CARR'S GROUP PLC — AGM Information 2011

Jun 20, 2011

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or about the action that you should take, you should immediately seek your own financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser who is authorised under the Financial Services and Markets Act 2000.

If you sell or transfer or have sold or transferred all of your Ordinary Shares, please forward this document with the accompanying Form of Proxy as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through or to whom the sale or transfer was effected for onward transmission to the purchaser or transferee. If you sell or have sold or otherwise transferred only part of your holding of Ordinary Shares, please consult the stockbroker, bank or other agent through or to whom the sale or transfer was effected as to the action you should take.

Investec Investment Banking, a division of Investec Bank PLC, which is authorised and regulated by the Financial Services Authority, is acting exclusively for Carr's Milling Industries PLC in relation to the Disposal. Investec Investment Banking is not acting for any other person (including any recipient of this document) and Investec Investment Banking will not be responsible to any person other than Carr's Milling Industries PLC for providing the protections afforded to clients of Investec Investment Banking or for providing advice in relation to the Disposal or in relation to the contents of or any transaction or arrangement referred to in this document.

Carr's Milling Industries PLC

(Incorporated in England and Wales under the Companies Act 1985 with Registered Number 98221)

Proposed Disposal of Carrs Fertilisers

and

Notice of General Meeting

This document should be read as a whole. Your attention is drawn to the letter from the Chairman of Carr's Milling Industries PLC, which is set out in Part I (Letter from the Chairman of Carr's Milling Industries PLC) of this document. The letter contains the recommendation of your board to vote in favour of the Resolution to be proposed at the General Meeting referred to below.

A Notice convening a General Meeting of the Company to be held at 1.00 p.m. on 13 July 2011 at Radisson Blu Hotel Manchester Airport, Chicago Avenue, Manchester, M90 3RA is set out at the end of this document. A Form of Proxy for use at the General Meeting is also enclosed with this document. Whether or not you intend to attend the General Meeting in person, please complete, sign and return the accompanying Form of Proxy in accordance with the instructions printed on it as soon as possible by post or (during normal business hours only) by hand but, in any event, so as to be received by the Company's Registrar no later than 1.00 p.m. on 11 July 2011, being 48 hours before the time appointed for the holding of the General Meeting. Forms of Proxy received after this time will be invalid.

Your attention is drawn to the section headed "Risk Factors" set out in Part II (Risk Factors) of this document indicating the various factors that should be considered by Shareholders when considering what action to take in connection with the General Meeting. A summary of the action to be taken by Shareholders is set out in Part I (Letter from the Chairman of Carr's Milling Industries PLC) of this document and in the accompanying Notice of General Meeting. No person has been authorised to give any information or make any representations other than those contained in the document and, if given or made, such information or representations must not be relied on as having been so authorised. The delivery of this document shall not, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this document or that the information in it is correct as of any subsequent time.

Capitalised terms have the meaning ascribed to them in Part VIII (Definitions) of this document.

All Shareholders on the Ordinary Share Register at the close of business on 17 June 2011 have been sent this document.

CONTENTS

		Page
Part I:	LETTER FROM THE CHAIRMAN OF CARR'S MILLING INDUSTRIES PLC	4
Part II:	RISK FACTORS	10
Part III:	FINANCIAL INFORMATION ON CARRS FERTILISERS	14
Part IV:	UNAUDITED PRO FORMA STATEMENT OF NET ASSETS OF THE RESULTANT GROUP	16
Part V:	ACCOUNTANT'S REPORT ON THE UNAUDITED PRO FORMA STATEMENT ON NET ASSETS OF THE RESULTANT GROUP	18
Part VI:	PRINCIPAL TERMS OF THE SALE & PURCHASE AGREEMENT	20
Part VII:	ADDITIONAL INFORMATION	22
	Part VIII: DEFINITIONS	27
	NOTICE OF GENERAL MEETING	30

EXPECTED TIMETABLE OF EVENTS

Latest time and date for receipt of forms of proxy	1.00 p.m. on 11 July 2011
General Meeting	1.00 p.m. on 13 July 2011

Notes:

Future dates are indicative only and are subject to change by the Company, in which event details of the new times and dates will be notified to the FSA and, where appropriate, Shareholders.

References to times in this document are to London time.

CORPORATE DETAILS AND ADVISERS

Registered Office:	Old Croft Stanwix Carlisle CA3 9BA
Directors:	Lord (Richard) Inglewood Christopher Holmes Ronald Wood Alistair Wannop Robert Heygate
Company Secretary:	Ronald Wood
Sponsor, Financial Adviser and Broker:	Investec Investment Banking a division of Investec Bank PLC 2 Gresham Street London EC2V 7QP
Legal Adviser:	Hill Dickinson LLP No. 1 St Paul's Square Liverpool L3 9SJ
Auditor and Reporting Accountants:	PricewaterhouseCoopers LLP 89 Sandyford Road Newcastle-Upon-Tyne NE1 8HW
Communications:	Bankside Consultants 1 Frederick's Place London EC2R 8AE
Registrar:	Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU

PART I

LETTER FROM THE CHAIRMAN OF CARR'S MILLING INDUSTRIES PLC

CARR'S MILLING INDUSTRIES PLC

(Incorporated in England and Wales under the Companies Act 1985 with Registered Number 98221)

Directors Registered and Head Office: Lord (Richard) Inglewood – (Non-Executive Chairman) Old Croft Christopher Holmes – (Chief Executive Officer) Stanwix Ronald Wood – (Finance Director) Carlisle Alistair Wannop – (Non-Executive Director) CA3 9BA Robert Heygate – (Non-Executive Director)

20 June 2011

To Shareholders and, for information only, to holders of options over Ordinary Shares

Dear Shareholder

Proposed Disposal of Carrs Fertilisers

1. Introduction

Earlier today, your Board announced that Carr's had entered into an agreement to sell Carrs Fertilisers to Origin Fertilisers (UK) Limited, a subsidiary of Origin Enterprises plc, for a consideration of £19.0 million. Under the agreement, Origin will also discharge the net debt of Carrs Fertilisers, which is expected to amount to approximately £5.9 million at Completion. The purchase price is payable in cash at Completion and is subject to customary adjustment for a normalised level of working capital and net debt. The sale of Carrs Fertilisers will be effected through the sale of the entire issued share capital of CM Fertilisers, a newly-incorporated, wholly-owned subsidiary of Carrs Agriculture, to Origin Fertilisers, a wholly-owned subsidiary of Origin. The trade, assets and liabilities (save for certain excluded liabilities) of Carrs Fertilisers which were owned by Carrs Agriculture until the date of the Agreement have been transferred into CM Fertilisers in order to facilitate the Disposal.

The Disposal is of sufficient size relative to the Group to constitute a class 1 transaction under the Listing Rules and is, therefore, conditional upon the approval of Shareholders. A General Meeting is being convened for this purpose and will be held at 1.00 p.m. on 13 July 2011 at Radisson Blu Hotel Manchester Airport, Chicago Avenue, Manchester, M90 3RA. Notice of such meeting is set out at the end of this document.

The Board intends to take advantage of the provisions of the Finance (No 3) Bill 2010/2011 and, as such, the Disposal is also conditional upon the passing of the Finance (No 3) Bill 2010/2011 (expected in July 2011) without modification from its present form or, if the Finance (No 3) Bill 2010/2011 is modified, in a form which does not in any way result in a tax liability arising in CM Fertilisers under section 179 TCGA 1992 as a result of the Disposal.

The purpose of this document is to provide you with information relating to the Disposal, to explain the reasons for the Disposal and why the Board considers the Disposal to be in the best interests of Shareholders as a whole and to recommend that you vote in favour of the Resolution set out in the Notice of General Meeting at the end of this document, as the Directors intend to do in respect of their aggregate shareholdings in Carr's amounting to 2.9 per cent. of Carr's current issued share capital.

2. Information on Carrs Agriculture, Carrs Fertilisers and CM Fertilisers

Carrs Agriculture is a wholly-owned subsidiary of Carr's with three operating divisions: Carrs Fertilisers, Caltech and Scotmin.

Carrs Fertilisers is engaged in the blending of raw fertiliser materials into finished products at Silloth in England and at Invergordon and Montrose in Scotland. It sells finished fertiliser product to merchants (including CBASL), agents and direct to the farming community.

CM Fertilisers is a wholly-owned subsidiary of Carrs Agriculture. CM Fertilisers was incorporated on 5 May 2011 and commenced trading on the date of the Agreement. CM Fertilisers has not produced any financial information since its incorporation. The trade, assets and liabilities (save for certain excluded liabilities) of Carrs Fertilisers which were owned by Carrs Agriculture until the date of the Agreement have been transferred into CM Fertilisers in order to facilitate the Disposal.

The table below summarises the results of Carrs Fertilisers for the years ended 30 August 2008, 29 August 2009 and 28 August 2010 and 26 weeks ended 26 February 2011.

	Year ended	Year ended	Year ended	26 weeks ended
	30 August 08	29 August 09	28 August 10	26 February 11
	£m	£m	£m	£m
Revenue	78.6	56.4	59.3	35.5
Operating profit/(loss)	7.3	(1.0)	1.9	2.4
Profit/(loss) before tax	7.0	(1.3)	1.8	2.3

In the first half of the current financial year, Carrs Fertilisers experienced strong demand as continuing high cereal prices and anticipation of higher fertiliser raw material prices caused a larger than expected number of farmers to buy stock. Subsequently, raw material prices have continued to rise, although the increases are modest compared to the fluctuations seen in 2008 and 2009. At 26 February 2011, Carrs Fertilisers had net assets of £1.6 million and gross assets of £34.9 million.

The above figures have been extracted without material adjustment from the financial information contained in Part III (Financial Information on Carrs Fertilisers) of this document. In order to make a proper assessment of the financial position of CM Fertilisers and Carrs Fertilisers you should not rely solely on the summary financial information set out above but should read the whole of this document.

3. Background to and reasons for the Disposal

The level of profit generated by Carrs Fertilisers is heavily dependent on the prices of fertiliser raw materials including nitrogen, potash and phosphate. Fertiliser raw material price inflation typically generates stronger demand for fertiliser as farmers look to increase their stock holdings, with Carrs Fertilisers benefiting from this stronger than average demand for finished fertiliser product and from inventory gains on raw materials held by the Group. Such market dynamics existed in the year ended 30 August 2008, for which Carrs Fertilisers reported an operating profit of £7.3 million.

In the converse situation, where weaker than average demand is experienced due to falling fertiliser prices, Carrs Fertilisers typically suffers the combined effects of its raw material stock being marked down to market prices and weaker demand for finished fertiliser product. Such was the situation in the year ended 29 August 2009 when Carrs Fertilisers generated an operating loss of £1.0 million.

Carrs Fertilisers is also a working capital intensive business with significant seasonal working capital requirements.

The Directors believe that the Disposal is in the best interests of Shareholders for the following reasons:

• it will reduce Carr's exposure to commodity prices which should reduce the volatility of Carr's profits;
• it will result in significantly reduced levels of seasonal working capital;
• it will allow the Group to realise an attractive valuation for Carrs Fertilisers;
• £3.0 million of the net sale proceeds will be used to reduce the Group's pension deficit; and
• CBASL will enter into a five year contract with Origin for the distribution of fertiliser products.

4. Terms of the Disposal

Origin Fertilisers has conditionally agreed to purchase CM Fertilisers for a consideration of £19.0 million. In particular, Origin Fertilisers shall pay £1 for the entire issued share capital of CM Fertilisers and inject £19.0 million into CM Fertilisers and will procure at Completion that CM Fertilisers repays to Carrs Agriculture the consideration payable under the Hive Down, namely £19.0 million. The purchase price and the consideration payable under the Hive Down are payable in cash at Completion. The purchase price is subject to a customary adjustment for a normalised level of working capital and net debt. Origin Fertilisers will also discharge the net debt of CM Fertilisers, which is expected to amount to approximately £5.9 million at Completion.

The terms of the Group's banking arrangement include a clause which requires the Group to obtain the approval of Clydesdale prior to entering into a material transaction. The Group has obtained the written consent of Clydesdale for the Disposal.

The Disposal is conditional upon:

• (i) the approval of Shareholders, which is to be sought at the General Meeting; and
• (ii) the Finance Bill Condition.

Further details of the Sale & Purchase Agreement are set out in Part VI (Principal Terms of the Sale & Purchase Agreement) of this document.

Further information on Schedule 10 of the Finance (No 3) Bill 2010/2011 is set out in Section 5 of this Part I (Information on the Finance (No 3) Bill 2010/2011).

5. Information on the Finance (No 3) Bill 2010/2011

Legislation will be introduced in Schedule 10 of the Finance (No 3) Bill 2010/2011 (Company Ceasing to be a Member of Group) to simplify the rules for the calculation of chargeable gains degrouping charges for companies.

The current legislation states that if a company transfers an asset to another company that is a member of the same group and the transferee company leaves the group within six years of the transfer, the transferee company is treated as making a market value disposal of that asset at the time of the intra group transfer. The tax on any gain that accrues on this deemed disposal is known as a "degrouping charge" and arises under section 179 Taxation of Chargeable Gains Act 1992.

The new legislation proposes that where a company leaves a group as a result of a disposal of its shares, any degrouping charge arising will be treated as additional consideration for the disposal. The new legislation also extends the shareholder relief, substantial shareholding exemption under Schedule 7AC TCGA 1992, to apply to the degrouping charge (provided all other conditions for the substantial shareholding exemption to apply are met).

The consequence on the Disposal of Schedule 10 of the Finance (No 3) Bill 2010/2011 (Company Ceasing to be a Member of Group) being granted Royal Assent without modification (or if modified from its present form to a form which does not in any way result in a tax liability arising in CM Fertilisers under section 179 TCGA 1992 in respect of the Disposal) is that it will result in no chargeable gains degrouping charge being levied as a result of the Hive Down on CM Fertilisers.

The Board expects that the Finance (No 3) Bill 2010/2011 will be given Royal Assent by the end of July 2011, following the date of the General Meeting. If the Finance (No 3) Bill 2010/2011 is not granted Royal Assent by 29 July 2011 or Schedule 10 (Company Ceasing to be a Member of Group) is modified from its present form to a form which results in a tax liability arising in CM Fertilisers under section 179 TCGA 1992 arising in respect of the Disposal, the Finance Bill Condition is waivable at the agreement of Carr's and Origin Fertilisers. If, subsequently, the Finance Bill Condition is not waived by Carr's and Origin Fertilisers, the Disposal will not complete.

6. Information on Origin Fertilisers and Origin

Origin Fertilisers is a wholly owned subsidiary of Origin. Origin is a focused agri-services group with strategic investments in consumer foods and marine proteins and oils.

Origin's Agri-Services division comprises on-farm integrated agronomy services and business-tobusiness agri-inputs (feed and fertiliser sourcing, handling and distribution). These businesses provide customised solutions that address the efficiency, quality and output requirements of primary food producers in Ireland, the UK and Poland.

Origin's strategy is to be the leading provider of value added services, technologies and strategic inputs that support the delivery of sustainable and profitable food production solutions for primary producers.

Origin is quoted on the Enterprise Securities Market of the Irish Stock Exchange and the Alternative Investment Market of the London Stock Exchange and is headquartered in Dublin, Ireland.

7. Information on the Resultant Group

Following the Disposal, the Group will continue to comprise four operating divisions: Agriculture – Trading, Agriculture – Manufacturing, Food and Engineering.

Agriculture – Trading

The Agriculture – Trading division sells and distributes animal feed and low moisture feed blocks, retails agricultural products, animal health products and fertiliser through CBASL's branch network and distributes fuel oil through a network of depots. Sales of feed and feed blocks are in the UK and through various export markets including Germany, France, the United States and New Zealand. The retail operation sells a wide range of farm inputs, rural supplies and other agricultural machinery from 19 branches across Northern England and Scotland and Massey Ferguson and Kuhn agricultural machinery brands from six of these branches. Through Johnstone Wallace Fuels and Wallace Oils, CBASL supplies a range of fuel products and services for domestic, agricultural and commercial customers in Cumbria, Dumfries, Galloway and Lancashire. Following Completion, sales of fertiliser will continue through a supply agreement between CBASL and CM Fertilisers.

Agriculture – Manufacturing

The Agriculture – Manufacturing division produces animal feed blocks and animal feed supplements. Carr's owns two specialist patented animal feed production plants in the USA and one in the UK. The brands produced and marketed are Crystalyx, Calflyx, Horslyx and Megalix in the UK and Continental Europe. In the USA, the brands produced and marketed are Smartlic and Feed in a Drum.

Food

The Food Division comprises three flour mills based in Cumbria, Fife and Essex. It supplies most sectors of the market, including industrial bakers, craft bakers, food manufacturers and multiple retailers.

Engineering

The Engineering Division comprises Bendalls Engineering and R Hind, which are based in Carlisle, Carrs MSM, which is based in Swindon, and Wälischmiller Engineering GmbH, which is based in Markdorf in Southern Germany. Bendalls Engineering designs and manufactures process plant and equipment for the petrochemical, oil and gas, nuclear power, pharmaceutical, process and water industries. Carrs MSM designs and manufactures master slave manipulators, which are key components for nuclear and other engineering businesses. Wälischmiller Engineering GmbH is involved in remote handling technology, robotics and radiation protection equipment.

8. Use of proceeds and financial effects of the Disposal on the Group

The net cash proceeds arising from the Disposal are expected to be approximately £18.45 million, after estimated transaction costs of £0.55 million. The net cash proceeds will be used to make a payment of £3.0 million to the Pension Fund with the balance placed on deposit pending a decision on its investment. In the short-term and prior to the reinvestment of any proceeds, the Directors expect the Disposal to be earnings dilutive for shareholders.

9. Current trading and prospects

On 11 April 2011, the Company released its interim results for the 26 weeks to 26 February 2011. The following is an extract from that announcement:

"We have made encouraging strategic progress in our markets during 2010 and into 2011. Our decision to expand the geographical cover of our agricultural branch network in the Borders and North of England, the expansion of our fuel business and our feed supplements business, and the development of the New Zealand market for our animal feed block Crystalyx, leave Carr's well placed to take advantage of the improving agricultural markets. Focus is beginning to return to the long-term positive fundamentals for agricultural markets and increasing demand for food, driven by global and UK population growth. This is creating more demand for protein which, in turn, creates the need for improved farmer productivity. The continuing over-capacity in the UK flour market will present management with challenges and we anticipate that the Food division will, at best, sustain its first half performance in the second half. Our engineering businesses have excellent skills, with good order books, and are well positioned to take advantage of the increasing demand in the nuclear, oil and gas sectors. With a business environment that remains challenging it is pleasing to report growth in profitability and announce a rise in the first interim dividend. We are confident that Carr's will continue to trade in line with management's expectations for the full year."

The Directors believe that this statement remains valid as at the date of this document.

10. Risk factors

For a discussion of the risks and uncertainties which you should take into account when considering whether to vote in favour of the Resolution please refer to Part II (Risk Factors) of this document.

11. Additional information

Your attention is drawn to the additional information set out in Part VII (Additional Information) of this document.

12. Action to be taken

Please vote on the resolution electronically or by post or by attending the General Meeting in person or by proxy.

Electronically: If you are a corporate or individual member of CREST, please vote through CREST in accordance with the procedures set out in the CREST Manual. Other Shareholders can vote electronically by contacting www.capitashareportal.com and following the on-screen instructions. You will need your investor code printed on your share certificate. Your vote must be received before 1.00 p.m. on 11 July 2011.

By post: Please complete and return the enclosed postage prepaid Form of Proxy card by post or in person so that it is received by Capita, the Company's Registrar, at PXS, 34 Beckenham Road, Beckenham, BR3 4TU as soon as possible and in any event by 1.00 p.m. on 11 July 2011.

In person: Please attend the General Meeting at 1.00 p.m. on 13 July 2011 at Radisson Blu Hotel Manchester Airport, Chicago Avenue, Manchester, M90 3RA or send your duly appointed proxy to vote for you.

Full details of how to vote or appoint a proxy to vote for you are set out in the notice of the General Meeting on pages 30 to 31 of this document. The completion of your Form of Proxy or electronic vote will not preclude you from attending the meeting in person. Even if you intend to attend the meeting, please complete and return a Form of Proxy or vote electronically. A proxy need not be a member of the company.

13. Recommendation

The Board considers the Disposal to be in the best interests of the Shareholders of the Company as a whole.

Accordingly, the Board unanimously recommends that you vote in favour of the Resolution to be proposed at the General Meeting, as the Directors intend to do in respect of their own beneficial holdings, which amount in aggregate to 257,543 Ordinary Shares and represent approximately 2.9 per cent. of Carr's issued share capital as at 17 June 2011 (the latest practicable date prior to publication of this document).

Yours faithfully

Lord (Richard) Inglewood 20 June 2011

PART II

RISK FACTORS

This Part II addresses the risks known to Carr's and the Directors to which the Group is exposed, which could materially and adversely affect the business, results of operations, cash flow, financial condition, revenue, profits, assets, liquidity and capital resources of the Group, as appropriate. In such cases, the market price of the Ordinary Shares may decline and Shareholders may lose all or part of their investment. Prior to voting on the Disposal, Shareholders should consider these risks fully and carefully, together with all other information set out in this document.

Additional risks and uncertainties currently unknown to Carr's and the Directors, or which Carr's and the Directors currently deem immaterial, may also have an adverse effect on the financial condition or business of the Group and/or the Resultant Group and/or CM Fertilisers.

The Directors consider the following risks to be the most significant for Shareholders and all the material risks known at the present time, but the risks listed do not necessarily comprise all those associated with an investment in the Company and are not set out in order of priority.

1. Risks related to the Disposal

The following risks and uncertainties relate to the Disposal:

(A) Warranties and indemnities in the Sale & Purchase Agreement

The Sale & Purchase Agreement and Hive Down Agreement contain certain warranties and indemnities given by Carrs Agriculture in favour of Origin Fertilisers in respect to CM Fertilisers, which are customary for a transaction of this nature. If Carrs Agriculture is required in the future to make payments under any of these warranties or indemnities this would have an adverse effect on the Group's cash flow and financial condition. The aggregate liability of Carrs Agriculture for a breach or inaccuracy of warranties is limited to £19.0 million. Further details of the Sale & Purchase Agreement are set out in Part VI (Principal Terms of the Sale & Purchase Agreement) of this document.

(B) Pre-closing changes in CM Fertilisers

During the period from the signing of the Sale & Purchase Agreement on 20 June 2011 to Completion, events or developments may occur which could make the terms of the Sale & Purchase Agreement less attractive for the Group. Subject to the terms of the Sale & Purchase Agreement, Carrs Agriculture may be required to complete the Disposal notwithstanding such events or developments. This may have an adverse effect on the business, financial condition and results of operations of the Group. By means of example, Carrs Agriculture may become aware in the period between the date of the Sale & Purchase Agreement and Completion of a matter or circumstance which may result in a warranty claim being made by Origin fertilisers after Completion which, if substantiated and subject to the limitations set out in the Sale & Purchase Agreement and Hive Down Agreement, could result in a payment being made by Carrs Agriculture to Origin Fertilisers and/or CM Fertilisers.

(C) Conditions

• (i) Closing of the Sale & Purchase Agreement is conditional upon the approval of Shareholders. There can be no assurance that this condition will be satisfied and Completion will take place. In the event that Shareholders do not approve the Resolution, the Disposal will not be completed. If the Disposal does not complete, any of the risks and uncertainties set out in Section 2 of this Part II (Risks related to the Disposal not proceeding) may affect the Group's business and results.
• (ii) The Board intends to take advantage of the provisions of Schedule 10 of the Finance (No 3) Bill 2010/2011. As such, the Disposal is also conditional upon the passing of Finance (No 3) Bill 2010/2011 (expected in July 2011) without modification from its present form

or, if the Finance (No 3) Bill 2010/2011 is modified, in a form which does not in any way result in a tax liability arising in CM Fertilisers under section 179 TCGA 1992 as a result of the Disposal. In the event that the Finance Bill Condition is not met and the Finance Bill Condition is not waived by Carr's and Origin Fertilisers, the Disposal will not be completed. If the Disposal does not complete, any of the risks and uncertainties set out in Section 2 of this Part II (Risks related to the Disposal not proceeding) may affect the Group's business and results.

2. Risks related to the Disposal not proceeding

If the Disposal does not proceed, the following risks and uncertainties may affect the Group's business and results.

(A) Potentially disruptive effect on the Group

The Group's management and employees may be affected and key management or employees may choose to leave CM Fertilisers. This may have a negative effect on the performance of CM Fertilisers under Carrs Agriculture's ownership.

(B) Inability to realise value for Carrs Fertilisers

If the Disposal does not complete, the value to the Group of Carrs Fertilisers may be lower than can be realised by way of the Disposal.

(C) Raw material price fluctuations

A significant proportion of Carrs Fertilisers input costs are raw materials, including nitrogen, potash and phosphate. Many of these raw materials are subject to potentially significant price fluctuations. Fertiliser raw material price inflation typically generates stronger demand for fertiliser as farmers look to increase their stock holdings, with Carrs Fertilisers benefitting as a result both from stronger than average demand for finished fertiliser product and from inventory gains on raw materials held. In the converse situation, Carrs Fertilisers suffers from the combined effects of its raw material stock being marked down to market prices and weaker demand for finished fertiliser product. Consequently, the Disposal will reduce the Group's exposure to commodity prices and is expected to reduce the volatility of the Group's profits. If the Disposal does not proceed, the Group will be more exposed to fluctuations in commodity prices which could have an adverse effect on the Group's profitability and financial condition.

3. Risks related to general economic conditions and the markets in which the Group operates

(A) Economic conditions

Changes in global economic conditions, the volatility of international markets and any downturn in any of the markets in which the Group operates may have an adverse effect on demand for the Group's products and its revenue, profitability, liquidity and overall financial condition.

(B) Currency risk

Carr's consolidated financial statements are prepared in sterling, leaving it exposed to the translation of the results and net assets of foreign operations into sterling. The Group is also exposed to the impact of currency fluctuations on its commercial transactions denominated in foreign currencies and its purchases in sterling of goods which are priced originally in foreign currencies. Exposures are primarily to the US dollar and the euro. Despite the use of currency forward contracts which mitigate risk to the Group, adverse exchange rate movements could have a negative effect on the Group's business, financial condition, operating results, shareholder funds or liquidity.

(C) Interest rate fluctuations

The Group is exposed to changes in interest rates, which, if significant, could have a material adverse effect on the Group's financial position.

(D) Changes in tax laws or regulations, or their respective interpretations

The Group is subject to the effect of future changes in tax legislation and practice in the United Kingdom and any other tax jurisdiction affecting the Company or any other company within the Group and such changes could materially and adversely affect the Company's ability to achieve its business objectives, decrease the post-tax returns to Shareholders, affect the taxation liabilities of Shareholders in relation to Ordinary Shares and limit the level of dividend the Company is able to pay. Any taxation relief referred to in this documentation as being available or potentially available to Shareholders is currently available or potentially available and may change.

(E) Competition

All of the Group's main operating companies face a significant competitor base. Actions by existing competitors and/or new entrants may place pressure on the Group's pricing margins and profitability. Some of the Group's competitors may have access to some or all of the following advantages: greater financial resources, greater purchasing economies and lower cost bases, giving them a competitive advantage over the Group. In response to a changing competitive environment and the actions of competitors, the Group's businesses may from time to time make certain pricing, service or marketing decisions that could have a material effect on the revenues, results of operations and financial condition of the Group.

(F) Raw material cost and availability

The Group purchases a significant amount of raw materials each year. In recent years, there has been a material increase in the cost of raw materials and other input costs such as utilities. The Group purchases large volumes of raw materials, which assists it in negotiating better terms and lower per unit costs, and it is able to source goods from around the world and develop strong relationships with key suppliers. Whilst to date the Group has a strong record of successfully recovering input cost increases, any inability or delay in passing on increases in raw material costs to its customers or to source raw materials of an acceptable type or quality could adversely affect the result of the Group.

4. Risks related to the Group's business

(A) Dependency on key executives and certain employees

The Group is dependent upon the quality, ability and commitment of key personnel in order to sustain, develop and grow its business. There can be no assurance that these employees will remain with the Group and, consequently, the Group's success will depend upon its ability to attract, motivate, develop and retain key personnel. The loss of key personnel or a substantial number of talented employees, or an inability to attract, motivate, develop and retain the calibre of employees the Group's business requires could cause disruption and such disruption or the loss of experience, skills or client relationships of such personnel could adversely affect the Group's business, reputation, expertise, results of its operations or financial condition. Carr's seeks to reduce this risk by giving managers authority within their areas of responsibility and ensuring that they are suitably incentivised.

(B) Intellectual Property

The Group owns a number of registered trade marks and unregistered trade mark rights in countries throughout the world for use in connection with the sale and marketing of its branded products.

Whilst the Group intends to enforce its trade mark, patent and licensed rights against infringement by third parties, the Group's actions to establish and protect its intellectual property may not be adequate to prevent imitation of its products by others or to prevent others from seeking to block sales of the Group's products which, in their opinion, violate their trade marks or other intellectual property rights. If a competitor were to infringe intellectual property held by, or licensed to, the Group, enforcing the Group's rights would be likely to be costly and could potentially divert funds and resources that could otherwise be used to operate the Group's business.

(C) Damage to sites and IT systems

The sale of the Group's products could be adversely affected if production at one of its factories were to be disrupted, for example, by fire or flood or inadequate or failed internal information technology processes and systems. Although the Group has disaster recovery plans in place for most anticipated disruptive events, in certain cases the Group may not be able to find alternative sources of production. Such a loss of production capability would have an adverse effect on the results of the Group's operations.

Further, whilst the Group believes that its insurance is adequate, there can be no assurance that such insurance will continue to be available on acceptable terms or that the amount of any particular flood or fire claim will not exceed the amount of, or not be covered under, the insurance cover.

(D) Product quality and safety

The Group's products are subject to a number of supply, manufacturing, packaging and distribution processes. A failure to control the quality of these processes, or the occurrence of some other, perhaps external, event (for example, a third party contamination or tampering incident), may result in the need to take remedial action such as issuing warnings, withdrawing one or more batches of the Group's products or destruction of inventory. Such occurrences may harm the Group's relationships both with consumers of its goods and with its customers and may, where the product is branded, damage the reputation of such brand as well as other brands in the Group's portfolio. If such branded product is manufactured under agreement or licence, such a quality control failure may also result in the termination of the relevant agreement or licence. The Group takes product quality very seriously and has rigorous quality assurance processes in place to minimise any potential risk. Nonetheless, any of these circumstances could have an adverse effect on the Group's business and the results of its operations.

PART III

FINANCIAL INFORMATION ON CARRS FERTILISERS

The following historical information relating to Carrs Fertilisers has been extracted without material adjustment from the consolidation schedules used in preparing the audited consolidated financial statements of the Group for the periods ended 30 August 2008, 29 August 2009 and 28 August 2010 and the unaudited consolidated financial statements of the Group for the 26 weeks ended 26 February 2011.

The financial information contained in this Part III (Financial Information on Carrs Fertilisers) does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 or as the case may be Section 434 of the Companies Act 2006. The consolidated statutory accounts for Carr's in respect of the financial years ended 30 August 2008, 29 August 2009 and 28 August 2010 have been delivered to the Registrar of Companies. The auditors' reports in respect of the statutory accounts of the Group for each of these three financial periods were unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985 or as the case may be Section 298(2) or (3) of the Companies Act 2006.

The financial information contained in this Part III has been prepared using the accounting policies of Carr's on a basis consistent with the accounting policies adopted in Carr's latest financial accounts.

Shareholders should read the whole of this document and not rely solely on the summarised financial information contained in this Part III.

Financial information

(i) Combined income statement (on an IFRS basis) for the 52 week periods ended 30 August 2008, 29 August 2009, 28 August 2010 and the 26 weeks ended 26 February 2011:

30 August 2008 £'000	29 August 2009 £'000	28 August 2010 £'000	26 weeks ended 26 February 2011 £'000
78,576	56,422	59,251	35,516
			(30,849)
11,554	2,599	6,817	4,667
(1,742)	(1,230)	(1,750)	(875)
(2,479)	(2,360)	(3,123)	(1,346)
7,333	(991)	1,944	2,446
22	5	6	2
(370)	(304)	(168)	(101)
6,985	(1,290)	1,782	2,347
(1,080)	(167)	(468)	(635)
5,905	(1,457)	1,314	1,712
	(67,022)	(53,823)	Year ended Year ended Year ended (52,434)

Notes

Group management charges of £130,000, £240,000, £220,000 and £1,150,000 have been excluded from the 2008, 2009, 2010 and 2011 income statements respectively as they will not recur following the disposal.

The taxation charge for the 52 week periods ended 30 August 2008, 29 August 2009 and 28 August 2010 has been apportioned to the Carrs Fertilisers business pro-rata to the taxable profits of the division.

The taxation charge for the 26 weeks ended 26 February 2011 has been calculated as 27 per cent. of profit before tax.

	28 August 2010 £'000	26 February 2011 £'000
Non-current assets
Goodwill	390	390
Property, plant and equipment	2,899	3,078
Other investments	5	5
	3,294	3,473
Current assets
Inventories	4,988	15,475
Trade and other receivables	8,365	15,798
Cash and cash equivalents	937	1
Derivatives	—	139
	14,290	31,413
Total assets	17,584	34,886
Current liabilities
Trade and other payables	(15,024)	(17,798)
Financial liabilities
Borrowings	(439)	(10,027)
Inter-company borrowings	—	(3,850)
Derivative financial instruments	(127)	—
Current tax liabilities	(432)	(1,067)
	(16,022)	(32,742)
Non-current liabilities
Financial liabilities
Borrowings	(231)	(231)
Deferred tax liabilities	(282)	(283)
	(513)	(514)
Total liabilities	(16,535)	(33,256)
Net assets	1,049	1,630

Notes

Deferred tax liabilities have been apportioned to the Carrs Fertilisers business pro-rata to the net book value of the fixed assets owned by the division.

PART IV

UNAUDITED PRO FORMA STATEMENT OF NET ASSETS OF THE RESULTANT GROUP

The following is an unaudited pro forma statement of the net assets of the Resultant Group following the proposed Disposal of CM Fertilisers, prepared on the basis and assumptions set out in the notes below. Adjustments have been made to illustrate the effect of the Disposal on the net assets of Carr's at the date of its last interim balance sheet, 26 February 2011, as if it had taken place on that date. This statement is prepared for illustrative purposes only and, because of its nature, may not give a true picture of the financial position of the Resultant Group.

			Adjustments
	Carr's Milling
	Industries PLC					Pro forma
	Group at					of the
	26 February 2011	Disposal of CM Fertilisers	Net proceeds	Pension contribution	Disposal adjustments	Resultant Group
	£'000	£'000	£'000	£'000	£'000	£'000
	(1)	(2)	(3)	(4)	(5)
ASSETS
NON-CURRENT ASSETS
Goodwill	4,679	(390)				4,289
Other intangible assets	1,207					1,207
Property, plant and equipment	32,494	(3,078)				29,416
Investment property	775					775
Investment in associate Interest in joint ventures	3,518 2,414					3,518 2,414
Other investments	69					69
Financial assets
– Non-current receivables	5					5
Deferred tax assets	2,798			(780)		2,018
	47,959	(3,468)	0	(780)	0	43,711
CURRENT ASSETS Inventories	47,841	(15,475)				32,366
Trade and other receivables	68,800	(15,798)			2,787	55,789
Current tax assets	0					0
Financial assets
– Derivative financial instruments	139	(139)				0
– Cash at bank and in hand	11,599	(1)	18,133		3,850	33,581
	128,379	(31,413)	18,133	0	6,637	121,736
TOTAL ASSETS	176,338	(34,881)	18,133	(780)	6,637	165,447
LIABILITIES
CURRENT LIABILITIES
Financial liabilities
– Borrowings	(22,313)	13,877	317	(3,000)	(3,850)	(14,969)
Trade and other payables	(74,348)	17,798			(2,787)	(59,337)
Current tax liabilities	(2,031)			840		(1,191)
	(98,692)	31,675	317	(2,160)	(6,637)	(75,497)
NON-CURRENT LIABILITIES
Financial liabilities
– Borrowings	(17,478)	231				(17,247)
Retirement benefit obligation	(6,701)			3,000		(3,701)
Deferred tax liabilities	(4,749)	283				(4,466)
Other non-current liabilities	(2,743)					(2,743)
	(31,671)	514	0	3,000	0	(28,157)
TOTAL LIABILITIES	(130,363)	32,189	317	840	(6,637)	(103,654)
NET ASSETS	45,975	(2,692)	18,450	60	0	61,793

Notes

• 1. The net assets of Carr's Milling Industries PLC have been extracted from the unaudited balance sheet as at 26 February 2011 as published in the Group's interim results announcement dated 11 April 2011.
• 1. CM Fertilisers' net assets have been extracted from the financial information within Part III (Financial Information on Carrs Fertilisers) of this document excluding £1,067,000 of current tax liabilities and £5,000 of other investments which will remain with the Resultant Group, reflecting the transfer of Carrs Fertiliser into CM Fertilisers.
• 1. Estimated cash proceeds of £19m to be received less expected costs of £0.55m. £317,000 applied to eliminate an overdraft with £18,133,000 held in cash.
• 1. £3m of proceeds will be invested into the Group pension scheme, resulting in a reduction in the pension liability, the deferred tax asset and the current tax liability within the Group.
• 1. An adjustment of £3,850,000 has been made to borrowings and cash at bank to reflect the fact that intercompany borrowings currently eliminated on consolidation will be repaid prior to disposal. An adjustment of £2,787,000 has been made to trade and other receivables and trade and other payables to reflect the fact that intercompany accounts currently eliminated on consolidation will become external trading accounts following disposal.

PART V

ACCOUNTANT'S REPORT ON THE UNAUDITED PRO FORMA STATEMENT ON NET ASSETS OF THE RESULTANT GROUP

The Directors Carr's Milling Industries PLC Old Croft Stanwix Carlisle CA3 9BA

Investec Investment Banking a division of Investec Bank PLC 2 Gresham Street London EC2V 7QP

20 June 2011

Dear Sirs

Carr's Milling Industries PLC (the "Company")

We report on the unaudited pro forma statement of net assets of the Resultant Group (the "Pro forma net assets statement") set out in Part IV of the Company's circular dated 20 June 2011 (the "Circular") which has been prepared on the basis described in Part IV of the Circular, for illustrative purposes only, to provide information about how the proposed disposal of CM Fertilisers by Carr's Milling Industries PLC might have affected the financial information presented on the basis of the accounting policies adopted by the Company in preparing the unaudited interim results for the period ended 26 February 2011. This report is required by item 13.3.3R of the Listing Rules of the UK Listing Authority (the "Listing Rules") and is given for the purpose of complying with that item and for no other purpose.

Responsibilities

It is the responsibility of the directors of the Company to prepare the Pro forma net assets statement in accordance with item 13.3.3R of the Listing Rules.

It is our responsibility to form an opinion, as required by item 13.3.3R of the Listing Rules as to the proper compilation of the Pro forma net assets statement and to report our opinion to you.

In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the Pro forma net assets statement, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issues.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed and which we may have to shares of the Company as a result of the inclusion of this report in the Circular, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such person as a result of, arising out of, or in accordance with this report or our statement, required by and given solely for the purposes of complying with item 13.4.1R(6) of the Listing Rules, consenting to its inclusion in the Circular.

Basis of Opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro forma net assets statement with the directors of the Company.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Pro forma net assets statement has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Company.

Opinion

In our opinion:

• a) the pro forma net assets statement has been properly compiled on the basis stated; and
• b) such basis is consistent with the accounting policies of the Company.

Yours faithfully

PricewaterhouseCoopers LLP Chartered Accountants

PART VI

PRINCIPAL TERMS OF THE SALE & PURCHASE AGREEMENT

The Sale & Purchase Agreement was entered into on 20 June 2011 between Carr's, Carrs Agriculture, Origin Fertilisers and Origin for the sale and purchase of the entire issued share capital of CM Fertilisers. The principle terms of the Sale & Purchase Agreement are as set out in this Part VI.

1. Conditions Precedent to Completion

Completion is conditional on:

• (i) the passing of the Resolution by the Shareholders; and
• (ii) the Finance Bill Condition.

2. Consideration

The total consideration payable by Origin Fertilisers to Carrs Agriculture for the entire issued share capital of CM Fertilisers shall be £1 with Origin Fertilisers also required at Completion to inject £19.0 million into CM Fertilisers and to procure that CM Fertilisers repays to Carrs Agriculture the consideration payable under the Hive Down of £19.0 million (the "Purchase Price") as well as the assumption and discharge of the Net Debt. The purchase price is payable in cash at Completion and is subject to a customary adjustment for a normalised level of working capital and net debt.

3. Warranties and Indemnities

Each party has given a number of warranties and indemnities which are customary for a transaction of this nature.

The aggregate liability of Carrs Agriculture for breaches of the warranties and indemnities contained in the Sale & Purchase Agreement and Hive Down Agreement shall not exceed £19.0 million. Origin Fertilisers is not entitled to recover any amount in respect of warranty claims unless the aggregate claims under the warranties exceed £190,000. Any individual warranty claims with a value of less than £12,500 cannot be recovered by Origin Fertilisers.

Claims must, generally, be brought within 18 months after the date of Completion and within six years in respect of the tax covenant.

4. Undertakings

Carrs Agriculture has undertaken that the CM Fertilisers will continue to trade in the ordinary course of business until Completion. Carrs Agriculture has also given non-compete undertakings regarding CM Fertilisers products and non-solicit undertakings regarding CM Fertilisers employees for a period of two years following Completion and with exceptions allowing the Group to continue to operate its retained businesses in the ordinary course. These undertakings are customary for a transaction of this nature.

5. Termination

The Sale & Purchase Agreement shall be terminated if the Shareholders have not passed the Resolution of Shareholders on or before 15 July being two business days after the General Meeting date, or if Origin Fertilisers so elects, by the date which is five business days after this date. If the Sale & Purchase Agreement is terminated by failure to pass the Resolution, Carrs Agriculture shall be obliged to pay to Origin Fertilisers the fixed sum of £625,000.

The Sale & Purchase Agreement contains usual customary warranties from Carrs Agriculture. Origin Fertilisers has the right to terminate the Sale & Purchase Agreement if there is a material breach of certain warranties and undertakings during the period from the date of the agreement to Completion. If the Sale & Purchase Agreement is terminated by reason of such material breach, Carrs Agriculture is obliged to pay to Origin Fertilisers a fixed contribution towards costs of £625,000.

In the event that the Finance Bill Condition is not satisfied by 29 July 2011 and Carr's and Origin Fertilisers do not waive the Finance Bill Condition, the Sale & Purchase Agreement shall terminate. In such circumstances, Origin Fertilisers shall have no right to receive from Carr's any contribution towards its costs.

The two events set out above which might require Carrs Agriculture to make a payment of £625,000 to Origin Fertilisers are mutually exclusive.

6. Supply Agreement

CBASL, a member of the Resultant Group, and Origin Fertilisers (through CM Fertilisers) have entered into a supply agreement (the "Supply Agreement") providing for the supply by CM Fertilisers to CBASL of certain fertiliser products for an initial five year period as from Completion.

7. Change of Name

On Completion the name of CM Fertilisers will be changed to Origin Fertilisers 2011 Limited.

8. Governing Law

The Sale & Purchase Agreement and the Supply Agreement are governed by English Law.

PART VII

ADDITIONAL INFORMATION

1 Responsibility

The Directors of Carr's, whose names appear in Section 3 of this Part VII (Directors' interests), accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.

2 Carr's

Carr's has its registered office and head office at Old Croft, Stanwix, Carlisle CA3 9BA.

3 Directors' interests

(a) The Directors and their principal functions are as follows:

Lord (Richard) Inglewood – Non-Executive Chairman Christopher Holmes – Chief Executive Officer Ronald Wood – Finance Director Alistair Wannop – Non-Executive Robert Heygate – Non-Executive

(b) As at 17 June 2011 (being the latest practicable date prior to the publication of this document) the interests of each Director, their immediate families and related trusts and, insofar as is known to them or could with reasonable diligence be ascertained by them, persons connected (within the meaning of Section 252-255 of the Companies Act 2006) with the Director (all of which, unless otherwise stated, are beneficial) in the share capital of the Company, including interests arising pursuant to any transaction notified to the Company pursuant to rule 3.1.2 of the Disclosure Rules are as follows:

			Number of
			Ordinary Shares
		Percentage of	held under
	Number of	existing issued	option the Share
Director	Ordinary Shares	ordinary shares	Option Schemes
Lord (Richard) Inglewood	4,410	0.05	—
Christopher Holmes	118,527	1.35	6,000
Ronald Wood	95,230	1.08	6,000
Alistair Wannop	2,261	0.03	—
Robert Heygate	37,115	0.42	—

• (c) The combined beneficial interest of the Directors represents approximately 2.93 per cent. of the existing issued ordinary share capital of Carr's.
• (d) Save as disclosed in Section 3(b) above, no Director or any person connected (within the meaning of Section 346 of the Companies Act) with a Director has any interest in any of the share capital of Carr's or any of its subsidiaries.
• (e) No Director has or has had any interest in any transaction which is or was unusual in its nature or conditions, or significant to the business of the Group and which was effected by any member of the Group during the current or immediately preceding financial year, or which was effected by any member of the Group during an earlier financial year and which remains in any respect outstanding or unperformed.

4 Directors' service agreements

Carr's has entered into the following contracts and letters with its executive and non-executive directors:

• (a) Christopher Holmes is employed as Chief Executive Officer under a service contract dated 10 June 2002. Mr Holmes is paid a basic annual salary of £270,300 and is eligible to receive a discretionary annual bonus based on Carr's performance. In addition he is entitled to contributions towards an occupational defined benefit pension scheme and is provided with private medical insurance, life assurance, permanent health insurance and a company car. The service contract may be terminated by either party upon Carr's providing one year's notice and Mr Holmes providing six months' notice. Mr Holmes is entitled to salary and benefits for the duration of the notice period and is subject to a maximum 12 months non-compete covenant upon termination.
• (b) Ronald Wood is employed as Finance Director under a service contract dated 10 June 2002. Mr Wood is paid a basic annual salary of £237,810 and is eligible to receive a discretionary annual bonus based on Carr's performance. In addition he is provided with private medical insurance, life assurance and a company car. The service contract may be terminated by either party upon Carr's providing one year's notice and Mr Wood providing six months' notice. Mr Wood is entitled to salary and benefits for the duration of the notice period and is subject to a maximum 12 months non-compete covenant upon termination.
• (c) The non-executive directors have individual letters of appointment all of which are for a fixed term of two years, terminable if not re-elected to office at the relevant annual general meeting, or by Carr's paying the remaining balance of the two year contract. Lord (Richard) Inglewood was appointed Non-Executive Chairman with effect from 1 September 2004 which has been extended, most recently on 1 September 2009 for a further two years and is paid £58,250 per year. Alistair Wannop was appointed Non-Executive Director with effect from 1 September 2005 which was extended most recently on 1 September 2009 for a further two years and is paid £33,000 per year. Robert Heygate was appointed Non-Executive Director with effect from 1 May 1991, which was extended most recently on 1 September 2009 for a further two years and is paid £33,000 per year.

5 Details of key individuals for CM Fertilisers

The following individuals are deemed by Carr's to be key to the operations of CM Fertilisers:

Name	Position
Stanley Denby	Managing Director
Peter Scott	Sales & Marketing Director, Scotland
Matthew Everett	Sales & Marketing Director, England & Wales

6 Significant shareholdings

In so far as it is known to Carr's, the following are the only persons interested directly or indirectly in 3 per cent. or more of Carr's existing issued share capital as at 17 June 2011, being the latest practicable date prior to the publication of this document:

		Percentage of
		existing issued
	Number of	ordinary share
Shareholder	Ordinary Shares	capital
Heygate & Sons Limited	1,265,287	14.4
HSBC Global Custody Nominees (UK) Limited	717,500	8.2
TWG Charlton	575,000	6.5
Rathbone Nominees Limited	484,150	5.5
Europe Nominees Limited	375,658	4.3
Barclayshare Nominees Limited	283,524	3.2

7 Material contracts

(a) Carr's

Save as disclosed in this Section 7(a), neither Carr's nor any other member of the Group has entered into any contract otherwise than in the ordinary course of business (a) within two years immediately preceding the date of this document which is or may be material or (b) which contains any provisions under which any member of the Group has any obligation or entitlement which is or may be material to Carr's or the Group at the date of this document:

• (i) The Sale & Purchase Agreement, details of which are set out in Part VI (Principal Terms of the Sale & Purchase Agreement) of this document;
• (ii) The Hive Down Agreement, details of which are set out in this Section 7(b);
• (iii) The sale and purchase agreement dated 22 June 2010 made between (1) Buccleuch Country Limited, (2) CBASL and (3) Buccleuch Estates Limited and Others pursuant to which CBASL purchased the entire issued share capital of AC Burn Limited (t/a Borthwickburn Limited). The consideration payable by CBASL pursuant to the AC Burn Acquisition Agreement was £800,000 satisfied in cash on completion. The AC Burn Acquisition Agreement contained standard warranty protection and a tax indemnity in favour of CBASL together with standard restrictive covenants given by the seller to CBASL;
• (iv) The sale and purchase agreement dated 22 June 2010 made between (1) Mr David Forsyth and Mrs Marian Forsyth (2) CBASL pursuant to which CBASL purchased the entire issued share capital of Forsyths of (Wooler) Limited. The consideration payable by CBASL pursuant to the Forsyths Acquisition Agreement was £722,175 satisfied in cash on completion. The Forsyths Acquisition Agreement contained standard warranty protection and a tax indemnity in favour of CBASL together with standard restrictive covenants given by the seller to CBASL. In addition, on completion of the Forsyths Acquisition Agreement, CBASL entered into a lease with the sellers relating to a 121 ⁄2 year letting of the premises used by Forsyths of (Wooler) Limited as its head office. CBASL and the sellers entered into a put and call option agreement at the same time relating to the potential purchase by CBASL of the said premises in 2023;
• (v) The Scotmin Acquisition Agreement dated 22 June 2010 made between (1) Buccleuch Country Limited, (2) Carrs Agriculture and (3) Buccleuch Estates and others relating to the sale and purchase of the entire issued share capital of Scotmin Nutrition Limited. The consideration payable by Carrs Agriculture pursuant to the Scotmin Acquisition Agreement was £4,825,000. The Scotmin Acquisition Agreement contained standard warranty protection and a tax indemnity in favour of Carrs Agriculture together with standard restrictive covenants given by the seller and its group members in favour of Carrs Agriculture;
• (vi) A £38,365,000 facility agreement was entered into on 17 August 2009 between Carr's Flour Mills Limited, Carrs Agriculture, Carr's Properties Limited and BRB Trust Limited as borrowers, those companies together with Bowie & Aram Limited as guarantors and Clydesdale as arranger, original lender and agent. On 23 July 2010 Scotmin acceded to the facility agreement as a borrower and a guarantor; and
• (vii) The sale and purchase agreement dated 28 April 2011 made between (1) David Cooper-Holmes and (2) CBASL pursuant to which CBASL purchased the entire issued share capital of Safe at Work Limited for £1,700,000 (representing the value of net assets including cash of £600,000) plus £500,000. The purchase price was payable in cash on completion and is subject to a customary adjustment for a normalised level of working capital. The Safe at Work acquisition agreement contained standard warranty protection and a tax indemnity in favour of CBASL together with standard restrictive covenants given by David Cooper-Holmes to CBASL.

(b) CM Fertilisers and Carrs Fertilisers

Save as disclosed in this Section 7(b), no contracts have been entered into (other than contracts in the ordinary course of business) by CM Fertilisers or Carrs Fertilisers either (i) within the period of two years immediately preceding the date of this document, which are or may be material to CM Fertilisers or Carrs Fertilisers; or (ii) at any time, which contain any provisions under which CM Fertilisers or Carrs Fertilisers have any obligation or entitlement which is, or may be, material to CM Fertilisers or Carrs Fertilisers as at the date of this document:

(i) The Hive Down Agreement, certain details of which are set out in Part VI (Principal Terms of the Sale and Purchase Agreement) of this document, entered into on 20 June 2011 pursuant to which Carrs Agriculture (with its obligations under the agreement guaranteed by Carr's) transferred to CM Fertilisers the trade, assets and liabilities (save for the Excluded Liabilities) of Carrs Fertilisers for £19.0 million, such monies to be discharged on Completion when CM Fertilisers (to be put in funds by Origin Fertilisers) will repay such monies in full as required by the terms of Sale & Purchase Agreement.

8 General consents

• (a) Investec has given and has not withdrawn its written consent to the issue of this document with the inclusion herein of its name and the references thereto in the form and context in which they appear.
• (b) PricewaterhouseCoopers LLP has given and has not withdrawn its written consent to the inclusion of its report concerning the unaudited pro forma statement of net assets of the Resultant Group in Part IV (Unaudited Pro Forma Statement of Net Assets of the Resultant Group) of this document in the form and context in which it appears.

9 Working capital

The Company is of the opinion that, after taking into consideration the net proceeds of the Disposal and taking into account the financing facilities available to the Resultant Group, the working capital available to the Resultant Group is sufficient for its present requirements, that is, for at least the twelve months from the date of publication of this document.

10 Significant changes

(a) Carr's

There has been no significant change in the trading or financial position of the Resultant Group since 26 February 2011, the date to which the latest published unaudited interim results of the Group have been drawn up.

(b) Carrs Fertilisers

There has been no significant change in the trading or financial position of Carrs Fertilisers since 26 February 2011, the date to which the latest unaudited financial information of Carrs Fertilisers set out in Part III (Financial Information on Carrs Fertilisers) of this document has been drawn up.

11 Litigation

(a) Carr's

There have been no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which Carr's is aware) during the 12 months prior to the date of this document, which may have, or have had in the recent past, a significant effect on the Resultant Group or its financial position or profitability.

(b) CM Fertilisers and Carrs Fertilisers

There have been no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which Carr's is aware) during the 12 months prior to the date of this document, which may have, or have had in the recent past, a significant effect on CM Fertilisers or Carrs Fertilisers or their financial position or profitability.

12 Documents available for inspection

Copies of the following documents will be available for inspection during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) at the offices of Carr's at Old Croft, Stanwix, Carlisle CA3 9BA from the date of this document until completion of the General Meeting.

• (a) the memorandum and articles of association of the Company;
• (b) the published audited consolidated accounts of the Group for the two financial years ended 29 August 2009 and 28 August 2010;
• (c) the unaudited interim accounts of the Company and its subsidiary undertakings for the 26 weeks ended 26 February 2011;
• (d) the report by PricewaterhouseCoopers LLP on the unaudited pro forma statement of net assets;
• (e) the written consent letters referred to in Section 8 of this Part VII (General consents);
• (f) the Sale & Purchase Agreement;
• (g) the Hive Down Agreement; and
• (h) this document and the Form of Proxy.

Dated 20 June 2011

PART VIII

DEFINITIONS

The following definitions apply throughout this document unless the context requires otherwise:

"AC Burn Acquisition Agreement"	the sale and purchase agreement dated 22 June 2010 entered into between (1) Buccleuch Country Limited, (2) CBASL and (3) Buccleuch Estates Limited in relation to the sale and purchase of the entire issued share capital of AC Burn Limited (t/a Borthwickburn)
"Board" or "Directors"	the directors of Carr's whose names are set out on page 3 of this document
"Caltech"	the trading division of Carrs Agriculture
"Carrs Agriculture"	Carrs Agriculture Limited, a wholly-owned subsidiary of Carr's
"Carrs Fertilisers"	the fertiliser division of Carrs Agriculture known prior to the date of the Sale & Purchase Agreement as "Carrs Fertilisers"
"Carr's" or "the Company"	Carr's Milling Industries PLC
"CBASL"	Carrs Billington Agriculture (Sales) Limited, a 51 per cent. owned subsidiary of Carr's
"Clydesdale"	Clydesdale Bank PLC
"CM Fertilisers"	CM Fertilisers Limited
"Companies Acts"	has the meaning given in Section 2 of the Companies Act 2006
"Completion"	completion of the Disposal
"Consideration"	the consideration payable by Origin Fertilisers to Carrs Agriculture for CM Fertilisers, being approximately £19.0 million (inclusive of repayment by CM Fertilisers (having been put in funds by Origin Fertilisers) to Carrs Agriculture of the Hive Down consideration) together with the discharge by Origin of the Net Debt
"CREST"	the system of paperless settlement of trades in securities and the holding of uncertificated securities operated by CRESTCo Limited in accordance with Uncertificated Securities Regulations 2001 (SI 2001/3755)
"CREST Manual"	the manual, as amended from time to time, produced by CRESTCo described the CREST system and supplied by CRESTCo Limited to users and participants thereof
"CREST Proxy Instruction"	the instruction whereby CREST members send a CREST message appointing a proxy for the meeting and instructing the proxy on how to vote
"Disclosure Rules"	the Disclosure and Transparency Rules made by the FSA pursuant to FSMA governing the disclosure of information by listed companies
"Disposal"	the proposed Disposal of CM Fertilisers by Carrs Agriculture
"Excluded Liabilities"	the liabilities of Carrs Fertilisers to be excluded from the Hive Down and referred to as the "Excluded Liabilities" in the Hive Down Agreement

"Finance Bill Condition"	the granting of Royal Assent to the Finance (No 3) Bill 2010/2011 without modification from its present form or, if the Finance (No 3) Bill 2010/2011 is modified, in a form which does not in any way result in a tax liability arising in CM Fertilisers under section 179 TCGA 1992 as a result of the Disposal
"Form of Proxy"	the form of proxy accompanying this document for use by Carr's Shareholders in connection with the General Meeting
"Forsyths Acquisition Agreement"	the sale and purchase agreement dated 14 September 2010 entered into between (1) Mr David Forsyth and Mrs Marian Forsyth and (2) CBASL relating to the sale and purchase of the entire issued share capital of Forsyths of (Wooler) Ltd
"FSA"	the Financial Services Authority for the United Kingdom
"FSMA"	the Financial Services and Markets Act 2000
"General Meeting"	the General Meeting of the Company to be held at 1.00 p.m. on 13 July 2011
"Group"	Carr's and its subsidiary undertakings
"Hive Down"	the transfer of the trade, assets and liabilities of Carrs Fertilisers to CM Fertilisers
"Hive Down Agreement"	the agreement between (1) Carrs Agriculture, (2) CM Fertilisers and (3) Carr's dated 20 June 2011 in relation to the Hive Down, certain details of which are set out in Part IV (Principal Terms of the Sale & Purchase Agreement) of this document
"Investec"	Investec Investment Banking, a division of Investec Bank PLC
"issued share capital" or "issued shares"	Ordinary Shares in issue
"Listing Rules"	the rules and regulations of the UKLA
"London Stock Exchange"	London Stock Exchange PLC
"Net Debt"	the net debt of CM Fertilisers at Completion
"Notice"	the notice of general meeting set out at the end of this document
"Ordinary Shares"	ordinary shares of 25p each in the capital of the Company
"Origin"	Origin Enterprises plc
"Origin Fertilisers"	Origin Fertilisers (UK) Limited
"Pension Fund"	Carr's Pension Scheme 1993
"Registrar"	Capita Registrars Limited
"Resolution"	the resolution set out in the Notice
"Resultant Group"	Carr's and its subsidiaries and subsidiary undertakings, excluding CM Fertilisers
"Sale and Purchase Agreement" or "Agreement"	the agreement between (1) Carrs Agriculture, (2) Origin Fertilisers, (3) Carr's and (4) Origin dated 20 June 2011 in respect of the Disposal of CM Fertilisers, a summary of which is set out in Part VI (Principal Terms of the Sale & Purchase Agreement) of this document

"Scotmin"	the trading division of Carrs Agriculture
"Scotmin Acquisition Agreement"	the sale and purchase agreement dated 22 June 2010 entered into between (1) Buccleuch Country Limited, (2) Carrs Agriculture and (3) Buccleuch Estates Limited in relation to the sale and purchase of the entire issued share capital of Scotmin
"Shareholders"	holders of Ordinary Shares
"UKLA"	the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the FSMA

CARR'S MILLING INDUSTRIES PLC

NOTICE OF GENERAL MEETING

Notice is hereby given that a General Meeting of Carr's Milling Industries PLC (the "Company") will be held at 1.00 p.m. on 13 July 2011 at Radisson Blu Hotel Manchester Airport, Chicago Avenue, Manchester, M90 3RA to consider and, if thought fit, to pass the following resolution as an ordinary resolution of the Company:

Ordinary Resolution

THAT the disposal by Carrs Agriculture of the entire issued share capital of CM Fertilisers (the "Disposal") as described in the circular to shareholders of the Company dated 20 June 2011 of which this Notice forms part (the "Circular") on the terms and subject to the conditions of a share purchase agreement dated 20 June 2011 between Carrs Agriculture, Origin Fertilisers, Origin and the Company (a summary of which is set out in Part VI (Principal Terms of the Sale & Purchase Agreement) of the Circular) is hereby approved for the purposes of Chapter 10 of the Listing Rules of the Financial Services Authority and that each and any of the directors of the Company and Carrs Agriculture (or a duly authorised committee of the directors of the Company and Carrs Agriculture) are hereby authorised to conclude and implement the Disposal in accordance with such terms and conditions and to make such amendments, modifications, variations, waivers and extensions of any of the terms of the Disposal as the directors of the Company and Carrs Agriculture or any such committee may deem necessary, expedient or appropriate (provided such amendments, modifications, variations, waivers and extensions are not of a material nature) and to any documents and arrangements connected with the Disposal as they may in their absolute discretion think necessary or desirable.

By order of the Board

Ronald Wood Company Secretary

20 June 2011

Registered Office:

Old Croft Stanwix Carlisle CA3 9BA

Registered in England and Wales Company No: 98221

Notes:

1. Attendance and voting

Pursuant to Rule 6.1.12(2) of the Disclosure and Transparency Rules, as at 17 June 2011 (being the last business date prior to the publication of this notice), the Company had in issue 8,803,373 ordinary shares carrying one vote each. Therefore, the total voting rights in the Company as at 17 June 2011 are 8,803,373.

Pursuant to Regulation 41(1) of the Uncertificated Securities Regulations 2001 (S.I. 2011/3755), the Company specifies that only those shareholders who are registered on the Company's share register at 6.00 p.m. on 17 June 2011 (the "Specified Time") shall be entitled to attend or vote at the General Meeting in respect of the ordinary shares in the capital of the Company registered in their names at that time. Changes to entries on the Register for certified and uncertified shares of the Company after the Specified Time shall be disregarded in determining the rights of any person to attend or vote at the meeting. Should the General Meeting be adjourned, members, to be entitled to attend, must have been entered on the Register by 6.00 p.m. two days prior to the adjourned General Meeting or, if the Company gives notice of the adjourned General Meeting, at the time specified in such notice.

2. Corporate Representatives

A member of the Company which is a corporation may authorise a person or persons to act as its representative(s) at the General Meeting. In accordance with the provisions of the Companies Act 2006 (as amended by the Companies (Shareholders' Rights) Regulations 2009), each such representative may exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual member of the Company, provided that they do not do so in relation to the same shares.

3. Proxies

Shareholders can vote by either:

• attending the meeting and voting in person or by attorney or, in the case of corporate shareholders, by corporate representative; or
• appointing a proxy to attend and vote on their behalf, using the Form of Proxy accompanying this notice of General Meeting, or electronically via www.capitashareportal.com or (for shares held through CREST) via the CREST proxy voting system.

Whether or not you intend to attend the General Meeting, you are requested to complete the enclosed Form of Proxy and return it to the Company's registrar, together with any power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof, at the following address: PXS, 34 Beckenham Road, Beckenham, BR3 4TU as soon as possible and in any event so as to be received no later than 1.00 p.m. on 11 July 2011 or, in the event that the meeting is adjourned, not less than 48 hours before the time for holding any adjourned meeting. Any Form of Proxy received after this time will be void.

The completion and submission of a Form of Proxy will not prevent you from attending and voting in person if you so wish.

If you do not wish, or are unable, to attend, you may appoint either the Chairman of the meeting or one or more persons of your choice to exercise all or any of your rights to attend and to speak and vote at the meeting. That person is known as a "proxy". You are advised to use the enclosed Form of Proxy to appoint a proxy.

You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, additional proxy forms may be obtained by contacting the registrar, Capita Registers, on their helpline 0871 664 0300 (calls cost 10p per minute plus network extras). Lines are open 8.30 a.m. to 5.30 p.m. Monday to Friday (or +44 (0) 208 639 3399 if calling from outside the UK) or you may photocopy the Form of Proxy enclosed with this notice.

A proxy need not be a shareholder and can be either an individual or a body corporate. At the meeting, the proxy can act for the member he or she represents. The proxy is valid for any adjournment of the meeting. A proxy may vote on any other business, which may properly come before the meeting, as that person thinks fit. If a proxy is not directed how to vote on an item of business, the proxy may vote, or abstain from voting, as they see fit.

The appointment of the proxy may specify the proportion or the number of votes that the proxy may exercise. Where more than one proxy is appointed and the appointment does not specify the proportion or number of the shareholder's votes, each proxy may exercise the number of votes proportionate to the number of proxies appointed.

If a proxy is instructed to abstain from voting, that person is directed not to vote on the shareholder's behalf and the shares which are the subject of the proxy appointment will not be counted in computing the required majority.

Please mark the appropriate box alongside the resolution on the Form of Proxy to indicate whether you wish your vote to be cast "for", or "against", or whether you wish to withhold your vote from, the resolution. Unless you give specific instructions on how to vote on the resolution, your proxy will be able, at his or her discretion, either to vote "for" or "against" the resolution or to withhold from voting.

Shareholders who return their Forms of Proxy with a direction how to vote but do not nominate the identity of their proxy will be taken to have appointed the Chairman of the meeting as their proxy to vote on their behalf. If a Form of Proxy is returned but the nominated proxy does not attend the meeting, the Chairman of the meeting will act in place of the nominated proxy and vote in accordance with any instructions. Proxy appointments in favour of the Chairman of the meeting, the Secretary or any other director which do not contain a direction how to vote will be used where possible to support the resolution proposed in this notice.

Before posting the Form of Proxy to the registrar, please check that you have signed it. In the case of joint holders, any of you may sign it.

4. Information Rights

A person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to enjoy information rights (a "Nominated Person") may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the General Meeting. If a Nominated Person has no such proxy appointment right, or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. The statements of the rights of members in relation to the appointment of proxies above do not apply to a Nominated Person. The rights described in these paragraphs can only be exercised by registered members of the Company.

5. Electronic Communications

Any website or electronic address (within the meaning of Section 333(4) of the Companies Act 2006) provided either in this notice of General Meeting or in any related documents (including the Circular and the form of proxy) may not be used to communicate with the Company for any purposes other than those expressly stated.

6. Shareholder Questions

Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.

7. Additional Information

A copy of this notice, and other information required by Section 311A of the Companies Act 2006, can be found at www.carrs-milling.com.