repayable on demand.
During the year deferred consideration arose on an acquisition (note 28). In addition there remained initial cash consideration unpaid at the balance
sheet date together with deferred and contingent consideration on prior year acquisitions. After retranslation at the balance sheet date of foreign
currency denominated amounts, £2,371,000 of these outstanding payables are recognised within current liabilities and £1,576,000 are recognised
within non-current liabilities.
84
Carr’s Group plcAnnual Report and Accounts 2018
22 Trade and other payables (continued)
Included within accruals and deferred income is the following in respect of government grants:
At the beginning of the year
Exchange differences
Subsidiaries acquired
Amortisation in the year
At the end of the year
Included within:
Current liabilities
Non-current liabilities
23 Borrowings
Current:
Bank overdrafts
Bank loans and other borrowings
Loans from Group undertakings (note 34)
Finance leases
Non-current:
Bank loans
Finance leases
Borrowings are repayable as follows:
On demand or within one year
In the second year
In the third to fifth years inclusive
Group
Company
2018
£’000
2017
£’000
2018
£’000
2017
£’000
269
(1)
—
(54)
214
6
208
214
2018
£’000
3,627
30,444
—
923
34,994
3,564
1,433
4,997
34,994
1,916
3,081
39,991
274
2
46
(53)
269
6
263
269
—
—
—
—
—
—
—
—
Group
Company
2017
£’000
5,273
10,951
—
836
17,060
19,425
1,541
20,966
17,060
16,543
4,423
38,026
2018
£’000
—
13,378
5,461
—
18,839
3,564
—
3,564
18,839
1,188
2,376
22,403
—
—
—
—
—
—
—
—
2017
£’000
—
1,693
5,461
—
7,154
19,018
—
19,018
7,154
15,454
3,564
26,172
Group and Company borrowings are shown in the balance sheet net of arrangement fees of £53,000 (2017: £149,000) of which £17,000 (2017: £57,000)
is deducted from current liabilities and £36,000 (2017: £92,000) is deducted from non-current liabilities.
The net borrowings are:
Borrowings as above
Cash and cash equivalents
Net borrowings
Group
Company
2018
£’000
39,991
(24,632)
15,359
2017
£’000
38,026
(23,887)
14,139
2018
£’000
22,403
(4,955)
17,448
2017
£’000
26,172
(8,494)
17,678
Bank loans and other borrowings includes an amount of £15,922,000 (2017: £6,988,000) which is secured on trade receivables. The Company, together
with certain subsidiaries, act as guarantors on the bank loans. In addition, The Royal Bank of Scotland PLC has legal charges over certain properties.
Finance lease obligations are secured on the assets to which they relate.
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.
Current bank loans (2017: non-current bank loans) includes a drawn down revolving credit facility of £11.8m (2017: £13.9m) which is repayable in June
2019. At the year end the Group had £12.7m of undrawn revolving credit facilities (2017: £10.6m). At the date of signing these financial statements the
facility has been renewed until November 2023.
85
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
24 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.
Financial Instruments by currency
Group
Sterling Dollar
£’000 £’000
Assets
Other investments
Non-current receivables
Current trade and other receivables
Current derivatives
Cash and cash equivalents
50
—
50,535
—
16,761
23
21
4,154
13
6,792
US
Euro
£’000
1
—
9,461
13
704
2018
NZ
Dollar Other
£’000
£’000 £’000
Total Sterling
£’000
—
—
416
—
281
74
—
—
21
— 64,566
—
26
94 24,632
50
50
44,177
—
12,165
(Restated)
US
Dollar
£’000
23
394
3,699
13
6,192
2017
NZ
Euro
£’000
Dollar Total
£’000 £’000
—
—
8,028
—
5,323
—
—
225
—
207
73
444
56,129
13
23,887
67,346 11,003
10,179
697
94 89,319
56,442
10,321
13,351
432
80,546
Liabilities
Current borrowings
Current derivatives
Current trade and other payables
Non-current borrowings
Other non-current liabilities
29,326
—
50,623
4,997
—
148
—
4,957
—
1,576
5,520
—
7,180
—
—
84,946
6,681
12,700
—
—
93
—
—
93
15,273
— 34,994
—
—
—
— 62,853 42,656
16,068
—
—
—
4,997
1,576
329
—
3,100
—
3,492
1,458
18
9,269
4,898
—
—
—
60
—
—
17,060
18
55,085
20,966
3,492
— 104,420
73,997
6,921
15,643
60
96,621
Company
Assets
Non-current receivables
Current trade and other receivables
Cash and cash equivalents
Liabilities
Current borrowings
Current trade and other payables
Non-current borrowings
2018
2017
Sterling
£’000
US
Dollar
£’000
Euro
£’000
US
Total Sterling Dollar
£’000
£’000
£’000
Euro
£’000
Total
£’000
—
12,308
3,765
15,405
1,239
1,185
—
8,413
5
15,405
21,960
4,955
—
12,488
7,271
18,007
1,243
1,009
—
6,984
214
18,007
20,715
8,494
16,073
17,829
8,418 42,320
19,759
20,259
7,198
47,216
14,056
1,770
3,564
19,390
—
—
—
—
4,783
—
—
18,839
1,770
3,564
7,154
900
14,120
4,783
24,173
22,174
—
—
—
—
—
—
4,898
7,154
900
19,018
4,898
27,072
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.
Sensitivity analysis
The impact of a weakening or strengthening in Sterling against other currencies at the balance sheet date is shown in the table below. The Directors
consider that a 10% (2017: 10%) weakening or strengthening in Sterling against other currencies represents reasonable possible changes.
Impact on profit after taxation
Impact on total equity
10%
weakening
£’000
861
4,940
2018
10%
strengthening
£’000
(704)
(4,042)
2017
10%
weakening
£’000
1,429
4,623
10%
strengthening
£’000
(1,170)
(3,779)
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.
86
Carr’s Group plcAnnual Report and Accounts 2018
24 Derivatives and other financial instruments (continued)
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
Bank overdrafts
Bank loans and other borrowings
Finance lease liabilities
Fixed rate
Floating rate
Weighted
average
effective
interest rate
%
2.70
2.13
2.39
Weighted
average
effective
interest rate
%
2.26
1.82
2.42
2018
£’000
3,627
34,008
2,356
39,991
2,356
37,635
39,991
The Group’s floating rate financial liabilities bear interest determined as follows:
Bank overdrafts
Bank loans and other borrowings
US prime rate + 1.0% margin; US prime rate + 1.35% margin; Bank of England base rate +1.8% margin
Libor + 1.8%; Libor + 2.0%; Bank of England base rate + 1.15% margin; 1.3%
Company
Bank loans
Loans from Group undertakings
Floating rate
Weighted
average
effective
interest rate
%
2.18
—
Weighted
average
effective
interest rate
%
1.93
—
2018
£’000
16,942
5,461
22,403
The Company’s floating rate financial liabilities bear interest determined as follows:
Bank loans
Libor + 1.8%
2017
£’000
5,273
30,376
2,377
38,026
2,377
35,649
38,026
2017
£’000
20,711
5,461
26,172
87
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
24 Derivatives and other financial instruments (continued)
Sensitivity analysis
The impact of a decrease or increase in interest rates during the year is shown in the table below. The Directors consider that a 1% movement in interest
rates represents a reasonable possible change.
2018
2017
1% decrease
£’000
1% increase
£’000
1% decrease
£’000
1% increase
£’000
Impact on profit after taxation
Impact on total equity
415
415
(415)
(415)
283
283
(283)
(283)
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 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
Bank overdrafts
Bank loans and other borrowings
Finance lease liabilities
Derivatives
Trade and other payables
Other non-current liabilities
Company
Bank loans
Loans from Group undertakings
Trade and other payables
2018
Within
one
year
£’000
Total
£’000
One to
two
years
£’000
Two to
five
years
£’000
3,627
34,534
2,537
—
62,853
1,657
3,627
30,790
992
—
62,853
—
—
1,279
786
—
—
1,657
—
2,465
759
—
—
—
Total
£’000
5,273
31,357
2,580
18
55,085
3,671
(Restated)
2017
Within
one
year
£’000
5,273
11,415
903
18
55,085
—
One to
two
years
£’000
Two to
five
years
£’000
—
16,227
737
—
—
2,009
—
3,715
940
—
—
1,662
105,208
98,262
3,722
3,224
97,984
72,694
18,973
6,317
2018
2017
Within
one
year
£’000
Total
£’000
17,467
5,461
1,770
13,723
5,461
1,770
One to
two
years
£’000
1,279
—
—
Two to
five
years
£’000
2,465
—
—
Within
one
year
£’000
1,693
5,461
900
One to
two
years
£’000
15,454
—
—
Two to
five
years
£’000
3,564
—
—
Total
£’000
20,711
5,461
900
24,698
20,954
1,279
2,465
27,072
8,054
15,454
3,564
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.
88
Carr’s Group plcAnnual Report and Accounts 2018
24 Derivatives and other financial instruments (continued)
Future minimum lease payments of finance leases
Group
Amount payable:
Within one year
In the second year
In the third to fifth years inclusive
Less: future finance charges
Present value of lease obligations
Repayment profile
2018
£’000
923
728
705
2,356
2017
£’000
836
683
858
2,377
2018
£’000
992
786
759
2,537
(181)
2,356
2017
£’000
903
737
940
2,580
(203)
2,377
The Company has no finance lease obligations (2017: none).
Borrowing facilities
The Group has various undrawn facilities. The undrawn facilities available at 1 September 2018, in respect of which all conditions precedent had
been met, were as follows:
Expiring in one year or less
Expiring within two and five years inclusive
2018
Floating rate
£’000
2017
Floating rate
£’000
14,868
12,374
27,242
5,957
24,273
30,230
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 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 1 September 2018 the Group had net debt of £15.4m (2017: £14.1m). Gearing was 12.7% at the year end.
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
All derivative financial instruments are measured at fair value using Level 2 inputs. There were no transfers between levels in the above hierarchy
in either the current or prior year.
The Group holds shares in several private limited companies. These have been classified as unquoted investments for which fair value cannot
be reliably measured and are held at cost less accumulated impairment. Had fair value been applied this financial asset would have been Level 3.
89
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
24 Derivatives and other financial instruments (continued)
Fair values of financial assets and liabilities
The fair value 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 loss of £4,000
(2017: Pre-tax gain of £36,000) was recognised in equity during the year on translation of US dollar denominated loans with a fair value of $1,608,000
(2017: $1,608,000) to sterling. A foreign exchange pre-tax gain of £115,000 (2017: pre-tax loss of £106,000) was recognised in equity during the year
on translation of Euro denominated loans with a fair value of €5,330,000 (2017: €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
At beginning of the year
Gains during the year
At end of the year
Included within:
Current assets
Current liabilities
2018
Contractual
or notional
amount
£’000
Fair
value
£’000
2017
Contractual
or notional
amount
£’000
Fair
value
£’000
(3)
16
13
13
—
13
2,821
(1,615)
1,206
1,206
—
1,206
(20)
17
(3)
13
(16)
(3)
1,462
1,359
2,821
2,152
669
2,821
The Company has no forward foreign currency contracts.
The Group uses currency swaps to manage exchange risk exposure. At the balance sheet date, the fair value of outstanding currency swaps are as below:
Group
At beginning of the year
Gains/(losses) during the year
At end of the year (current assets/(current liabilities))
The Company has no currency swaps (2017: none).
2018
Contractual
or notional
amount
£’000
146
(22)
124
Fair
value
£’000
(2)
15
13
2017
Contractual
or notional
amount
£’000
—
146
146
Fair
value
£’000
—
(2)
(2)
Fair value has been determined by reference to the value of equivalent forward foreign currency contracts and currency swaps at the balance sheet date.
Gains and losses on currency related derivatives are included within administrative expenses.
90
Carr’s Group plcAnnual Report and Accounts 2018
25 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
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 (2017: £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 2017 and updated on an approximate basis to 1 September 2018 by a qualified
independent actuary.
Major assumptions:
Inflation (RPI)
Inflation (CPI)
Rate of discount
Pension in payment increases:
RPI or 5.0% per annum if less
RPI or 5.0% per annum if less, minimum 3.0% per annum
2018
%
3.00
2.10
2.80
3.00
3.50
2017
%
3.20
2.30
2.40
3.10
3.60
The mortality tables used in the valuation as at 1 September 2018 are 100% of S2PA with allowance for mortality improvements using CMI_2017
with a 1.25%pa underpin. The mortality assumptions adopted imply the following life expectancies at age 65 as at 1 September 2018:
Males currently age 45
Females currently age 45
Males currently age 65
Females currently age 65
Amounts recognised in the Income Statement in respect of defined benefit schemes:
Service cost – administrative cost
Net interest on the net defined benefit asset
Total (income)/expense
At
1 September
2018
At
2 September
2017
23.4 years
25.4 years
22.0 years
23.9 years
23.5 years
25.4 years
22.1 years
23.9 years
2018
£’000
24
(125)
(101)
2017
£’000
59
(6)
53
91
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
25 Retirement benefits (continued)
The (income)/expense is recognised within the Income Statement as shown below:
2018
£’000
2017
£’000
Within operating profit:
Administrative expenses
Within interest:
Finance income
Total (income)/expense
Remeasurements of the net defined benefit asset to be shown in the Statement of Comprehensive Income:
Net measurement – financial
Net measurement – demographic
Net measurement – experience
Return on assets, excluding interest income
Total remeasurement of the net defined benefit asset
Amounts included in the Balance Sheet:
Present value of funded defined benefit obligations
Fair value of scheme assets
Surplus in funded scheme
Reconciliation of opening and closing balances of the present value of the defined benefit obligation:
Benefit obligation at the beginning of the year
Interest cost
Net measurement gains – financial
Net measurement gains – demographic
Net measurement (gains)/losses – experience
Benefits paid
Benefit obligation at the end of the year
Benefit obligation by participant status:
Vested deferreds
Retirees
92
24
(125)
(101)
2018
£’000
4,716
486
1,353
(1,719)
4,836
2018
£’000
(60,488)
70,634
10,146
2018
£’000
69,921
1,624
(4,716)
(486)
(1,353)
(4,502)
60,488
2018
£’000
19,181
41,307
60,488
59
(6)
53
2017
£’000
1,492
1,283
(1,888)
4,064
4,951
2017
£’000
(69,921)
75,130
5,209
2017
£’000
73,355
1,463
(1,492)
(1,283)
1,888
(4,010)
69,921
2017
£’000
24,472
45,449
69,921
Carr’s Group plcAnnual Report and Accounts 2018
25 Retirement benefits (continued)
Reconciliation of opening and closing balances of the fair value of scheme assets:
Fair value of scheme assets at the beginning of the year
Interest income on scheme assets
Return on assets, excluding interest income
Benefits paid
Scheme administrative cost
Fair value of scheme assets at the end of the year
Analysis of the scheme assets and actual return:
Equity instruments
Property
Bonds
Cash
Other
2018
£’000
75,130
1,749
(1,719)
(4,502)
(24)
70,634
2017
£’000
73,666
1,469
4,064
(4,010)
(59)
75,130
Fair value of assets
2018
£’000
12,306
3,805
48,618
44
5,861
70,634
2017
£’000
22,979
3,278
48,601
272
—
75,130
Actual return on scheme assets
30
5,533
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
Decrease by 25 basis points
Increase by 25 basis points
Decrease by 25 basis points
Increase by 25 basis points
Decrease by 1 year
Increase by 1 year
Discount rate
Price inflation rate
Mortality assumption
Expected cash flows for the following year:
Expected employer contributions
Expected contributions to reimbursement rights
Expected total benefit payments:
Year 1
Year 2
Year 3
Year 4
Year 5
Next 5 years
62,722
58,374
59,270
61,641
62,760
58,245
£’000
—
—
4,633
4,769
4,908
5,051
5,198
28,351
93
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
25 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.
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.
Information about the risks of the Scheme to the Company:
The Scheme exposes the Company to actuarial risks such as market (investment) risk, interest rate risk, inflation risk, currency risk and longevity risk.
The Scheme does not expose the Company to any unusual Scheme-specific or Company-specific risks.
Amount, timing and uncertainty of future cash flows
The Scheme’s investment strategy:
The Scheme’s investment strategy is to invest in return seeking assets and matching assets. This strategy reflects the Scheme’s liability profile and the
Trustees’ attitude to risk. The Scheme’s investments include vehicles for interest rate and inflation hedging.
Carr’s Group Retirement Savings Scheme
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 was £1,485,000 (2017: £911,000).
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 £2.0m (2017: deficit of £2.3m). The sponsoring employer, Carrs Billington Agriculture (Operations) Ltd, is currently paying
£0.8m per annum under the terms of the recovery plan agreed between them and the Trustees of the scheme.
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.
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’. Under the rules of the scheme, on a wind-up the orphan liabilities would be split between the participating employers in the same
proportion as their calculated share of non-orphan liabilities. At the last actuarial valuation, the buy-out deficit was £15.7m and the Group’s estimated
liability on the wind up of the scheme was £7.6m.
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 (2017: £nil). Currently the deficit repair contributions are
being funded solely by the sponsoring employer and this is expected to remain the case in the future. Those deficit repair contributions are based on
the last triennial valuation of the scheme as at 31 December 2015, which showed that the scheme had a deficit of £4.4m on a technical provisions basis.
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 deficit calculated on an IAS 19 accounting basis within its ‘Investment in Associates’
in its consolidated balance sheet.
Other pension schemes
Carrs Billington Agriculture (Sales) Ltd offered a Group Personal Pension Plan to some of its employees. From 1 September 2017 contributions into this
plan ceased and employees were instead offered membership in the Carr’s Group Retirement Savings Scheme (Carr’s Group RSS). The pension expense
for this plan in the year was £nil (2017: £521,000).
The pension expense in respect of defined contribution pension arrangements in foreign subsidiaries during the year was £503,000 (2017: £308,000).
Pension contributions into NEST during the year amounted to £62,000 (2017: £39,000).
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 was £17,000 (2017: £36,000).
94
Carr’s Group plcAnnual Report and Accounts 2018 26 Share capital
Group and Company
Authorised:
Ordinary shares of 2.5p each
Allotted and fully paid ordinary shares of 2.5p each:
At start of the year
Allotment of shares
At end of the year
2018
Shares
2018
£’000
2017
Shares
2017
£’000
140,000,000
3,500
140,000,000
3,500
91,395,541
7,571
91,403,112
2,285
—
2,285
91,192,804
202,737
91,395,541
2,280
5
2,285
The consideration received on the allotment of shares during the year was £11,292 (2017: £23,628).
For details of share based payment schemes see note 27.
Since the year end there was a further allotment of 7,540 shares with a nominal value of £189 due to the exercise of share options. In addition, to enable
vesting of the Group’s long term incentive plan, 520,315 shares with a nominal value of £13,008 were allotted and held in treasury.
27 Share-based payments
Group
The Group operates two active share based payment schemes at 1 September 2018.
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 2015, November 2016 and December 2017 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 both 3 year and 5 year vesting period plans. The exercise period is 6 months from the vesting date.
The fair value per option granted and the assumptions used in the calculation of fair values are as follows:
Grant date
Share price at grant date
(weighted average)
Exercise price
(weighted average)
Fair value per option at grant
Number of employees
Shares under option
Vesting period (years)
Model used for valuation
Expected volatility
Option life (years)
Expected life (years)
Risk-free rate
Expected dividends
expressed as a
dividend yield
Expectations of vesting
Long Term
Incentive Plan
December 2017
Long Term
Incentive Plan
November 2016
Long Term
Incentive Plan
November 2015
Share Save
Scheme
(3-Year Plan
2018)
Share Save
Scheme
(5-Year Plan
2014)
22/12/17
14/11/16
£1.240
£1.440
£0.00
£1.119
7
611,596
3
Market value*
—
10
6.5
—
£0.00
£1.324
7
541,574
3
Market value*
—
10
6.5
—
9/11/15
£1.460
£0.00
£1.344
7
511,785
3
Market value*
—
10
6.5
—
18/12/17
£1.20
£1.061
£0.280
267
1,336,867
3
Binomial
32.7%
3.5
3.25
0.6%
9/6/14
£1.870
£1.520
£0.529
22
75,480
5
Black Scholes
26.9%
5.5
5.25
2.07%
1.68%
100%
1.78%
100%
2.54%
100%
2.7%
95%
1.93%
95%
* Discounted for dividends forgone over the three year vesting 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.
95
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
27 Share-based payments (continued)
Number of options
Long Term
Incentive Plan
Long Term
Incentive Plan
Long Term
Incentive Plan
December 2017 November 2016 November 2015 November 2014
Number
’000
Long Term
Incentive Plan
Number
’000
Number
’000
Number
’000
Share Save
Scheme
(3-Year Plan
2018)
Number
’000
Share Save
Scheme
(3-Year Plan
2014)
Number
’000
Share Save
Scheme
(5-Year Plan
2014)
Number
’000
282
—
—
(83)
199
—
—
(124)
75
—
—
1.25
1.00
2017
£’000
—
105
243
87
—
37
13
485
Outstanding:
At 3 September 2016
Granted in the year
Exercised in the year
Forfeited in the year
At 2 September 2017
Granted in the year
Exercised in the year
Forfeited in the year
At 1 September 2018
Exercisable:
At 2 September 2017
At 1 September 2018
Weighted average:
Remaining contractual
life (years)
Remaining expected
life (years)
—
—
—
—
—
612
—
—
612
—
—
—
579
—
(37)
542
—
—
—
542
—
—
625
—
—
(113)
512
—
—
—
512
—
—
9.00
8.00
7.00
5.50
4.50
3.50
512
—
—
(69)
443
—
—
(443)
—
—
—
—
—
—
—
—
—
—
1,465
—
(128)
1,337
—
—
2.83
2.58
428
—
(5)
(401)
22
—
(7)
(15)
—
22
—
—
—
The total expense recognised for the year arising from share based payments are as follows:
2018
£’000
228
350
435
—
86
—
26
1,125
Long Term Incentive Plan December 2017
Long Term Incentive Plan November 2016
Long Term Incentive Plan November 2015
Long Term Incentive Plan November 2013
Share Save Scheme (3-Year Plan 2018)
Share Save Scheme (3-Year Plan 2014)
Share Save Scheme (5-Year Plan 2014)
96
Carr’s Group plcAnnual Report and Accounts 2018
27 Share-based payments (continued)
Company
The movement in the number of outstanding options under the share schemes for the Company is not shown as it is immaterial and disclosure
would be excessively lengthy.
The total expense recognised for the year arising from share based payments are as follows:
Long Term Incentive Plan December 2017
Long Term Incentive Plan November 2016
Long Term Incentive Plan November 2015
Long Term Incentive Plan November 2013
Share Save Scheme (3-Year Plan 2018)
Share Save Scheme (3-Year Plan 2014)
Share Save Scheme (5-Year Plan 2014)
2018
£’000
2017
£’000
179
255
299
—
12
—
1
746
—
82
195
62
—
8
1
348
Share based payments awarded to employees of subsidiary undertakings and recognised as an investment in subsidiary undertakings in the
Company are as follows:
Long Term Incentive Plan December 2017
Long Term Incentive Plan November 2016
Long Term Incentive Plan November 2015
Share Save Scheme (3-Year Plan 2018)
Share Save Scheme (3-Year Plan 2014)
Share Save Scheme (5-Year Plan 2014)
Total carrying amount of investments
2018
£’000
2017
£’000
48
118
183
74
—
84
507
—
23
48
—
9
58
138
28 Acquisition
Pearson Farm Supplies Ltd
On 31 October 2017 Carrs Billington Agriculture (Sales) Ltd acquired the entire issued share capital of Pearson Farm Supplies Ltd for cash consideration
of £1.2m. Of this cash consideration £0.1m was deferred until February 2018 and a further £0.1m is deferred until the third anniversary of completion.
The principal activity of Pearson Farm Supplies Ltd is that of an agricultural retail business.
The primary reason for the business combination was the expansion of the existing agriculture business.
This purchase has been accounted for as an acquisition. Given the size and timing of the acquisition no separate disclosure has been presented
on the face of the consolidated income statement as the impact would not be material.
Goodwill arising from the acquisition in the year amounts to £658,000. Goodwill represents the excess of the consideration paid over the Group’s
interests in the net fair value of the net identifiable assets, liabilities and contingent liabilities acquired.
The following amounts have been recognised within the consolidated income statement in respect of the acquisition made in the year:
Revenue
Profit before taxation
There were no other recognised gains and losses other than the profit shown above.
£’000
4,318
188
97
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
28 Acquisition (continued)
Acquisition related costs amounted to £9,000, which have been recognised within administrative expenses in the consolidated income statement and
have been included in business combination expenses within non-recurring items (note 4).
The assets and liabilities recognised in the acquisition accounting are set out below:
Intangible assets
Property, plant and equipment
Inventories
Receivables
Bank overdraft
Payables
Finance leases
Taxation liabilities
– Current
– Deferred
Net assets acquired
Goodwill
Satisfied by:
Cash consideration
Deferred consideration
Fair value
£’000
53
267
958
1,099
(445)
(1,196)
(108)
(33)
(40)
555
658
1,213
1,013
200
1,213
During the year £100,000 of the £200,000 deferred consideration has been paid. Cash consideration includes £73,000 that remains unpaid at the year end.
Intangible assets represents the fair value of customer relationships of Pearson Farm Supplies Ltd.
Pro forma full year information
IFRS3 (revised) requires disclosure of information as to the impact on the financial statements if the acquisition had occurred at the beginning of the
accounting year.
The unaudited pro forma summary below presents the Group as if the acquisition had been acquired on 3 September 2017.
The pro forma amounts include the results of the acquisitions and the interest expense on the increase in net debt as a result of the acquisitions.
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.
Revenue
Profit before taxation
£’000
404,452
16,053
98
Carr’s Group plcAnnual Report and Accounts 2018
29 Cash generated from/(used in) continuing operations
Profit for the year from continuing operations
Adjustments for:
Tax
Tax credit in respect of R & D
Dividends received from subsidiaries
Dividends received from associate and joint ventures
Depreciation of property, plant and equipment
Depreciation of investment property
Goodwill impairment
Intangible asset amortisation
Loss on disposal of property, plant and equipment
Release of contingent consideration
Business combination expenses
Net fair value expense on share based payments
Other non-cash adjustments
Finance costs:
Interest income
Interest expense and borrowing costs
Share of results of associates and joint ventures
IAS19 income statement charge (excluding interest)
(note 25)
Changes in working capital (excluding the effects of
acquisitions):
Increase in inventories
(Increase)/decrease in receivables
Increase/(decrease) in payables
Group
Company
2018
£’000
13,647
1,855
(451)
—
—
4,372
6
516
397
19
—
251
1,125
107
(358)
1,357
(3,215)
24
(5,106)
(7,015)
7,449
2017
£’000
8,295
1,707
(129)
—
—
4,093
6
1,700
124
215
(2,090)
1,299
485
(222)
(176)
901
(2,813)
59
(2,379)
(383)
4,402
2018
£’000
2,541
(642)
—
(4,625)
(588)
15
—
—
—
59
—
—
746
276
(1,836)
610
—
24
—
300
996
2017
£’000
3,349
(77)
—
(2,303)
(1,097)
—
—
—
—
—
—
—
348
(742)
(1,861)
329
—
59
—
(224)
(720)
Cash generated from/(used in) continuing operations
14,980
15,094
(2,124)
(2,939)
30 Analysis of net debt
Group
Cash and cash equivalents
Bank overdrafts
Loans and other borrowings:
– current
– non-current
Finance leases:
– current
– non-current
Net debt
At
3 September
2017
£’000
23,887
(5,273)
18,614
(10,951)
(19,425)
(836)
(1,541)
(14,139)
Cash flow
£’000
1,050
1,646
2,696
(6,025)
2,407
997
—
75
Other
non-cash
changes
£’000
Exchange
movements
£’000
At
1 September
2018
£’000
—
—
—
(13,511)
13,339
(1,084)
108
(1,148)
(305)
—
(305)
43
115
—
—
24,632
(3,627)
21,005
(30,444)
(3,564)
(923)
(1,433)
(147)
(15,359)
Other non-cash changes relate to finance leases, debt acquired with subsidiaries and transfers between categories of borrowings. It also includes the
release of deferred borrowing costs to the consolidated income statement.
99
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
30 Analysis of net debt (continued)
Company
At 3 September
2017
£’000
Cash flow
£’000
Other non-cash
changes
£’000
Exchange
movements
£’000
At 1 September
2018
£’000
Cash and cash equivalents
8,494
(3,541)
—
Loans and other borrowings:
– current
– non-current
Net debt
(7,154)
(19,018)
(17,678)
1,826
2,000
285
(13,511)
13,339
(172)
2
—
115
117
4,955
(18,839)
(3,564)
(17,448)
Other non-cash changes relate to the release of deferred borrowing costs to the consolidated income statement and transfers between categories
of borrowings.
31 Capital commitments
Group
Capital expenditure on property, plant and equipment that has been contracted
for but has not been provided for in the accounts
The Company has no capital commitments (2017: none).
32 Other financial commitments
Group
At 1 September 2018 the Group had commitments under non-cancellable operating leases as follows:
2018
£’000
2017
£’000
621
966
Within one year
Within two and five years inclusive
After five years
2018
2017
Land and
buildings
£’000
1,190
3,448
5,443
10,081
Other
£’000
522
468
—
990
Land and
buildings
£’000
1,095
2,761
5,764
9,620
Other
£’000
625
738
1
1,364
The Company has no commitments under non-cancellable operating leases (2017: none).
33 Financial guarantees and contingent liabilities
The Company, together with certain subsidiary undertakings, has entered into a guarantee with Clydesdale Bank PLC in respect of the Group loans,
overdraft, asset finance and guarantee facilities with that bank, which at 1 September 2018 amounted to £nil (2017: £1,593,000).
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 1 September 2018 was £4,359,000 (2017: £6,760,000).
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 £12,181,000 (2017: £2,037,000) and as at 1 September 2018 £5,064,000
(2017: £2,037,000) 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 1 September 2018 the cumulative rent payable over the remaining term of the lease is £1,227,000 (2017:
£1,362,000).
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
(2017: £1,500,000).
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 £7.6m (2017: £7.6m).
From time to time the Company, or its subsidiaries, may be required to participate or otherwise become involved in legal proceedings, including
those brought by government or regulatory bodies, which could potentially give rise to a contingent liability. At this time there is no expectation that any
liabilities or other financial loss will be incurred in connection with any such proceedings.
The Group and Company does not expect any of the above to be called in.
100
Carr’s Group plcAnnual Report and Accounts 2018
34 Related parties
Group and Company
Identity of related parties
The Group has a related party relationship with its subsidiaries, associates 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.
Group
Company
2018
£’000
2017
£’000
2018
£’000
2017
£’000
Balances reported in the Balance Sheet
Amounts owed by businesses controlled by key management
personnel (in a trading capacity):
Trade receivables
Transactions reported in the Income Statement
144
74
Revenue
166
296
Transactions with subsidiaries
Balances reported in the Balance Sheet
Amounts owed by subsidiary undertakings:
Loans
Other receivables
Amounts owed to subsidiary undertakings:
Loans
Other payables
Transactions reported in the Income Statement
Management charges receivable
Dividends received
Interest receivable
Purchases
—
—
—
—
Company
2018
£’000
2017
£’000
35,510
80
35,590
(5,461)
(9)
(5,470)
2,360
4,625
1,643
(2)
36,682
190
36,872
(5,461)
(31)
(5,492)
2,360
2,303
1,759
(1)
101
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes to the Financial Statements (continued)
34 Related parties (continued)
Transactions with associates
Balances reported in the Balance Sheet
Amounts owed by associates:
Trade and other receivables
Amounts owed to associates:
Trade and other payables
Transactions reported in the Income Statement
Revenue
Rental income
Management charges receivable
Dividends received
Interest receivable
Management charges payable
Purchases
Group
Company
2018
£’000
(Restated)
2017
£’000
2018
£’000
2017
£’000
85
841
(25,072)
(19,338)
758
20
110
—
71
(97)
(114,350)
874
19
93
—
6
(126)
(97,922)
18
—
—
—
110
588
—
—
—
17
—
—
—
45
245
—
—
—
Included within Group trade and other receivables is £nil (2017 restated: £631,000) in respect of loans owed by associates. Of this, £nil (2017: £237,000)
is within current receivables and £nil (2017 restated: £394,000) is within non-current receivables.
Transactions with joint ventures
Balances reported in the Balance Sheet
Amounts owed by joint ventures:
Trade and other receivables
Amounts owed to joint ventures:
Trade and other payables
Group
Company
2018
£’000
2017
£’000
2018
£’000
1,734
1,736
1,659
(12)
(33)
—
Included within Group trade and other receivables is £1,659,000 (2017: £1,663,000) in respect of loans owed by joint ventures.
Included within Company trade and other receivables is £1,659,000 (2017: £1,663,000) in respect of loans owed by joint ventures.
Transactions reported in the Income Statement
Revenue
Management charges receivable
Dividends received
Purchases
2018
£’000
696
152
—
(1,138)
Group
Company
2017
£’000
2018
£’000
554
139
—
(757)
—
—
—
—
2017
£’000
1,669
—
2017
£’000
—
—
852
—
35 Post balance sheet events
Acquisition
On 21 September 2018, after the year end, the Group acquired the entire issued share capital of Animax Ltd, a producer of market-leading animal health
products, for a total cash consideration of up to £8.5m. As part of the acquisition, the Group also acquired the entire issued share capital of Animax Ltd’s
related party, Clinimax Ltd. Clinimax Ltd is a manufacturer of specialist disinfectant products for use in the medical industry.
Both businesses were acquired for an initial cash consideration of £6.0m, with an additional cash consideration of up to a maximum of £2.5m payable
over the period to November 2020, based on the achievement of agreed financial targets.
The acquisition of Animax Ltd aligns with the Group’s stated strategy of investing in growing agriculture markets in the UK and internationally.
Given that this has been a recent acquisition the identifiable assets and liabilities at completion and goodwill have yet to be finalised. The Directors
therefore consider it impracticable to be able to disclose this information in these financial statements. The most recent published financial statements,
for year ended 30 November 2017, showed net assets of £4.2m for Animax Limited and £0.2m net assets for Clinimax Limited.
The table opposite is an extract from the Animax Limited balance sheet as at 30 November 2017:
102
Carr’s Group plcAnnual Report and Accounts 2018
35 Post balance sheet events (continued)
Tangible assets
Net current assets
Non-current liabilities and provisions
Net assets
£’000
1,814
2,742
(380)
4,176
High Court legal ruling
Since the year end, the High Court has ruled on the case of Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank plc and others. The ruling that
Lloyds Bank Group must amend its three defined benefit pension schemes in order to equalise Guaranteed Minimum Pensions (GMPs) between males
and females will impact how companies account for pension schemes under IAS 19. Given the timing of this ruling and the date of signing these financial
statements it is considered impracticable to reflect any potential financial impact to the accounting for the Group’s defined benefit pension scheme
within this Report and Accounts. Any impact arising from this ruling will be reflected in the IAS 19 accounting in the Group’s interim results for 2019. This
is not expected to be material to the Group’s net assets.
36 Restatement of year ended 2 September 2017 balance sheet
The financial statements for year ended 2 September 2017 included provisional fair value accounting for the acquisition of NuVision Engineering, Inc
which occurred on 4 August 2017. Given the proximity of the acquisition to the year end and date of publication of the report and accounts for 2017
it was not possible to finalise the accounting for this acquisition at that time. IFRS 3 permits the acquirer to determine fair values in the period
subsequent to acquisition (the ‘measurement period’). Where measurement period adjustments are identified the comparative information included
in subsequent financial statements should be restated to include the effect of the adjustments as if the accounting for the business combination had
been completed on the acquisition date.
The balance sheet as at 2 September 2017 has been restated in accordance with IFRS 3 to reflect the measurement period adjustments identified
during the finalisation of the acquisition accounting.
The table below shows the finalised fair values of assets and liabilities acquired, consideration payable and goodwill, translated to sterling using
exchange rates as at the date of acquisition.
Intangible assets
Property, plant and equipment
Investment in associate
Receivables
Loan due from associate
Current taxation asset
Cash at bank
Bank loan
Payables
Current taxation liability
Deferred taxation liability
Net assets acquired
Goodwill
Satisfied by:
Cash consideration
Contingent consideration
The effect on the balance sheet for the year ended 2 September 2017 is shown below.
Goodwill
Non-current loans receivable
Current tax assets
Trade and other payables
Current tax liabilities
Other non-current liabilities
Foreign currency denominated balances have been translated using exchange rates as at the balance sheet date.
Provisional
fair value
£’000
Finalised
fair value
£’000
1,488
1,250
544
766
940
185
1,196
(528)
(1,147)
—
(850)
3,844
8,293
12,137
8,044
4,093
12,137
Original
£’000
24,241
762
485
(56,008)
(632)
(4,423)
1,488
1,250
544
766
627
—
1,196
(528)
(1,147)
(40)
(850)
3,306
8,344
11,650
7,931
3,719
11,650
Restated
£’000
24,293
444
297
(56,181)
(673)
(3,755)
103
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Five Year Statement
Continuing operations
Revenue and Results
Revenue
Operating profit
Analysed as:
Operating profit before amortisation and
non-recurring items
Amortisation and non-recurring items
Operating profit
Finance income
Finance costs
Profit before taxation
Analysed as:
Profit before taxation before amortisation
and non-recurring items
Amortisation and non-recurring items
Profit before taxation
Taxation
(Restated)9
2014
£’000
341,849
14,124
14,423
(299)
14,124
264
(1,171)
13,217
13,516
(299)
13,217
(2,873)
Profit for the year from continuing operations
10,344
Profit for the year from discontinued operations
2,549
Profit for the year
Ratios (continuing operations)
Operating margin (excluding non-recurring items
and amortisation)9
Return on net assets (excluding non-recurring
items and amortisation)
Earnings per share – basic8
Dividends per ordinary share8
– adjusted8
12,893
4.2%
15.0%
9.9p
10.2p
3.4p
(Restated)7,9
2015
£’000
(Restated)9
2016
£’000
(Restated)9
2017
£’000
2018
£’000
331,285
14,397
14,648
(251)
14,397
338
(1,045)
13,690
13,941
(251)
13,690
(3,010)
10,680
3,013
13,693
4.4%
14.1%
10.0p
10.2p
3.7p
314,907
346,224
403,192
14,851
10,690
16,405
15,063
(212)
14,851
236
(1,009)
14,078
14,290
(212)
14,078
(2,907)
11,171
2,817
13,988
4.8%
13.0%
10.7p
10.9p
3.8p
12,091
(1,401)
10,690
176
(864)
17,464
(1,059)
16,405
358
(1,261)
10,002
15,502
11,403
(1,401)
10,002
(1,707)
8,295
—
8,295
3.5%
10.8%
7.7p
8.9p
4.0p
16,561
(1,059)
15,502
(1,855)
13,647
—
13,647
4.3%
13.7%
13.0p
13.9p
4.5p
Revenue and results included in the table above have been restated to reflect the disposal of Carr’s Flour Mills Ltd in the year ended 3 September 2016.
The profit after taxation from this business has been included within profit for the year from discontinued operations in the table above.
7 Restated for the reclassification to interest income of the net interest on the net defined benefit retirement asset previously recognised within operating profit.
8 Restated for the effect of the 10:1 share split in January 2015.
9 Restated for the reclassification to operating profit of the share of post-tax results of the associates and joint ventures.
104
Carr’s Group plcAnnual Report and Accounts 2018
Net assets employed
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment property
Investments
Financial assets
– Non-current receivables
Retirement benefit asset
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Financial assets
– Derivative financial instruments
– Cash and cash equivalents
Total assets
Current liabilities
Financial liabilities
– Borrowings
– Derivative financial instruments
Trade and other payables
Current tax liabilities
Non-current liabilities
Financial liabilities
– Borrowings
Deferred tax liabilities
Other non-current liabilities
2014
£’000
9,798
499
56,626
656
11,796
501
2,056
1,507
83,439
33,315
63,623
47
—
17,268
114,253
197,692
(19,688)
(15)
(54,236)
(1,631)
(75,570)
(22,189)
(4,111)
(5,995)
(32,295)
(Restated)10
2015
£’000
10,849
448
58,385
636
13,530
50
1,767
861
2016
£’000
11,440
286
35,811
182
14,996
50
311
—
86,526
63,076
35,031
64,454
839
50
20,052
120,426
206,952
(18,721)
(72)
(54,496)
(472)
(73,761)
(25,744)
(4,184)
(4,300)
(34,228)
33,423
56,940
303
—
48,411
139,077
202,153
(21,642)
(20)
(46,823)
(470)
(68,955)
(18,625)
(1,817)
(2,668)
(23,110)
(Restated)11
2017
£’000
24,293
2,266
37,149
176
18,106
444
5,209
—
87,643
37,023
59,723
297
13
23,887
120,943
208,586
(17,060)
(18)
(56,181)
(673)
2018
£’000
24,272
2,223
38,484
170
21,207
21
10,146
—
96,523
42,371
67,516
119
26
24,632
134,664
231,187
(34,994)
—
(64,290)
(175)
(73,932)
(99,459)
(20,966)
(4,010)
(3,755)
(4,997)
(3,981)
(1,784)
(28,731)
(10,762)
Total liabilities
Net assets
(107,865)
(107,989)
(92,065)
(102,663)
(110,221)
89,827
98,963
110,088
105,923
120,966
10 Restated for the grossing up of cash and cash equivalents and bank overdrafts, included within current borrowings, for accounts with right of offset within the same banking facility.
11 Restated for the finalisation of the fair value acquisition accounting for NuVision Engineering, Inc.
105
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Directory of Operations
Carr’s Group plc
Old Croft, Stanwix, Carlisle,
Cumbria CA3 9BA
Tel: 01228 554600
Web: www.carrsgroup.com
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
Bibby Agriculture*
Priory House, Priory Street,
Carmarthen SA31 1NE
Tel: 01267 232 041
Bibby Agriculture*
1A Network House, Badgers
Way, Oxon Business Park,
Shrewsbury,
Shropshire SY3 5AB
Tel: 01743 237 890
Caltech
Solway Mills, Silloth, Wigton,
Cumbria CA7 4AJ
Tel: 016973 32592
Carrs Billington Agriculture
(Operations)**
Warren Road, Brecon,
Powys LD3 8EF
Tel: 01874 623470
Carrs Billington Agriculture
(Operations)**
Parkhill Road, Kingstown
Industrial Estate,
Carlisle CA3 0EX
Tel: 01228 518860
Carrs Billington Agriculture
(Operations)**
Lansil Way, Lancaster LA1 3QY
Tel: 01524 597 200
Carrs Billington Agriculture
(Operations)**
High Mill, Langwathby,
Penrith CA10 1NB
Tel: 01228 518 860
106
Carrs Billington Agriculture
(Operations)**
Lion Works, Pool Road,
Newtown,
Powys SY16 3AG
Tel: 01686 626680
Carrs Billington Agriculture
(Operations)**
Cold Meece, Stone,
Staffordshire ST15 0QW
Tel: 01785 760 535
Carrs Billington Agriculture
(Operations)**
Micklow House Farm,
Eccleshall Road, Stone,
Staffordshire ST15 0BY
Tel: 01782 374387
Carrs Billington Agriculture
(Operations)**
Cilherwydd Store,
Llanboidy, Whitland,
Carmarthenshire SA34 0LL
Tel: 01994 448209
Carrs Billington Agriculture
(Operations)**
Pow Hill, Kirkbride,
Wigton, Cumbria CA7 5LF
Tel: 01697 352229
Carrs Billington Agriculture
(Sales), Anglesey
Unit 36, Gaerwen Industrial
Estate, Anglesey LL60 6HR
Tel: 01248 422486
Carrs Billington Agriculture
(Sales), Annan
2 Annan Business Park, Annan,
Dumfriesshire DG12 6TZ
Tel: 01461 202772
Carrs Billington Agriculture
(Sales), Appleby
Crosscroft Industrial Estate,
Appleby, Cumbria CA16 6HX
Tel: 01768 352999
Carrs Billington Agriculture
(Sales), Ayr
1A Whitfield Drive, Heathfield
Ind Est, Ayr, Ayrshire KA8 9RX
Tel: 01292 263635
Carrs Billington Agriculture
(Sales), Bakewell
Unit 4-6, Kingfisher Building,
Buxton Road, Bakewell,
Derbyshire DE45 1GZ
Tel: 01629 814126
Carrs Billington Agriculture
(Sales), Barnard Castle
Montalbo Road, Barnard
Castle, Durham DL12 8ED
Tel: 01833 637537
Carrs Billington Agriculture
(Sales), Berwick upon Tweed
29 Northumberland Road,
Berwick upon Tweed,
Tweedmouth,
Northumberland TD15 2AS
Tel: 01289 307 245
Carrs Billington Agriculture
(Sales), Brecon
Warren Road Stores, Warren
Road, Brecon, Powys LD3 8EF
Tel: 01874 623470
Carrs Billington Agriculture
(Sales), Brock
Brockholes Way, Claughton
Trading Estate, Lancaster Old
Road, Claughton on Brock,
Preston PR3 0PZ
Tel: 01995 643 200
Carrs Billington Agriculture
(Sales), Carlisle
Montgomery Way, Rosehill
Estate, Carlisle CA1 2UY
Tel: 01228 520212
Carrs Billington Agriculture
(Sales), Cockermouth
Unit 5, Lakeland Agricultural
Centre, Cockermouth
CA13 0QQ
Tel: 01900 824 105
Carrs Billington Agriculture
(Sales), Skipton
Skipton Auction Mart,
Gargrave Road, Skipton,
North Yorkshire BD23 1UD
Tel: 01756 792166
Carrs Billington Agriculture
(Sales), Gisburn
Pendle Mill, Mill Lane, Gisburn,
Clitheroe, Lancashire BB7 4ES
Tel: 01200 445 491
Carrs Billington Agriculture
(Sales), Spennymoor
Southend Works, Byers Green,
Spennymoor, Durham DL16 7NL
Tel: 01388 662266
Carrs Billington Agriculture
(Sales), Hawes
Burtersett Road, Hawes,
North Yorkshire DL8 3NP
Tel: 01969 667334
Carrs Billington Agriculture
(Sales), Hexham
Tyne Mills Industrial Estate,
Hexham, Northumberland
NE46 1XL
Tel: 01434 605371
Carrs Billington Agriculture
(Sales), Jedburgh
Mounthooly, Crailing,
Jedburgh TD8 6TJ
Tel: 01835 850250
Carrs Billington Agriculture
(Sales), Kendal
Unit 1, J36, Rural Auction
Centre, Crooklands,
Milnthorpe, Kendal,
Cumbria LA7 7FP
Tel: 01539 566035
Carrs Billington Agriculture
(Sales), Leek
Macclesfield Road, Leek,
Staffordshire ST13 8NR
Tel: 01538 383277
Carrs Billington Agriculture
(Sales), Malton
31 Horsemarket, Malton,
North Yorkshire YO17 7NB
Tel: 01653 600328
Carrs Billington Agriculture
(Sales), Milnathort
Stirling Road, Milnathort,
Kinross KY13 9UZ
Tel: 01577 862381
Carrs Billington Agriculture
(Sales), Morpeth
Unit 20c, Coopies Lane
Industrial Estate, Morpeth,
Northumberland NE61 6JN
Tel: 01670 503930
Carrs Billington Agriculture
(Sales), Morpeth (Greens)
Old Station Buildings,
Coopies Lane, Morpeth,
Northumberland NE61 2SL
Tel: 01670 518474
Carrs Billington Agriculture
(Sales), Penicuik
4 Eastfield Park Road,
Penicuik, Midlothian EH26 8EZ
Tel: 01968 707040
Carrs Billington Agriculture
(Sales), Penrith
Haweswater Road, Penrith
Industrial Estate, Penrith,
Cumbria CA11 9EU
Tel: 01768 866354
Carrs Billington Agriculture
(Sales), Rothbury
The Store, Coquet View,
Rothbury, Morpeth,
Northumberland NE65 7RZ
Tel: 01669 620320
Carrs Billington Agriculture
(Sales), Selkirk
Dunsdale Haugh, Selkirk,
Selkirkshire TD7 5EF
Tel: 01750 720734
Carrs Billington Agriculture
(Sales), Stirling
Stirling Agricultural Centre,
Stirling FK9 4RN
Tel: 01786 474826
Carrs Billington Agriculture
(Sales), Wigton
Hopes Auction Co Ltd, Skye
Road, Wigton, Cumbria
CA7 9NS
Tel: 016973 45874
Carrs Billington Agriculture
(Sales), Wooler
Bridge End, South Road,
Wooler, Northumberland
NE71 6QE
Tel: 01668 281567
Carr’s Supplements (NZ)
Limited
515a Wairakei Road,
Burnside, Christchurch,
8053, New Zealand
Tel: 0064 03 974 9274
Clinimax Limited
Shepherds Grove West,
Stanton, Bury St Edmund’s,
Suffolk IP31 2AR
Tel: 01359 252181
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
Johnstone Wallace Fuels,
Castle Douglas
Abercromby Industrial Park,
Castle Douglas, Dumfriesshire
DG7 1BA
Tel: 01387 750747
Johnstone Wallace Fuels,
Dumfries
Dargavel Stores,
Lockerbie Road, Dumfries,
Dumfriesshire DG1 3PG
Tel: 01387 750747
Johnstone Wallace Fuels,
Stranraer
Droughduil, Dunragit,
Stranraer DG9 8QA
Tel: 01387 750747
Phoenix Feeds, a division
of Carrs Billington
Agriculture (Sales) Ltd
1 Station Park, Ramsgreave
Road, Blackburn,
Lancashire BB1 9BH
Tel: 01254 240888
Reid & Robertson, a
division of Carrs Billington
Agriculture (Sales) Ltd
Livestock Auction Mart,
Whiteford Hill, Ayr KA6 5JW
Tel: 01292 619229
Reid & Robertson, a
division of Carrs Billington
Agriculture (Sales) Ltd
Ballagan, Stirling Road,
Balloch G83 8LY
Tel: 01389 752800
Reid & Robertson, a
division of Carrs Billington
Agriculture (Sales) Ltd
Unit 3 Oban Livestock Centre
Soroba, Oban, Argyll PA34 4SD
Tel: 01631 566279
Scotmin
13 Whitfield Drive, Heathfield
Industrial Estate, Ayr KA8 9RX
Tel: 01292 280 909
Silloth Storage Company*
Station Road, Silloth,
Wigton, Cumbria CA7 4JQ
Wallace Oils
Kingstown Broadway,
Kingstown Industrial Estate,
Carlisle CA3 0HA
Tel: 01228 534 342
Wallace Oils
Tyne Mills Industrial Estate,
Hexham, Northumberland
NE46 1XL
Tel: 01434 600404
Wallace Oils
Lancaster Mill, Lansil Way
Lancaster, Lancashire LA1 3QY
Tel: 01524 599333
Wallace Oils
Lakeland Agricultural Centre
Cockermouth, Cumbria
CA13 0QQ
Tel: 01900 828800
Wallace Oils
High Mill, Langwathby,
Penrith, Cumbria CA10 1NB
Tel: 01768 889899
Workware
Kingstown Broadway,
Kingstown Industrial Estate,
Carlisle CA3 0HA
Tel: 01228 591 091
ENGINEERING
Bendalls
Brunthill Road, Kingstown
Industrial Estate, Carlisle
CA3 0EH
Tel: 01228 526 246
R Hind
Kingstown Broadway,
Kingstown Industrial Estate,
Carlisle CA3 0HA
Tel: 01228 523 647
Carrs MSM
Unit 1 Spitfire Way, Hunts
Rise, South Marston Park,
Swindon, Wiltshire SN3 4TX
Tel: 01793 824 891
Chirton Engineering
Unit 4A, High Flatworth,
Tyne Tunnel Trading Estate,
North Shields, Tyne & Wear
NE29 7SW
Tel: 0191 296 2020
Wälischmiller
Engineering GmbH
Schießstattweg 16, 88677
Markdorf, Germany
Tel: 0049 7544 95140
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
* joint venture company
** associate company
Carr’s Group plcAnnual Report and Accounts 2018 Registered Office and Advisers
Registered Office
Carr’s Group plc
Old Croft, Stanwix,
Carlisle
CA3 9BA
Registered No. 98221
Chartered Accountants and Statutory Auditors
PricewaterhouseCoopers LLP
Central Square South,
Orchard Street,
Newcastle upon Tyne
NE1 3AZ
Bankers
Clydesdale Bank PLC
82 English Street,
Carlisle
CA3 8HP
The Royal Bank of Scotland PLC
37 Lowther Street,
Carlisle
CA3 8EL
Financial Adviser and Broker
Investec Bank (UK) Ltd
30 Gresham Street,
London
EC2V 7QP
Financial and Corporate PR Advisers
Powerscourt
1 Tudor Street,
London
EC4Y 0AH
Solicitors
Hill Dickinson LLP
1 St Paul’s Square,
Liverpool
L3 9SJ
Registrars
Link Asset Services
The Registry,
34 Beckenham Road,
Beckenham,
Kent
BR3 4TU
Dormant Subsidiaries at 1 September 2018
Company Name
B. E. Williams Ltd
Caltech Biotechnology Ltd
Carrs Animal Feed Supplements Ltd
Carrs Feeds Ltd
Carrs Fertilisers Ltd
Carr’s International Industries Ltd
Carr’s Milling Industries Ltd
Carrs Milling Ltd
Carrs Natural Feeds Ltd
Chirton Engineering Ltd
Forsyths of (Wooler) Ltd
Greens Flour Mills Ltd
Horse and Pet Warehouse Ltd
Johnstone Fuels and Lubricants Ltd
Pearson Farm Supplies Ltd
Phoenix Feeds Ltd
R Hind Ltd
Reid and Robertson Ltd
Robert Hutchison Ltd
Safe at Work Ltd
Scotmin Nutrition Ltd
Simarghu Ltd
Walischmiller Solutions Ltd
Wallace Oils Ltd
WM. Nicholls and Company (Crickhowell) Ltd
Registered and Located
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Scotland
Scotland
England and Wales
England and Wales
England and Wales
Scotland
England and Wales
England and Wales
Scotland
England and Wales
England and Wales
England and Wales
England and Wales
Ownership
51%12
100%
100%
51%12
100%
100%
100%
100%
100%
100%
51%12
100%
51%12
51%12
51%12
51%12
100%
51%12
100%
51%12
100%
51%12
100%
51%12
51%12
12 100% owned by Carrs Billington Agriculture (Sales) Ltd which is a 51% subsidiary of Carr’s Group plc.
Companies registered in England and Wales have a registered office of Old Croft, Stanwix, Carlisle, Cumbria CA3 9BA. Companies registered in Scotland
have a registered office of 13 Whitfield Drive, Heathfield Ind. Est., Ayr KA8 9RX, with the exception of Horse and Pet Warehouse Ltd which has
a registered office of 1a Whitfield Drive, Heathfield Ind. Est., Ayr KA8 9RX.
107
Carr’s Group plcAnnual Report and Accounts 2018Strategic Report / Corporate Governance / Financial Statements
Notes
108
Carr’s Group plcAnnual Report and Accounts 2018 Designed and produced by corporateprm, Edinburgh and London. www.corporateprm.co.uk
Registered address:
Old Croft, Stanwix, Carlisle CA3 9BA
www.carrsgroup.com