We create some of the world’s most distinctive and technically advanced paper products, using materials from cotton and wood to carbon fibre. We support industries from packaging to digital imaging and aerospace with products that are at the cutting edge of performance. d
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C O N T E N T S
11 STRATEGIC
REPORT
12 FINANCIAL HIGHLIGHTS
13 FINANCIAL SUMMARY
14 CHAIRMAN’S LETTER
18 CHIEF EXECUTIVE’S REVIEW
24 FINANCIAL REVIEW
41 GOVERNANCE
42 BOARD OF DIRECTORS
44 REPORT OF THE DIRECTORS
52 DIRECTORS REMUNERATION
REPORT
57 FINANCIAL
STATEMENTS
58 INDEPENDENT AUDITOR’S
REPORT
59 STATEMENT OF
COMPREHENSIVE INCOME
60 STATEMENT OF FINANCIAL
POSITION
61 STATEMENT OF CASH FLOWS
62 STATEMENT OF CHANGES
IN EQUITY
64 NOTES TO THE FINANCIAL
STATEMENTS
88 SHAREHOLDER INFORMATION
05
Introduction
WHAT WE VALUE
In 2014 the board of James Cropper plc reviewed and
redrafted the company’s vision and values. We attach great
importance to both, not least as they provide the basis for
much more, from our new branding and evolving business
plans to the leadership attributes and culture we wish to
protect and promote.
Accordingly we dedicated a significant amount of time to
the process of revision. The resulting vision is shown on
the first page of this report. The values are shown opposite.
We have chosen to expand on and explain nearly all of these
and provide objective measures of our performance where
possible. Profitable growth – which was included as we felt it
was something we needed to value even if an output – is only
omitted as it is covered in the bulk of this report.
PRIDE AWARDS 2015
This is the sixth year of the James Cropper Pride Awards.
These continue to be a key way in which we celebrate outstanding
achievement and effort as well as reconfirming our commitment
to our values. The six categories are closely tied to our values,
as shown opposite.
Employees are nominated by their colleagues and the winners
selected by a panel comprising of employees across the group.
More details on each category and the winners are shown
within the pages expanding on our values.
06
Introduction
Trust, Dignity
and Respect
Profitability
Safety at
Work
Support for
Colleagues
Safety
Successful
Customers
Innovation and
Creativity and
Customers
Taking Pride
Motivated
Workforce
Environment
Community
Sustainability
Continuous
Learning
Community
Focused
07
Our Values and Pride Awards
OUR VALUES AND PRIDE AWARDS
Pictured below with Sir James
Cropper on the left is Richard
Graham who joined in April
2015 and is, at the time of this
report, our most recent recruit,
and on the right is Peter Malin
who joined in August 1966
and is approaching 49 years
of service with the company.
Also featured are a selection
of photographs from the James
Cropper archives capturing
images through the generations.
08
Our Values and Pride Awards
TRUST, DIGNITY AND RESPECT
At James Cropper, behaving and interacting with others
with integrity is at the heart of what we do. As long as a
century ago we were known nationally as the ‘gentlemen
of the paper trade’, though one origin of this value is perhaps
even older – our founder James Cropper was a Quaker by
birth, and the core tenet of the Quaker faith was adherence
to truth in all matters.
This is not an easy value to measure, although we believe the
longevity of our relationships with employees, customers,
suppliers and many others is testimony to this – we usually
count in decades. Pictured right below is Peter Robinson
(No. 4 Machineman) who joined the Company in 1970
and is the sixth generation of his family to be employed
by James Cropper.
This value underpins all the others and much else besides.
It is about valuing every individual we come across in
our working lives.
75% OF OUR EMPLOYEES HAVE BEEN WITH THE COMPANY FOR 5 YEARS OR MORE
OVER 30
YEARS
9%
BET
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20 - 30
YEARS
17%
10 - 20
YEARS
25%
5 - 10
YEARS
24%
PRIDE: SUPPORT FOR COLLEAGUES
PRIDE AWARD WINNER:
MARK PALMER
(Process & Project Co-ordinator)
Mark is always happy to help the machine crews with
problems and his knowledge of the steam and wet end systems
across production is invaluable. Although he spends most
of his time dealing with issues in the reclaimed fibre plant,
Mark is always there to give a helping hand.
09
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Strategic Report
S T R A T E G I C
R E P O R T
12 FINANCIAL HIGHLIGHTS
13 FINANCIAL SUMMARY
14 CHAIRMAN’S LETTER
18 CHIEF EXECUTIVE’S REVIEW
24 FINANCIAL REVIEW
11
Strategic Report - Financial Highlights
FINANCIAL HIGHLIGHTS
GEOGRAPHICAL % SEGMENTATION
OF REVENUE
TOTAL REVENUE
£83.1m
79.2
78.2
83.1
84.5
83.3
2015
2014
2013
2012
2011
10
20
30
40
50
PROFIT BEFORE TAX
(excluding IAS 19 Pension adjustments)
£3.5m
GEARING
(excluding IAS 19 Pension adjustments)
20%
2.1
2.1
0.8
3.5
2015
20
2014
2013
2012
2011
3.4
23
6
35
33
(2011 included exceptional pension curtailment adjustment)
PROFIT BEFORE TAX
£2.6m
DILUTED EPS
20.1p
2.6
1.3
1.2
1.0
20.1
15.0
10.0
9.5
2015
2014
2013
2012
2011
12.8
(2011 included exceptional pension curtailment adjustment)
(2011 included exceptional pension curtailment adjustment)
NET DEBT
£6.1m
CAPITAL EXPENDITURE
£2.6m
6.1
6.5
10.3
9.3
2015
2014
2013
2012
2011
1.7
2.6
3.0
2.3
4.1
5.9
UK
Europe
Americas
Asia
Other
117.4
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
2011 in all graphs have been re-presented to exclude the discontinued Paper Mill Shop operation.
12
Strategic Report - Financial Summary
FINANCIAL SUMMARY
SUMMARY OF RESULTS
Revenue
83,052
84,518
79,241
78,223
83,264
2015
£’000
2014
£’000
2013
£’000
2012
£’000
2011 (i)
£’000
Operating profit before interest
(excluding IAS 19 impact)
Profit before tax
(excluding IAS 19 impact)
Impact of IAS 19
Profit before tax
(after IAS 19 impact)
Earnings per share - diluted
3,899
2,545
2,535
1,207
3,361
3,494
(919 )
2,575
20.1p
2,088
(775 )
1,313
15.0p
2,052
(806 )
1,246
10.0p
843
128
971
9.5p
3,390
9,392
12,812
117.4p
2011 (i) has been re-presented to exclude the discontinued Paper Mill Shop operation.
BALANCE SHEET SUMMARY
2015
£’000
2014
£’000
2013
£’000
2012
£’000
2011
£’000
Non-pension assets – excluding cash
50,810
51,093
48,426
46,278
44,000
Non-pension liabilities – excluding borrowings
(14,289 )
(11,230 )
(10,831 )
(11,956 )
(13,481 )
Net IAS 19 pension deficit (after deferred tax)
(11,554 )
(9,312 )
(7,972 )
(5,850 )
36,521
39,863
37,595
34,322
24,967
30,551
29,623
28,472
Net borrowings
(6,105 )
(10,277 )
(9,286 )
(6,505 )
Equity shareholders’ funds
18,862
20,274
20,337
21,967
Gearing % - before IAS 19 deficit
Gearing % - after IAS 19 deficit
Capital expenditure £’000
20%
32%
2,619
35%
51%
2,958
33%
46%
4,072
23%
30%
5,934
30,159
(1,039 )
29,120
(1,711 )
27,407
6%
6%
2,276
13
Strategic Report - Chairman’s Letter
CHAIRMAN’S LETTER
MARK CROPPER
Chairman, James Cropper plc.
Dear Shareholders
I am pleased to report that James Cropper plc made
considerable progress in 2014/15.
The strengthening of the business is evident in the many
improvements that are being implemented across the
Group and borne out in our improved profitability.
DIVIDEND PER SHARE 2015
2011
2012
2013
2014
2015
7.9p
7.9p
7.9p
7.9p
8.5p
During the year, the operations of James Cropper Speciality
Papers and James Cropper Converting were brought together
and re-branded as James Cropper Paper under a management
team drawn from both businesses. This decision was
well received by our customers and ensures we are able
to offer them our full range of products, as well as access
to excellence in supply chain management, service, quality,
innovation, sustainability and brand development.
The operations of Technical Fibre Products (“TFP”) have
been improved in the year by manufacturing developments
which have reduced costs and increased capacity, all of
which helped TFP to meet increased demand and more than
double profitability year on year. Investment in additional
manufacturing equipment will double our capacity for TFP
in the UK and this is progressing according to plan with early
commissioning expected to commence mid July of this year.
This additional capacity will support our ambitious growth plans.
On the human resources side, we continue to strengthen the
teams in both our businesses through selective recruitment,
development and training. Our commitment to investing
in our people is encapsulated in our value “Continuous
Learning”, which is covered elsewhere in this report, and in
our focus on succession planning which forms another key
part of our HR strategy.
The Group’s five strategic growth platforms, set out in
detail in the CEO review (from page 18), are now firmly
established across the company and are supporting its transition
14
Strategic Report - Chairman’s Letter
to a culture which focuses on sustained growth. It has been
this determination to improve margins, build operational
efficiencies and sustain growth whilst maintaining a focus
on our strategic platforms that has served us well and enabled
us to deliver the improvement in profitability reported herein.
Together with the steps taken to preserve and promote our
values we are hopeful that we are building strong foundations
for future success.
John Denman retired from the Board at the AGM on 30
July 2014. John served James Cropper plc for 19 years having
joined the Group in 1995 and I would like to thank him for
his tremendous contribution to the company over many years.
I am also very pleased to congratulate Isabelle Maddock
on her appointment to the Board on 31 July 2014 as Group
Finance Director. Isabelle joined James Cropper plc in 2006
as Group Financial Controller and served as Head of Finance
from September 2013.
Diluted Earnings per Share (after the adjustment for IAS 19)
increased by 34% to 20.1 pence compared to 15.0 pence in
the previous year.
The Board is recommending a final dividend of 6.3 pence
per share making a total dividend for the financial year
of 8.5 pence, an increase of 7.6% on the prior year.
OUTLOOK
remaining focused on distinctive and technically advanced
paper products, offering customers the expertise that comes
from 170 years of papermaking and a continuous programme
of investment in people, products and knowledge.
Technical Fibre Products operates in high growth markets
which offer many exciting opportunities including green
technologies, aerospace, and defence.
The Technology and Innovation division, which was set up
in January 2014, has identified a diversification opportunity.
A new business for James Cropper, manufacturing moulded
products, which will build on our current strengths and
knowledge, has been established. Investment in developing
this business is underway.
I am delighted with the progress we have made in the past
financial year. This was achieved as a result of the continued
hard work and commitment of all my colleagues whom I wish
to thank on behalf of the company and all its stakeholders.
For many years I have communicated my belief that this
company has great potential. Now I see that this can
and will be delivered in the coming years.
James Cropper Paper continues to operate in niche
markets and we are honing our competitive edge,
Mark Cropper
Chairman
15
Our Values and Pride Awards
OUR VALUES AND PRIDE AWARDS
SUCCESSFUL CUSTOMERS
Creating materials that make our customers successful has
been a core driver for James Cropper plc for many decades.
Tailoring products to meet exacting and often unique
specifications is something we do every day but enabled
by decades of investment in flexible equipment and wide-
ranging materials know-how. Our capabilities are accordingly
incredibly broad.
James Cropper Paper has a formidable reputation for
supplying bespoke solutions to customers using its diverse
range of capabilities that allows laminating, embossing,
coating, watermarking and the creation of dazzling and
stunning colours. This flexibility, on one site, has made us a
key partner for numerous leading players in branded goods,
wine and spirits, framing, bookbinding, digital reproduction
and electronic packaging.
A recent example is the selection of our Obsidian black paper
for the packaging of the Smartisan smartphone in China.
James Cropper’s reputation for quality and sustainability were
cited as reflecting a key part of the brand story experience and
we were featured as a key supplier at the launch event held in
the China National Conference Centre in Beijing; over
5,000 attended with nearly 3 million watching online.
TFP materials play an even more profound role in making
customers’ successful, very often providing essential technical
solutions in the industries served by the business.
Not least TFP solutions are playing a key role in the aerospace
industry as it develops lighter and more efficient aircraft
based on composite carbon fibre materials. TFP helps aircraft
manufacturers and their suppliers to succeed and prosper
by using our products to bond composites, to improve
surface finish and to shield key electrical components.
TFP products have also been used recently as part of a lower
cost manufacturing system for primary aircraft structures,
which has helped one of our customers win a significant
new contract for a commercial passenger jet.
TFP is also taking a lead in recycling carbon fibre waste
produced by aircraft manufacturers, further reducing
the impact of this industry and providing customers with
the means to demonstrate environmental responsibility.
PRIDE: INNOVATION & CREATIVITY
PRIDE AWARD WINNER:
BOB DUVALL
(TFP Inc)
Bob continues to impress his colleagues with his knowledge
and skills for plating. Plating operations have existed for
decades, however Bob is always ready to try new ideas and
applications. Even though certain plating concepts have been
deemed unsuccessful in the past, Bob will come up with new
suggestions and attempt to do things that have never been
done before in the plating world.
PRIDE: CUSTOMER SERVICE
PRIDE AWARD WINNER:
DEAN PENNINGTON
(TFP Operator)
No job request or problem fazes Dean. He always takes it on
positively and nothing is too much trouble. His standard of
work and attention to detail is exemplary. Since joining TFP
he has taken everything in his stride and does everything with
a smile. He has quickly gained a reputation for going the extra
mile and consistently works to a high standard.
16
Our Values and Pride Awards
1
2
01 TFP Recycled Carbon Veil
02 Bookbinding for
international publications
03 James Cropper branded
paper collections
04 Award winning packaging
for the world’s leading
manufacturer of high-quality
chocolate and cocoa products
3
4
17
Strategic Report - Chief Executive’s Review
CHIEF EXECUTIVE’S REVIEW
REVENUE
(2014: £84.5m)
OPERATING PROFIT BEFORE INTEREST
(Excluding IAS 19 Impact)
(2014: £2.5m)
£83.1m -1.7%
£3.9m +53.2%
PROFIT BEFORE TAX
(2014: £1.3M)
£2.6m +96%
NET BORROWINGS
(2014: £10.3M)
£6.1m -41%
DILUTED EARNINGS PER SHARE
(2014: 15.0P)
FULL YEAR DIVIDEND PER SHARE
(2014: 7.9P)
20.1p +34%
8.5p +7.6%
REVENUE
Group revenue for the financial year was £83.1m, down 1.7%
on the prior year.
Across both businesses, UK sales were up 3.4% whilst export
sales fell 6.9%. Across the Group, sales into the USA were down
4.8%. Sales into continental Europe were down 11.4% partly
reflecting the Euro, which weakened by 13% against Sterling
over the period, and partly as a result of lower volumes.
Exports represented 47% of revenue in the year (2014: 50%).
By division, revenue for James Cropper Paper fell by 4.1%.
This was affected by the planned exit of a non strategic line of
display board business, de-stocking by a key customer and the
Sterling’s strength against the Euro. In order to grow exports
in the paper division, we have invested in our regional sales
teams, and this is starting to bear fruit. Sales in the Greater
China area, where we established a sales and marketing
subsidiary in April 2014, were up 32% on the prior year.
Revenue for Technical Fibre Products increased 11.5 %
year on year, with particularly strong growth generated
in our target sectors of aerospace, defence, industrial and
infrastructure. The fastest growing geographical region was
China with sales growth of 66%, albeit from a relatively
small base. TFP’s sales in the UK grew by 31%, reflecting the
successful re-organisation of the sales teams. TFP has seen a
strong recovery in the UK wind turbine industry and a year
on year uplift in sales for the joint strike fighter programme.
RESEARCH AND DEVELOPMENT
Research and development (R&D) is a vital part of our
growth strategy, adding to our capability, maintaining our
competitiveness and bringing new product lines into our
portfolios. We continue to invest in research and development
PHIL WILD
Chief Executive Officer, James Cropper plc.
PROFIT
I am pleased to report a 53.2% growth in operating profit
before interest to £3.9m in the year to 28 March 2015,
compared to £2.5m in the year to 29 March 2014
(prior to the impact of IAS 19 pension adjustments).
Profit before tax (after IAS 19 adjustments) in the year was
£2.6m representing an increase of 96% on the prior year.
18
Strategic Report - Chief Executive’s Review
JAMES CROPPER GLOBAL LOCATIONS
Worldwide presence with sales offices in Europe, China and USA
BURNESIDE, UK
SCHENECTADY, USA
CREWE, UK
FRANKFURT, GERMANY
PHILADELPHIA, USA
PARIS, FRANCE
SHANGHAI, PRC
GUANGZHOU, PRC
DUBAI
INDIA
HONG KONG, PRC
MALAYSIA
BRAZIL
SOUTH AFRICA
AUSTRALIA
• HEAD OFFICE • MANUFACTURING • RESEARCH & DEVELOPMENT • SALES OFFICE • PARTNERS
across the Group. Expenditure in R & D was £1.3m this year,
up 7% on prior year.
GLOBAL PRESENCE
The Group’s significant presence worldwide is built on
our own international network of manufacturing, research
and development and sales facilities and is supported by
sales agents.
STRATEGY
Since 2013, James Cropper plc has embarked on a growth
programme covering all functions within the group.
The programme is built on five strategic platforms:-
• Superior levels of operational excellence
• High performance culture
• Existing market opportunities
• Gaining additional profitable market share
• Customer intimacy and market presence
CAPITAL EXPENDITURE
Capital expenditure during the year was £2.6m (2014:£3.0m).
The largest investment was on the additional capacity in TFP.
This work will be completed in time for early commissioning
in July 2015.
PENSION
The Group operates three pension schemes. Close to 55% of
employees have defined contribution personal payment plans.
The Group operates two funded pension schemes providing
defined benefits for a decreasing number of its employees.
On the defined benefit schemes the overall value of the Schemes’
assets increased by 25% over the period, whilst the schemes’
liabilities also increased by 25%. The IAS 19 valuations of
these schemes as at 28 March 2015 revealed a combined deficit
of £14.4m compared with £11.6m at the previous year end, an
increase of £2.8m. This increase in the schemes’ overall deficit
was principally caused by a decrease in the discount rate which
is driven by new lows on corporate bond yields.
CASH AND DEBT
Having repaid £2.1m of debt during the year, the Group had
gross debt of £8.8m at the balance sheet date. At the same date,
it had £2.7m of cash, giving a net debt of £6.1m (2014:£10.3m).
The Group had un-drawn overdraft facilities of £4.7m. With
short term borrowings of £2.7m to be repaid within 12 months
of the balance sheet date, £4.7m remained available to the
Group. Post year end, the Group has secured a £5.5m revolving
credit facility, which further enhances it’s financial flexibility.
Gearing at the financial year end, after deduction of the IAS 19
pension deficit, was 32%, down from 51% on the previous year.
19
Strategic Report - Chief Executive’s Review
SUPERIOR LEVELS OF
OPERATIONAL EXCELLENCE
Objective: To establish world-class standards
for safety, quality, efficiency, capability,
service and cost throughout our businesses.
Achievements in product development and improvement
In Paper: investment in equipment to enhance colour
management, slitting and laminating capabilities.
In TFP: development of laminated and powder
scattered products.
Accreditations
In Paper: Food contact papers have been approved to
European (BfR XXXVI) and USA (FDA 176.170 and
176.180) standards.
In TFP: FOD (Foreign Object Debris) controls and
compliance with the AS9100 accreditation is being completed
in support of our aerospace business.
Safety
The Group was awarded a Gold Award by the Royal Society
for the Prevention of Accidents (RoSPA) in recognition of
our safety work. This recognised consistent high standards in
monitoring health and safety on site and maintaining a process
of continual improvement.
Supply chain
A focus on a lean supply chain has delivered significant
increases in warehousing and storage capacities and improved
delivery and service capabilities at a reduced overall cost.
HIGH PERFORMANCE CULTURE
Objective: to develop our organisation by
building on our existing skills and investing
in our development programmes to maximise
performance at all levels of the company,
supported by external recruitment as necessary.
Development programmes
During the year the Group, in partnership with external
professionals, committed substantial investment in
employee development for our senior leadership and
sales and marketing teams.
External recruitment
The Group has made significant hires in operations,
sales and marketing and technical, building further on the
company’s capability.
In Paper we continue to invest in regional sales employees,
with additions during the year across Europe and planned
additions to follow in the USA.
Employee engagement
We implemented a number of actions following feedback from
the 2013 employee engagement survey, including launching
a new vision, values and leadership competencies.
Our engagement levels will be measured again in our
follow-up survey in 2015.
EXISTING MARKET OPPORTUNITIES
Objective: to increase our market share
within our prioritised existing markets.
Credentials
In Paper: with products containing increased levels of PCW
(Post-Consumer Waste) as well as reclaimed fibre from
our coffee cup recycling centre, we have enhanced our
sustainability credentials across the product range.
In TFP: with products specified for use in the commercial
aircraft sector and products specified into the F-35 Lightning
II fighter jet we will benefit from higher sales as quantities for
this programme and commercial applications increase.
Phased exit of declining commodity markets
In Paper: an exit of a large portion of the display board market
reducing sales by £2m, with minimal impact to profits.
Technical know-how
In Paper: through businesses restructuring we have
increased our ability to provide an overall solution for
customers in specialist markets in the mid and higher
value-add tiers. This is particularly notable within our
luxury packaging business.
In TFP: The provision of technical solutions in wind, energy
and consumer electronics markets, solutions not available
from other manufacturers. During the year, some key changes
in the phosphoric acid fuel cell supply chain have left TFP
well positioned to build a strong position in this market.
20
Strategic Report - Chief Executive’s Review
Khora is a photographic quality paper with top class reproduction for creating high quality wall art.
Simple to assemble and fast to print, it serves the on-demand wall art market.
GAINING ADDITIONAL PROFITABLE
MARKET SHARE
Objective: to penetrate new geographic sectors
and to grow specialised markets.
Geographical focus
In Paper: the expansion of our field-based sales team with
additional coverage in key markets such as Germany, France
and Spain. In 2015, a significant investment in the USA will
be made.
Also in Paper we have significantly strengthened the sales
team’s language capability.
In TFP: new business in China and Russia generates
important revenue streams, and overall we have seen a
double digit percentage increase in the number of new
accounts.
Also in TFP a more effective sales structure in Europe and
a recognition that sales efforts are more effective when closely
supported by members of the technology team.
Innovation and specialised markets
In Paper: a number of innovations branded under the James
Cropper name have been launched, notably Khora, Coffee
and Carvetian Suede.
Coffee is a new brand made from reclaimed coffee cup fibre
separated from the plastic in the cups in James Cropper’s unique
recycling plant. This is a ground breaking product and has led
to significant opportunities as well as raising the profile of James
Cropper as a truly innovative player in the speciality paper sector.
Carvetian Suede was launched in Monaco late last year.
It closely reproduces the soft, yet durable qualities of suede
leathers in a paper-based form. Through the range of colours
Carvetian Suede is manufactured with a minimum of 40%
recycled, post-consumer waste. The product is intended
to provide not only luxury brands with a lavish packaging
solution, but also encourage those compiling business
documents, brochures and creative advertising materials
with a show stopping finish.
In TFP: investment focussed on a small number of funded
programmes, which leverage government funding and
relationships with primes and other supply chain partners
with the aim of developing “future technologies.”
The emphasis here is on composites, a fast growing market.
Also in TFP a number of development projects running
directly with primes and tier 1 partners. These projects will
see us strengthen our position through added know-how and
capability in particle plating, electroplating, resistive heating
and the application of thermoplastic veils in composites.
21
Strategic Report - Chief Executive’s Review
CUSTOMER INTIMACY
AND MARKET PRESENCE
BUSINESS PORTFOLIO ANALYSIS -
DIVERSIFICATION & INNOVATION
Objective: To increase customer intimacy
and targeted geographic market presence.
Adaptation to customer needs
In Paper: development of the customer experience has been
enhanced with extended customer service hours and improved
product sampling, boosted by the brand experience through
collateral and customer visits. Paper is implementing a
relaunch of it’s brand which better reflects it’s strong heritage
and the company’s values.
Customer reach
In TFP: significant marketing expenditure is helping to
ensure that the company and its unique capabilities are
better understood globally.
Also in TFP strengthened relationships with both aerospace
primes and tier 1 suppliers, leave us well placed to benefit
from future growth in the aerospace sector.
Market presence
Both businesses exhibit at key events throughout Europe,
Middle-East, Asia, Australasia and North America, and
actively participate as subject matter experts in our field
of expertise. Our exhibitions and PR strategy are proving
effective in generating increased enquiries, visits to our web
sites and attracting new customers.
Over the past 24 months we have reviewed and refined
the focus for each of the James Cropper businesses. As the
business strategy in Paper and TFP has taken hold it has
allowed time to evaluate the opportunity for the company
to innovate further to diversify the group. As a result in 2014
the company established a new department: “Technology
and Innovation” with the objective to build a third business
for the company.
Following 18 months of testing and evaluation of a range
of different opportunities, we have now concentrated our
effort to develop one specific business. James Cropper
3D Products will require significant up front investment
and is expected to become profitable in 2018. More details
of the business as it becomes established will follow through
the year.
Our strategy is now on a solid foundation and is starting to
yield results across all of our businesses. I am very encouraged
with the progress made by the team and I remain highly
confident on our ability to achieve significant future growth
in both new and existing businesses.
Phil Wild
Chief Executive Officer
22
23
Strategic Report - Financial Review
FINANCIAL REVIEW
SUMMARY (excluding IAS 19 adjustments)
REVENUE
OPERATING PROFIT BEFORE INTEREST
PAPER
TFP
GROUP
PAPER
TFP
OTHER GROUP
NET
INTEREST
PROFIT
BEFORE
TAX
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
2015
68,505
14,547
83,052
2014
71,471
13,047
84,518
2,419
2,023
2,719
1,278
(1,239 )
3,899
(756 )
2,545
(405 )
(457 )
3,494
2,088
Group turnover for the financial year was £83m, down 1.7% on last year. Reduced sterling revenues from the Euro zone
markets, a key customer de-stocking and the exit of display board business all contributed to a deflated revenue line. Despite
these headwinds strong sales in TFP, cost savings in energy and operational efficiencies have led to a 67% increase in profitability,
with a profit before tax (excluding the impact of IAS 19) being £3.5m against £2.1m in the prior year.
After taking account of IAS 19 the Group’s profit before tax in the year was £2.6m (2014: £1.3m).
IMPACT OF IAS 19 PENSION ADJUSTMENTS
BEFORE IAS 19 ADJUSTMENTS
IAS 19 ADJUSTMENTS
PROFIT
BEFORE TAX
SERVICE
CHARGE
INTEREST
IAS 19
ADJUSTMENTS
2015
2014
£’000
3,494
2,088
£’000
£’000
£’000
(418 )
(307 )
(501 )
(468 )
(919 )
(775 )
2,575
1,313
ADJUSTED
PROFIT
BEFORE TAX
PROFIT
£’000
The table below captures key expenses down to operating profit before interest (excluding IAS 19). The largest Group year
on year savings are in energy charges with the overall cost of consumption being £5.2m compared to £6.0m in the comparable
period. The unit commodity cost of natural gas was down 19% on the previous financial year. Group raw material and
consumable costs were £34.4m down 6.8% on last year driven by price, efficiency and volumes. Research and development
expenditure is up 7% to £1.3m on prior year, the costs incurred are in materials and consumables used on trials and employment
related expenditure.
The average number of people employed increased from 518 to 526 over the year. Included in employment costs are provisions
for a profit related bonus payout due to employees as a result of the successful growth in profitability. Prior to the IAS 19
pension adjustment employment costs were £22.2m compared to £20.8m in the previous year. IAS 19 dictates that a charge
be made against operating profits of £0.4m over and above the cost of future service contributions, (2014: £0.3m), the cost
of employment after the impact of IAS 19 as presented in the Income Statement, is £22.6m (2014: £21.1m).
Paper Products
Technical Fibre Products
Revenue
EXPENSES
2015
£’000
68,505
14,547
83,052
2014
£’000
CHANGE
£’000
CHANGE
%
71,471
13,047
84,518
(2,966 )
1,500
(1,466 )
-4.1%
11.5%
-1.7%
Raw materials and consumables used
(34,415 )
(36,909 )
2,494
-6.8%
Energy costs
Employee benefit costs
Depreciation and amortisation
Other expenses
Other income and changes in inventory
(5,186 )
(5,994 )
808
-13.5%
(22,189 )
(20,842 )
(1,347 )
(2,502 )
(2,654 )
(15,427 )
(16,100 )
566
526
(79,153 )
(81,973 )
152
673
40
2,820
1,354
6.5%
-5.7%
-4.2%
7.6%
-3.4%
53.2%
OPERATING PROFIT before Interest (Excluding IAS 19 impact)
3,899
2,545
24
Strategic Report - Financial Review
OPERATING PROFIT before interest
(Excluding IAS 19 adjustment)
2015
£’000
2014
£’000
CHANGE
£’000
CHANGE
%
3,899
2,545
1,354
53.2%
Depreciation and amortisation
2,502
2,654
(152 )
-5.7%
EBITDA *(before IAS 19 adjustment)
6,401
5,199
1,202
23.1%
*EBITDA is operating profit before interest, tax, depreciation and amortisation.
The Group has a moderate 6% decrease in depreciation this year on the prior year. EBITDA increased by 23% to £6.4m (2014:£5.2m).
TFP
REVENUE
OPERATING PROFIT
11.5%
113%
PAPER
REVENUE
OPERATING PROFIT
4.1%
20%
Revenue grew to £14.5m from £13.0m in the previous year,
an 11.5% increase. Operating profit before interest more
than doubled to £2.7m compared with the prior year of £1.3m.
The major drivers in performance came from the success
of growth in markets outside of the US, the strong dollar
increasing sterling revenues from the US where aerospace
and defence business is on an upward trend. A large impact
from operational efficiencies which helped the business
meet demand in the year and overheads remaining under
tight control.
Technical Fibre Products continues to invest in R&D
with particle plating, powder scatter and nano fibre
coating applications engaging key customers in early
development work.
Revenue fell from £71.4m to £68.5m in the year, down 4.1%
principally as a result of the strong sterling against the euro
combined with the planned exit from non-strategic markets,
a key customer de-stocking and weak demand from Europe.
With a strong dollar affecting raw material input costs it
has been a very challenging year. Despite these headwinds
operating profit before interest increased to £2.4m from
£2.0m in the prior year.
The cost of Northern Bleached Softwood Kraft (“NBSK”)
wood-pulp opened at $920/tonne rising progressively to
US$933/tonne by the end of December 2014 and only falling
downwards at the year end to $886/tonne. The cost of
Northern Bleached Hardwood Kraft (“NBHK”) wood-pulp
opened at $766/tonne and ended the year at $755/tonne.
James Cropper Paper continues to invest in R&D. In 2014
the Group launched a range of 6 coffee themed colours which
contain 50% reclaimed fibres, providing an environmentally
conscious choice for a range of applications. The team are
now placing an increasing emphasis on a range of food contact
approved papers.
25
Strategic Report - Financial Review
CURRENCY
Opening rate April 2014 v. £
Closing rate March 2015 v. £
Exchange rate movement
Strengthen/(Weaken) v. £
$
1.6641
1.4826
10.9%
€
1.2097
1.3677
-13.1%
The majority of exports into continental Europe are invoiced in €s. €s are used to purchase € priced pulp and other € priced
raw materials. Similarly, export sales outside Europe are invoiced in $ and the receipts fund the purchase of $ priced pulp.
The situation is monitored to ensure that whenever possible currency receipts and payments are matched. These steps reduce
exposure to foreign currency rate fluctuations and in the last year the exposure was closely matched in $ and not so well matched
in €s. The table above compares the opening and closing exchange rates for the financial year against the exchange rate movement
in the year, the euro having weakened by 13% against sterling in the year whilst the dollar strengthened by 11% in the period.
Potential foreign currency surpluses or deficits are dealt with by a combination of foreign currency forward selling and forward
purchasing contracts. No forward contracts are in place at the balance sheet date, more detail of the Groups foreign exchange
exposure is discussed under the Principal Risks section in this Annual Report.
TAX
The Group’s total tax charge for the year is £0.7m (2014: £0.1m credit) a tax rate of 27% on profit before tax. The effective rate
is higher than the standard rate of corporation tax in the UK mainly as a result of the costs of overseas operations not being
recognised for corporation tax purposes in the UK.
The deferred tax balances as at 28th March 2015 have been calculated based on the rate of 20% substantially enacted at the
balance sheet date.
BALANCE SHEET, CASH AND BORROWINGS
Non-pension assets – excluding cash
Non-pension liabilities – excluding borrowings
Net IAS 19 pension deficit (after deferred tax)
Net borrowings
Equity shareholders’ funds
Gearing % - before IAS 19 deficit
Gearing % - after IAS 19 deficit
Capital expenditure £’000
2015
£’000
50,810
(14,289 )
36,521
(11,554 )
24,967
(6,105 )
18,862
20%
32%
2,619
2014
£’000
51,093
(11,230 )
39,863
(9,312 )
30,551
(10,277 )
20,274
35%
51%
2,958
Shareholders’ funds fell by £1.4m from £20.3m at the previous year end to £18.9m as at 28th March 2015. The overall IAS 19
pension deficit increased by £2.8m to £14.4m. This was off-set by a deferred tax asset of £2.9m. The IAS 19 pension deficit,
net of deferred tax increased by £2.2m over the year to £11.6m. Further analysis of IAS 19 on pensions is provided on page 31.
Over the year borrowings falling due after more than a year decreased by £1.8m from £7.9m to £6.1m. Net debt decreased
by £4.2m, whilst other liabilities excluding pensions increased by £2.9m. The Group’s aim is to provide continuity of financing
via the generation of operating cash inflows and in the continuation of a range of financing facilities with varying maturities from
a variety of sources. The Group has secured a £5.5m revolving credit facility post year end.
26
Strategic Report - Financial Review
FACILITY PROFILE
Overdraft facility
Loans
Leases
Total Facilities
Drawn
Undrawn
Undrawn facilities
Cash
Short term borrowings repayable within 1 year
Funds available in excess of 1 year
2015
£’000
4,658
5,199
3,627
13,484
8,826
4,658
4,658
2,721
(2,720)
4,659
2014
£’000
4,084
6,412
4,557
15,053
10,969
4,084
4,084
692
(3,040)
1,736
Net cash inflow from operating activities in the year was £7.8m after deducting past service pension deficit payments of £1.4m.
The Group has focused on keeping working capital under tight control which resulted in a working capital cash inflow of £3.5m
(2014: outflow of £1.4m). Capital expenditure was £2.6m (2014:£3.0m).
CASH
EBITDA (excluding IAS 19 impact)
Pension deficit payments
Decrease/ (increase) in working capital
Other
Net cash generated from operations
Capital expenditure
Dividends
Decrease in loans
Other
Increase/(decrease) in cash
Opening cash
Closing cash
2015
£’000
6,401
(1,362)
3,475
(668)
7,846
(2,619)
(708)
(2,497)
7
2,029
692
2,721
2014
£’000
5,199
(853)
(1,377)
(599)
2,370
(2,958)
(697)
(264)
(8)
(1,557)
2,249
692
Shareholders’ funds at the year-end were £18.9m and net debt was £6.1m, resulting in a gearing ratio of 32% post IAS 19 deficit.
With EBITDA of £6.4m (2014: £5.2m) the Group’s leverage ratio (Net debt/EBITDA) is 1 (2014 leverage ratio of 2).
27
Our Values and Pride Awards
OUR VALUES AND PRIDE AWARDS
SUSTAINABILITY
Sustainability, by which we principally mean environmental
sustainability, is at the heart of what we do at James Cropper.
It covers many aspects, from the way we manage our operations
to the products we develop and the markets we choose to serve.
More than ever we believe that embracing this value is closely
aligned to the long-term growth and prosperity of the Group.
ENERGY
Paper-making is an energy intensive industry and as such it has
always been important to manage our energy use as efficiently
as possible. We were one of the first British manufacturers
(in any industry) to install a gas combined heat and power
(CHP) plant in the mid-1980s, and since then have continually
updated our generation systems.
In 2013 we reintroduced hydroelectric power to our energy
mix for the first time in nearly 50 years, and continue to
exploit any opportunity to improve energy efficiency.
The result is that our energy usage and associated emissions
has not risen despite us adding a considerable amount of extra
equipment over the last few years.
Next steps for our energy management includes obtaining the
ISO 50001 Energy Management System accreditation, which
promotes best practice beyond statutory requirements by
specifying a programme of continual improvement backed
up by regular external audit. The accreditation is underway
and will help us better understand energy use and implement
targeted reductions.
RAW MATERIALS
Our chief raw material is pulp, which is used by our Paper
division. This is only sourced from sustainably managed
forests, which has been a long-term policy. Details on the
different sources of fibre we have procured over the last five
years are given below. In addition to virgin pulp, we are also
sourcing a growing % of recycled fibres. This includes recycled
fibre certified post-consumer waste (PCW), which has grown
five-fold in recent years. This growth is set to continue.
The percentage of recycled fibres we derive from our
Reclaimed Fibre (RCF) Plant also continues to rise.
The £5m plant, opened by HM Queen in 2013, and
predominantly recycling coffee cups, has seen its overall
contribution to our fibre provision nearly double from 5%
in the first few months of operation to nearly 10% in the
last financial year. Further process improvements will allow
a further uplift this financial year.
Other materials we source such as mineral fillers, dyes and
fibres and other substances procured for our TFP division, are
carefully selected to ensure the lowest possible environmental
impact, whether in production or the lifetime of a product.
WATER
James Cropper plc uses water abstracted from Cumbria’s river
Kent. This is as an integral part of the manufacturing process
in both its Paper and TFP divisions.
The abstraction is carefully managed in partnership with the
regulator of the Environment Agency, as is the treatment of
all effluent arising from our operations. Over many years
we have sought to increase the efficiency of our water usage
and reduce the volume of waste and waste-water. This work
continues apace, although it does not always result in absolute
reductions as we continue to grow our businesses and the
extent of operations. Thus efficiency metrics such as cubic
metres of water used per tonne of output (M3/T) are key
performance indicators.
Since 2007 we have operated a dewatering plant that allowed
us to dry our sludge and divert it from landfill. It is certified to
be of agricultural benefit and supplied to local farms as a mild
fertiliser. Wastewater is sent via a dedicated sewer to Kendal
Wastewater Treatment Works, where is it processed by United
Utilities and restored to the river.
RAW MATERIALS FIBRE SOURCE
WATER ABSTRACTION RIVER KENT(M3/T)
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
% FSC
% PEFC
% Controlled
Wood
% PCW
% RCF
2,000,000
1,500,000
1,000,000
500,000
1
1
/
0
1
0
2
2
1
/
1
1
0
2
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
28
1
1
/
0
1
0
2
2
1
/
1
1
0
2
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
1
1
/
0
1
0
2
2
1
/
1
1
0
2
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
Strategic Report - Financial Review
PENSIONS
The Group operates 3 pension schemes. An increasing number of employees, now close to 55%, have defined contribution
personal payment plans, where the retirement benefits are determined by the value of funds arising from contributions paid
in respect of each employee. The Group also operates 2 defined benefit plans which require contributions to be made into
separately administered funds and the benefits are based on employee’s pensionable salary and length of service. The Group,
or the Company makes contributions into employees’ personal pension plans and the defined benefit schemes.
DEFINED BENEFIT SCHEMES : “ON-GOING” VALUATION
The Group operates two funded pension schemes providing defined benefits for a decreasing number of its employees;
The James Cropper plc Pension Scheme (the “Staff Scheme”) and the James Cropper plc Works Pension Plan (the “Works
Scheme”). The latest actuarial “on-going” valuations of the Group’s pension schemes at April 2013, determined the combined
deficit of the schemes to be £12.7million. It is the Group’s legal responsibility to fund the defined benefit pension scheme deficits.
TRIENNIAL “ON-GOING” VALUATION 2013
Discount Rate
Assets
Liabilities
(Deficit)/Surplus
Funding level%
STAFF
SCHEME
WORKS
SCHEME
TOTAL
4.45%
£’000
4.45%
£’000
£’000
35,255
37,815
73,070
(38,837 )
(46,925 )
(85,762 )
(3,582 )
(9,110 )
(12,692 )
90.8%
80.6%
The “on-going” valuations are conducted on a tri-ennial basis and provide the Group with a steady platform to manage the
deficit from one valuation to the next. The Group’s Operating Profit (excluding the impact of IAS 19) of £3.5m (2014:£2.1m)
is based on the pension management in line with the latest “on-going” tri-ennial valuation.
The schemes were closed to new members in 2000 in order to contain the Groups exposure to rising pension costs and to
safeguard the accrued benefits to existing members. Future annual increases in pensionable pay were capped at a maximum
of 2% as from 1st April 2011. Starting April 2014 increases in employee contributions are being phased in.
The Company’s annual contributions to reduce the deficit have an impact on cash and the deficit as recognised on the Statement
of Financial Position (SFP). The Group reached an agreement with the trustees on a schedule of annual cash contributions to
eliminate the deficit as follows;
£m
1.4
1.05
0.7
0.35
0
STAFF
WORKS
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
THE STAFF SCHEME
The actuarial valuation revealed a deficit of £3.6m. The Group
has agreed that it will aim to eliminate the deficit over a period of
4 years from 1 April 2014 by the payment of annual contributions
of £0.6 in respect of the deficit and will meet expenses of the
Scheme and levies to the Pension Protection Fund.
THE WORKS SCHEME
The actuarial valuation showed a deficit of £9.1m. The Group
has agreed that it will aim to eliminate the deficit over a period
of 11 years and 1 month from 5 April 2014 by the payment
of annual contributions of £0.7m in respect of the deficit and
will meet expenses of the scheme and levies to the Pension
Protection Fund.
The defined benefit pension schemes are sensitive to a number of key factors: the value of the assets, the discount rate used to
calculate the schemes liabilities (based on a premium above gilt yields), the rate of inflation and the mortality assumptions for
members of the schemes. Changes in these assumptions will impact the deficit positively or negatively. The next tri-ennial
“on-going” valuation is in April 2016 at this time payments to reduce the deficit are subject to a new agreement with the trustees.
30
Strategic Report - Financial Review
IAS 19 PENSION VALUATION
IAS 19 “Employee Benefits” requires the Group’s actuaries to make assumptions including, but not limited to, future asset
returns, rates of inflation, discount rates and current and future life expectancies, based on values and interest rates at the balance
sheet date. The use of assumptions can have a material effect on the accounting values of the relevant assets and liabilities
recognised on the Group’s Statement of Financial Position (SFP), which in turn has an effect on the cost of such liabilities
as recognised in the Income Statement (IS).
As market values of the scheme assets and the discount factors applied to the scheme liabilities will fluctuate, this method of
valuation will often lead to large variations in the “pension balance” year on year. The actuarial gains and losses arising from
variances against previous actuarial assumptions are passed through to the balance sheet with corresponding movements in
reserves. Specific movements are offset by actual contributions paid by the employer in the period.
The overall value of the schemes’ assets increased by 25% over the period, whilst the schemes liabilities also increased by 25%.
The IAS 19 valuations of these schemes as at 28 March 2015 revealed a combined deficit of £14.4m compared with £11.6m at the
previous year end, an increase of £2.8m.
IAS 19 VALUATION 2015
Discount Rate
Assets
Liabilities
(Deficit)
STAFF WORKS
SCHEME
SCHEME
3.30%
3.30%
BOTH SCHEMES
TOTAL
2015
TOTAL
2014
CHANGE
%
£000s
£000s
£000s
£000s
45,271
47,075
92,346
73,842
(48,345 )
(58,443 )
(106,788 )
(85,482 )
(3,074 )
(11,368 )
(14,442 )
(11,640 )
+25%
+25%
+24%
Funding Level - %
94%
81%
86%
86%
The increase in the schemes overall deficit was principally
caused by a decrease in the discount rate to 3.30% used to
value the schemes liabilities (4.50% at March 2014).
The fall in the discount rate which is driven by new lows on
corporate bond yields has driven a substantial increase in
the scheme’s liabilities over the year, off set in part by the
increase in asset values over the period.
Under IAS 19 the pension deficit is likely to be volatile
and may in the future be very different from this current
year end position. An indication of the potential variability
of the scheme deficits under IAS 19 is set out in the chart
opposite. The Group’s IAS 19 deficit has fluctuated markedly
since 2005. The large declines in the combined deficit in 2008
and 2011 were as a result of significant reductions in future
service benefits introduced in April of those years.
0
(£4m)
(£8m)
(£12m)
(£16m)
IMPACT ON PROFIT
SCHEME DISCOUNT RATES AND
PENSION DEFICITS UNDER IAS 19
7.0%
5.3%
3.5%
1.8%
0.0%
‘05
‘06
‘07
‘08
‘09
‘10
‘11
‘12
‘13
‘14
‘15
IAS 19 Pension Deficits (£m)
Scheme Discount Rates
The Group manages pensions based on the latest on-going valuation and this provides a steady basis by which the deficit can
be managed. The Group is however, required to report the impact of IAS 19 on pensions. The Group’s Operating Profit before
Tax is based on the adjustments required to incorporate IAS 19 “Employee Benefits”.
The methodology set out under IAS 19 to calculate the pension scheme deficit is just one of a number of ways of calculating the
deficit at a point in time and the assumptions used by the actuaries for their IAS 19 valuations are likely to be very different from
those used with regard to their “on-going” valuations. Upon valuation at subsequent year-ends the movement in value from the
previous valuation is expressed in the following component parts:
31
Strategic Report - Financial Review
MOVEMENTS WHICH AFFECT PROFIT
OPERATING COSTS
• Current service charge, being the cost of benefits earned in
the current period shown net of employees’ contributions.
• Past service costs, being the costs of benefit improvements.
• Curtailment and settlement costs.
FINANCE COSTS, BEING THE NET OF
• Expected return on pension scheme assets
• Interest cost on the accrued pension scheme liabilities
This chart sets out the 2 key impacts of IAS 19 on Profit before Tax (excluding the impact of IAS 19) at the year end
to report a Profit before Tax in the Income statement on page 59, for the year to 28 March 2015 and 29 March 2014.
418
501
4,000
3,000
0
0
0
£
2,000
3,494
1,000
2,575
2,088
307
468
1,313
Mar ‘15 Profit
before tax
excluding IAS 19
IAS 19 impact on
Operating Costs
IAS 19 impact on
Finance costs
Mar ‘15 SCI
Profit before tax
Mar ‘14 Profit
before tax
excluding IAS 19
IAS 19 impact on
Operating Costs
IAS 19 impact on
Finance costs
Mar ‘14 SCI
Profit before tax
TOTAL ADJUSTED EMPLOYMENT COSTS
Wages and salaries
Social security costs
Pension costs - future service pensions contributions paid
Other pension costs
Chargeable against Trading Operating Profit
Wages and salaries
Social security costs
Pension costs - future service pensions contributions paid
Other pension costs
2015
£000
19,403
1,688
561
537
22,189
19,403
1,688
979
537
2014
£000
17,806
1,625
662
749
20,842
17,806
1,625
969
749
CHANGE
£000
(1,597 )
(63 )
101
212
(1,347 )
(1,597 )
(63 )
(10 )
212
Chargeable against Group Operating Profit
22,607
21,149
(1,458 )
Difference being: NET IAS 19 pension adjustment to operating profit
418
307
(111 )
IAS 19 IMPACT ON OPERATING COSTS
IAS 19 IMPACT ON FINANCE COSTS
The cost of providing post-employment benefits decreased
from £1,718,000 in 2014 to £1,516,000 in 2015. This charge
was included in full within Operating Profit on the Income
Statement. Actual future service pension contributions paid
in the period by the Group to its two final salary schemes in
accordance with the actuaries’ recommendations, resulting
from their 2010 “on-going” valuations, were £561,000.
Under IAS 19 the charge against operating profit in the
year was £979,000. This sum includes an excess charge of
£418,000 required by IAS 19 over and above the future service
contributions. The table above analyses employment costs
charged against Operating Profit.
The income from plan assets allowed for in the interest cost is
based on the discount rate, this impacts the costs shown in the
Income Statement. A charge of £0.5m is charged to the income
statement this year (2014: £0.5m in 2014).
IAS 19 TOTAL IMPACT ON PROFIT
The Group’s Operating Profit before Tax is based on the
adjustments required to Operating Profit to incorporate
IAS 19 “Employee Benefits” as described in this section.
THE TOTAL CHARGE AGAINST PROFITS FOR THE
YEAR END 28 MARCH 2015 IS £0.92M (2014: £0.78M).
32
Our Values and Pride Awards
OUR VALUES AND PRIDE AWARDS
MOTIVATED WORKFORCE
Employee engagement is essential if James Cropper is
to deliver its aspirations.
We have made many changes to consolidate the positives
and address these shortcomings, including:
In recent years we have recognised this more than ever,
leading us to commission an Employee Survey in 2013.
This was designed to measure engagement levels across
three principal areas:
1. Commitment to organisation’s goals and values
2. Motivation to contribute to organisational success
3. Ability to enhance their own sense of well-being
The results were mixed, however the response rate of 76% was
above average. 81% said they were proud to work for James
Cropper plc while 83% said they understood and supported
the company’s values. These were both high ranking scores.
However, the survey highlighted a number of areas that
needed to be addressed. This included performance
management and leadership development, individual and
collective employee development, employee recognition and
knowledge of our competitors.
• Leadership competencies introduced and launched based
on input from line managers and designed to tie in with
revised vision and values
• People managers and sales teams taking part in major
development programmes focussing on performance
management and commercial skills
• Regular discussions (formal and informal) to plan
individual and team development. Staff appraisals include
career development plans
• All employee business briefings several times per year
• Monthly face-to-face briefings for each department
• Weekly news and updates provided by
communications screensaver
In 2015 we will be running the survey again to further measure
progress and identify areas for improvement.
PRIDE: TAKING PRIDE
PRIDE AWARD WINNER:
GRANT McDOUGALL
(Process & Project Co-ordinator)
Grant’s dedication to helping Paper products run smoothly
is exemplary. He often stays behind at night to help the
operators out, to see the products run and to sort out any
issues that may occur. Grant’s technical knowledge of
converting is second to none and this has meant we have
pushed the boundaries of our capabilities.
PRIDE: TEAM AWARD
PRIDE AWARD WINNER:
IAN STANLEY (Management Accountant)
STEVE ATKINSON (Finance Manager - Paper)
STEVE GRABEK (IT Systems Developer)
The team have supported Paper through implementation of
TROPOS production monitoring; training operators across
all shifts; working early 6am starts and finishing late to assist
each shift after go-live. Together they broke down road
blocks, engaged end-users and resolved issues, remaining true
to the success of the production monitoring. Their support
for users, and assistance in understanding and resolving issues
post implementation continues and has proven to be invaluable.
33
Strategic Report - Financial Review
PRINCIPLE RISKS
Effective management of risk is within the overall
responsibility of the Board and is key to ensuring good
governance and to achieving the Group’s strategy. The Board
has ownership of the risk management strategy and coordinates
activity across the Group. There is an ongoing process for
identifying, evaluating and managing significant risks faced by
the Group, which has been in place for the year under review
and up to the date of approval of this Annual Report.
The Group manages risk by a combination of insurance and self-
insurance. Self-insurance refers to actions taken internally or in
conjunction with other third parties. In broad terms, high risks in
financial and operational areas are more dependent on insurance
than risks in commercial and personnel areas, which because of
their nature are more likely to be managed by self-insurance.
Each subsidiary company has a strategy and process for
highlighting the key risk areas of their business, and explaining
the control measures and risk exposure.
It then takes appropriate steps to manage the risk exposure
taking into consideration the likelihood, impact and cost/
benefit of each of the risks. The Audit Committee monitors
and reviews the effectiveness of the Group’s financial
accounting process and system of internal controls.
In addition to the Audit Committee the Board has departmental
teams with risk management briefs. These include:
• Health & Safety
• Insurance
• Human Resources
• Pensions
• Environment
• Treasury
• Purchasing
• Information Systems
The principal risks and uncertainties that may adversely impact
the performance of the Group are set out in the table on the
following pages along with the steps taken to address these.
Each risk should be considered independently. Other factors
could adversely affect group performance and so the risks and
uncertainties tabled should not be considered a complete set
of potential risks.
EMPLOYEE SAFETY
RISK DESCRIPTION AND IMPACT
MITIGATION
Employee safety is paramount and the Group embraces the
ethos that nothing we do is worth getting hurt for.
It is essential that the Group operates a process of continuous
improvement in maintaining high standards of safety. The
risk of safe working practises being out of date or behavioural
standards falling could result in a serious accident. If an
incident were to arise where unsafe practice was found to
be taking place, this could potentially result in an employee
getting seriously hurt , the interruption of operations, financial
penalties and reputational damage.
The Group has an extensive Health & Safety programme
built around the ISO18001 framework which is proactively
driven across every division. This is further supplemented with
engagement from senior leaders in our proactive Safety Walk &
Talk initiative where they take the time to review and endorse
safe working practices with employees at all levels across
the organisation. Our dedication to continuously improving
occupational health and safety was recognised earlier this year
when RoSPA (Royal Society For the Prevention of Accidents)
accredited the James Cropper Group with a Gold Award.
The James Cropper Group remains fully committed to
continuously improving its rigorous health and safety
management system as it strives to deliver world class
standards of safety. With this in mind, the James Cropper
Group participates in external benchmarking and best practice
set across the paper industry as a proactive committee member
of PABIAC (Paper And Board Industry Advisory Committee),
a tripartite strategic health and safety delivery partnership for
the paper, board and recovered paper industries.
ENVIRONMENT
RISK DESCRIPTION AND IMPACT
MITIGATION
Environmental sustainability, is at the heart of what we
do at James Cropper and the way we operate safeguarding
against environmental incidents is key. Should a material
environmental incident occur at a James Cropper site this
could result in material financial costs and reputational
damage that undermines our commercial position as an
environmentally responsible provider of sustainable products.
The Group has detailed processes in place to ensure as a
minimum we comply with all environmental rules and
regulations. In addition the Group engages proactively with
the Environment Agency and seeks to enhance the way
organisations can work together on environmental matters,
controls and governance.
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Strategic Report - Financial Review
ENVIRONMENTAL TAXATION
RISK DESCRIPTION AND IMPACT
MITIGATION
EUETS is a mandatory scheme for greenhouse gas emission
allowance trading introduced by the EU to tackle emissions
of carbon dioxide and other greenhouse gases from a number
of specific industrial activities. The Group’s combustion
facilities became subject to this scheme as from 1st January
2008 under Phase 2. Phase 3 of the scheme is now underway
and the Group’s annual allowances have been reduced to an
average of 16,000 tonnes of CO2 per annum (phase 2: 41,000
tonnes) resulting in an average of 24,000 tonnes of CO2 to be
purchased on the EU Emissions Trading Scheme.
Risk on price
Prices are presently low, thought to be due to over-supply in
the market and this keeps the cost of carbon emissions low. The
risk is that the over-supply will be addressed by the EU and the
actions taken will have a significant effect on prices. The likely
result is that the current single figure prices rise significantly and
create an increasing financial burden on the Group.
Risk on Energy Intensive Industries (EIIs).
The European Commission has recognised that EUETS
could easily cause EIIs to move operations outside the
European Economic Area or to close. The EC has created
a special category, “Industries at risk of carbon leakage”, to
afford some shelter from the tax for those companies most at
risk. Industries in this category receive beneficial treatment
through Phase 3 of EUETS in that they do not have their free
allowances reduced on a sliding scale throughout the Phase,
as will happen with non-EIIs. The Group benefits from
this concession as the paper sector is a carbon leakage sector.
The risk is to the Group that in 2019 shelter from EUETS is
removed prior to phase 4 of EUETS. Should the EC remove
the carbon leakage status given to the paper industry the
Group will face ever increasing costs of emissions, making
operations unaffordable and it would be uncompetitive to stay
within the EU.
Risk that the Carbon Price Floor exemptions
are withdrawn.
The Carbon Price Floor is part of the government’s Electricity
Market Reform package. It is a combination of the EUETS
European Union Allowance (EUA) price and a top-up
amount that, when added to the EUA price, forms the “Floor”
price of carbon that HM Government has set. This levy is
a UK “green” tax on the generation of electricity. From 1st
April 2013 the Group has been subject to the Carbon Price
Floor. HM Government announced changes to legislation that
will largely exempt the Group from the Carbon Price Floor
from 2015 onwards. The risk to the Group that government
support could be withdrawn making the cost of manufacture
rise and placing James Cropper at a distinct disadvantage to it’s
EU competitors as well as those in the rest of the world.
As part of it’s energy strategy the Group considers
diversification away from gas to alternative fuels and this also
includes consideration of investments into sustainable energy
saving solutions including technologies to reduce emissions or
technologies which do not emit CO2 whilst generating energy.
In order to comply with EUETS phase 3 the Group will meet
it’s mandatory requirement to purchase around 24,000 tonnes
of C02 a year. The Group actively considers forward contracts
to manage it’s costs in this area. At the year end March 2015
forward carbon emission purchase commitments are in place
to December 2018, these provide the Group with some
certainty over the future cost of emissions.
EUETS Emissions
44,000
40,000
36,000
32,000
28,000
24,000
20,000
16,000
Mar-09 Feb-10
Jan-11
Dec-11 Nov-12 Oct-13
Sep-14
Free Allowances
Actual Emissions
The Group’s energy strategy considers investments into
technologies which reduce emissions or technologies which
do not emit CO2 whilst generating energy. Until a suitable
investment opportunity is found, the Group will continue to
operate within the existing framework and be subject to EC
regulation in this area as it develops.
James Cropper plc is a member of the Confederation of
Paper Industries (CPI) an organisation which works on
behalf of the UK’s Paper-based Industries. The CPI lobbies
HM Government alongside other UK intensive energy users
to protect UK industry and manufacturing from carbon
leakage. The CPI also addresses issues that impact UK
manufacturers such as the Carbon Price Floor and is a leading
trade association that monitors proposals to tax carbon and
represents industries which are threatened by new taxes.
The Group evaluates operational energy efficient
improvements on a continuous basis and is keen to recognise
and adopt energy reduction measures that may be derived
through the Energy Savings Opportunity Scheme (ESOS) a
mandatory initiative for large UK enterprises requiring regular
audits of energy use.
35
Strategic Report - Financial Review
PENSION
RISK DESCRIPTION AND IMPACT
MITIGATION
The Group operates 2 defined benefit pension schemes which
are in deficit. Actuarial deficits are sensitive to a number of
key factors: the value of the assets, the discount rate used to
calculate the schemes liabilities (based on corporate bond
yields), the rate of inflation and the mortality assumptions for
members of the schemes. Changes in these assumptions could
mean that the deficit increases further.
The Group’s strategy is to ensure the profitable and sustainable
growth of the Group whilst monitoring the longer term
economic environment as conditions change.
Membership of the Schemes was closed to new members in
2000 in order to contain the Groups exposure to rising pension
costs and to safeguard the accrued benefits to existing members.
Future annual increases in pensionable pay were reduced to a
cap of 2% as from 1st April 2011. Starting April 2014 increases
in employee contributions are being phased in. Annual
contributions to reduce the deficit have been agreed with the
trustees. The next tri-ennial valuation is in April 2016 and an
evaluation of pension liabilities will contribute to a proactive
consideration of liability management exercises and a new
agreement with the trustees on payments to reduce the deficit.
The Group agrees an investment strategy with the trustees
taking account of risk.
ENERGY PRICE VOLATILITY
RISK DESCRIPTION AND IMPACT
MITIGATION
Gas prices are affected by global supply and demand and price
can be subject to significant fluctuations.
Factors that influence these include natural disasters, climate,
political instability, conflicts , economic conditions and actions
by major oil & gas exporting countries
Price fluctuations can affect our business assumptions, margins
and investment decisions.
The Group aims to mitigate it’s exposure to energy costs by
a combination of: strategically considering diversification
away from gas to alternative fuels, investing in sustainable
energy saving solutions and securing long term purchase
forward prices.
At the time of this report forward purchase contracts are in
place to secure prices for 24 months. This provides the Group
with a degree of certainty over future energy costs.
COMMODITY PRICE VOLATILITY
RISK DESCRIPTION AND IMPACT
MITIGATION
Pulp prices are affected by global supply and demand and
price can be subject to significant fluctuations.
Factors that influence these include natural disasters, climate,
political instability, conflicts , economic conditions and actions
by major pulp producers.
The Group aims to recover costs in pricing with a typical
4 to 8 month delay. In the event that competitor behaviours
and global economic factors mean that the Group is unable
to recover further price increases the profitability of the
Group would be substantially reduced.
The Group’s ability to offer more than a quality product,
in addition to supply chain management, service, innovation,
sustainability and brand support, helps to provides some buffer
against price sensitivity.
Pulp substitution from the reclaimed fibre plant works
to mitigate some of the impact of virgin pulp costs.
36
Strategic Report - Financial Review
EXCHANGE RATE VOLATILITY
RISK DESCRIPTION AND IMPACT
MITIGATION
The Group operates on a global basis, and earns revenues,
incurs costs and makes investments in a number of currencies;
the 3 major operating currencies are Sterling, Euro and Dollar.
The Group’s financial results are reported in Sterling.
Volatile exchange rates could have a significant impact on
the Group’s results.
The Group matches receipts and payments in the same foreign
currency due in the same period. The Group’s treasury
function seeks to hedge anticipated unmatched cash flows
using financial instruments. No transactions for this purpose
have been entered into at the year ending March 2015.
The Group prepares consolidated financial statements
for reporting purposes, the consolidation process entails
translating the financial statements of foreign subsidiaries
from foreign to domestic currency. A dollar hedge is in
place to mitigate the impact of translation exposure with
the subsidiaries based in the USA.
FALL IN DEMAND
RISK DESCRIPTION AND IMPACT
MITIGATION
The profitability of the Group is sensitive to economic
slowdown in non UK markets, volume, the mix of sales and
product and service pricing. A 5% reduction in sales in any
one division could result in a fall in operating profits if not
mitigated by a cost reduction programme or growth in
other areas.
The global expansion of the Group helps to mitigate economic
risks and plans are being deployed to grow our market
presence and diversify product ranges and geographical
markets. The Group will continue to build on existing skills,
and the skills development of sales executives, recruitment
of experienced sales and planning professionals also assist
the effective deployment of these diversification plans.
The Group is launching a new division which over time will
bring greater resilience.
NEW DIVISION
RISK DESCRIPTION AND IMPACT
MITIGATION
In January 2014 the Group established the “Technology
and Innovation” division, which has now identified a
diversification opportunity. The risk recognised is that
the new division may cost more to set up and take longer
to be cash generative.
The Group supports the utilisation of existing employee
resource at the start of this diversification opportunity.
Initial investment is minimised through the utilisation of
existing factory resource and infrastructure. The market
will be tested before a significant upscale of operations.
There will be discussion and updates at monthly meetings
of the Executive and the Group Board on key strategic
and operational matters affecting the development of the
new operation.
On behalf of the Board.
Isabelle Maddock,
Group Finance Director
37
Our Values and Pride Awards
OUR VALUES AND PRIDE AWARDS
COMMUNITY FOCUS
Community focus is a broad ranging value that goes beyond
our relationships and support for the communities around our
operations. We believe in social responsibility more broadly.
For instance, Patrick Willink, our Chief Technology Officer, is
currently President of the Confederation of Paper Industries,
which represents British paper industry interests on a national
and international stage. We also work on a national level on
other fronts including education and safety. Chief Operations
Officer, Dave Watson, sits on the Paper and Board Industry
Advisory Committee which is a partnership between industry,
unions and HSE responsible for health and safety.
In our locality, we work broadly with schools and universities
to promote careers in science and industry. This includes
technology development projects with Lancaster University,
Kendal’s Queen Katherine and Kirkbie Kendal secondary
schools, and providing work experience to local students.
Closer to home, our community focus is channelled through
our Community Support Committee, which provides modest
grants to a wide range of local institutions, not least charitable
but also cultural and sporting. We are very proud of our
long-standing involvement in the production of the paper
remembrance poppy and are honoured to have worked with
the Royal British Legion in support of their fund raising
campaigns. In addition, for many years we have supported
local schools with the provision of free paper. Our lorries
have also been a regular participant in the annual Kendal
Torchlight Carnival for many decades.
We hope to inject fresh ideas into our community focus.
Over a period of many years our links with the village
of Burneside, which grew on the back of our operations,
have weakened. The trend towards directors and employees
living further afield, combined within modern safety and
security considerations, has made our mills less accessible
than they once were. We have sought to address this by
participating alongside other key stakeholders, including
the Burneside Parish Council, in the creation of a masterplan
for a revitalised village in which we would like to play a clearer
and stronger role.
38
Our Values and Pride Awards
PRIDE: COMMUNITY & ENVIRONMENT
PRIDE AWARD WINNER:
STUART BELL
(Utilities Co-ordinator)
Stuart not only runs the power station on site, but also has the
whole site services to look after. This ranges from supplying
clean drinking water to local houses and farms to maintaining
the reservoirs. A lot of his work goes unnoticed, but without
his expertise and dedication the mill wouldn’t run as smoothly.
Alongside this, Stuart is also the secretary of the Burneside
Brass Band and spends a lot of his spare time organising
concerts and helping the band raise money for charity.
39
Strategic Report
GOVERNANCE
42 BOARD OF DIRECTORS
44 REPORT OF THE DIRECTORS
52 DIRECTORS REMUNERATION REPORT
41
Governance - Director’s Details
BOARD OF DIRECTORS
MARK A J CROPPER, MA
CHAIRMAN
Mark joined the Group and the
Board in 2006, becoming Chairman
in 2010, the sixth generation of the
Cropper family to hold this position.
He is a Director of Ellergreen Hydro
Ltd, a developer and operator of
hydro-electric schemes, and is a
partner in Turquoise Capital LLP.
ISABELLE M MADDOCK
BSC, FCMA
GROUP FINANCE DIRECTOR
Educated at the University of
Central Lancashire, Isabelle is a
Fellow of the Chartered Institute
of Management Accountants.
Isabelle joined the Company in
2006 and was appointed Head
of Finance in 2013 and Group
Finance Director in July 2014.
PHILIP I WILD, BEng
CHIEF EXECUTIVE OFFICER
Phil joined the Group and the
Board as Chief Executive in 2012.
A graduate of Loughborough
University and the London
Business School, he previously
worked for 3M where he held
roles and directorships covering
industrial, healthcare, automotive
and security market sectors.
PATRICK J WILLINK
BSC, MBA
CHIEF TECHNOLOGY OFFICER
Educated at Newcastle University
and Imperial College, Patrick joined
the Group in 1990 and the Board
in 1998. In 2014 he became Chief
Technology Officer of the Group
and was also appointed President
of the Confederation of Paper
Industries Ltd later that year.
KARL D WATSON
B.Eng (Hons)
CHIEF OPERATING OFFICER
Educated at Sunderland
University and London Business
School, Karl has over 30
years experience in industrial,
automotive, pharmaceutical and
secure documents and systems
markets. Karl joined the Group
and Board in January 2014.
MARTIN THOMPSON, MBA
MANAGING DIRECTOR,
TECHNICAL FIBRE PRODUCTS LIMITED
Prior to joining the Group, Martin
held a variety of roles covering
Business Systems, Technical and
Operations Management. Martin
joined the Group in 2003, he was
appointed Managing Director of
Technical Fibre Products Ltd in 2013
and appointed to the Board in 2013.
Full disclosure on Directors credentials can be found at: www.cropper.com/corporate-governance/directors
42
Governance - Director’s Details
DAVID R WILKS,
LLB (HONS)
NON-EXECUTIVE DIRECTOR
A Director of Wilks & Partners,
a management consultancy
company he founded, David joined
the Board in April 2004. He has
extensive manufacturing operations
experience and is a former director
of the Paper Federation of Great
Britain Ltd.
DOUGLAS MITCHELL
BSC (HONS)
NON-EXECUTIVE DIRECTOR
Prior to his retirement in 2010,
Douglas was Managing Director
of 3M UK and Ireland, within 3M
he held a number of senior roles in
Management, Sales and Marketing,
Logistics and Manufacturing.
Douglas joined the Board in
January 2012.
JAMES SHARP, BA
NON-EXECUTIVE DIRECTOR
James is a partner of Sirius Equity
LLP, an investment firm which
specialises in the retail and luxury
goods sectors, whose investments
include L K Bennett and
feelunique.com. James joined
the Board in 2009. He is also
a Non-Executive Director of The
Brunner Investment Trust plc.
JOHN M DENMAN
BSC, FCA
John joined the Group and the
Board from Cable & Wireless
plc in 1995. A former trustee of the
James Cropper plc Pension Scheme
and former director of the Paper
Federation of Great Britain Limited.
John retired and resigned from the
Board on 30 July 2014.
NIGEL A READ, BA
Nigel joined the Group in 1981
from Robert Fletcher & Sons and
to the Board in 1998. Nigel was the
Sales and Marketing Director for
James Cropper Speciality Paper
Limited and a former trustee of
the James Cropper plc Pension
Scheme. Nigel retired and resigned
from the Board on 2 May 2014.
DAVID R CAREY, FCCA
COMPANY SECRETARY
David joined the Group in 1974
as Chief Accountant and he
became Company Secretary
in 1996.
43
Governance - Report of the Directors
REPORT OF THE DIRECTORS
REVIEW OF THE BUSINESS
The Group’s principal activities comprise the manufacture
of specialist paper and advanced materials.
Details of the Group’s activities are included in the Strategic
Report. The Chairman’s letter and the CEO’s review address
business activities during the year and comment on strategic
direction and prospects.
RESULTS
The profit attributable to equity holders of the Company for
the 52 weeks ended 28 March 2015 is set out in the Statement
of Comprehensive Income. The dividends paid during the
year, and the proposed final dividend, are set out in the
Notes to the financial statements.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the UK governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
DIRECTORS’ RESPONSIBILITIES IN
RESPECT OF CORPORATE GOVERNANCE
The Board is accountable to the Group’s shareholders for
corporate governance. Whilst there is no requirement to
comply with the Combined Code, the Group is committed
to a high standard of corporate governance and this section
describes how the relevant principles of governance are
applied to the Group.
STATEMENT OF DIRECTORS’
RESPONSIBILITIES IN RESPECT
OF THE ANNUAL REPORT AND
THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare Group and
Parent Company financial statements for each financial year.
As required by the AIM Rules of the London Stock Exchange
they are required to prepare the Group financial statements in
accordance with IFRSs as adopted by the EU and applicable
law and have elected to prepare the Parent Company financial
statements on the same basis.
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
Parent Company and of their profit or loss for that period.
In preparing each of the Group and Parent Company financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgments and estimates that are reasonable and prudent;
• state whether they have been prepared in accordance
with IFRSs as adopted by the EU; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
the Parent Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Parent Company and
enable them to ensure that its financial statements comply with
the Companies Act 2006. They have general responsibility for
taking such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud and
other irregularities.
THE BOARD
The Group Board considers that it is well balanced and
operates in an effective manner and is collectively responsible
for the success of the Group. It comprises the Chairman
together with five Executive Directors and three Non-
Executive Directors.
Sir James Cropper is the Company’s Honorary President,
but is not a director of the Company.
Nigel Read retired from the Company on 2 May 2014 and
ceased to be an Executive Director and Sales & Marketing
Director of James Cropper Speciality Papers Ltd.
John Denman retired from the Company on 30 July 2014 and
ceased to be Finance Director of the Group. Isabelle Maddock,
the Group’s Head of Finance was appointed Group Finance
Director and a director of the Company on 31 July 2014.
Mark Cropper is the Chairman of the Group and is
responsible for the running of the Board.
Although he is deemed not to be independent under the
Combined Code as he has close family ties, the Board considers
him to be independent as he displays sound business judgment,
and provides unequivocal counsel and advice to the Board.
Phil Wild is the Chief Executive and is responsible for the
running of the Group’s business.
David Wilks is the senior independent Non-Executive Director.
The Group Board met seven times during the year, with
prepared agendas for discussion and formal schedules of items
to be approved covering structure and strategy, management,
financial reporting and controls, board membership and
committees, and corporate governance. There is a schedule
of matters reserved for the Board’s decision.
The Executive Committee, under the chairmanship of Phil
Wild, met twelve times during the year with prepared agendas
for discussion.
All Directors have access to the advice and services of
the Company Secretary. The Board has also established
44
Governance - Report of the Directors
a formal procedure whereby Directors, wishing to do so in the
furtherance of their duties, may take independent professional
advice, if necessary, at the Group’s expense. All Directors are
aware of their responsibility to regularly update their skills
and knowledge.
without the Chairman being present, and the comments
fed back to him for discussion.
FINANCIAL POLICIES
AND INTERNAL CONTROLS
BOARD COMMITTEES
There are four sub-committees reporting to the Group Board:
• Executive Committee
• Remuneration & Management Development Committee
• Audit Committee
• Nomination Committee
The Executive Committee comprises the Executive Directors
and two Senior Executives. The Committee’s terms of
reference include the development and implementation of
strategies, operational plans, and the assessment and control
of risk. Phil Wild, the Group’s Chief Executive, is Chairman
of the Committee.
The Audit Committee, the Remuneration & Management
Development Committee, and the Nomination Committee
comprise the Non-Executive Directors of the Group. Jim
Sharp is Chairman of the Audit Committee, David Wilks is
Chairman of the Remuneration & Management Development
Committee, and Mark Cropper is Chairman of the
Nomination Committee.
The Committees’ terms of reference are displayed on the
Group’s website.
RE-ELECTION
The Directors are subject to retirement on a periodic basis
and re-election by the shareholders in accordance with the
Articles of Association whereby a director shall retire from
office at the first AGM after their appointment and thereafter
shall retire at every third AGM after the AGM at which
last appointed.
Resolutions will be proposed at the Annual General Meeting
for the re-election of P.J.Willink and I.M.Maddock
as Directors of the Company.
PERFORMANCE EVALUATION
The Chairman undertakes an annual Group Board appraisal
with each Executive Director.
The performance evaluation process includes the Chairman
reviewing and monitoring the Chief Executive’s performance
on an annual basis and the Chief Executive reviewing and
monitoring the Executive Directors. The high level individual
objectives agreed at the reviews are communicated to the
Remuneration & Management Development Committee.
The Chairman reviews the Non-Executive Directors’
performance annually on an individual basis.
The Chairman’s performance is appraised by the senior
independent director and the other non-executive directors
The Board is committed to presenting a full, balanced
and understandable assessment of the Group’s position
and prospects, both in the Annual Report and at other times
as appropriate throughout the year.
The Directors are responsible for preparing the Annual
Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable law
and International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
The Directors are responsible for preparing financial
statements for each financial year which give a true and fair
view, in accordance with IFRSs as adopted by the European
Union, of the state of affairs of the company and the group
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 judgments and estimates that are reasonable
and prudent;
• state whether the financial statements comply with
IFRSs as adopted by the European Union;
The Directors confirm that they have complied with the
above requirements in preparing the financial statements.
The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time
the financial position of the company and the group and
to enable them to ensure that the financial statements and
the Directors’ Remuneration Report comply with the
Companies Act and 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 corporate and financial information included
on the Group’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Board is responsible for and sets appropriate policies on
internal control and seeks regular assurance, at least annually,
that enables it to satisfy itself that processes are functioning
effectively. Such a system is designed to manage rather than
eliminate the risk of failure to achieve business objectives and
can provide reasonable, but not absolute, assurance against
material misstatement or loss. If a failure is discovered the
Board will take remedial action.
45
Governance - Report of the Directors
There is no internal audit function within the Group and the
Board consider that this is appropriate given the nature of
the Group’s activities. The letter from the external auditors
confirming their independence and objectivity was reviewed
by the Audit Committee. KPMG LLP have confirmed their
independence and the Directors believe KPMG LLP to be
independent and objective.
The Audit Committee monitors and reviews the effectiveness
of the Group’s financial accounting process.
The Key Performance Indicators (KPIs) and principal risks
and uncertainties affecting the Group are considered in the
Strategic Report.
RELATIONS WITH SHAREHOLDERS
The Finance Director, the Chairman and the Chief Executive
maintain contact with institutional investors as appropriate
and any presentations made to them can be found on the
Group’s website.
The Non-Executive Directors attend the Annual General
Meeting and are available for discussions with shareholders.
Currently the Group makes available its financial results on
the website www.cropper.com and issues printed copies of the
Annual Report to shareholders.
GOING CONCERN
The Directors consider that the principal risks noted in the
Strategic Report are the most significant to the Group but
these do not necessarily comprise all risks to which the
Group is exposed.
At 28 March 2015 the Group’s available cash and borrowing
facilities were £7.4m of which £4.7m was undrawn. Having
taken account of current borrowings to be repaid within 12
months of the balance sheet date, £4.7m was available to the
Group beyond 12 months. The Group has negotiated a £5.5m
revolving credit facility post year end.
The Directors having considered the current trading prospects,
identifiable risks, working capital requirements and the
availability of finance are of the opinion that the Group
and Company are going concerns. The accounts have been
prepared on this basis.
At the Annual General Meeting the Chairman will give an
update on the current trading position and invites shareholders
to table any questions and encourages their participation.
EMPLOYEE INVOLVEMENT
Regular consultative meetings are held with the employee
trade union representatives to advise them on all aspects
of Group developments. A monthly briefing on Group
performance is carried out for all employees and they have
access to a copy of the Annual Report. As a matter of policy,
plans are formally discussed with those who will use new
equipment, plant and computer systems before designs are
finalised. Safety improvement teams deal with day-to-day
aspects of safety improvement.
The Group operates bonus schemes and a Save as You Earn
(“SAYE”) Scheme to encourage employee involvement.
Independent to the assets on the Group Balance Sheet there
is an Employee Share Trust which currently holds approx
122,000 shares in James Cropper plc for the benefit of all
employees so that their interests are linked to the Group’s
future growth. No director of the Group is a trustee of the
Scheme, and the trustees confirm that they apply the assets for
purely benevolent purposes.
EMPLOYMENT OF DISABLED PEOPLE
It is the Group’s policy to give equality of opportunity when
considering applications from disabled people where the
job requirements are considered to be within their ability.
When existing employees become disabled they are retained
wherever reasonable and practicable. The Group tries to
provide equal promotion opportunities wherever possible.
DONATIONS FOR POLITICAL
AND CHARITABLE PURPOSES
It is the Group’s policy not to make any donations to, or
incur expenditure on behalf of political parties, other political
organisations or independent election candidates and the
Board does not intend to change this policy.
Donations totalling £5,000 (2014: £9,000) were made for
various local charitable purposes.
AT THE FORTHCOMING ANNUAL
GENERAL MEETING THE FOLLOWING
RESOLUTIONS WILL BE PROPOSED:
DIRECTORS’ AUTHORITY TO
ALLOT SHARES
A resolution will be proposed to renew an existing authority
which expires at the Annual General Meeting and gives the
Directors authority to exercise the powers of the Company
to allot un-issued shares.
DIRECTORS POWER TO DISAPPLY
PRE-EMPTION RIGHTS
A resolution will be proposed which disapplies statutory
pre-emption rights on the allotment of shares by empowering
the Directors to allot shares for cash without offering them
to existing shareholders first.
WAIVER OF THE OBLIGATION TO MAKE
A GENERAL OFFER UNDER RULE 9 OF
THE TAKEOVER CODE
A resolution will be proposed as an ordinary resolution, to
seek the approval of independent shareholders to a waiver,
which the Panel on Takeover and Mergers has agreed to give
(subject to such approval to be sought by way of vote taken by
poll), of the obligation that might otherwise arise under Rule 9
of the City Code on Takeovers and Mergers for the members
of the Cropper, Willink and Acland families (the “Concert
Party”) to make a mandatory offer for the shares
46
Governance - Report of the Directors
in the Company not already owned by the Concert Party as a result of any or all of (i) the vesting of shares under the LTIP
awards granted in 2012-2014 and the grant (and subsequent vesting) of ordinary shares under the 2015 LTIP awards and (ii)
the vesting of shares under the 2013 SAYE scheme. For more details on this waiver resolution, the City Code on Takeover
and Mergers, the Concert Party and the awards under the LTIP and SAYE please see the Notice of Annual General Meeting
accompanying this Annual Report.
SUBSTANTIAL INTERESTS
Shareholdings in excess of 3% of the issued capital at 1 June 2015 were as follows:
NAME OF SHAREHOLDING
NUMBER
OF SHARES
%
HOLDING
NOTE NO.
BELOW
Cropper Family - Beneficial and Non Beneficial Interests
Willink Family – Beneficial and Non Beneficial Interests
Acland Family – Beneficial Interests
Total
Brewin Nominees Ltd
BNY (OCS) Nominees Ltd
The Bank of New York Nominees Ltd
Platform Securities Nominees Ltd
Nortrust Nominees Ltd
3,039,366
512,995
52,386
3,604,747
531,797
343,162
321,688
297,294
279,151
33.1
5.6
0.6
39.3
5.8
3.7
3.5
3.2
3.0
1
2
Notes on Shareholding Table:
1. The Cropper, Willink and Acland families are related and are deemed to be acting in concert with a total holding
of 39.3% holding in the Company.
2. Included in this percentage is 5.2% disclosed in the shareholding of the concert party.
AUDITOR AND DISCLOSURE OF INFORMATION TO AUDITOR
Each Director, as at the date of this report, has confirmed that insofar as they are aware there is no relevant audit information
(that is, information needed by the Company’s auditor in connection with preparing their report) of which the Company’s
auditor is unaware, and they have taken all the steps that they ought to have taken as a Director in order to make themselves
aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.
AGM resolutions will be proposed that KPMG LLP be and are hereby reappointed auditors of the Company and will hold
office from the conclusion of this year’s Annual General Meeting until the conclusion of next year’s Annual General Meeting
at which accounts are laid before the Company, and that their remuneration be fixed by the Directors.
47
Governance - Report of the Directors
DETAILS OF DIRECTORS’ INTERESTS
AT 28 MARCH 2015
AT 29 MARCH 2014
ORDINARY
SHARES
OPTIONS ON
ORDINARY
SHARES
ORDINARY
SHARES
OPTIONS ON
ORDINARY
SHARES
DIRECTOR
INTEREST
M A J Cropper
Beneficial
Non-beneficial
1,205,593
660,826
P I Wild
Beneficial
1,143
I M Maddock
Beneficial
M Thompson
Beneficial
K D Watson
Beneficial
11,019
37,630
1,021
P J Willink
D R Wilks
J E Sharp
D.Mitchell
Beneficial
Non-beneficial
44,210
1,132,408
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Beneficial
Non-beneficial
9,112
101,255
7,950
101,255
1,000
101,255
10,695
-
78,872
14,036
32,469
11,084
35,748
-
-
-
-
-
-
-
1,205,549
60,000
1,058
10,707
27,785
1,000
47,595
1,132,408
9,112
60,000
7,950
60,000
1,000
60,000
4,673
-
56,630
6,168
52,852
2,252
39,880
-
-
-
-
-
-
-
DETAILS OF DIRECTORS’ INTERESTS
The Directors who served throughout the period are detailed
in the Directors’ Remuneration Report, and details of their
interests in shares of the Company are listed above.
Any material related party transactions between the Directors
and the Company are set out in the Notes to the Accounts.
Further information relating to the interests of the Directors
regarding options on ordinary shares is given in the Directors’
Remuneration Report.
Non-beneficial interests include shares held jointly as trustee
with other Directors. M A J Cropper resigned as a Director of
James Cropper EBT Ltd on 1 June 2015 and his non-beneficial
interest reduced from 660,826 shares to 559,571 shares.
There have been no other material changes between the year
end and 22 June 2015.
Approved by the Board of Directors on 22 June 2015
and were signed on its behalf by
M A J Cropper, Chairman. Burneside Mills. Kendal.
48
Pride Awards
OUR VALUES AND PRIDE AWARDS
CONTINUOUS LEARNING
We are committed to developing our employees and the
Company’s aim is to provide training and development which
enables all employees to perform their role competently and
efficiently, thus supporting our business needs and growth plans.
from engineering to business administration, purchasing and
sales and marketing. Twelve of this number have continued
to be supported in higher education, progressing to degree
or HND qualifications.
By providing opportunities, facilities and in some cases,
making available financial assistance, the Company aims to
improve skills in the workplace, promote job satisfaction and
encourage career development.
In addition to the above we also continue to offer several
apprenticeships every year. In the last five years we have
supported 20 apprentices across all areas of our business
Our engineering apprentices have won several awards in
recent years, in many cases outclassing apprentices from much
larger companies. This year Liam Moffat won four awards at
the annual T2000 Engineering Awards in Burnley, including
First Year Off-the-job Apprentice of the Year award and
accolades for fitting, behavioural safety and conventional
machining. His colleague Brett Ashley also won an award
for Fabrication and Welding.
49
Our Values and Pride Awards
OUR VALUES AND PRIDE AWARDS
SAFETY AT WORK
The health and safety of our staff and all those who visit our
operations is always a top priority – nothing we do is worth
getting hurt for.
The rationale is very clear: we simply do not accept that
anyone can go home hurt to the extent they cannot return
to work the next day.
The importance of this value transcends our numerous
activities in this area, which are not only led by dedicated
safety personnel but also across every level of our workforce.
It is everyone’s responsibility - as communicated by the
Safety Charter we launched this year.
Quality and compliance standards can integrate strongly
with a safe work environment, TFP operate a F.O.D.
(Foreign Object Debris) prevention programme in
accordance with NAS 412 and are completing accreditation
to AS9100.
The key measures of our safety performance are Lost Time
Accidents (injuries which have prevented an employee
returning to work the next day) and Reported Hazards.
We encourage hazard reporting as it is a proactive way
of preventing potential safety incidents ahead of time.
Our target is zero lost time accidents.
In 2015 we were delighted to be awarded a Gold Award by
the Royal Society for the Prevention of Accidents (RoSPA)
in recognition of our safety work. This is the highest level
of award presented by RoSPA and recognised consistent
high standards in monitoring health and safety on site
and maintaining a process of continual improvement.
REPORTED HAZARDS
1
5
7
4
1
6
3
2
6
8
0
5
2
6
3
800
600
400
200
0
April 10 -
March 11
April 11 -
March 12
April 12 -
March 13
April 13 -
March 14
April 14 -
March 15
PRIDE: SAFETY IMPROVEMENT
PRIDE AWARD WINNER:
LEE WILSON
(Machineman)
Lee has without question exceeded his duty in reporting
potential hazards in production over the past year. He will
report any unsafe condition and will not work with any
faulty equipment. Most, if not all, of the hazards reported
have been dealt with either at the time or via the Engineering
Department. Lee is a true representative of the Company
safety culture.
51
Governance - Directors Remuneration Report
DIRECTORS’ REMUNERATION REPORT
THIS REPORT DETAILS THE
DIRECTORS REMUNERATION
SERVICE CONTRACTS
The Chief Executive, the Group Finance Director, and the
Chief Operating Officer are employed on rolling six month
contracts. The Chairman and other Executive Directors are
employed on rolling one year contracts.
Non-Executive Directors are employed on contracts of one
month’s notice by either side.
SALARIES AND FEES
The remuneration and emoluments of Executive Directors
and the Chairman are determined by the Remuneration
Committee. The remuneration of the other Non-Executive
Directors is agreed by the Group Board and they are not
entitled to participate in pension schemes, bonus arrangements
or share schemes. The basic salaries of the Directors are
reviewed annually and take into consideration cost of living
and overall accountability. Also considered is remuneration
paid to senior executives in comparable public companies.
This information is checked by reference to published
surveys, but no formula is in place to determine any
specific relationship.
The remuneration of senior management is discussed by
the Chairman of the Remuneration Committee and the
Chief Executive and their recommendations endorsed
by the Remuneration Committee.
No Director can take part in the decision on his own
salary or reward.
ANNUAL BONUS
The Group operates an Executive Bonus Scheme which is
structured to reward the Executive Directors if targets are
achieved on budgeted earnings, yearly earnings improvement,
and year on year working capital control. The total bonus
payable to a director is capped at 25% of their contractual
salary and is not pensionable.
The Executive Directors are also eligible to participate
in the Employee Group Bonus Scheme (‘the Scheme’)
and any beneficial interest they hold in Company shares
in the Scheme is included in their beneficial holding of
shares in the Directors’ Report.
EMPLOYEE SHARE SCHEME
The Group operates a Long Term Incentive Plan (LTIP)
Scheme for the Executive Directors, of which details of the
options granted and awarded are shown later in this Report.
Other senior management personnel are entitled to participate
in the LTIP Scheme.
The Group also operates a Save as You Earn Scheme (SAYE)
for employees, and details of the SAYE options currently held
by Executive Directors are also shown later in this Report.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN (TSR)
To enable shareholders to assess
the Company’s performance
against the London Stock
Exchange, the cumulative TSR
for the period ended 28 March
2015 is shown in the graph below.
The FTSE All Share is deemed
to be the most appropriate
comparison in terms of
performance. TSR is the
total return to shareholders
in terms of capital growth
and dividends reinvested.
TOTAL SHAREHOLDER RETURN
D
E
S
A
B
E
R
450
225
113
0
3/31/05 3/20/06 3/9/07 2/28/08 2/18/09 2/9/10 1/31/11 1/23/12 1/14/13 1/3/14 12/22/14
James Cropper
FTSE AIM All Share
FTSE All Share
52
Governance - Directors Remuneration Report
DETAILS OF DIRECTORS’ REMUNERATION
The financial details within this report have been audited. The following table brings together the various elements
of remuneration of each director for the financial year period ended 28 March 2015: -
SALARY
AND FEES
COMPENSATION
FOR LOSS
OF OFFICE
BENEFITS
ANNUAL
BONUS
PENSION
COST
TOTAL
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
EXECUTIVE
M A J Cropper
P I Wild
J M Denman
(retired July 2014)
N A Read
(retired May 2014)
G T Quayle
(retired July 2013)
I M Maddock
(appointed July 2014)
M Thompson
K D Watson
P J Willink
NON-EXECUTIVE
J A Cropper
(retired July 2013)
D Mitchell
J E Sharp
D R Wilks
HIGHEST PAID DIRECTOR
Aggregate emoluments
Pension cost
72
65
170
166
34
98
9
93
59
32
125
67
105
113
101
25
25
27
81
27
94
6
26
20
23
10
55
7
1
12
23
23
20
7
36
20
22
3
22
5
20
20
14
3
11
2
85
74
11
256
227
5
5
8
1
5
30
41
153
7
17
76
137
28
188
4
7
7
91
5
2
160
116
156
35
16
19
149
138
8
25
13
12
6
26
20
23
25
25
27
748
731
59
125
151
135
78
38
55
114
1,091
1,143
2015 2014
£’000 £’000
245
216
11
11
DETAILS OF DIRECTORS’ REMUNERATION
The Chief Executive and the Chairman are members of the Company’s defined contribution scheme. Other Executive Directors
are either members of the Company’s defined benefit scheme or the Company’s defined contribution scheme. Non-Executive
Directors are not in any of the Company pension schemes.
The annual cost borne by the Company is shown above in the Directors’ Remuneration table.
53
Governance - Directors Remuneration Report
LONG TERM INCENTIVE PLAN
Under the Plan, awards to acquire ordinary shares in the Company can be made to executive directors and employees of the
Company and its subsidiaries selected by the Remuneration Committee.
Awards made during the financial year to 28 March 2015 under the Plan to executive directors were as follows:
NUMBER
AT 29
MARCH
2014
NUMBER
GRANTED
IN PERIOD
MID-MARKET
PRICE (£) OF
OPTIONS
AWARDED
NUMBER
EXERCISED
IN PERIOD
OPTIONS
LAPSED
IN PERIOD
NUMBER
AT 28
MARCH
2015
52,120
4,673
39,601
39,029
38,978
1,808
34,601
2,252
22,242
6,022
-
-
7,868
7,868
7,868
8,832
£3.828
£3.828
-
£3.828
£3.828
£3.828
£3.828
-
-
-
-
-
-
-
-
-
-
39,601
39,029
12,000
-
10,000
-
74,362
10,695
-
-
34,846
9,676
32,469
11,084
P I Wild
M A J Cropper
J M Denman*
N A Read*
P J Willink
I M Maddock
M Thompson
K D Watson
* previous directors
The number of options that can be awarded to any participant in a financial year under the Plan, determined by reference to
Company’s 20 day average mid-market share price at the time of the award, is limited to a maximum of 50% of the participant’s
basic salary.
The LTIP awards are subject to the achievement of certain performance conditions, specific to each director, as set out below:
EARNINGS PER SHARE CONDITIONS
PERCENTAGE OF AWARD
EBITDA TARGETS CONDITIONS
PERCENTAGE OF AWARD
P I Wild
M A J Cropper
P J Willink
I M Maddock
K D Watson
M Thompson
60%
60%
100%
100%
100%
100%
40%
40%
-
-
-
-
54
Governance - Directors Remuneration Report
(i) Earnings per share conditions
Awards will vest in full on the third anniversary of the Award provided the growth in the Company’s earnings per share, adjusted
for IFRS pension adjustments, between the preceding financial year end when the award was granted and the preceding financial
year end when the grant is vested exceed the increase in retail price index plus 10% per annum;
Awards will vest at 10% on the third anniversary of the Award if the growth in the Company’s earnings per share, adjusted for
IFRS pension adjustments, between the preceding financial year end when the award was granted and the preceding financial
year end when the grant is vested exceed the increase in retail price index plus 2.5% per annum;
Awards will vest proportionally between 10% and 100% on the third anniversary of the Award if the growth in the Company’s
earnings per share, adjusted for IFRS adjustments, between the preceding financial year end when the award was granted and the
preceding financial year end when the grant is vested exceed the increase in retail price index by more than 2.5% but less than
10% per annum; and
Awards will lapse on the third anniversary of the Award if the growth in the Company’s earnings per share, adjusted for IFRS
pension adjustments, between the preceding financial year end when the award was granted and the preceding financial year
end when the grant is vested, does not exceed the increase in retail price plus 2.5% per annum.
(ii) EBITDA target conditions
Awards will vest in full on the third anniversary of the Award if the third year EBITDA target as set out in the Company’s
3 Year Business Plan approved in the year that the award was granted has been met or exceeded;
Awards will vest at 30% on the third anniversary of the Award if at least 95% but less than 100% of the third year EBITDA
target as set out in the Company’s 3 Year Business Plan approved in the year that the award was granted has been met or
exceeded;
Awards will vest at 20% on the third anniversary of the Award if a least 90% but less than 95% of the EBITDA target as set
out in the Company’s 3 Year Business Plan approved in the year that the award was granted has been met or exceeded; and
Awards will lapse on the third anniversary of the Award if less than 90% of the EBITDA target as set out in the Company’s
3 Year Business Plan approved in the year that the award was granted has been achieved.
SAYE OPTIONS
The details of the SAYE options that are open to the Executive Directors at 28th March 2015 are as follows:
DATE OF SAYE GRANT
01 SEPTEMBER 2013
01 SEPTEMBER 2013
Term of Option
Exercise price
3.25 years
5.25 years
£1.9952 per share
£1.9952 per share
Executive Director
No. of shares
No. of shares
Total Share Options available
as at 28 March 2015
P I Wild
P J Willink
I M Maddock
4,510
902
-
-
-
4,360
4,510
902
4,360
On behalf of the Board.
D R WILKS
Chairman of the Remuneration Committee
22 June 2015
55
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©
Financial Statements
F I N A N C I A L
S T A T E M E N T S
58 INDEPENDENT AUDITOR’S REPORT
59 STATEMENT OF COMPREHENSIVE INCOME
60 STATEMENT OF FINANCIAL POSITION
61 STATEMENT OF CASH FLOWS
62 STATEMENT OF CHANGES IN EQUITY
64 NOTES TO THE FINANCIAL STATEMENTS
88 SHAREHOLDER INFORMATION
57
Financial Statements
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF JAMES CROPPER PLC
We have audited the financial statements of James Cropper plc
for the year ended 28 March 2015 set out on pages 59 to 87.
The financial reporting framework that has been applied in
their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the EU and, as
regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as
a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the company’s members those matters
we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other
than the company and the company’s members, as a body, for
our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities
Statement set out on page 44, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view.
Our responsibility is to audit, and express an opinion on,
the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors.
Opinion on other matter prescribed by the Companies
Act 2006
In our opinion the information given in the Strategic Report
and the Directors’ Report for the financial year for which
the financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if,
in our opinion:
•
•
•
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit.
Michael Frankish
for and on behalf of KPMG LLP, Statutory Auditor
Scope of the audit of the financial statements
A description of the scope of an audit of financial
statements is provided on the Financial Reporting Council’s
website at www.frc.org.uk/auditscopeukprivate
Chartered Accountants
Edward VII Quay
Navigation Way
Preston
PR2 2YF
Opinion on financial statements
22 June 2015
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the
state of the group’s and of the parent company’s affairs
as at 28 March 2015 and of the group’s profit for the year
then ended;
the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
EU;
the parent company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the EU and as applied in accordance with the
provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
58
Financial Statements
JAMES CROPPER PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
Continuing operations
Revenue
Other income
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Energy costs
Employee benefit costs
Depreciation and amortisation
Other expenses
Operating profit
Interest payable and similar charges
Interest receivable and similar income
Profit before taxation
Tax (expense)/income
Profit for the period
Earnings per share - basic
Earnings per share - diluted
OTHER COMPREHENSIVE INCOME
Profit for the period
Items that are or may be reclassified to profit or loss
Foreign currency translation
Items that will never be reclassified to profit or loss
Retirement benefit liabilities – actuarial losses
Deferred tax on actuarial losses on retirement benefit liabilities
Deferred tax on share options
Income tax on other comprehensive income
Other comprehensive expense for the year
Total comprehensive income for the period attributable
to equity holders of the Company
Note
2
20
4
2
3
3
4
5
6
6
17
18
5
5
52 week period
to 28 March 2015
£’000
52 week period
to 29 March 2014
£’000
83,052
314
252
(34,415 )
(5,186 )
(22,607 )
(2,502 )
(15,427 )
3,481
(906 )
-
2,575
(694 )
1,881
20.8p
20.1p
84,518
350
176
(36,909 )
(5,994 )
(21,149 )
(2,654 )
(16,100 )
2,238
(927 )
2
1,313
58
1,371
15.4p
15.0p
1,881
1,371
(47 )
55
(3,244 )
560
(225 )
214
(2,742 )
(861 )
(1,365 )
(53 )
361
67
(935 )
436
59
Financial Statements
JAMES CROPPER PLC
STATEMENT OF FINANCIAL POSITION
Group as at
28 March 2015
£’000
Note
Group as at
29 March 2014
£’000
Company as at
28 March 2015
£’000
Company as at
29 March 2014
£’000
Assets
Intangible assets
Property, plant and equipment
Investments in subsidiary undertakings
Deferred tax assets
Total non- current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current tax assets
Total current assets
Total assets
Liabilities
Trade and other payables
Other financial liabilities
Loans and borrowings
Current tax liabilities
Total current liabilities
Long-term borrowings
Retirement benefit liabilities
Total non-current liabilities
Total liabilities
Equity
Share capital
Share premium
Translation reserve
Reserve for own shares
Retained earnings
Total shareholders’ equity
8
9
10
18
11
12
13
14
15
15
17
19
297
21,707
-
1,174
23,178
13,089
15,717
2,721
-
31,527
480
21,294
-
820
22,594
13,300
16,019
692
-
30,011
54,705
52,605
12,445
-
2,720
130
15,295
6,106
14,442
20,548
9,509
11
3,040
202
12,762
7,929
11,640
19,569
35,843
32,331
2,292
1,034
264
(269 )
15,541
18,862
2,243
915
311
(102 )
16,907
20,274
184
1,703
7,350
2,878
12,115
-
31,399
1,903
290
33,592
45,707
13,910
-
1,139
-
15,049
1,104
14,442
15,546
30,595
2,292
1,034
-
-
11,786
15,112
325
2,121
7,350
2,552
12,348
-
29,600
257
-
29,857
42,205
10,428
11
1,328
6
11,773
2,243
11,640
13,883
25,656
2,243
915
-
-
13,391
16,549
Total equity and liabilities
54,705
52,605
45,707
42,205
The financial statements on pages 59 to 87 were approved by the Board of Directors on 22 June 2015 and were signed
on its behalf by:
M A J Cropper
Chairman
Company Registration No: 30226
60
Financial Statements
STATEMENT OF CASH FLOWS
For the period ended 28 March 2015 (2014: for the period ended 29 March 2014)
Group 2015
£’000
Group 2014
£’000
Company 2015
£’000
Company 2014
£’000
1,881
1,371
1,643
1,791
Cash flows from operating activities
Net profit
Adjustments for:
Tax
Depreciation and amortisation
Net IAS 19 pension adjustments within SCI
Past service pension deficit payments
Foreign exchange differences
(Profit)/loss on disposal of property, plant and equipment
Net bank interest income / (expense)
Share based payments
Dividends received from Subsidiary Companies
Changes in working capital:
Decrease / (increase) in inventories
Decrease / (increase) in trade and other receivables
694
2,502
919
(1,362 )
41
(2 )
405
155
-
236
196
Increase / (decrease) in trade and other payables
3,043
Interest received
Interest paid
Tax paid
-
(414 )
(448 )
Net cash generated from / (used by) operating activities
7,846
Cash flows from investing activities
Purchase of intangible assets
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Dividends received
(136 )
(2,483 )
41
-
(58 )
2,654
775
(853 )
109
27
457
71
-
(1,462 )
(1,143 )
1,228
2
(462 )
(346 )
2,370
(336 )
(2,622 )
13
-
Net cash (used in) / generated from investing activities
(2,578 )
(2,945 )
Cash flows from financing activities
Proceeds from issue of ordinary shares
Proceeds from issue of new loans
Repayment of borrowings
Issue of inter-company loans
Purchase of LTIP investments
Dividends paid to shareholders
168
-
(2,497 )
-
(167 )
(708 )
Net cash (used in) / generated from financing activities
(3,204 )
Net increase / (decrease) in cash and cash equivalents
2,064
Effect of exchange rate fluctuations on cash held
(35 )
Net increase / (decrease) in cash and cash equivalents
2,029
Cash and cash equivalents at the start of the period
Cash and cash equivalents at the end of the period
692
2,721
Cash and cash equivalents consists of:
127
2,238
(2,502 )
-
-
(697 )
(834 )
(1,409 )
(148 )
(1,557 )
2,249
692
225
237
919
(1,362 )
71
6
(1,171 )
155
(2,800 )
-
(4,132 )
3,726
1,265
(103 )
(448 )
(1,769 )
(136 )
(81 )
428
2,800
3,011
168
-
(1,328 )
2,333
-
(708 )
465
1,707
(61 )
1,646
257
1,903
(37 )
375
775
(852 )
69
-
(1,263 )
71
(2,000 )
-
(1,388 )
(848 )
1,377
(118 )
-
(2,048 )
(309 )
(267 )
1,153
2,000
2,577
127
600
(1,448 )
-
-
(697 )
(1,418 )
(889 )
(63 )
(952 )
1,209
257
Cash at bank and in hand
2,721
692
1,903
257
61
Financial Statements
Share
capital premium
Share Translation
reserve
Own Retained
Shares earnings
Total
2,217
814
256
(102)
17,152
20,337
STATEMENT OF CHANGES IN EQUITY
GROUP
All figures in £’000
30 March 2013
Profit for the period
Exchange differences
Actuarial gains on retirement benefit
liabilities (net of deferred tax)
Tax on share options
Other comprehensive income tax
Total other comprehensive income
Dividends paid
Share based payment charge
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Proceeds from issue of ordinary shares
26
101
Total contributions by and distributions
to owners of the Group
At 29 March 2014
Profit for the period
Exchange differences
Actuarial gains on retirement benefit
liabilities (net of deferred tax)
Tax on share options
Other comprehensive income tax
Total other comprehensive income
Dividends paid
Share based payment charge
Proceeds from issue of ordinary shares
Consideration paid for own shares
Total contributions by and distributions
to owners of the Group
26
101
2,243
915
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49
119
-
-
49
119
-
55
-
-
-
55
-
-
-
-
311
-
(47 )
-
-
-
(47 )
-
-
-
-
-
-
-
-
-
1,371
1,371
-
55
(1,418 )
(1,418 )
361
361
- 67
67
-
-
-
-
-
(990 )
(697 )
71
-
(935 )
(697 )
71
127
(626 )
(499 )
(102 )
16,907
20,274
-
-
-
-
-
-
-
-
-
(167 )
1,881
1,881
-
(47 )
(2,684 )
(2,684 )
(225 )
(225 )
214 214
(2,695 )
(2,742 )
(708 )
156
-
-
(708)
156
168
(167 )
(167 )
(552)
(551 )
At 28 March 2015
2,292
1,034
264
(269 )
15,541
18,862
62
Financial Statements
STATEMENT OF CHANGES IN EQUITY
COMPANY
All figures in £’000
At 30 March 2013
Profit for the period
Actuarial gains on retirement benefit liabilities
(net of deferred tax)
Tax on share options
Other comprehensive income tax
Total other comprehensive income
Dividends paid
Share based payment charge
Proceeds from issue of ordinary shares
Total contributions by and distributions
to owners of the Group
At 29 March 2014
Profit for the period
Actuarial gains on retirement benefit liabilities
(net of deferred tax)
Tax on share options
Other comprehensive income tax
Total other comprehensive income
Dividends paid
Share based payment charge
Share Retained
Share
capital premium earnings
Total
2,217
814
13,215
16,246
-
-
-
-
-
-
-
26
-
-
-
-
-
-
-
101
1,791
1,791
(1,418 )
(1,418 )
361
67
361
67
(990 )
(990 )
(697 )
71
-
(697 )
71
127
26
101
(626 )
(499 )
2,243
915
13,391
16,549
-
-
1,643
1,643
-
-
-
-
-
-
-
-
-
-
-
-
(2,684 )
(2,684 )
(225 )
214
(225 )
214
(2,695 )
(2,695 )
(708 )
155
-
(708 )
155
168
Proceeds from issue of ordinary shares
49
119
Total contributions by and distributions
to owners of the Group
49
119
(553 )
(385 )
At 28 March 2015
2,292
1,034
11,786
15,112
63
Notes to the Financial Statements
1. ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation
of these financial statements are set out below. These policies
have been consistently applied to all the years presented,
unless otherwise stated.
Basis of preparation
The accounting “year” for the Group is a 52 week period
ending 28 March 2015, (2014: 52 week period ended
29 March 2014).
Throughout these notes, the following references apply:
The Statement of Comprehensive Income is referenced as “SCI”
The Statement of Financial Position is referenced as “SFP”
Both the parent company financial statements and the Group
financial statements have been prepared and approved by the
directors in accordance with International Financial Reporting
Standards as adopted by the EU (“Adopted IFRSs”).
On publishing the parent company financial statements
here together with the Group financial statements, the
Company is taking advantage of the exemption in s408 of the
Companies Act 2006 not to present its individual Statement of
Comprehensive Income and related notes that form a part of
these approved financial statements.
Use of estimates and judgements
The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and judgements 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 period. Although these estimates are based on
management’s best knowledge of the amount, event or actions,
actual results ultimately may differ from those estimates.
The following are the policies and accompanying notes are
where the assumptions and judgements made by management
could have an impact on the Group’s consolidated financial
statements.
Note 9 Property, plant and equipment
It is the Group’s policy to depreciate categories within
property, plant and equipment on a straight line basis over
their estimated useful lives. A key element of this policy is
the estimate of the useful life applied to each category of asset
which in turn determines the annual depreciation charge.
Variations in asset lives could affect Group profit through an
increase or decrease in the depreciation charge.
Note 11 Inventories
In the course of normal trading activities management uses it’s
judgement to establish the net realisable value of it’s stocks.
Provisions are established for obsolete or slow moving stocks,
based on past practice, current conditions and aged inventory
facts available to management.
Note 12 Trade receivables
In estimating the collectability of trade receivables judgement
is required and the policies in regard to credit risk are further
described in note 16.2.
Note 17 Retirement benefits
Assumptions used in the calculation of the Group’s retirement
liability have the biggest impact on these financial statements
and are detailed in note 17.
Impairment of assets
At each reporting date, the Group assesses whether there
is any indication that an asset may be impaired. Where an
indicator of impairment exists, the Group makes an estimate
of recoverable amount. Where the carrying value 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.
Basis of consolidation
The financial statements of the Group consolidate the accounts
of the company and those of its subsidiary undertakings. No
subsidiaries are excluded from consolidation. The results and
cash flows of subsidiary undertakings acquired are included
from the effective date of acquisition. Intragroup balances and
any unrealised income and expenses arising from intra-group
transactions are eliminated in preparing the consolidated
financial statements.
Subsidiaries are entities controlled by the Group. Control
exists when the Group has the power, directly or indirectly, to
govern the financial and operating policies of an entity so as
to obtain benefits from its activities. The financial statements
of subsidiaries are included in the consolidated financial
statements from the date that control commences until the
date that control ceases.
Revenue recognition
Revenue is recognised when the significant risks and rewards
of ownership have been transferred to the customer. For the
majority of customers this is when delivery has been made
or specifically when title has passed, the point at which title
passes varying in accordance with the terms and conditions
of trade. Revenue is recognised when the amount of the
revenue and related costs can be measured reliably and the
collectability of the related receivables is reasonably assured.
Revenue is measured at the fair value of the amount received
or receivable which is arrived at after deducting trade rebates,
customer returns and value added tax. Shipping and handling
costs, such as freight to our customers’ destination are
included in cost of sales. These costs, when included in the
sales price charged for our products are recognised in net sales.
Operating segments
IFRS 8 Operating Segments has been adopted by the Group
and requires that entities reflect the ‘management approach’ to
reporting the financial performance of it’s operating segments.
Management has determined the segments that are reported
in a manner consistent with the internal reporting provided to
the chief operating decision-maker, identified as the Executive
Committee that makes strategic decisions. The committee
considers the business principally via the three main operating
segments. Operating segments are those components of
the Group that are engaged in providing a group of related
products that are subject to risks and returns that are
different to other operating segments. Geographical areas
are components where the eventual product destination is in
a particular geographic environment which is subject to risks
and returns that are different from other such areas. Costs
64
Notes to the Financial Statements
are allocated to segments based on the segment to which they
relate. Central costs are recharged on an appropriate basis.
Management responsibility and reporting for the two paper
subsidiaries has been merged into one operating segment
referred to as Paper products in order to achieve greater
customer and operational synergies.
Foreign currencies
Transactions in foreign currencies are translated at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at
the Statement of Financial Position date are translated at the
foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the
Statement of Comprehensive Income. Non-monetary assets
and liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the
date of the transaction.
The assets and liabilities of foreign operations are translated
at foreign exchange rates ruling at the Statement of Financial
Position date. The revenues and expenses of foreign operations
are translated at an average rate for the period where this
rate approximates to the foreign exchange rates ruling at the
dates of the transactions. Exchange differences arising from
translation of foreign operations are taken directly to the
translation reserve; they are released into the Statement of
Comprehensive Income upon disposal.
The portion of gain or loss on foreign currency borrowings
that are used to hedge a net investment in a foreign operation,
that is determined to be an effective hedge, is included
as a movement in the cumulative translation reserve. On
subsequent disposal such gains or losses will form part of the
profit/loss on disposal within the Statement of Comprehensive
Income. Any ineffective portion is recognised immediately in
the Statement of Comprehensive Income.
Research and development
Research expenditure is recognised as an expense as incurred.
Costs incurred on development projects (relating to the design
and testing of new or improved products) are recognised as
intangible assets when the IAS 38 conditions are met. Other
development expenditures are recognised as an expense as
incurred. Development costs with a finite useful life that have
been capitalised are amortised from the commencement of the
commercial production of the product on a straight-line basis
over the period of its expected benefit, not exceeding 5 years.
Retirement benefits
The Group operates various pension schemes. The
schemes are generally funded through payments to trustee-
administered funds, determined by periodic actuarial
valuations. The Group has both defined benefit and defined
contribution plans. A defined benefit plan is a pension plan
that defines an amount of pension benefit that an employee
will receive on retirement. A defined contribution plan is a
pension plan under which the Group pays fixed contributions.
The liability recognised in the Statement of Financial Position
in respect of defined benefit pension plans is the present value
of the defined benefit obligation at the Statement of Financial
Position date less the fair value of plan assets. The defined
benefit obligation is calculated annually by independent
actuaries using the projected unit credit method. The present
value of the defined benefit obligation is determined by
discounting the estimated future cash flows 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.
Actuarial gains and losses arising from experience adjustments
and changes in actuarial assumptions are recognised in
the period in which they occur outside of Statement of
Comprehensive Income in the Statement of Changes in
Equity.
Past service costs are recognised immediately in income,
unless the changes to the pension plan are conditional on the
employees remaining in service for a specified period of time
(the vesting period). In this case, the past-service costs are
amortised on a straight-line basis over the vesting period.
For defined contribution plans, the Group pays agreed
contributions to the schemes. The Group has no further
payment obligations once the contributions have been paid.
The contributions are recognised as an employee benefit
expense when they are due.
Share based payments
Options granted to employees are recognised as employee
expenses based on fair value at grant date, with a
corresponding increase in equity, over the period in which the
employees become unconditionally entitled to the options.
The fair value of the options granted is measured using an
option valuation model, taking into account the terms and
conditions upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual
number of share options that vest except where forfeiture
is due only to share prices not achieving the threshold for
vesting.
The group has a wholly owned subsidiary EBT Limited,
which is a trustee of an Employee Benefit Trust in favour of
former, current and future employees of James Cropper plc
and its subsidiaries. Its purpose is to acquire market shares
in James Cropper plc, with the intention that these should be
made available to such employees on such terms or basis as
the trustee of the Employee Trust so decides, and includes the
granting of awards under a long term incentive plan.
Intangible fixed assets
Intangible assets are stated at cost less accumulated
amortisation and accumulated impairments losses, if any.
The following useful lives have been determined for intangible
assets.
Trade secrets such as processes or unique recipes
10 years
Computer software
3 - 10 years
Emission Allowances
(refer to note below on Emissions trading scheme for policy)
0 – 1 year
Property plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation. Depreciation is provided on all
property, plant and equipment, other than freehold land, at
rates calculated to write off the cost less residual value of each
asset evenly over its expected useful life, as follows:
Freehold land and buildings
Plant and machinery
14 – 40 years
4 – 20 years
Residual values and useful lives are reviewed annually.
65
Notes to the Financial Statements
Inventories
Inventories are stated at the lower of cost and net realisable
value. The cost of finished goods and work in progress
comprises design costs, raw materials, direct labour, other
direct costs and related production overheads (based on
normal operating capacity). It excludes borrowing costs. Net
realisable value is the estimated selling price in the ordinary
course of business, less applicable variable selling expenses.
Engineering spares are included within inventories.
Emissions trading scheme
The Group’s power generation facilities became subject to
the European Union Emission Trading Scheme (“EUETS”)
as from 1 January 2008. The Group is permitted to emit
an average of 16,000 tonnes of carbon dioxide per calendar
year up to the year ended 31 Dec 2020. Credits for this
quantum are issued to the Group free of charge by HM
Government. The Group has adopted an accounting policy
which recognises the emission allowances as an intangible
asset and an associated liability. The intangible asset is
valued at the market price on the date of issue. The liability
is valued at the market price on the date of issue up to the
level of allocated allowances held. Should emissions exceed
the annual allowance any excess of liability above the level
of the allowances held is valued at the market price ruling at
the Statement of Financial Position date and charged against
operating profit. Un-utilised allowances are maintained against
a potential future shortfall. When allowances are utilised both
the intangible asset and liability are amortised to the Statement
of Comprehensive Income. After entering phase 3 of the
EUETS annual emissions in a calendar year are expected to
exceed allowances received and the impact is taken to the SCI
under “Other expenses”. At 28 March 2015 the intangible
asset was valued at £59,000 (2014 £87,000) and the associated
liability at £59,000 (2014 £73,000). The liability is categorised
under current liabilities.
Grants
Capital grants are credited to a deferral account and released
to income over the expected useful lives of the relevant assets.
Grants of a revenue nature are credited to the Statement of
Comprehensive Income in the period to which they relate.
Leasing
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 Statement of Financial Position and are
depreciated over the expected useful life of the asset. The
interest element of the rental obligation is charged to the
Statement of Comprehensive Income over the period of the
lease and represents a constant proportion of the balance of
capital repayments outstanding. Operating lease payments
are charged to the Statement of Comprehensive Income in the
appropriate period.
Taxation
Tax on the Statement of Comprehensive Income for the
year comprises current and deferred tax. Tax is recognised in
the Statement of Comprehensive Income, according to the
accounting treatment of the related transaction.
Deferred tax is provided on temporary differences between
the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not
provided for: the initial recognition of goodwill; the initial
recognition of assets or liabilities that affect neither accounting
nor taxable profit other than in a business combination, and
differences relating to investments in subsidiaries to the extent
that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively
enacted at the Statement of Financial Position date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised.
Research & development tax credit
Research and development expenditure credit (RDEC) is
recognised within other operating income.
Financial instruments
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
re-measured at their fair value at each Statement of Financial
Position date. The resulting gain or loss on re-measurement
is recognised in the Statement of Comprehensive Income,
unless hedge accounting is applicable. There were no material
balances at the year end.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an
active market. They arise when the Group provides money,
goods or services directly to a debtor with no intention of
trading the receivable. They are included in current assets,
except those with maturities greater than twelve months after
the Statement of Financial Position date, which are classified as
non-current assets. Loans and receivables are included within
trade and other receivables in the Statement of Financial
Position.
The fair value of financial instruments traded in active markets
is based on quoted market prices at the Statement of Financial
Position date.
Investments
Trade investments are stated at cost less any impairment in
value.
The Group’s share of the profit is included in the Statement of
Comprehensive Income on the equity accounting basis.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks, other short-term highly liquid investments
with original maturities of three months or less, and bank
overdrafts. Bank overdrafts are shown as borrowings within
current liabilities on the Statement of Financial Position.
Bank overdrafts that are repayable on demand and form an
integral part of the Group’s cash management are included as a
component of cash and cash equivalents for the purpose only
of the Statement of Cash Flows.
Borrowing costs
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently
stated at amortised cost; any difference between the proceeds
(net of transaction costs) and the redemption value is
recognised in the Statement of Comprehensive Income over the
period of the borrowings using the effective interest method.
66
Notes to the Financial Statements
Interest
Interest is recognised in the Statement of Comprehensive
Income on an accruals basis using the effective interest method.
Trade receivables
Trade receivables are recorded at their initial fair value after
appropriate revision of impairment.
Trade payables
Trade payables are stated at their fair value.
Capital management
Group and Company’s capital includes share capital, reserves
and retained earnings. The Group and Company’s policy is to
maintain the ability to continue as a going concern, in order
to provide returns to the shareholder and benefits to other
stakeholders. The Group, and Company, invest in financial
assets that will provide an adequate level of return to the
shareholder commensurate with the level of risk.
The Group and Company manages the capital structure and
adjusts this in light of the changes in the economic conditions
and risk associated with the underlying assets. In order
to maintain or adjust the capital structure, the Group and
Company may adjust the amount of any dividend paid to the
shareholder, return capital to the shareholder, issues new shares,
or sell assets to reduce debt. Details of borrowings can be seen
in note 15 and share holdings can be referred to in note 19.
The Group, and Company, are not subject to any externally
imposed capital requirements. There have been no material
changes in the management of capital during the period.
Going concern
The directors have prepared the accounts for James Cropper
plc on a going concern basis. See the Report of the Directors
for the basis of the going concern assumption.
New standards and interpretation not applied
A number of new standards, amendments to standards and
interpretations have been issued during the year ended 28
March 2015 but are not yet effective, and therefore have not
yet been adopted by the Group.
IFRS 9 ‘Financial Instruments’ is applicable from 2018.
If endorsed, this standard will simplify the classification
of financial assets for measurement purposes, but is not
anticipated to have a significant impact on the financial
statements.
IFRS 15 “Revenue from contracts with customers” is
applicable from January 2017. This standard replaces IAS 11
“Construction Contracts” , IAS 18 “Revenue”, IFRIC 13
“Customer Loyalty Programmes”, IFRIC 15 “Agreements
for the Construction of Real Estate”, IFRIC 18 “Transfer
of Assets from Customers” and SIC-31 “Revenue – Barter
Transactions Involving Advertising Services”. It applies to
contracts with customers but does not apply to insurance
contracts, financial instruments or lease contracts, which fall
in the scope of other IFRSs. It also does not apply if two
companies in the same line of business exchange
non -monetary assets to facilitate sales to other parties. The
standard introduces a new revenue recognition model that
recognizes revenues either at a point in time or over time.
The model features a contract-based five-step analysis of
transactions to determine whether, how much and when
revenue is recognised.
Amendments to IAS 19 ‘Employee benefits’ is applicable
from February 2015. The amendments introduce a relief
that will reduce the complexity and burden of accounting
for certain contributions from employees or third parties.
When contributions are eligible for the practical expedient, a
company is permitted (but not required) to recognise them
as a reduction of the service cost in the period in which the
related service is rendered. This is not anticipated to have a
significant impact on the financial statements.
The Group continues to monitor the potential impact of other
new standards and interpretations which may be endorsed by
the European Union and require adoption by the Group in
future reporting periods.
The Group does not consider that any other standards,
amendments or interpretations issued by the IASB, but not
yet applicable, will have a significant impact on the financial
statements.
2. SEGMENTAL REPORTING
IFRS 8 Operating Segments - requires that entities adopt the
‘management approach’ to reporting the financial performance
of its operating segments. Management has determined the
segments that are reported in a manner consistent with the
internal reporting provided to the chief operating decision-
maker, identified as the Executive Committee that makes
strategic decisions. The committee considers the business
principally via the three main operating segments, principally
based in the UK:
•
James Cropper Paper Products: comprising:
•
•
JC Speciality Papers – relates to James Cropper
Speciality Papers, a manufacturer of specialist paper
and boards.
JC Converting – relates to James Cropper
Converting, a converter of paper.
•
Technical Fibre Products – a manufacturer of advanced
materials.
• Group Services – comprises central functions providing
services to the subsidiary companies.
“Eliminations” refers to the elimination of inter-segment
revenues, profits and investments. “Trading Operating Profit
before Interest” refers to profits prior to other income and
expenditure and the IAS 19 pension adjustment. The “IAS 19
pension adjustment” refers to the impact on operating profits
of the pension schemes’ operating costs, as described in the
IAS 19 section of the Financial Review. “Interest Expense”
incorporates the IAS 19 pension impact of the pension
schemes’ finance costs, as described in the IAS 19 section of
the Financial Review. The net IAS 19 pension adjustments to
Operating profit and interest can be seen in the Summary of
Results “Profit before tax” is consistent with that reported
in the Statement of Comprehensive Income. Inter segment
transactions are performed in the normal course of business
and at arms length.
67
Notes to the Financial Statements
2. SEGMENTAL REPORTING (CONTINUED)
Operating Segments
Period Ended 28 March 2015
Revenue
- External
- Inter-segment
Segment Profit
Trading Operating Profit
before Interest
IAS 19 Pension adjustments
to profit
Operating Profit
Interest Expense
Interest Income
Profit before tax
Tax on profit for year
Profit for the year
Technical
James Cropper
Paper Products Fibre Products
£’000
£’000
Group
Services
£’000
Other
£’000
Eliminations Continuing
Operations
£’000
£’000
68,505
14,547
-
-
68,505
14,547
-
-
-
2,419
2,719
(1,184 )
-
-
(418 )
2,419
2,719
(1,602 )
-
-
-
-
-
-
-
-
-
(55 )
-
(55 )
83,052
-
83,052
3,899
(418 )
3,481
(906 )
-
2,575
(694 )
1,881
Total Assets
Total Liabilities
50,299
(40,533 )
27,928
45,707
(26,076 )
(30,595 )
1,916
(269 )
(71,145 )
61,630
54,705
(35,843 )
Period Ended 29 March 2014
Revenue
- External
- Inter-segment
Segment Profit
Trading Operating Profit
before Interest
IAS 19 Pension adjustments
to profit
Operating Profit
Interest Expense
Interest Income
Profit before tax
Tax on profit for year
Profit for the year
James Cropper
Technical
Paper Products Fibre Products
£’000
£’000
Group
Services
£’000
Other
£’000
Eliminations Continuing
Operations
£’000
£’000
71,471
13,047
-
-
71,471
13,047
-
-
-
-
-
-
-
-
-
84,518
-
84,518
2,023
1,278
(734 )
-
-
(307 )
-
-
(22 ) 2,545
-
(307 )
2,023
1,278
(1,041 )
-
(22 ) 2,238
(927 )
2
1,313
58
1,371
Total Assets
Total Liabilities
48,068
(38,460 )
23,801
42,204
(22,025 )
(325,656 )
1,749
(102 )
(63,217 )
53,912
52,605
(32,331 )
68
Notes to the Financial Statements
2. SEGMENTAL REPORTING (CONTINUED)
The Group’s country of domicile is the UK. Revenue from external customers is based on the customer’s location.
Non - current assets are based on the location of the assets and exclude financial assets, deferred tax assets and
post - employment benefit net assets.
UK
Europe
Asia
The Americas
Australasia
Africa
Total
3. FINANCE COSTS
Interest expense
Interest payable on bank borrowings
Interest payable on finance leases
Expected return on pension scheme assets
Interest on pension scheme liabilities
Total interest expense
Interest income
Interest receivable on bank borrowings
Other Interest received
Total interest income
Finance costs – net
Revenues from
external customers
2014
£’000
2015
£’000
44,083
42,652
15,016
16,943
7,193
6,939
14,631
15,377
1,595
2,214
534
393
Non – current assets
2014
£’000
2015
£’000
19,689
19,619
-
1
-
-
2,314
2,155
-
-
-
-
83,052
84,518
22,004
21,774
2015
£’000
2014
£’000
229
176
249
210
(3,309 )
(3,459 )
3,810
3,927
906
927
-
-
-
1
1
2
906
925
69
Notes to the Financial Statements
4. PROFIT BEFORE TAX
The following items have been charged / (credited) in arriving at profit before tax:
Staff costs
2015
£’000
2014
£’000
22,607
21,149
Depreciation of property, plant and equipment
- owned assets
1,926
1,994
- leased assets
- amortisation of intangibles
- plant & machinery
(Profit) / loss on disposal of fixed assets
Other operating lease rentals payable
Repairs and maintenance expenditure on property, plant and equipment
Research & development tax credits
Government grants received
Research and development expenditure
Foreign exchange differences
Trade receivables impairment
Government grants relate to assistance received for research projects and the development of new technology
Services Provided by the Group’s Auditor and network firms
During the year the group obtained the following services from the group’s auditor at costs as detailed below:
395
182
(2 )
138
400
261
27
322
3,757
4,024
(128 )
(136 )
(119 )
(188 )
1,281
1,194
17
11
367
17
2015
£’000
2014
£’000
Audit Services
- Fees payable to the company’s auditor for the audit of parent company and consolidated accounts
18
17
Other services
- Remuneration payable to the company’s auditor for the auditing of subsidiary accounts and associates
of the company pursuant to legislation (including that of countries and territories outside Great Britain)
- Fees in respect of debt strategy assessment
- Fees in respect of risk assessment undertaken for TFP Ltd
- Fees in respect of other accountancy matters
- Fees in respect of other assurance services
- Tax advisory services
44
25
-
11
-
-
42
-
75
9
2
9
98
154
70
Notes to the Financial Statements
5. TAXATION
Analysis of charge in the period
Continuing operations
Current tax
Adjustments in respect of prior period current tax
Total current tax
Deferred tax
Adjustments in respect of prior period deferred tax
Effects of changes in tax rate
Total deferred tax
Taxation
Tax on items charged to equity
Deferred tax on actuarial gains on retirement benefit liabilities
Deferred tax on share options
Income tax charged to OCI
The tax for the period is higher (2014: lower) than the standard rate of corporation tax
in the UK of 21% (2014: 23%). The differences are explained below:
Profit before tax
Profit on ordinary activities multiplied by rate of corporation tax in the UK
of 21% (2014: 23%)
Effects of:
Adjustments to tax in respect of prior period
Overseas tax
Expenses not deductible for tax purposes
Income not taxable
Rate change on deferred tax
Other
Total tax charge / (credit) for the period
Note
2015
£’000
2014
£’000
18
714
(1 )
713
(47 )
27
1
(19 )
570
(52 )
518
(161 )
(135 )
(280 )
(576 )
694
(58 )
560
(225 )
214
(53 )
361
67
2015
£’000
2014
£’000
2,575
1,313
540
302
26
(187 )
158
15
(46 )
-
1
694
56
71
-
(280 )
(20 )
(58 )
71
Notes to the Financial Statements
6. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average
number of shares outstanding during the year.
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 Group has one class of dilutive potential ordinary shares - those share options granted
to employees where the exercise price is less than the average market price of the company’s ordinary shares during the year.
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
2015
Earnings Weighted Per Share
amount
average
number
of shares
‘000
£’000
pence
2014
Earnings Weighted Per Share
average
amount
number
of shares
‘000
£’000
pence
Basic EPS
Earnings attributable to ordinary shareholders
Effect of dilutive securities
- Options
1,881
9,046
20.8
1,371
8,904
15.4
-
303
-
-
235
-
Diluted EPS
1,881
9,349
20.1
1,371
9,139
15.0
7. DIVIDENDS
Final paid for the period ended 29 March 2014 / period ended 30 March 2013
Interim paid for the period ended 28 March 2015/period ended 29 March 2014
Final dividend payment paid pence per share for the period ended 29 March
2014 / period ended 30 March 2013
Interim dividend payment paid pence per share for the period ended 28 March
2015 / period ended 29 March 2014
2015
£‘000
508
199
5.7
2.2
2014
£’000
501
196
5.7
2.2
In addition, the directors are proposing a final dividend in respect of the financial period ended 28 March 2015 of 6.3p per share
(2014: 5.7p per share) which will absorb an estimated £571,000 (2014: £508,000) of shareholders’ funds. If approved by members
at the Annual General Meeting, it will be paid on 7 August 2015 to shareholders who are on the register of members at 10 July
2015. There are no tax implications in respect of this proposed dividend.
The proposed dividend is not accounted for until it is formally approved at the Annual General Meeting.
72
Notes to the Financial Statements
8. INTANGIBLE ASSETS
Group
Computer
Software
£’000
Trade
Emission
Secrets Allowances
£’000
£’000
Company
Computer
Software
£’000
Total
£’000
Emission
Allowances
£’000
Total
£’000
Cost
At 29 March 2014
Additions - externally generated
Disposals
Effects of movements in
foreign exchange
3,852
20
-
300
-
-
2,715
206
(39 )
6,867
226
(39 )
3,744
20
-
2,715
206
(39 )
6,459
226
(39 )
-
7
-
7
-
-
-
At 28 March 2015
3,872
307
2,882
7,061
3,764
2,882
6,646
Aggregate amortisation
At 29 March 2014
Charge for Period
At 28 March 2015
Net book value at 28 March 2015
Net book value at 29 March 2014
3,534
151
3,685
187
318
225
31
256
51
75
2,628
195
6,387
377
2,823
6,764
59
87
297
480
3,506
133
3,639
125
238
2,628
195
6,134
328
2,823
6,462
59
87
184
325
Group
Computer
Software
£’000
Trade
Emission
Secrets Allowances
£’000
£’000
Company
Computer
Software
£’000
Total
£’000
Emission
Allowances
£’000
Cost
At 30 March 2013
Additions - externally generated
Disposals
Effects of movements in
foreign exchange
At 29 March 2014
Aggregate amortisation
At 30 March 2013
Charge for Period
Disposals
At 29 March 2014
Net book value at 29 March 2014
Net book value at 30 March 2013
3,714
187
(49 )
-
3,852
3,314
229
(9 )
3,534
318
400
308
-
-
(8 )
300
193
32
-
225
75
115
Total
£’000
5,984
475
-
2,400
315
-
6,422
502
(49 )
3,584
160
-
2,400
315
-
-
(8 )
-
-
-
2,715
6,867
3,744
2,715
6,459
2,400
228
-
5,907
489
(9 )
2,628
6,387
87
-
480
515
3,291
215
-
3,506
238
293
2,400
228
-
5,691
443
-
2,628
6,134
87
-
325
293
The computer software capitalised principally relates to the ongoing development of the Group’s Enterprise Resource Planning
and Financial systems. There is a separate Enterprise Resource Planning system for the Technical Fibre Products Business
segment and the remaining amortisation period of this asset at the period end is 6 years.
The trade secrets relate to certain recipes and know how acquired within the TFP division. The remaining amortisation period of
the assets at the period end is 4 years.
The Emission Allowances relate to the allowances received through the European Emissions Trading Scheme (EUETS) and are
valued at market value at the date of initial recognition. The allocated allowances are held throughout each compliance period
and are used to meet the Group’s emissions obligations.
73
Notes to the Financial Statements
9. PROPERTY, PLANT AND EQUIPMENT
Group
Freehold land & buildings
£’000
Plant & machinery
£’000
Cost
Brought forward at 29 March 2014
Additions at cost
Disposals
Effects of movements in foreign exchange
At 28 March 2015
Accumulated Depreciation
Brought forward at 29 March 2014
Charge for Period
Disposals
At 28 March 2015
Net book value at 28 March 2015
Net book value at 29 March 2014
Cost
Brought forward at 30 March 2013
Additions at cost
Disposals
Effects of movements in foreign exchange
At 29 March 2014
Accumulated Depreciation
Brought forward at 30 March 2013
Charge for Period
Disposals
At 29 March 2014
Net book value at 29 March 2014
Net book value at 30 March 2013
16,854
21,707
16,227
21,294
Freehold land & buildings
£’000
Plant & machinery
£’000
Total
£’000
86,977
2,483
(716 )
251
88,995
65,683
2,321
(716 )
67,288
Total
£’000
84,669
2,622
(160 )
(154 )
86,977
63,450
2,393
(160 )
65,683
75,892
2,430
(716 )
251
77,857
59,665
2,054
(716 )
61,003
73,827
2,379
(160 )
(154 )
75,892
57,696
2,129
(160 )
59,665
16,227
21,294
16,131
21,219
11,085
53
-
-
11,138
6,018
267
-
6,285
4,853
5,067
10,842
243
-
-
11,085
5,754
264
-
6,018
5,067
5,088
Assets held under finance leases, capitalised and included in tangible fixed assets:
B/f NBV
Additions in period
Reclassification to assets owned
Depreciation in period
Net book value
2015
£’000
5,828
-
(402 )
(395 )
Group
2014
£’000
6,801
573
(1,146 )
(400 )
5,031
5,828
2015
£’000
811
-
(402 )
(36 )
373
Company
2014
£’000
2,049
-
(1,146 )
(92 )
811
74
Notes to the Financial Statements
9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Company
Cost
Brought forward at 29 March 2014
Transfers
Additions at cost
Disposals
At 28 March 2015
Accumulated Depreciation
Brought forward at 29 March 2014
Charge for Period
Transfers
Disposals
At 28 March 2015
Net book value at 28 March 2015
Net book value at 29 March 2014
Cost
Brought forward at 30 March 2013
Transfers
Additions at cost
At 29 March 2014
Accumulated Depreciation
Brought forward at 30 March 2013
Charge for Period
Transfers
At 29 March 2014
Net book value at 29 March 2014
Net book value at 30 March 2013
Freehold land & buildings
£’000
Plant & machinery
£’000
1,610
-
53
-
1,663
360
33
-
-
393
1,270
1,250
2,675
(473 )
28
(245 )
1,985
1,804
71
(77 )
(246 )
1,552
433
871
Freehold land & buildings
£’000
Plant & machinery
£’000
Total
£’000
4,285
(473 )
81
(245 )
3,648
2,164
104
(77 )
(246 )
1,945
1,703
2,121
Total
£’000
5,703
(1,685 )
267
4,285
2,536
160
(532 )
2,164
4,336
(1,685 )
24
2,675
2,202
134
(532 )
1,804
871
2,121
2,134
3,167
1,367
-
243
1,610
334
26
-
360
1,250
1,033
75
Notes to the Financial Statements
10. INVESTMENTS
Investments in subsidiary undertakings:
Group
2014
£’000
2015
£’000
Company
2014
£’000
2015
£’000
At 28 March 2015 and 29 March 2014
-
-
7,350
7,350
Investments in subsidiary undertakings are stated at cost. A list of principal subsidiary undertakings is given below:
Country of
incorporation
% holding
(of ordinary shares)
Nature of business
James Cropper Speciality Papers Limited
James Cropper (Guanghzou) Trading Co Limited
James Cropper Converting Limited
Technical Fibre Products Limited
Tech Fibers Inc
Technical Fibre Products Inc
Metal Coated Fibers Inc
Electro Fiber Technologies LLC
James Cropper EBT Limited
Melmore Limited
Papermilldirect.com Limited
The Paper Mill Shop Company Limited
England
China
England
England
USA
USA
USA
USA
England
England
England
England
Manufacture of specialist paper and boards
100
Sales and marketing organisation
100
Paper converter
100
Manufacture of advanced materials
100
Holding Company
100
100
Sales and marketing organisation
100 Manufacturer of metal coated carbon fibres
Manufacturer of metal coated fibres
100
Trustee of an employee benefit trust
100
Dormant company
100
Dormant company
100
Dormant company
100
11. INVENTORIES
Materials
Work in progress
Finished goods
Group
2014
£’000
2015
£’000
7,592
1,382
4,115
8,052
1,122
4,126
13,089
13,300
Inventories are stated after a provision for impairment of £46,000 (2014: £96,000).
The cost of inventories recognised as expenses and included in cost of sales for the year ended 28 March 2015 was £67,292,000
(2014: £68,242,000). The Company does not have inventories.
12. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Provision for impairment of receivables
Trade receivables - net
Amounts owed by group undertakings
Other receivables
Prepayments
Group
2014
£’000
2015
£’000
14,610
15,059
(68 )
(79 )
14,542
14,980
-
262
913
-
77
962
Company
2014
£’000
2015
£’000
-
-
-
-
-
-
30,704
29,004
262
433
77
519
15,717
16,019
31,399
29,600
Management believe there is no further credit risk provision required in excess of normal provision for doubtful receivables.
76
Notes to the Financial Statements
13. TRADE AND OTHER PAYABLES
Trade payables
Amounts owed to group undertakings
Other tax and social security payable
Other payables
Accruals
Group
2014
£’000
2015
£’000
5,795
-
458
287
5,905
3,152
-
428
314
5,615
Company
2014
£’000
2015
£’000
2,079
10,355
116
268
1,092
588
8,851
95
291
603
12,445
9,509
13,910
10,428
14. OTHER FINANCIAL LIABILITIES
Interest rate swap
Group
2014
£’000
2015
£’000
-
11
The Group uses an interest rate swap to hedge the risk associated with interest rate increases against a proportion
of it’s existing borrowings.
The gain arising in the Income Statement on fair value hedging instruments was £11,000 (2014: £21,000).
15. BORROWINGS
Note
Group
2014
£’000
2015
£’000
Company
2014
£’000
2015
£’000
Current
Bank loans and overdrafts due within one year or on demand:
Unsecured bank loans
Secured finance lease
Non-current loans:
Unsecured bank loans
Secured finance lease
16.3
16.3
1,825
895
2,110
930
2,720
3,040
3,375
2,731
4,302
3,627
6,106
7,929
1,070
69
1,139
930
174
1,104
1,220
108
1,328
2,000
243
2,243
Bank loans bear interest at rates between 1% and 4.5% above UK bank base rates.
The future minimum lease payments under finance leases held, together with the value of principal are as follows:
Group
Within one year
Greater than one year and
less than five years
Greater than 5 years
Company
Within one year
Greater than one year and
less than five years
Minimum
lease payments
2015
£’000
Interest Principal
Minimum
Interest Principal
2015
£’000
2015
£’000
lease payments
2014
£’000
2014
£’000
2014
£’000
1,027
132
895
1,106
176
930
2,919
-
188
2,731
- -
3,477
469
314
6
3,163
463
84
15
69
189
15
174
128
273
20
30
108
243
77
Notes to the Financial Statements
16. FINANCIAL INSTRUMENTS AND RISK
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk • Liquidity risk • Currency risk • Interest rate risk
This note presents information about the fair value of the Group’s financial instruments, the Group’s exposure to each of
the risks noted and the Group’s objectives, policies and processes for measuring and managing risk. The Board has overall
responsibility of the risk management strategy and coordinates activity across the Group. This responsibility is discussed further
in the Director’s report.
Exposure to the financial risks noted, arise in the normal course of the Group’s business.
16.1 CATEGORIES OF NON-DERIVATIVE FINANCIAL ASSETS AND LIABILITIES
AND FAIR VALUES
The fair values of the financial assets and liabilities of the Group together with their book values are as follows:
Group
Book Value Fair Value
2015
£’000
2015
£’000
Book Value Fair Value
2014
£’000
2014
£’000
Note
Financial assets
Bank loans and overdrafts due within one year or on demand:
Current
Trade receivables
Cash and cash equivalents
12
14,610
2,721
14,542
2,721
15,059
692
14,980
692
17,331
17,263
15,751
15,672
Financial liabilities
Current
Trade payables
Short term borrowings
Non-current
Long term borrowings
Company
Financial assets
Current
Cash and cash equivalents
13
15
15
5,795
2,720
5,795
2,720
3,152
3,040
3,152
3,040
8,515
8,515
6,192
6,192
6,106
6,106
7,929
7,929
Book Value Fair Value
2015
£’000
2015
£’000
Book Value Fair Value
2014
£’000
2015
£’000
Note
Non-current
Investments in subsidiary undertakings
Financial liabilities
Current
Trade payables
Short term borrowings
Non-current
Long term borrowings
10
13
15
15
1,903
1,903
1,903
1,903
257
257
257
257
7,350
7,350
7,350
7,350
2,079
1,139
2,079
1,139
588
1,328
588
1,328
3,218
3,218
1,916
1,916
1,104
1,104
2,243
2,243
The fair values are stated at the reporting date and may be different from the amounts which will be actually paid or received on
settlement of the instruments. The fair values are based on book values as the directors do not consider that there is a material
difference between the book values and the fair values.
78
Notes to the Financial Statements
16.2 CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer or counterparty fails to meet its contractual obligations. Credit
risk arising from the Group’s normal commercial activities are controlled by individual business units operating in accordance
with Group policies and procedures. Exposure to credit risk arises from the potential of a customer defaulting on their invoiced
sales. Some of the Group’s businesses have credit insurance in place. For un-insured customers, the financial strength and credit
worthiness of the customer is assessed from a variety of internal and external information, and specific credit risk controls that
match the risk profile of those customers are applied.
Trade receivables recorded by business held at the 28 March 2015 were:
JC Speciality Papers
JC Converting
Technical Fibre Products
The Company does not have trade receivables.
The ageing of trade receivables at the reporting date was:
Not past due
Past due 0-30 days
Past due 31 -60 days
Less impairment
2015
£’000
9,452
2,117
2,973
14,542
2015
£’000
12,473
2,104
33
14,610
(68 )
14,542
2014
£’000
10,355
2,192
2,433
14,980
2014
£’000
12,288
2,771
-
15,059
(79 )
14,980
At the end of each reporting period a review of the provision for bad and doubtful debts is performed. It is an assessment of the
potential amount of trade debtors which will not be paid by customers after the balance sheet date. This amount is calculated by
reference to the age, status and risk of each receivable.
Provision for doubtful debts.
Group
Balance at start of period
Released during the period
Utilised during the period
Balance at end of period
2015
£’000
79
(11 )
-
68
2014
£’000
200
(21 )
(100 )
79
Included in the outstanding trade receivables balance are debtors with an overdue amount of £2,069,000 (2014: £2,692,000) that
the Group has not provided for. The directors believe that these amounts are still considered recoverable from customers for
whom there is no recent history of default.
79
Notes to the Financial Statements
16.3 LIQUIDITY RISK
Liquidity risk is the risk that the Group will not have sufficient funds to meet liabilities. The Group’s policy is to maintain a
mix of short, medium and long term borrowings with a number of banks. Short term flexibility is achieved through overdraft
facilities. In addition, it is the Group’s policy to maintain undrawn committed borrowing facilities in order to provide flexibility
in the management of liquidity.
Current and non- current financial liabilities
The maturity profile of the carrying amount of the current and non-current financial liabilities, at 28 March 2015, was as follows:
Group
In less than one year
In more than one year but not more than two years
In more than two years but not more than five years
In more than five years
Finance
lease
Debt obligations
2015
2015
£’000
£’000
1,825
755
2,618
2
895
843
1,888
-
Total
2015
£’000
2,720
1,598
4,506
2
Finance
lease
Debt obligations
2014
2014
£’000
£’000
2,110
1,191
3,101
10
930
894
2,268
465
Total
2014
£’000
3,040
2,085
5,369
475
5,200
3,626
8,826
6,412
4,557
10,969
Company
In less than one year
In more than one year but not more than two years
In more than two years but not more than five years
In more than five years
Trade payables
Trade payables at the reporting date was:
Trade payables at the reporting date was
Total contractual cash flows
Finance
lease
Debt obligations
2015
2015
£’000
£’000
69
74
100
-
1,070
620
310
-
2,000
Total
2015
£’000
1,139
694
410
-
243
2,243
Group
2014
£’000
2015
£’000
5,795
3,152
5,795
3,152
Finance
lease
Debt obligations
2014
2014
£’000
£’000
108
243
-
-
1,220
1,220
780
-
3,220
Total
2014
£’000
1,328
1,463
780
-
351
3,571
Company
2014
£’000
2015
£’000
2,079
2,079
588
588
Borrowing facilities
The Group has the following undrawn committed borrowing facilities available at 28 March 2015:
Group at 28 March 2015
Floating rate £’000
Group at 29 March 2014
Floating rate £’000
Expiring within one year (renewable annually)
4,658
4,084
The Group’s expiry profile of the drawn down facilities is as follows:
Group
at 28 March 2015
£’000
Group
at 29 March 2014
£’000
Company
at 28 March 2015
£’000
Company
at 29 March 2014
£’000
December 2014
September 2015
December 2015
June 2016
July 2016
August 2016
April 2017
March 2018
January 2019
August 2019
November 2019
-
450
621
2,023
-
512
800
300
450
28
16
5,200
80
769
1,050
-
1,803
569
-
1,200
400
570
33
18
6,412
-
450
-
-
-
-
800
300
450
-
-
2,000
-
1,050
-
-
-
-
1,200
400
570
-
-
3,220
Notes to the Financial Statements
16.4 CURRENCY RISK
The Group publishes its consolidated financial statements in sterling but also conducts business in foreign currencies. As a result
it is subject to foreign currency exchange risk arising from exchange rate movements which will be reflected in the Group’s
transaction costs or in the underlying foreign currency assets of its foreign operations. The Group has operations in the US.
The Group is exposed to foreign exchange risks primarily with respect to US Dollars and the Euro. Where possible, the Group
maintains a policy of balancing sales and purchases denominated in foreign currencies. Where an imbalance remains, the group
has also entered into certain forward exchange contracts. No material contracts were outstanding at the year end.
The management of foreign currency is described in further detail in the Financial Review.
Represented below is the net exposure to foreign currencies, reported in pounds sterling, and arising from
all Group activities, as at 28 March 2015.
Trade Receivables
Cash and cash equivalents
Trade Payables
Unsecured current loans
Finance lease current
Unsecured non-current loans
Finance lease non-current
Net exposure
At the 29 March 2014 the Group’s exposure to foreign
currency risk was as follows:
Trade Receivables
Cash and cash equivalents
Trade Payables
Unsecured current loans
Finance lease current
Unsecured non-current loans
Finance lease non-current
Net exposure
USD
£’000
3,727
465
(1,209 )
(747 )
-
(2,409 )
-
Euro
£’000
2,257
15
(494 )
-
-
-
-
(173 )
1,778
RMB
£’000
-
72
-
-
-
-
-
72
GBP
£’000
8,558
2,169
(4,092 )
(1,078 )
(895 )
(965 )
(2,731 )
Total
£’000
14,542
2,721
(5,795 )
(1,825 )
(895 )
(3,374 )
(2,731 )
966
2,643
USD
£’000
2,997
763
(475 )
(882 )
-
(2,259 )
-
Euro
£’000
3,066
5
(358 )
-
-
-
-
RMB
£’000
-
119
-
-
-
-
-
GBP
£’000
8,917
(195 )
(2,319 )
(1,228 )
(930 )
(2,043 )
(3,626 )
Total
£’000
14,980
692
(3,152 )
(2,110 )
(930 )
(4,302 )
(3,626 )
144
2,713
119
(1,424 )
1,552
This represents the net exposure to foreign currencies, reported in pounds Sterling, and arising from all Group activities.
At the 28 March 2015 the Company’s exposure to foreign
currency risk was as follows:
USD
£’000
Euro
£’000
Cash and cash equivalents
Trade Payables
Unsecured current loans
Finance lease current
Unsecured non-current loans
Finance lease non-current
Net exposure
At the 29 March 2014 the Company’s exposure to foreign
currency risk was as follows:
Cash and cash equivalents
Trade Payables
Unsecured current loans
Finance lease current
Unsecured non-current loans
Finance lease non-current
Net exposure
81
GBP
£’000
1,896
(2,076 )
(1,070 )
(69 )
(930 )
(174 )
Total
£’000
1,903
(2,079 )
(1,070 )
(69 )
(930 )
(174 )
5
(3 )
-
-
-
-
2
(2,423 )
(2,419 )
2
-
-
-
-
-
2
USD
£’000
Euro
£’000
481
-
-
-
-
-
481
3
-
-
-
-
-
3
GBP
£’000
(227 )
(588 )
(1,220 )
(108 )
(2,000 )
(243 )
Total
£’000
257
(588 )
(1,220 )
(108 )
(2,000 )
(243 )
(4,386 )
(3,902 )
Notes to the Financial Statements
A one percent strengthening of the pound against the Euro and the US Dollar at 28 March 2015 would have had the following
impact on equity and profit by the amounts shown below.
Group
28 March 2015
28 March 2015
29 March 2014
29 March 2014
Equity
£’000
SCI
£’000
USD
Euro
USD
Euro
Nil
(18 )
(1 )
(27 )
(25 )
(17 )
(25 )
(27 )
Company
28 March 2015
28 March 2015
29 March 2014
29 March 2014
Equity
£’000
SCI
£’000
USD
Euro
USD
Euro
Nil
Nil
(5 )
Nil
Nil
Nil
Nil
Nil
This sensitivity analysis is indicative only and it should be noted that the Group’s exposure to such market rate changes is
continually changing. The calculations assume all other variables, in particular interest rates, remain constant.
16.5 INTEREST RATE RISK
Interest rate risk derives from the Group’s exposure to changes in value of an asset or liability or future cash flow through
changes in interest rates. The group finances its operations through a mixture of retained profits and bank borrowings. The
group borrows in the desired currencies at fixed or floating rates of interest. As part of the Group’s interest rate management
strategy the Company entered into an interest rate swap which matured in January 2015. The exposure is measured on variable
rate debt and instruments.
The net exposure to interest rates at the Statement of Financial Position date can be summarised as follows:
Group
2015
£’000
Group
2014
£’000
Company
2015
£’000
Company
2014
£’000
Interest bearing liabilities - floating
Borrowings
Finance lease
Interest bearing liabilities - fixed
Borrowings
Finance lease
Interest bearing liabilities
5,157
2,327
7,484
43
1,299
1,342
8,826
6,360
2,809
9,169
52
1,748
1,800
10,969
The effective interest rates at the balance sheet date were as follows:
Bank overdraft
Borrowings
2,000
-
2,000
-
243
243
2,243
2015
%
1.5
3.9
3,220
-
3,220
-
351
351
3,571
2014
%
1.5
3.9
The sensitivity analysis below assumes a 100 basis point change in interest rates from their levels at the reporting date, with all
other variables held constant. A 1% rise in interest rates would result in an additional £75,000 for the Group and £20,000 for the
Company in interest expense being incurred per year. The impact of a decrease in rates would be an identical reduction in the
annual charge.
28 March 2015
29 March 2014
Group
SCI
£’000
Company
SCI
£’000
75
62
20
2
82
Notes to the Financial Statements
17. RETIREMENT BENEFITS
The Group operates a number of pension schemes. Two of these schemes, the James Cropper PLC Works Pension Plan
(“Works Scheme”) and the James Cropper PLC Pension Scheme (“Staff Scheme”) are funded schemes of the defined benefit
type. The Group also operates a defined contribution scheme and makes contributions to personal pension plans for its
employees in the USA.
Pension costs for the defined contribution scheme and personal pension contributions are as follows:
Group
Defined contribution schemes
Personal Pension contributions
2015
£’000
2014
£’000
286
25
370
19
Other pension costs totalled £226,000 (2014: £359,000) and represent life assurance charges and government pension protection
fund levies.
Defined benefit plans
As from 1 April 2011 active members’ benefits have been reduced such that future increases in pensionable salaries are restricted
to RPI up to a maximum of 2% per annum. Thus the Staff and Works Schemes will remain defined benefit schemes but they will
no longer be “final salary” schemes. The most recent actuarial valuations of the Staff Scheme and the Works Scheme have been
updated to 28 March 2015 by qualified independent actuaries. The major assumptions used by the actuary for each scheme were
as noted below. The expected return on plan assets is calculated by using a weighted average across each category of asset:
Inflation assumption
Rate of increase in pensionable salaries
Discount rate
Allowance for pension in payment increases of RPI
or 5% p.a. if less (subject to minimum of 3% p.a)
Allowance for revaluation of deferred pensions of CPI or 5% p.a if less
on the Staff scheme or RPI or 2.5% p.a. if less on the Works scheme
Staff Scheme
2014
%
2015
%
Works Scheme
2014
2015
%
%
3.0
2.0
3.3
3.3
2.0
4.5
3.0
2.0
3.3
3.4
3.5
3.4
2.0
2.3
2.0
3.3
2.0
4.5
3.5
2.3
In respect of mortality for the Works members the assumptions adopted at 28 March 2015 are 145% of the standard tables
S1PxA, with no age rating, projected using CMI_2014 converging to 1.25%. For the Staff members the S1PxA tables with a
95% rating has been used with no age rating, projected using CMI_2014 converging to 1.25%. The different tables and methods
applied to each Scheme reflect the different characteristics of the members within these Schemes. The long-term expected rate
of return on cash is determined by reference to bank base rates at the SFP dates. The long-term expected return on bonds is
determined by reference to UK long dated government and corporate bond yields at the SFP date. The long-term expected rate
of return on equities is based on the rate of return on bonds with an allowance for out-performance.
The amounts recognised in the Statement of Financial Position are determined as follows:
Present value of scheme liabilities
Fair value of plan assets
Net liability recognised in the SFP
2015
£’000
2014
£’000
2013
£’000
2012
£’000
2011
£’000
(106,788 )
(85,482 )
(85,112 )
(78,005 )
(69,593 )
92,346
73,842
74,759
70,307
68,189
(14,442 )
(11,640 )
(10,353 )
(7,698 )
(1,404 )
83
Notes to the Financial Statements
The fair value of the plan assets comprises the following categories
of asset in the stated proportions:
Equities
Bonds
Annuities
Cash
Corporate Bonds
Real Liability Strategy
Nominal Liability Strategy
Staff Scheme
2014
%
2015
%
Works Scheme
2014
2015
%
%
64
-
4
1
-
9
22
74
-
5
-
-
-
21
72
-
-
1
-
4
23
81
-
-
-
-
-
19
The pension plan assets do not include any investments in the shares of the Company (2014: nil).
The amounts recognised in the Statement of Comprehensive Income are as follows:
Total included within employee benefit costs - current service cost
Expected return on plan assets
Interest on pension scheme liabilities
Total included within interest
Total
Analysis of the movement in the Statement of Financial Position liability:
At B/f
Total expense as above
Contributions paid
Actuarial losses recognised in SCI
At 28 March 2015
2015
£’000
2014
£’000
979
969
(3,309 )
3,810
(3,459 )
3,927
501
468
1,480
1,437
2015
£’000
2014
£’000
(11,640 )
(1,480 )
1,922
(3,244 )
(10,353 )
(1,437 )
1,515
(1,365 )
(14,442 )
(11,640 )
The actual return on plan assets was £18,900,000 (2014: £371,000 deficit). The Company expects to pay £928,000 (2014:
£667,000) in contributions to the Staff Scheme and £1,137,000 (2014: £950,000) in contributions to the Works Scheme in the next
financial period.
The cumulative amount of losses recognised in the Statement of Comprehensive Income, since the adoption of IAS 19, are
£15,243,000 (2014: £11,999,000).
Works Scheme
2015
2015
Staff Scheme
2014
Assets DBO Assets DBO Assets DBO Assets DBO
Works Scheme
2014
2014
Staff Scheme
2015
2014
2015
B/f
Expected return on assets
Current service costs
Benefits paid
Contributions by plan participants
Employer contributions
Interest cost
37,604
(46,018 )
36,238
(39,464 )
37,548
(45,027 )
37,211
(40,085 )
1,686
-
1,623
-
1,744
-
1,715
-
-
(568 )
-
(411 )
-
(527 )
-
(442 )
(1,407 )
1,407
(1,397 )
1,397
(1,159 )
1,159
(1,392 )
1,392
317
(317 )
1,044
-
168
879
(168 )
-
305
784
(305 )
-
185
731
(185 )
-
-
(2,053 )
-
(1,757 )
-
(2,086 )
-
(1,841 )
Actuarial (losses)/gains
7,831
(10,894 )
7,760
(7,942 )
(1,618 )
768
(2,212 )
1,697
At 28 March 2015 / 29 March 2014
47,075
(58,443 )
45,271
(48,345 )
37,604
(46,018 )
36,238
(39,464 )
Experience adjustments
Arising on plan assets
Percentage of scheme assets
Arising on plan liabilities
Percentage of scheme liabilities
2015
£’000
2014
£’000
2013
£’000
2012
£’000
15,591
16.88%
(3,830 )
(5.19% )
1,855
2.48%
(1,759 )
(2.50% )
(18,836 )
(17.64% )
2,621
3.07%
(143 )
(0.17% )
-
-
2011
£’000
112
0.20%
2,717
3.90%
84
Notes to the Financial Statements
18. DEFERRED TAXATION
The movement on the deferred tax account is shown below:
At 29 March 2014
Deferred tax on actuarial gains on retirement liabilities
Deferred tax on share options recognised in OCI
SCI credit / (charge)
At 28 March 2015
Group
2014
£’000
2015
£’000
820
560
(225 )
19
1,174
(64 )
(53 )
361
576
820
Company
2014
£’000
2015
£’000
2,552
560
(60 )
(174 )
2,007
(53 )
361
237
2,878
2,552
Deferred tax assets have been recognised in respect of all temporary differences giving rise to deferred tax assets because it is
probable that these assets will be recovered. No deferred tax is recognised on the un-remitted earnings of overseas subsidiaries.
Based on the combined distributable reserves in the US Companies of £2,268,000 (2014: £1,257,000), tax at 21% of £476,000
could be receivable, before any application for double tax relief, which could be expected to reduce the UK liability to nil.
Deferred tax liabilities
At 29 March 2014
SCI credit
Deferred tax on share options recognised in OCI
At 28 March 2015
Deferred tax assets
At 29 March 2014
Deferred tax on actuarial gains on retirement liabilities
At 28 March 2015
Net deferred tax asset
19. CALLED UP EQUITY SHARE CAPITAL
Group and Company
Authorised
10,000,000 (2014:10,000,000) ordinary shares of 25p each
Issued and fully paid
At 29 March 2014
Issued during the period
At 28 March 2015
Potential issue of ordinary shares
Accelerated
capital allowances Other
£’000
£’000
Total
£’000
(2,317 )
384
-
809
(365 )
(225 )
(1,508 )
19
(225 )
(1,933 )
219
(1,714 )
Pension
£’000
2,328
560
Total
£’000
2,328
560
2,888
2,888
Total
£’000
1,174
2015
£’000
2014
£’000
2,500
2,500
Number of
ordinary shares
8,971,150
195,616
£’000
2,243
49
9,166,766
2,292
Under the Group’s long-term incentive plan for executive directors and senior executives, such individuals hold rights over
ordinary shares that may result in the issue of up to 173,999 25p ordinary shares by 2018 (2014: 213,062 25p ordinary shares by
2016). There were no share options exercised in the period (2014: none were exercised). Further information on directors share
options can be seen in the Directors Remuneration Report.
85
Notes to the Financial Statements
The Save As You Earn (SAYE) schemes were introduced in August 2009, September 2010 and September 2013 and run for either
a three or five year period. Options were valued using a Black-Scholes option pricing model. The fair value per option and
assumptions used in the calculation are as follows:
Fair value per option
Date of grant
Exercise Price
Market Price at date of grant
Volatility
Net dividend yield
Term of option
Aug ‘09
5 year scheme
Sept ‘10
5 year scheme
Sept ‘13
3 year scheme
Sept ‘13
5 year scheme
23p
18 August
2009
46p
30 September
2010
57p
1 September
2013
71p
1 September
2013
85p
112p
27%
6%
130p
163p
35%
4%
199.52p
313.5p
26%
3%
199.52p
313.5p
26%
2%
5.25 years
5.25 years
3.25 years
5.25 years
Risk free rate of interest
2.8%
1.6%
0.8%
1.5%
During the period 195,616 options were exercised (2014: 104,803 options were exercised).
20. EMPLOYEES AND DIRECTORS
Staff costs during the period
Wages and salaries
Social Security costs
Pension costs
Note
Group
2014
£’000
2015
£’000
Company
2014
£’000
2015
£’000
19,403
17,806
3,322
2,208
1,688
1,625
17
1,516
1,718
271
451
234
547
22,607
21,149
4,044
2,989
The average monthly number of people (including executive directors) employed in the Group during the year, analysed by
division was as follows:
James Cropper Paper Products
Technical Fibre Products
James Cropper plc
2015
2014
Number Number
359
92
75
526
362
91
65
518
21. COMMITMENTS UNDER OPERATING LEASES
Group
Commitments under non-cancellable operating leases expiring:
Within one year
Later than one year and less than five years
After five years
2015
Property
£’000
2015
Plant &
Machinery
£’000
2014
Property
£’000
2014
Plant &
Machinery
£’000
26
391
1,185
1,602
-
501
-
501
33
45
1,199
1,277
-
505
-
505
86
Notes to the Financial Statements
21. COMMITMENTS UNDER OPERATING LEASES (CONTINUED)
Company
Commitments under non-cancellable operating leases expiring:
Within one year
Later than one year and less than five years
22. CAPITAL COMMITMENTS
2015
Property
£’000
2015
Plant &
Machinery
£’000
2014
Property
£’000
2014
Plant &
Machinery
£’000
-
391
391
-
501
501
24
-
24
-
505
505
2015
£’000
Group
2014
£’000
2015
£’000
Company
2014
£’000
Contracts placed for future capital expenditure not
provided in the financial statements.
1,791
90
33
53
23. CONTINGENT LIABILITIES
There were no contingent liabilities at the period end for the group. The Company is included in a cross guarantee between
itself and its subsidiaries.
24. RELATED PARTY TRANSACTIONS
Group
The Group has taken advantage of the exemption not to disclose intra-group transactions that are eliminated on consolidation.
Company
The Company pays £40,000 (2014: £38,750) annually to Sir James Cropper for the use of reservoirs to supply water to the factory
premises. The contract is based on a twenty year repairing lease with rent reviews every five years. The rent is negotiated
through independent advisers representing each party. The Company paid £45,550 (2014: £76,231) to Ellergreen Hydro, a
company in which M A J Cropper is Managing Director, in the period for a maintenance project. The Company paid £23,909
(2014: £12,736) to Ellergreen Estate (trading name of the J A Cropper (1989) Settlement), a trust of which M A J Cropper is a
beneficiary, for imports of electricity from the hydro-electric plant owned and operated by the Trust.
The Company also has the following transactions with related entities:
2015
James Cropper Speciality Papers Limited
James Cropper Converting Limited
Technical Fibre Products Limited
James Cropper EBT Limited
2014
James Cropper Speciality Papers Limited
James Cropper Converting Limited
Technical Fibre Products Limited
Tech Fibers Inc
James Cropper EBT Limited
87
Management
charges
£’000
4,309
763
896
-
5,968
Loans and net
/intercompany
funding
£’000
8,071
8,997
474
269
17,811
Receivable
£’000
1,746
467
325
-
2,538
Management
charges
£’000
Receivable
£’000
Loans and net
/intercompany
funding
£’000
3,927
720
904
-
-
5,551
2,048
139
385
-
-
2,572
13,495
7,665
(3,199 )
(481 )
101
17,581
Shareholder Information
2014 - 2015 SHAREHOLDER INFORMATION
Reporting
Interim Results announced and sent to:
Ordinary Shareholders
11 November 2014
Final results announced
Annual Report issued by
23 June 2015
7 July 2015
Annual General Meeting - at Bryce Institute, Burneside, Kendal, Wednesday 29 July 2015 at 11.00am.
Dividends on Ordinary Shares
Interim dividend paid on 9 January 2015 to Ordinary Shareholders registered on 12 December 2014.
Final dividend to be paid on 7 August 2015 to Ordinary Shareholders registered on 10 July 2015.
Bankers and Advisers
James Cropper plc
Bankers
Svenska Handelsbanken AB (publ)
Barclays Bank plc
HSBC Bank plc
Independent Auditor
KPMG LLP, Preston
Burneside Mills
Kendal, Cumbria LA9 6PZ
Telephone. +44 (0)1539 722002
Fax. +44 (0)1539 720001
Email. info@cropper.com
www.cropper.com
Tax Advisers
PriceWaterhouseCoopers LLP, Newcastle upon Tyne
Company Registration No: 30226
NOMAD & Stockbrokers
Westhouse Securities Limited, London
Corporate Lawyers
Bond Dickinson, Newcastle upon Tyne
Registrars
Capita Asset Services, Beckenham
Pension Adviser
Towers Watson, Manchester
Annual Report Production
All the paper used in this report has been made in England by James Cropper PLC.
Duplex Cover
Kirkbie Green with Cambric texture
Dyers Broom with Elation feltmark, 540gsm
Strategic Report
Paper from G . F Smith
Zen, Pure White, 120gsm
Governance
Dyers Broom, 135gsm
Financial Statements
Vanguard Jade, 120gsm
Design
Plain Creative Ltd
Photography
Pantling Studio
James Cropper Archives
Steven Barber Photography
Print
Dixons Printing Company Ltd
88