ANNUAL REPORT AND ACCOU NTS 2 01 6
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.
A N NU A L R EP O RT A N D ACC O U N TS 2 01 6
GLOBAL LOCATIONS
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LOCATION
MANUFACTURING
R & D
SALES OFFICE
PARTNERS
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BURNESIDE, UK - HEAD OFFICE
PARIS, FRANCE
FRANKFURT, GERMANY
DUBAI
INDIA
SHANGHAI, PRC
GUANGZHOU, PRC
HONG KONG, PRC
MALAYSIA
AUSTRALIA
SOUTH AFRICA
BRAZIL
PHILADELPHIA, USA
SCHENECTADY, USA
CREWE, UK
“
MUCH OF THE
FUTURE GROWTH
OF JAMES CROPPER
IS CLOSELY TIED TO
THE GREEN AGENDA,
FROM DISPLACING
PLASTICS IN PACKAGING
TO HELPING MAKE
AIRCRAFT LIGHTER
”
GLOBAL PRESENCE
REDEFINING PAPER FOR LAND ROVER
In May 2015 we collaborated with British artist, Steve Messam,
to create the spectacular Paper Bridge installation in the heart of
the Lake District ‐ using durable, red colour‐fast paper that would
withstand Cumbria’s notorious weather and ensure no running of
colour into the natural surroundings.
The five‐metre bridge was designed to take the weight of the iconic
Range Rover, constructed solely from our Natural Crystal 330gsm
white paper and entirely free of glue or bolts. The hand-built bridge
took three days to construct using 54,390 sheets of paper, in order
to support the 2,374 kilogram vehicle.
In November 2015 Paper Bridge went global when Land Rover
commissioned an even more ambitious structure. As part of their
Range Rover 45th birthday celebrations at the China International
Automobile Exhibition the luxury SUV brand staged the world’s first
ever drive across a paper bridge.
WHY A PAPER BRIDGE?
This meaningful feat of engineering and artistry was erected in
China, the birthplace of paper, in the ancient water city of Suzhou
– famous for its bridges and nicknamed the ‘Venice of the East’.
“ IN 2016 EXPORTS
HIT A NEW HIGH
FOR JAMES CROPPER,
INCREASING BY 14%
TO EXCEED OVER
HALF OF TURNOVER”
FUTURE FOCUSED
SUSTAINABLE INNOVATION WITH SELFRIDGES AND THE WHITWORTH
“ OUR COLLABORATION
WITH SELFRIDGES AND THE
WHITWORTH ART GALLERY
SHOWCASES PAPERS
MADE WITH RECYCLED
COFFEE CUPS.”
SUSAN WILSON
LUXURY PACKAGING DIRECTOR
JAMES CROPPER PLC
Selfridges is championing sustainability as
part of its nationwide Bright New Things
campaign - focusing on northern companies
that come with real manufacturing heritage,
have sustainable credentials, and use time
honoured skills and production methods.
As part of the campaign, this dramatic
installation was created at Selfridges
Exchange Square, a meaningful celebration
of the reopening of Manchester’s Whitworth
gallery - now one of the most sustainable
cultural venues in the UK.
‘Hands of Industry’ was built with more
than 25,000 handmade cubes, made entirely
from James Cropper paper. The paper was
chosen to celebrate our commitment to
sustainable innovation ‐ made using fibres
from used coffee cups, recycled at our
industry‐first Reclaimed Fibre Plant.
“It’s almost a year since the Whitworth
reopened. This installation is an ideal way
to mark our first momentous year, and
to cement our relationship with two of
the country’s most creative companies,
Selfridges and James Cropper. First wedding
anniversaries are traditionally marked by
giving gifts of paper; this beautiful, paper-
based commission on the eve of our first
anniversary thus feels rather fitting.”
Dr. Maria Balshaw
Director of the Whitworth
Introduction
CONTENTS
STRATEGIC REPORT
FINANCIAL HIGHLIGHTS
FINANCIAL SUMMARY
CHAIRMAN’S LETTER
CHIEF EXECUTIVE’S REVIEW
FINANCIAL REVIEW
OUR PEOPLE SET US APART
INVESTED IN OUR COMMUNITY
ENVIRONMENTAL COMMITMENT
& SUSTAINABLE INNOVATION
GOVERNANCE
BOARD OF DIRECTORS
REPORT OF THE DIRECTORS
DIRECTORS’ REMUNERATION REPORT
SPOTLIGHT ON TFP
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CASH FLOWS
STATEMENT OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
SHAREHOLDER INFORMATION
NOTICE OF ANNUAL GENERAL MEETING
09
10
11
12
14
18
31
36
38
41
42
44
49
53
57
59
60
61
62
63
65
89
91
05
“
OUR PEOPLE SET US APART.
THE IMPORTANCE WE
ATTACH TO OUR PEOPLE
IS ALSO WHY OUR VALUES
MATTER SO MUCH.
THESE HELP US ENSURE
WE PROVIDE A SAFE,
REWARDING AND
INTERESTING PLACE
TO WORK AS WELL AS
AN ENVIRONMENT THAT
ATTRACTS THE NEXT
GENERATION OF TALENT.
MARK CROPPER, CHAIRMAN ”
OUR VALUES
TRUST, DIGNITY AND RESPECT
COMMUNITY FOCUSED
SAFETY AT WORK
CONTINUOUS LEARNING
MOTIVATED WORKFORCE
PROFITABILITY
SUSTAINABILITY
SUCCESSFUL CUSTOMERS
MARK CROPPER (RIGHT) WITH DAVID GLYNN, DRYERMAN (LEFT)
AND JOHN LANGHORNE, ASSISTANT DRYERMAN (MIDDLE)
06
THE NEXT GENERATION OF SUSTAINABLE
PACKAGING - JAMES CROPPER 3D PRODUCTS
Strategic Report
STRATEGIC REPORT
“ JAMES CROPPER 3D PRODUCTS IS A BUSINESS WHICH CAPITALISES ON OUR INDUSTRY-
LEADING FIBRE AND COLOUR CAPABILITIES AS WELL AS OUR STAND-OUT COMMITMENT
TO SUSTAINABLE INNOVATION. THE BUSINESS IS ANSWERING A GLOBAL DEMAND FOR
SUSTAINABLE PACKAGING THAT ADDS REAL VALUE FOR BRANDS - A TRUE ALTERNATIVE
TO PLASTIC.”
PHIL WILD, CEO
STRATEGIC REPORT
FINANCIAL HIGHLIGHTS
FINANCIAL SUMMARY
CHAIRMAN’S LETTER
CHIEF EXECUTIVE’S REVIEW
FINANCIAL REVIEW
09
10
11
12
14
18
09
Strategic Report - Financial Highlights
Strategic Report - Financial Summary
FINANCIAL HIGHLIGHTS
FINANCIAL SUMMARY
TOTAL REVENUE
£87.9m
87.9
83.1
84.5
79.2
78.2
PROFIT BEFORE TAX
(excluding IAS 19 Pension adjustments)
£5.2m
5.2
3.5
2.1
2.1
0.8
REVENUE BY REGION
SUMMARY OF RESULTS
2016
2015
2014
2013
2012
2016
2015
2014
2013
2012
UK
Europe
Americas
Asia
Other
10%
20%
30%
40%
50% 60%
PROFIT BEFORE TAX
£3.9m
3.9
2.6
1.3
1.2
1.0
2016
£’000
2015
£’000
2014
£’000
2013
£’000
2012
£’000
Revenue
87,920
83,052
84,518
79,241
78,223
Operating profit before interest
(excluding IAS 19 impact & exceptionals)
6,264
3,899
2,545
2,535
1,207
Profit before tax
(excluding IAS 19 impact)
Impact of IAS 19
Profit before tax
(after IAS 19 impact)
Earnings per share - diluted
5,173
(1,305 )
3,868
31.8p
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
BALANCE SHEET SUMMARY
2016
£’000
2015
£’000
2014
£’000
2013
£’000
2012
£’000
(2016 includes exceptional adjustments re impact of flood)
(2016 includes exceptional adjustments re impact of flood)
Non-pension assets – excluding cash
57,470
50,810
51,093
48,426
46,278
DILUTED EPS
31.8p
GEARING
(excluding IAS 19 deficit)
22%
31.8
20.1
15.0
10.0
9.5
NET DEBT
£7.3m
7.3
6.1
6.5
10.3
9.3
22
20
23
35
33
CAPITAL EXPENDITURE
£4.1m
2.6
3.0
4.1
4.1
5.9
2016
2015
2014
2013
2012
2016
2015
2014
2013
2012
10
Non-pension liabilities – excluding borrowings
(17,019 )
(14,289 )
(11,230 )
(10,831 )
(11,956 )
Net IAS 19 pension deficit (after deferred tax)
(6,453 )
(11,554 )
(9,312 )
(7,972 )
40,451
36,521
39,863
37,595
33,998
24,967
30,551
29,623
Net borrowings
(7,305 )
(6,105 )
(10,277 )
(9,286 )
Equity shareholders’ funds
26,693
18,862
20,274
20,337
Gearing % - before IAS 19 deficit
Gearing % - after IAS 19 deficit
Capital expenditure £’000
22%
27%
4,086
20%
32%
2,619
35%
51%
2,958
33%
46%
4,072
34,322
(5,850 )
28,472
(6,505 )
21,967
23%
30%
5,934
11
2016
2015
2014
2013
2012
2016
2015
2014
2013
2012
2016
2015
2014
2013
2012
2016
2015
2014
2013
2012
Strategic Report - Chairman’s Letter
CHAIRMAN’S LETTER
Dear Shareholders
I am delighted to report another year of strong progress in
2015/16.
Technical Fibre Products continues to deliver on our long held
aspirations for the subsidiary. This year was marked by the
commissioning of a new production line at the Burneside facility
in the UK with further investments in the USA in particle plating
technology. The UK investment doubles our production capacity
for non- woven materials providing much needed room for
growth. This year’s double digit growth would not have been
achieved, however, without a significant improvement to the
operational efficiencies of existing plant. Both sales growth and
operational developments are a credit to the teams involved. A
spotlight on Technical Fibre Products is presented in this Annual
Report by TFP’s Managing Director Martin Thompson.
In Paper, growth has been sustained in a number of targeted
markets of which packaging is one with a number of large global
contracts acquired with world leaders in consumer electronics
and luxury goods. During the year we have invested in additional
capacity in embossing and ream wrapping in response to
customer demand.
Investment for growth is a marked feature of the 2015/16 financial
year. New subsidiary James Cropper 3D Products (“3DP”),
created to provide stand-out sustainable moulded fibre products,
made good progress with more expected in the coming year. This
initiative resulted directly from the Board’s decision to create a
new Technology & Innovation Department in early 2014. While
it is still early days, we are hopeful that 3DP will provide another
growth platform for the Group.
3DP also aligns with a broader theme for the Group: the demand
for a growing number of our products is tied to the green or
sustainable agenda, from carbon fibre veils for composite aircraft
to fully recyclable paper products, themselves with high levels
of recycled content. We follow such trends keenly, albeit never
losing sight of the importance of more traditional markets and the
tailored service we continue to provide them.
Looking internally, the progress of the Group is also being
heightened by a continual drive to transform the way we operate
across all functions, from operations to finance and commercial.
Developments include revised structures and processes as well
as continued investment in training, coaching and development
programmes. Such advances, as set out further in the CEO
report, are often unsung and can take considerable time to yield
benefits, but they are essential and will provide the Group with
considerable resilience.
Ultimately, however, it is our people, at every level, who are making
the difference. Nowhere was this more apparent than in our
workforce’s response to Storm Desmond at the Burneside facility.
Hardly a single employee did not contribute to the recovery in
some way, and many gave up their Christmas break to get us back
on our feet. The turnaround was impressive, although the event was
not without consequences. Around £0.7m of site wide replacement
and repair projects were postponed as maintenance teams focused
on recovery; these will be completed in the 2016/17 financial year.
Net exceptional costs of £0.77m were incurred in the year as a result
of insurance excesses, uninsured losses and the award of a grant to
alleviate the impact of the flood. To mitigate future flood risks, the
Board has approved £1m of capital investments in 2016/17 to build
flood resilience at the Burneside site.
12
The importance we attach to our people is also why our
values matter so much. These help us ensure we provide a
safe, rewarding and interesting place to work as well as an
environment that attracts the next generation of talent. We
continue to monitor and measure our performance against them.
Diluted Earnings per Share (after the adjustment for IAS 19)
increased by 58% to 31.8 pence compared to 20.1 pence in the
previous year.
The Board is recommending a final dividend of 7.1 pence per
share making a total dividend for the financial year of 9.3 pence,
an increase of 9.4% on the prior year.
2016
2015
2014
2013
2012
DIVIDEND PER SHARE 2016
9.3p
8.5p
7.9p
7.9p
7.9p
Interim
Final
Proposed
The other aspects of this year’s financial performance are covered
in the CEO Report and elsewhere.
OUTLOOK
A personal highlight for me this year was the celebration we
held to mark the opening of our new TFP line and our 170th
anniversary. This was held primarily to thank our employees and
community at Burneside. We invited the whole village and over
770 people came for tea and a tour. The village bakery provided
cakes and the Burneside Ukelele Band kept us entertained. All
who came remarked upon the friendly engaging atmosphere they
encountered and the evident pride taken in the ‘Mill’, as we call
it in the family.
Today we are so much more than a mill, with over 540 people
and operations across the globe, as evidenced on the global map
at the front of this report. We also work hard to make a positive
contribution to the world, near and far. We will never stand still,
there is still so much more we aspire to do, as suggested in the
coming pages.
The Group has performed strongly in 2015/16, a testament to
the strategies introduced and deployed in the last few years.
Although we will be catching up with a number of deferred
repair projects in 2016/17, growth will continue to be delivered
with further capital investments across all divisions in support
of focused market developments and group wide efficiency
improvements. This gives me confidence that the Group will
continue to advance for some years to come.
M A J Cropper
Chairman
13
Strategic Report - Chief Executive’s Review
Strategic Report - Chief Executive’s Review
CHIEF EXECUTIVE’S REVIEW
REVENUE
(2015: £83.1m)
£87.9m +6%
OPERATING PROFIT BEFORE INTEREST
(excluding IAS 19 impact & exceptional items)
(2015: £3.9m)
£6.3m +61%
PROFIT BEFORE TAX
(after exceptional items but before IAS19 impact) (2015: £3.5m)
£5.2m +48%
PROFIT BEFORE TAX
(2015: £2.6m)
£3.9m +50%
NET BORROWINGS
(2015: £6.1m)
GEARING
After IAS19 deficit
(2015: 32%)
£7.3m +20%
27%
-16%
DILUTED EARNINGS PER SHARE
(2015: 20.1p)
FULL YEAR DIVIDEND PER SHARE
(2015: 8.5p)
31.8p +58%
9.3p +9%
PROFIT
I am pleased to report a 61% growth in operating profit before
interest to £6.3m in the year to 2 April 2016, compared to
£3.9m in the prior year, prior to the impact of IAS 19 pension
adjustments and exceptional costs.
Profit before tax, after exceptionals and prior to IAS 19, was
£5.2m, up £1.7m on 2015, representing an increase of 48%.
Exceptionals are described in the financial review section of
this report, and are applicable in the year to 2 April 2016, there
were no exceptionals in the prior year.
Profit before tax of £3.9m was up £1.3m on prior year.
REVENUE
Group revenue for the financial year was £87.9m, up 6%
on the prior year.
Revenue for James Cropper Paper grew by 1% in the year
to £69.2m and operating profit by 7% to £2.6m.
For Technical Fibre Products revenue grew by 29% in the
year to £18.7m and operating profit more than doubled with
an increase of 117% to £5.9m.
PHIL WILD
Chief Executive Officer, James Cropper PLC.
RESEARCH AND DEVELOPMENT
Research and development (R&D) is a fundamental part of
our growth strategy, adding to our capability, maintaining
our competitiveness and bringing new product lines into our
target markets. The Group continues to invest in research and
development with expenditure in R&D of £1.8m this year, up
38% on prior year.
CAPITAL EXPENDITURE
Capital expenditure during the year was £4.1m (2015: £2.6m). The
largest investment was on a new production line in TFP, completed
and commissioned in the first half and doubling capacity.
CASH AND DEBT
The Group had gross debt of £10.5m at the balance sheet date
and cash of £3.2m, giving a net debt of £7.3m (2015: £6.1m).
The Group had undrawn overdraft and revolving credit
facilities of £5.0m, at the balance sheet date and borrowings of
£3.9m to be repaid within 12 months. The undrawn facilities
and the cash provide funds against which the short term
borrowings can be paid, leaving £4.3m of cash available to the
Group at the year end. Post year end the Group has secured a
second revolving credit facility of £5.0m.
Gearing at the financial year end, after deduction of the IAS 19
pension deficit, was down from 32% on the previous year to
27% this year.
MARK STARRS
STRATEGY
In 2013 we laid out five strategic platforms for growth that
continue to drive progress across all areas of the company.
HIGH PERFORMANCE CULTURE
The capabilities, knowledge and motivation of our people
continue to set James Cropper apart - we see this High
Performance Culture as the foundation of our continued growth.
Measured improvements
Part of our strategy is to measure our High Performance Culture
through an employee survey. This has showed significant
improvements since the previous survey two years ago.
Our previous survey recorded above-average levels of
employee engagement and provided valuable insight for
development. Only two years later, our latest survey showed
an 11% increase in engagement spanning all topic areas
explored; this is 10% higher than the national average. Insights
also demonstrated the positive impact, business-wide, of our
senior management restructuring.
92% I HAVE THE NECESSARY SKILLS AND
KNOWLEDGE TO DO MY JOB WELL
95% I’M PREPARED TO CHANGE HOW
I WORK TO IMPROVE BUSINESS
EFFECTIVENESS
93% I KNOW WHAT’S EXPECTED
OF ME IN MY JOB
80% I BELIEVE THAT THE COMPANY
IS WELL LED BY ITS SENIOR
MANAGEMENT TEAM
85% I AM FAIRLY TREATED
BY MY MANAGER
Continued investment in individuals
Our High Performance Culture is driven by continued
investment in individuals at all levels in the company.
We are drawing on world-class external training, coaching
and development programmes to maximise performance,
knowledge and skills - ultimately ensuring that we maintain
our competitive edge.
Sales Excellence a permanent focus
James Cropper businesses excel in sales by adding value.
Our project-oriented approach provides comprehensive
support to clients, in line with the quality of our products.
As our programme of training and mentoring continues,
I am proud to report that our sales teams are better equipped
than ever before to exceed the expectations of our clients
around the globe.
14
15
Strategic Report - Chief Executive’s Review
EXISTING MARKET OPPORTUNITIES
Driving organic growth in our core markets is a continued
strategic focus, and this year we have seen positive results
across the Group.
TFP - Core markets
In TFP we continue to drive expansion in a number of core,
profitable markets. Aerospace and Defence represent 30% of TFP
sales and, supported by our AS9100 accreditation growth is strong.
See Martin Thompson’s special review (page 53), of exciting
new applications for our nonwovens, as well as developments in
thermals that confirm our position as thought leaders in technical
fibre innovation.
Paper - Global strategy brings positive results
In Paper, we are driving growth in a number of targeted
markets including packaging. This year we have won a number
of large global contracts including world-leaders in consumer
electronics, luxury gifts and jewellery.
Our global position has strengthened on the back of our
WOFE (Wholly Owned Foreign Enterprise) in China,
which enables use of local currency, local communication
and transactions. Perhaps most importantly, it enables us to
keep complete chain of custody of our materials - supporting
the accreditation and credibility of our products throughout
the supply chain.
Additionally, we are re-establishing the global presence
of certain paper products to align with global trends. One
example is our Wall-Ready pre-coated inkjet media range,
a cost-effective solution with broad applications in the fast-
growing Sign & Display ‘print-on-demand’ market, as well as
Photo Retail.
SUPERIOR LEVELS OF
OPERATIONAL EXCELLENCE
We have continued to advance manufacturing capacity and
processes, invested in world-first technical capabilities,
extended our commitment to sustainability and achieved
accreditations that support a truly competitive position
in all our markets.
New potential for TFP, driven by sales growth
This year we have opened a third TFP production line at
Burneside Mills. This investment has doubled manufacturing
capacity across this business. TFP has had a record year and
we anticipate even better results in the future.
On page 53, a special report by Managing Director of TFP,
Martin Thompson, describes other significant operational
developments. These include product development on our
nano-coating line and the opening of our particle-coating
production facilities, as well as our new AS9100 accreditation
- an invaluable asset which secures our position as a credible,
reliable supplier to the aerospace industries.
Expanding capabilities in Paper
Developments in Paper are driven by our knowledge of
the global market, and our technical know-how. We have
continued to invest in new technologies, expanding the
possibilities for our global paper clients. This year we have
made the investment in additional paper embossing capacities
enabling us to create entirely unique textures, appearances
and finishes for our customers. Developments such as these
continue to enhance our position as industry leaders in
bespoke papermaking. New ream-wrapping equipment has
enhanced the presentation of stock orders to merchants.
ISO50001 accreditation underpins our sustainable
innovations
Sustainability is at the core of our values. We are a business not
only striving to reduce environmental impact through our own
responsible manufacture, but also through the products we
create, so I am delighted to report our ISO 50001 certification
in 2015. This internationally recognised energy-management
standard demonstrates our on-going commitment to reducing
energy consumption and greenhouse gas emissions. As an
operational system, it drives energy efficiency and protects
our energy security - we see this as one of many important
progressions for our future-focused Group.
GAINING ADDITIONAL PROFITABLE
MARKET SHARE
Continued research and development has underpinned several
new developments this year, where we enter new global markets.
James Cropper 3D Products - The next generation of
moulded fibre
In 2014 we created a Technology and Innovation Department,
led by our Chief Technology Officer Patrick Willink. The
objective was to create a third business within the James
Cropper Group - an additional platform for growth.
We undertook a rigorous scope of research; analysing global
trends and fields of innovation, while exploring the wider
potential of our unique capabilities in fibre innovation, colour
application, design and global service provision.
James Cropper 3D Products is the result - a business which
capitalises on our industry-leading fibre and colour capabilities
as well as our stand-out commitment to sustainable
innovation. As we launch we are answering a global demand
for sustainable packaging that adds real value for brands - a
true alternative to plastic.
Paper - Food contact paper is among new developments
James Cropper paper adds value. This year, our new brand
of certified food contact paper has launched to add value to
the packaging experience for the high-end food and drink
sector. Customers will benefit from exceptional and bespoke
possibilities in colour, texture, creative finishing and technical
performance - all realised at our Burneside Mill.
Also in Paper, the new Porcelain paper range is our
smoothest ever paper - the new benchmark for flawless paper
manufacture and effortless printing.
TFP - Out of this world
TFP is a business driven by future-focused research and
innovation, meaning we are always well placed to explore
new market opportunities. Our products support future
technologies and renewable energy, reduce fuel consumption
in aeroplanes and provide fire protection in buildings…to
mention just a few examples. This year, we are proud to see
our nonwovens launch into space in NASA’s Jason-3 satellite -
please see page 53 for Martin Thompson’s special review.
GLOBAL PRESENCE, GLOBAL SERVICE
As a global organisation we work to enhance our position
at every level in the business - from sales excellence and
service through to brand awareness and establishing thought
leadership in our industries. Customer intimacy is a big part
of this strategy - through developments in global service, and
internationally important trade shows such as Luxepack and
JEC, we strive to be close to our customers wherever they are.
Aligned with the best in the world
This year has seen a number of high profile collaborations,
which demonstrate our global presence and prove the
relevance of our values in important market sectors.
Highlighted in this report, you will see the continued
exposure of our PaperBridge creative collaboration - which
has gone global and was commissioned by Land Rover. You
will also find our creative partnership with the UK’s high-end
retailer, Selfridges, and Manchester’s Whitworth gallery - now
reopened as one of the most sustainable cultural venues in the
UK. Through partnerships such as these we continue to set an
example in our industry, and those of our clients.
Recognised thought leaders in sustainable innovation
Our commitment to sustainability speaks to a global audience.
In 2016, we gained exposure in national media, and on
BBC Radio, when our industry leading Reclaimed Fibre
Plant was highlighted as a pioneering solution to the ‘coffee
cup problem’. Through our manufacturing standards, our
sustainable innovations and our proactive approach to real
world concerns, we continue to build our global reputation as
thought leaders in our industry.
Phil Wild
Chief Executive Officer
16
17
Strategic Report - Financial Review
Strategic Report - Financial Review
FINANCIAL REVIEW
REVENUE
Paper Products
Technical Fibre Products
Revenue
2016
£’000
69,182
18,738
87,920
2015
£’000
CHANGE
£’000
CHANGE
%
68,505
14,547
83,052
677
4,191
4,868
1%
29%
6%
Group Revenue increased year on year to £87.9m from £83.1m, a 6% increase. Revenues include a £750,000 receipt of business
income insurance, designed to put the business in the same financial position it would have been in if Storm Desmond had not
impacted one of our production facilities. Trade revenues for the Group, excluding business income insurance, are £87.2m a 5%
increase on prior year. Clear growth for the Group in Europe and America in the year with trade in these regions now at 20%
and 21% of total trade respectively.
Paper increased sales by 1% despite challenging market conditions where the first half saw the demise of a major global paper
merchant and another UK based Paper mill.
The UK market also faced strong challenges from Europe, for the large part of the year, when the Euro remained weak. Against
this backdrop, UK sales were under pressure however strong opportunities in Europe and the US came through delivering
growth in these markets. All regions provide good opportunity for profitable growth of our innovative products in line with our
core strategic direction for Paper.
TFP sales show an increase of 29% on the prior year, an excellent year in terms of growing sales with strong margins in the key
markets of aerospace, green technologies and defence. During the year the business installed and commissioned additional non-
woven production capacity and a particle plating line, and sales started to initiate on these investments.
PROFIT SUMMARY
Paper Products
Technical Fibre Products
Other Group expenses
2016
£’000
2,592
5,904
2,419
2,719
(2,232 )
(1,239 )
Operating profit before Interest prior to IAS 19 and exceptionals
6,264
Net interest prior to IAS 19 finance costs
Profit before tax prior to IAS 19 and exceptionals
Exceptional costs
Profit before tax prior to IAS 19
Net IAS 19 pension adjustments
Net current service charge required
Net interest
Net IAS 19 pension adjustment before tax
Profit before tax
OPERATING PROFIT
(326 )
5,938
(765 )
5,173
(839 )
(466 )
(1,305 )
3,868
3,899
(405 )
3,494
-
3,494
(418 )
(501 )
(919 )
2,575
173
3,185
(993 )
2,365
79
2,444
(765 )
1,679
(421 )
35
(386 )
1,293
7%
117%
80%
61%
-20%
70%
-
48%
101%
-7%
42%
50%
Group Operating Profit before interest, prior to the impact of IAS 19 and exceptional costs, has seen growth with a 61% increase
on prior year, £6.3m (2015: £3.9m).
Paper attained a 7% increase on profitability, assisted by the sale of the Papermilldirect on-line retailing business which detracted
from our core business-to-business strategic growth direction.
TFP experienced record profits delivering £5.9m compared to £2.7m in the prior year.
2015
£’000
CHANGE
£’000
CHANGE
%
Raw materials and consumables used
(35,795 )
(34,415 )
(1,380 )
EXCEPTIONAL COSTS
On the 5th December last year, large areas of northern England were affected by exceptionally high rainfall. This resulted in
flooding across Cumbria impacting one of our sites based in Burneside. This site had some areas that were significantly affected,
however the response from various teams across our workforce to secure the safety of employees and get production at the
Burneside site back up as quickly as possible was exceptional and full production was reinstated more quickly than first expected.
The Group is working closely with our loss adjusters on making good damage to utilities, structures and facilities. Our insurance
for this period covered losses to stocks, consequential losses and plant and equipment, with excesses of £15,000 for stocks, and £1
million for consequential losses and plant and equipment. The business is grateful to Cumbria Local Enterprise Partnership and
to Cumbria County Council, which has already started to make payments against a total £1 million grant to contribute towards
uninsured losses.
Uninsured losses within exceptional costs come to £1.77m in the year, covering £1.01m excess for stock, and for physical damage
to property, and £750,000 of other uninsured damaged items, including an estimate from management for ongoing uncertainties
at this stage as work with the loss adjusters continues. Also recognised separately within exceptionals is full recognition of the
£1m grant as income. Net costs of £765,000 have been recognised separately within exceptionals in the year. It is expected that
the claim will be finalised during the latter half of this calendar year.
Managing the potential impact from floods in the future is one aspect of risk management that will be accelerated. The Group’s
main strategy going forward is to build flood resilience at the Burneside site. The Group Board has approved an additional £1m
of capital investment to protect key structures or relocate them away from a flood risk zone. This is a key part of the Group’s
strategic risk management programme, ensuring best practice for business continuity in protecting a key site, our reputation and
our market share.
EXPENSES
This table captures key expenses down to operating profit before interest prior to IAS 19 and exceptionals.
2016
£’000
2015
£’000
CHANGE
£’000
CHANGE
%
Energy costs
Employee benefit costs
Depreciation and amortisation
Other expenses
Other income and changes in inventory
Total Expenses
(4,519 )
(5,186 )
667
(24,316 )
(22,189 )
(2,127 )
(2,306 )
(2,502 )
(16,996 )
(15,427 )
2,276
566
(81,656 )
(79,153 )
196
(1,569 )
1,710
(2,503 )
4%
-13%
10%
-8%
10%
302%
3%
Energy costs were lower than the prior year with the overall cost of consumption being £4.5m compared to £5.2m in the
comparable period. Raw materials and consumables used are in line with growth. The average full time equivalent employed
increased to 518 from 507 in the comparative year. Included in employment costs are provisions for a profit related bonuses
due to employees as a result of the successful growth in profitability. Employment costs were £24.3m compared to £22.2m in
the previous year. IAS 19 dictates that a charge be made against operating profits of £839,000 over and above the cost of current
service contributions, (2015: £418,000). As a result of this employment costs after the impact of IAS 19, and as presented in the
Income Statement, are £25.1m (2015: £22.6m).
Within expenses we have increased freight and distribution charges, supporting costs for the development and training programmes for
the Group, marketing activities, general repairs and maintenance and site running costs. One of the consequences of Storm Desmond
was to defer £712,000 expenditure on a programme of replacement and repair activities at the Burneside site. This programme will
be picked up in 2016/17. Also within expenses we have the start-up costs for James Cropper 3D Products (3DP), a diversification
opportunity to bring growth, strength and greater presence to the Group. Start-up costs for this entity are in line with expectations
and captured within other expenses.
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EBITDA
The Group monitors EBITDA prior to the impact of IAS 19 and exceptional costs. EBITDA is operating profit before interest,
tax, depreciation and amortisation.
EBITDA
2016
£’000
2015
£’000
CHANGE
£’000
CHANGE
%
OPERATING PROFIT before Interest prior to IAS 19 impact
and exceptionals
6,264
3,899
2,365
Depreciation and amortisation
2,306
2,502
(196 )
EBITDA prior to IAS 19 and exceptionals
8,570
6,401
2,169
61%
-8%
34%
The Group achieved a 34% increase in EBITDA, £8.6m compared to £6.4m in the prior year comparative, both Paper and TFP continue to
be strongly cash generative.
CURRENCY
Opening rate April 2015 v. £
Closing rate March 2016 v. £
Exchange rate movement
Strengthen/(Weaken) v. £
US$
1.4826
1.4132
4.7%
€
1.3677
1.2417
9.2%
A comparison of the opening and closing exchange rates for the financial year show both the euro and the dollar strengthening
against sterling by the close of the year. Both the euro and the dollar weakened against sterling in the first half of the year and
recently the dollar strengthened to close at 4.7% against sterling and the euro is 9.2% stronger against sterling by the close of the
year. 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 US$ and the receipts fund the purchase of US$ priced pulp.
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. The Groups foreign exchange risk management
approach to currency fluctuations is discussed under the Principal Risks section in this Financial Review.
THE IMPACT OF IAS 19 ON OPERATING PROFIT AND PROFIT BEFORE TAX
TAX
IAS 19 IMPACT
Net IAS 19 pension adjustments
Net current service charge required
Net interest
Net IAS 19 pension adjustment before tax
2016
£’000
2015
£’000
CHANGE
£’000
CHANGE
%
(839 )
(466 )
(1,305 )
(418 )
(501 )
(919 )
Operating profit before interest prior to IAS19 & exceptionals
6,264
3,899
Exceptional costs
Operating profit after exceptionals
IAS 19 impact on operating profit
Operating profit after IAS 19
Net interest prior to IAS 19
IAS 19 impact on interest
Interest payable and similar charges
(765 )
5,499
(839 )
4,660
(326 )
(466 )
(792 )
-
3,899
(418 )
3,481
(405 )
(501 )
(906 )
Profit before Tax
3,868
2,575
(421 )
35
(386 )
2,365
(765 )
1,600
(421 )
1,179
79
35
114
1,293
101%
-7%
42%
61%
-
41%
101%
34%
-20%
-7%
-13%
50%
IAS 19 “Employee benefits” requires a set methodology to be applied to calculate the pension scheme deficits, finance and
operating costs based on assumptions determined by the reporting date. This can result in a volatile view of pension management
from one reporting period to the next. The Group manages pensions according to an on-going valuation and more details of this
approach is provided under “Pensions”.
IAS 19 determines £1.3m of costs (2015: £0.9m) to be recognised within the income statement. After taking this into account
profit before tax, in the year was £3.9m (2015: £2.6m).
The Group’s total tax charge for the year is £915,000 (2015: £694,000) a tax rate of 23% 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 2 April 2016 have been calculated based on
the rate of 18% substantially enacted at the balance sheet date.
CASH, BORROWINGS AND BALANCE SHEET
During the year the Group secured a £5.5m revolving credit facility to provide financial flexibility. Over the year net debt
increased by £1.2m, long term borrowings (falling due after more than a year) increased by £499,000 to £6.6m. The Group’s aim
is to provide stability of financing via the generation of strong operating cash inflows and a range of financing facilities with
varying maturities from a variety of sources. The Group has secured a second revolving credit facility of £5.0m post year end.
FUNDING
Cash and cash equivalents
Borrowings: repayable within one year
Borrowings: non-current
Net debt
Borrowings: repayable within one year
Borrowings: non-current
Facilities drawn down
Undrawn facilities
Facilities
Cash and cash equivalents
Undrawn facilities
Funds available at year end
Borrowings: repayable within one year
Funds available in excess of one year
2015
£’000
CHANGE
£’000
2016
£’000
3,186
(3,886 )
(6,605 )
(7,305 )
3,886
6,605
10,491
5,013
2,721
(2,720 )
(6,106 )
(6,105 )
2,720
6,106
8,826
4,658
15,504
13,484
3,186
5,013
8,199
(3,886 )
4,313
2,721
4,658
7,379
(2,720 )
4,659
465
(1,166 )
(499 )
(1,200 )
1,166
499
1,665
355
2,020
465
355
820
(1,166 )
(346 )
Cash and cash equivalents moved from £2.7m to £3.2m in the year. Net cash inflow from operating activities in the year was
£3.7m after deducting past service pension deficit payments of £1.3m, (2015: £7.8m after deducting past service deficit payments
of £1.4m). The Group’s aim is to grow revenues whilst controlling working capital, during the year the working capital cash
outflow was £2.1m (2015: inflow of £3.5m). Capital expenditure in the year was £4.1m (2015: £2.6m).
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BALANCE SHEET
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
2016
£’000
2015
£’000
57,470
50,810
(17,019 )
(14,289 )
40,451
36,521
(6,453 )
(11,554 )
33,998
(7,305 )
26,693
22%
27%
4,086
24,967
(6,105 )
18,862
20%
32%
2,619
The overall IAS 19 pension deficit decreased by £6.6m to £7.9m. After offsetting a deferred tax asset of £1.4m the IAS 19 pension
deficit, net of deferred tax decreased by £5.1m over the year to £6.4m. A greater analysis of IAS 19 on pensions is provided
further within this section of the report.
Retirement benefit liabilities
Deferred tax asset
Net Pension Deficit
2016
£’000
2015
£’000
CHANGE
£’000
(7,870 )
(14,442 )
1,417
2,888
(6,453 )
(11,554 )
6,572
(1,471 )
5,101
Shareholders’ funds increased by £7.8m to £26.7m, from £18.9m at the previous year end, resulting in a gearing ratio of 27% post IAS
19 deficit. With EBITDA of £8.6m (2015: £6.4m) the Group’s leverage ratio (Net debt/EBITDA) is 0.9 (2015 leverage ratio of 1).
PENSIONS
The Group operates three pension schemes. An increasing number of employees, now close to 60%, 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 two 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.
TRIENNIAL “ON-GOING” VALUATION 2013
Discount Rate
Assets
Liabilities
Deficit
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 )
91%
81%
85%
Work has commenced on the next triennial “on-going” valuation set for April 2016. 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. A schedule of annual cash contributions to eliminate the deficit are
subject to a new agreement with the trustees. The evaluation of pension liabilities based on the April 2016 “on-going” valuation will
lead to the consideration of liability management exercises and a new agreement with the trustees on payments to reduce the deficit.
It is the Group’s legal responsibility to fund the defined benefit pension scheme deficits. The “on-going” valuations provide the
Group with a steady platform to manage the deficit from one valuation to the next and agree a funding plan.
The Group’s current payment plan to reduce the past service deficit amounts to contributions of £1.3m per annum. These
have an impact on both 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
Deficit contributions
THE STAFF SCHEME
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 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 £570,000 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 £660,000 in respect of the deficit and
will meet expenses of the Scheme and levies to the Pension
Protection Fund.
The Schemes were closed to new members in the year 2000 in order to contain the Group’s 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% from 1st April 2011, and starting in April 2014 employee contributions were increased.
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23
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IAS 19 “EMPLOYEE BENEFITS”
IAS 19 requires the Group’s actuaries to make a number of assumptions including, 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. Discount rates for IAS
19 are based on corporate bond yields, which run higher than gilt yields which form the basis for the triennial valuations. 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), and which in turn have 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 have increased by 2% over the period, whilst the schemes liabilities decreased by 4%.
The IAS19 valuations of these schemes as at 2 April 2016 reveal a combined deficit of £7.9m compared with £14.4m at the previous
year end, a decrease of £6.6m.
IAS 19 VALUATION 2016
STAFF WORKS
SCHEME
SCHEME
BOTH SCHEMES
TOTAL
2016
TOTAL
2015
CHANGE
%
Discount Rate
3.55%
3.55%
3.55%
3.30%
Assets
Liabilities
Deficit
£000s
£000s
£000s
£’000
46,345
47,926
94,271
92,346
(46,375 )
(55,766 )
(102,141 )
(106,788 )
2%
(4%)
(30 )
(7,840 )
(7,870 )
(14,442 )
(46%)
Funding Level - %
100%
86%
92%
86%
The decrease in the schemes overall deficit was principally
caused by a small increase in the discount rate to 3.55% (3.3%
at March 2015), this is fixed by reference to corporate bond
yields and shows a small favourable movement against the
prior year position.
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 this chart. 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)
7.0%
5.3%
3.5%
1.8%
0.0%
‘05
‘06
‘07
‘08
‘09
‘10
‘11
‘12
‘13
‘14
‘15
‘16
IAS 19 Pension Deficit (£m)
Discount Rates
IMPACT ON PROFIT
The Group is required to report the impact of IAS 19 on pensions. 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 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:
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.
IAS 19 IMPACT ON OPERATING COSTS
FINANCE COSTS, BEING THE NET OF
• Expected return on pension scheme assets
• Interest cost on the accrued pension scheme liabilities
The cost of providing pension benefits is included within operating profit on the income statement. The costs include the costs
for the defined contribution schemes, personal pension plans, defined benefit schemes, life assurance and government pension
protection levies. These costs also include an excess charge of £839,000 (2015 £418,000) determined by IAS 19 over and above the
current service contributions for the defined benefit schemes. 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 2013 “on-
going” valuations, were £520,000. Under IAS 19 the charge against operating profit in the year was £1.3m. This table analyses
employment costs charged against Operating Profit prior to IAS 19 and after the impact of IAS 19, overall pension costs increases
from £1.5m in 2015 to £2.2m in 2016.
TOTAL ADJUSTED EMPLOYMENT COSTS
Wages and salaries
Social security costs
Pension costs - future service pension contributions paid
Other pension costs
Chargeable against operating profit prior to IAS 19
Wages and salaries
Social security costs
Pension costs - IAS19 impact on Operating Profit
Other pension costs
2016
£000
21,105
1,886
524
801
24,316
21,105
1,886
1,363
801
2015
£000
19,403
1,688
561
537
22,189
19,403
1,688
979
537
CHANGE
£000
(1,702 )
(198 )
37
(264 )
(2,127 )
(1,702 )
(198 )
(384 )
(264 )
(2,548 )
(421 )
IAS 19 IMPACT ON FINANCE COSTS
IAS 19 TOTAL IMPACT ON 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 £466,000 is charged to the
income statement this year (2015: £501,000).
The Group’s profit before tax is based on the adjustments
required to incorporate IAS 19, these adjustments are within
operating costs and finance costs as shown.
THE TOTAL CHARGE AGAINST PROFITS FOR THE
YEAR END 2 APRIL 2016 IS £1.3M (2015: £0.92M).
6,000
This chart sets out the impact of IAS 19 on Profit before tax in the last 2 years. The Group’s PBT prior to IAS 19
adjustments is £5.2m (2015: £3.5m), after IAS 19 is £3.9m (2015: £2.6m).
839
466
4,500
0
0
0
£
3,000
5,173
1,500
418
501
3,868
3,494
2,575
March 2016 PBT
prior to IAS 19
IAS19 impact on
operating costs
IAS19 impact on
Finance costs
March 2016
SCI PBT
March 2015 PBT
prior to IAS 19
IAS19 impact on
operating costs
IAS19 impact on
Finance costs
March 2015
SCI PBT
SCHEME DISCOUNT RATES AND
PENSION DEFICIT UNDER IAS 19
Chargeable against operating profit after IAS 19
25,155
22,607
Difference being: Net IAS 19 pension adjustment against operating profit
839
418
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Strategic Report - Financial Review
Strategic Report - Financial Review
RISK MANAGEMENT
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. High risks in
financial and operational areas are normally more dependent
on insurance, however our flood resilience programme for the
Burneside site is testimony to a self-insurance approach which
provides protection to a key site. Risks in commercial and
personnel areas, because of their nature, are more likely to be
managed by self-insurance.
Each subsidiary company has a strategy and within that a
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 Group’s Audit Committee monitors and
reviews the effectiveness of the Group’s financial accounting
process and system of internal controls. In addition the Board
has departmental teams with risk management briefs. These
include:
• Health & Safety
• Insurance
• Human Resources
• Pensions
• Environment
• Treasury
• Purchasing
• Information Systems
PRINCIPAL RISKS
EMPLOYEE SAFETY - FIRE
RISK DESCRIPTION AND IMPACT
MITIGATION
The Group recognises the importance of protecting
employees, contracted person(s), visitors and members of the
public from any fire related risks whilst on site.
This includes the maintenance and protection of buildings,
equipment, raw materials and associated services without
which, manufacturing operations could be affected.
James Cropper adheres to their legal and moral responsibilities
with regard to fire by carrying out the following:-
• Fire risk assessments to identify and prioritise hazards
and necessary control measures;
• Developing and implementing appropriate arrangements
and procedures based on the risk assessment findings
• Identifying and allocating necessary resources
• Providing and maintaining any identified and required
fire prevention measures
• Providing appropriate information, instructions,
supervision and training
• Ensuring fire safety responsibilities are designated and
made known to all employees
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.
ENVIRONMENTAL SUSTAINABILITY
RISK DESCRIPTION AND IMPACT
MITIGATION
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 an 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 OHSAS 18001 framework which is proactively
driven across every division. This is further supplemented with
engagement from the executive team and senior management
in our proactive workplace standards inspections initiative,
where time is taken to review, grade and promote a safe
working environment with employees at all levels across the
organisation. Our dedication to continuously improving
occupational health and safety has been recognised on 2
consecutive years as RoSPA (Royal Society For the Prevention
of Accidents) has accredited the James Cropper Group with a
Gold Award for 2015 and 2016.
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 and is 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.
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.
ENVIRONMENTAL FLOODING
RISK DESCRIPTION AND IMPACT
MITIGATION
The risk that a flood on one of the Group’s operational sites
causes significant business interruption, cost and disruption
to business, with consequences on customer confidence, cash,
insurance and business continuity.
Accounting for flood risk through transfer to insurance
and ensuring effective crisis management practise in a flood
response situation is one aspect of risk management that will
continue.
The Group’s main strategy is to build flood resilience and
to minimise the impact of a future flood, enabling prompt
operational recovery in the event of a flood. The Group has
approved an investment of £1m to protect key elements of
plant and equipment and to remove material storage out of the
flood risk zone.
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Strategic Report - Financial Review
Strategic Report - Financial Review
ENVIRONMENTAL TAXATION
PENSION
RISK DESCRIPTION AND IMPACT
MITIGATION
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 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.
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 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 2016
forward carbon emission purchase commitments are in place to
December 2018, these provide the Group with some certainty
over the future cost of emissions.
ENERGY MANAGEMENT AND ENERGY TAXATION RISKS
RISK DESCRIPTION AND IMPACT
MITIGATION
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 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, due to it’s operation of an energy efficient CHP
plant. 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.
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 Company has qualified for compensation for the indirect
cost of EUETS and CPS in 2015 and will continue to apply
for compensation whilst this support is available from the
Government. 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. James Cropper is
pleased to have obtained ISO 50001 accreditation in Nov
2015 an international standard recognising the best energy
management practices. This is an alternative route to
compliance with the Energy Savings Opportunities Scheme
(ESOS) a mandatory initiative for large UK enterprises
requiring regular 4–yearly audits of energy use. The Group
opted to take the ISO 50001 route as it presents a better way
than ESOS for making energy savings, using, as it does, a
continual improvement process.
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.
Full details of this risk are explained within the Pension section
of the Financial Review.
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. The evaluation
of pension liabilities based on the April 2016 “on-going”
valuation will lead to the 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 its 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 12 months. This provides the Group
with a degree of certainty over the next year.
COMMODITY PRICE VOLATILITY
RISK DESCRIPTION AND IMPACT
MITIGATION
One of the Group’s Divisions is subject to virgin pulp price
risk. Virgin 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 Paper Division aims to recover costs via market price
increased typically a few months following a pulp price
increase. 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 reduced. Pulp substitution from recycled coffee cups from
our Reclaimed Fibre plant mitigates some of the impact of
virgin pulp costs. In additional the use of post-consumer waste
for virgin pulp substitution is more common place, and is not
subject to the same pricing influences.
The Paper Division’s ability to effectively grow profitable sales
offering value-add products and services plus the introduction
of new innovative products provides some additional buffer
against price sensitivity. Diversification and success of the
Divisions offers the Group greater long term stability.
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Strategic Report - Financial Review
Our people set us apart
OUR PEOPLE SET US APART
CELEBRATING THOUGHT LEADERSHIP
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 2 April 2016.
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 has launched a new division, James Cropper 3DP
which over time will bring greater resilience.
NEW DIVISION
RISK DESCRIPTION AND IMPACT
MITIGATION
In April 2015 the Group established James Cropper 3DP, a
diversification opportunity. The risk 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.
There will be continual monitoring at monthly meetings
of the Executive and at the Group Board on key strategic
and operational matters effecting the development of the
new operation.
NIGEL WALKER, TFP’s DIRECTOR OF TECHNOLOGY
AWARDED FELLOWSHIP BY THE ROYAL SOCIETY
OF CHEMISTRY FOR ADVANCES IN CHEMICAL
SCIENCES
It is a pleasure to congratulate Nigel Walker, TFP’s Director
of Technology, who has been awarded a prestigious fellowship
by the RSC for his outstanding contribution to chemical
sciences and industry developments.
Since joining James Cropper PLC as a chemist in 1982,
Nigel has been responsible for all technical aspects of TFP’s
business since its inception as a laboratory bench project
to its current position as the world’s leading producer of
advanced technical nonwovens and metal-coated carbon fibres.
As Director of Technology Nigel is responsible for product
developments, funded research and technical support across
the business.
Nigel has authored and co-authored several papers relating
to the use of advanced fibre nonwovens in composite
applications and is a named inventor in a number of patents
in the fields of fire protection, fuel cells and nonwovens.
“
THOUGHT LEADERS.
GLOBAL NETWORKERS.
TECHNICAL EXPERTS.
SKILLED CRAFTSMEN.
CREATIVE THINKERS.
WITH SUSTAINABLE
INNOVATION AT THEIR
CORE, OUR VALUES DRIVE
A CULTURE WHERE
GREAT PEOPLE ARE
SHAPING THE FUTURE.
”
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31
Isabelle Maddock,Group Finance DirectorOn behalf of the Board. Our People Set us Apart
Our People Set us Apart
CELEBRATING INDUSTRY-LEADING SKILLS
4.
4. ARRAN CHADWICK - CREATIVE ENGINEERING –
MAKING BETTER POSSIBLE
Arran is a talented engineer who has been with James Cropper
PLC for 15 years. He is passionate about his work, and takes
a particularly creative and proactive approach to the design,
implementation and continued improvement of the machinery
and manufacturing processes that enable our commercial
success. Last year, Arran joined the Technology & Innovation
Department and played a crucial role in the development of
our new business, James Cropper 3D Products. Working with
in-house teams and global suppliers, his attention to detail
has been critical - from project scoping through to the first
production run.
5. LIAM (RIGHT) AND SAM MOFFATT –
AWARD-WINNING ENGINEERING APPRENTICES
5.
Liam is just starting his third year, and Sam his second year,
of our 4-year engineering apprenticeship. At the Training
2000 Engineering Awards the brothers took home 4 awards
between them – celebrating their hard work and outstanding
achievements in mechanical maintenance at James Cropper PLC.
1.
2.
3.
SPOTLIGHT ON SKILLS
1. MARK STARRS – LEADING THE INDUSTRY
IN COLOUR
When it comes to colour, James Cropper PLC’s pedigree and
depth of knowledge is second to none. That’s why, in 2016,
we are able to launch new products to new markets with colour
excellence as our USP. Mark Starrs is our highly skilled Colour
Coordinator. He manages our colour experts, and complex
processes, to deliver industry-leading colour matching and
bespoke development of custom shades – keeping us at
the cutting edge.
2. ALAN MCBIRNIE – AWARD-WINNING BUSINESS
ADVISOR AND BCE PROJECT MANAGER
2016 is a year of achievements for Alan. Firstly, he won
Business Advisor of the Year for his work with Young
Enterprise – his teams took first place at the South Cumbria
finals in both 2014 and 2015. Secondly, Alan project-managed
installation of our award-winning Solar PV Array
– contributing to our 2016 Food Packaging Association
(FPA) Corporate Social Responsibility Award.
3. ANNA GLEDHILL – FROM APPRENTICE TO
BUSINESS MANAGEMENT EXPERT
Anna joined James Cropper PLC as a Business Apprentice in
2009. She showed great promise and was promoted to Inside
Sales Executive in 2013. Today, Anna’s highly analytical role
as Demand Manager helps to drive continued improvements
and efficiencies in our business.
Earlier this year, Anna was awarded a First Class degree
in Business Management (BA Hons) and has applied her
knowledge within our business – playing a key role in the
implementation of Integrated Business Planning.
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33
Our People Set us Apart
Our People Set us Apart
CELEBRATING PRIDE IN OUR WORK
4.
1.
2.
3.
5.
6.
7.
8.
9.
SAFETY IMPROVEMENT
SUPPORT FOR COLLEAGUES
COMMUNITY FOCUSSED
INNOVATION AND CREATIVITY
CUSTOMER SERVICE
TAKING PRIDE
COMMENDATION:
1. SHANE COOPER
(Dryerman - PM1)
WINNER:
2. MARK SORRENSON
(Blenderman)
WINNER:
4. DAVID DENNISON
(Salle Operative - Converting)
Shane has spent much of his own time
putting together various safety checklists
for PM1 machine. Though these have
not yet been fully implemented
they have provided a great start for
this important piece of safety
improvement work.
Mark is often referred to as a ‘very’
good blenderman by his colleagues and
performs to a consistent high level.
He is also the ‘go to’ person for his
peers, as well as technical teams, over
issues involving shade and dye recipes.
Dave was at the Station Inn pub with his
family at Easter when someone collapsed
and had a heart attack. As a trained first
aider, Dave administered CPR until
the Air Ambulance arrived. Because of
Dave’s action the gentleman survived.
COMMENDATION:
3. DAVID JHAVERI
(Regional Business Development
Director - TFP Inc)
David is a very helpful member of
the US team and is always willing to
lend a hand with technical challenges,
even when his time is in demand. He
is an important part of the total sales
revenue of the US group and definitely
contributes more than his share.
COMMENDATION:
IAN WAINE
(Power Plant Operative)
Ian is dedicated to helping others in the
community. When he is not at work he
is volunteering for St John’s Hospice.
This is a charity that provides support
and services for patients suffering from
life-limiting conditions.
WINNER:
5. JOHN GIBSON (U2A Slitterman)
& 6. NEIL HARRISON
(Maintenance Craftsman)
John identified that a number of inner
wraps of reels being run on the U2A were
being damaged causing up to 300m of
broke. John worked with Neil to develop
a solution that would save approximately
250m of broke on each reel run through
the U2A. This proactive work could
aggregate to an annual saving of around
£32,000 as well as production time saved
on the machine.
COMMENDATION:
CHRIS VANCE
(Machineman - PM2)
We started a project to reduce water and
effluent in early 2015. Chris worked across
all four paper machines and into finishing,
identifying opportunities to save water and
moreover, driving to put improvements in
place. As a direct result of Chris’s efforts
we made significant savings through the
early part of 2015, estimated to be around
£100k over the year.
WINNER:
7. MATT PARK
(Trainee Purchasing Co-ordinator)
WINNER:
8. ROSIE FISHER
(TFP Marketing Manager)
Matt is a shining example of someone
who started as an apprentice and has
worked his way up through hard work
and determination. Matt is always
willing to help both internal and external
suppliers & customers. He is willing to
take advice and always wants to try and
improve procedures.
COMMENDATION:
STEVE ATKINSON
(Production Planner)
Steve’s attention to detail is excellent.
He goes out of his way to ensure that
everything runs as smoothly as possible.
He works across all areas and without
his efforts the machine planning would
not be as efficient. Steve ensures that he
communicates with various departments
to ensure they are aware of anything that
could affect the running and planning of
their areas.
Rosie stands out as an enthusiastic,
professional and technically-gifted
marketing manager. Her fantastic efforts
in support of the Celebration Day and
great work to produce the Employee
Survey video are just two examples of
her excellent work.
COMMENDATION:
9. ANDY CHORLEY
(Pallet Department Team Leader)
Andrew always goes above and beyond
his duties to help others. He supports
the Purchasing department with stock
counts, ordering and ensures deliveries
are not left out in the rain even when
they are not his goods. Andrew helps
everyday to track deliveries in the mill,
the Purchasing team would struggle
without his knowledge and attention
to detail.
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Invested in our Community
Invested in our Community
CELEBRATING A SUSTAINABLE FUTURE
FPA CORPORATE SOCIAL RESPONSIBILITY
AWARD RECOGNISES OUR COMMITMENT
TO LOCAL, RENEWABLE ENERGY
The Food Packaging Association (FPA) Corporate Social
Responsibility Award is an independently judged and highly
respected accolade in the industry. We were delighted to receive
the award this year, in recognition of significant investments
in renewable energy that will both offset the consumption of
manufacturing processes and support our local community.
In late 2015 we provided space on the Burneside Mills roof
for the installation of a 250kW solar PV array. The project was
brought forward with our support by Burneside Community
Energy Ltd (BCE), a new social enterprise founded to fund
and manage the project. The £250,000 required was raised in
eight days with 90% of the backers living within three miles of
Burneside. Investors receive a modest return allowing surplus
profits to be provided to support local community projects.
The scheme supplies electricity directly into our operation
and is projected to generate around 200,000kWH per annum –
offsetting the energy requirements of our specialist laminating
and technical coating facility and reducing carbon dioxide
emissions by 1.91 million kilogrammes over the next 20 years.
PHIL DAVIES, DIRECTOR, BCE.
OUR COMMUNITY JOINED US TO
CELEBRATE 170 YEARS AND THE
OPENING OF TFP’S THIRD
PRODUCTION LINE
• 771 LOCALS GIVEN A TOUR OF BURNESIDE
MILLS AS WE CELEBRATED 170 YEARS
• SIR JAMES CROPPER OPENS TFP’S THIRD
PRODUCTION LINE
Community has always been hugely important to our Group,
so it was only natural to involve local people in our greatest
celebrations of 2015. Celebration Day marked both 170 years of
local industry and the opening of TFP’s third production line, by
Sir James Cropper.
All residents of our local parish were invited to attend the
celebration, and enjoy a guided tour of Burneside Mills –
the first tour of its scale in our history, with 771 attendees.
Refreshments were provided with music from the Burneside
Ukelele Band – The Bryce Street Strummers.
It was a special event to celebrate the continued growth of our
company and we were proud to receive universally positive
feedback from our community.
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37
Environmental Commitment & Sustainable Innovation
Environmental Commitment & Sustainable Innovation
ON-SITE
SOLAR FARM
200,000 KWH
GENERATED ANNUALLY
ISO50001
ENERGY MANAGEMENT
ACCREDITATION
COMBINED HEAT
AND POWER PLANT
REDUCED
OUR ENERGY
CONSUMPTION BY
24%
WORLD’S
FIRST COFFEE CUP
RECYCLING PLANT
10,000,000
TFP
REDUCING
FUEL CONSUMPTION
IN AEROPLANES
TFP
DESIGNING
COMPONENTS FOR
R E N EW A B L E
TECHNOLOGIES
CUPS CAN BE
PROCESSED
PER WEEK
GOING ABOVE AND BEYOND TO
SHAPE A SUSTAINABLE FUTURE FOR
OUR PLANET AND OUR PRODUCTS
The Values of our company are centred on a theme
of sustainability - for our business, our customers, our
community and our planet. We are also committed to
addressing real world problems - not only by reducing
our energy consumption, investing in renewable technologies,
minimising waste and carefully controlling pollution, but by
researching and developing innovative products that provide
new opportunities to reduce environmental impact
in their end use.
In 2016, our environmental commitment is clearer than
ever before. On the banks of the River Kent we have created
a manufacturing facility that operates in tune with its special
natural surroundings, and with minimal environmental impact.
Our product innovations are answering global demand for
sustainable solutions. Looking forwards, we are working
through a programme of lifecycle analysis that will support
our position as thought leaders in sustainable innovation.
HYDROELECTRIC
P O W E R S C H E M E
376,000 KWH
GENERATED ANNUALLY
NATIVE
CRAYFISH THRIVE
IN THE RIVER KENT,
A TESTAMENT TO
OUR MINIMAL
ENVIRONMENTAL
IMPACT
WASTE
MANAGEMENT
95% OF WASTE
AND WATER
IS REPURPOSED WITHIN
THE MANUFACTURING
PROCESSES
ALL PAPER
PRODUCTION CAN BE
FSC® OR PEFC®
CERTIFIED
JC3DP
REPLACING
PLASTIC WITH
RENEWABLE,
RECYCLABLE
MOULDED FIBRE
PACKAGING
38
39
Environmental Commitment & Sustainable Innovation
Governance
ISO50001 EXPLAINED
OUR NEW FOCUS ON ENERGY MANAGEMENT
Energy Management is an important and continued area of
development at James Cropper PLC. Not only do we have an
environmental responsibility to reduce our carbon emissions;
we have an eye on the future of our business. As energy prices
continue to rise, we see our investments in renewable energy
generation and expert energy management as critical to our
secure future.
ISO50001 Energy Management is not just about reaching a
standard once. The accreditation represents our commitment
to continued research, measuring, monitoring and innovation
to reduce our overall energy consumption.
ISO50001 - BENEFITS TO BUSINESS
• Identifying and managing risks around our future energy supply
•
Continually monitoring energy use and identifying opportunities
to improve efficiency
• Reducing energy consumption and energy costs
• Reducing carbon emissions
• Enhancing our reputation as industry leaders in sustainable innovation
GOVERNANCE
GOVERNANCE
BOARD OF DIRECTORS
REPORT OF THE DIRECTORS
DIRECTORS’ REMUNERATION REPORT
41
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44
49
41
Governance - Director’s Details
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.
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 with H J Heinz and
United Biscuits, and was a Director
of ER Consultants.
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.
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 2014.
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 2012.
JAMES E SHARP, MA
NON-EXECUTIVE DIRECTOR
James is a partner of Sirius Equity
LLP, an investment firm which
specialises in the retail and luxury
goods sectors. James joined the
Board in 2009. He is also a
Non-Executive Director of The
Brunner Investment Trust plc.
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 OPERATIONS 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 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
JAMES F ALDRIDGE, ACA
COMPANY SECRETARY
James joined the Group as Finance
Manager for Technical Fibre
Products Ltd in 2006. He was
appointed Head of Corporate
Finance in 2013 until November
2015, when he was appointed
Company Secretary.
DAVID R CAREY, FCCA
COMPANY SECRETARY
David joined the Group in 1974
as Chief Accountant. He became
Company Secretary in 1996 and
resigned in November 2015.
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43
Governance - Report of the Directors
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 53 weeks ended 2 April 2016 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.
STATEMENT OF 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
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.
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 holds regular meetings, both on site
and via telephone conference calls, 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.
• 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 Executive Committee, under the chairmanship of Phil
Wild, met sixteen times during the year with prepared agendas
for discussion.
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.
All Directors have access to the advice and services of the
Company Secretary. The Board has also established 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.
FINANCIAL POLICIES
AND INTERNAL CONTROLS
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 confirm that they have complied with the
requirements in preparing the financial statements, as detailed
in the Statement of director’s responsibilities in respect of the
annual report and the financial statements.
The Directors confirm that they have complied with the
requirements to keep adequate accounting records, as
detailed in the Statement of director’s responsibilities in
respect of the annual report and the financial statements.
The Directors confirm that they have complied with
the responsibility for the maintenance and integrity of
the corporate and financial information included on the
Company’s website, as detailed in the Statement of director’s
responsibilities in respect of the annual report and the
financial statements.
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.
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.
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 M.A.J.Cropper, P.I.Wild, M.Thompson
and J.E.Sharp 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
without the Chairman being present, and the comments fed
back to him for discussion.
44
45
Governance - Report of the Directors
Governance - Report of the Directors
RELATIONS WITH SHAREHOLDERS
EMPLOYMENT OF DISABLED PEOPLE
SUBSTANTIAL INTERESTS
Shareholdings in excess of 3% of the issued capital at 6 June 2016 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
Miton Group Plc
DW Pension Fund Ltd
3,021,183
526,032
52,386
3,599,601
931,613
370,000
32.7
5.7
0.6
39.0
10.1
4.0
1
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 39.0% holding in the Company.
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.
The Group Finance Director, the Chairman and the Chief
Executive maintain contact with institutional investors
as appropriate.
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 2 April 2016 the Group’s available cash and borrowing
facilities were £8.2m of which £5.0m was undrawn. Having
taken account of current borrowings to be repaid within 12
months of the balance sheet date, £4.3m was available to the
Group beyond 12 months. The Group has negotiated a £5.0m
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. Monthly and bi-annual briefings on
Group performance are 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 approximately
97,000 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.
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 £9,000 (2015: £5,000) were made for
various local charitable purposes.
AT THE FORTHCOMING ANNUAL
GENERAL MEETING THE FOLLOWING
RESOLUTIONS WILL BE PROPOSED:
DIVIDENDS
An interim dividend of 2.2p per ordinary share was paid
on 8 January 2016. The directors are recommending a final
dividend of 7.1p per ordinary share to be paid on 12 August
2016, subject to approval at the forthcoming Annual General
Meeting of the Company, to shareholders on the register
on 15 July 2016 making the total dividend for the year 9.3p
(2015: 8.5p) per share. Full details of dividends in respect
of the year ended 2 April 2016 are given in note 7 of the
financial statements.
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.
46
47
Governance - Report of the Directors
Governance - Directors’ Remuneration Report
DETAILS OF DIRECTORS’ INTERESTS
AT 2 APRIL 2016
AT 28 MARCH 2015
ORDINARY
SHARES
OPTIONS ON
ORDINARY
SHARES
ORDINARY
SHARES
OPTIONS ON
ORDINARY
SHARES
DIRECTOR
INTEREST
M A J Cropper
Beneficial
Non-beneficial
1,229,593
559,571
P I Wild
Beneficial
7,142
I M Maddock
Beneficial
9,071
M Thompson
Beneficial
39,932
K D Watson
Beneficial
1,223
P J Willink
D R Wilks
J E Sharp
D Mitchell
Beneficial
Non-beneficial
50,210
1,132,408
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Beneficial
Non-beneficial
9,465
96,958
7,950
96,958
1,000
96,958
15,339
-
76,700
20,103
26,117
17,909
25,815
-
-
-
-
-
-
-
1,205,593
660,826
1,143
11,019
37,630
1,021
44,210
1,132,408
9,112
101,255
7,950
101,255
1,000
101,255
10,695
-
78,872
14,036
32,469
11,084
35,748
-
-
-
-
-
-
-
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.
Non-beneficial interests include shares held jointly as
trustee with other Directors.
There have been no other material changes between the
year-end and 27 June 2016.
Any material related party transactions between the Directors
and the Company are set out in the Notes to the Accounts.
Approved by the Board of Directors on 27 June 2016 and
were signed on its behalf by
Further information relating to the interests of the Directors
regarding options on ordinary shares is given in the Directors’
Remuneration Report.
M A J Cropper, Chairman. Burneside Mills. Kendal.
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 open
for 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 2 April 2016 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.
48
49
TOTAL SHAREHOLDER RETURNREBASED08.001.002.003.004.005.006.007.00James CropperFTSE AIM All ShareFTSE All Share04/0604/0704/0804/0904/1004/1104/1204/1304/1404/1504/16
Governance - Directors’ Remuneration Report
Governance - Directors’ Remuneration Report
DETAILS OF DIRECTORS’ REMUNERATION
LONG TERM INCENTIVE PLAN
‘AUDITED’
EXECUTIVE
M A J Cropper
P I Wild
J M Denman
(retired July 2014)
N A Read
(retired May 2014)
I M Maddock
(appointed July 2014)
M Thompson
K D Watson
P J Willink
NON-EXECUTIVE
D Mitchell
J E Sharp
D R Wilks
SALARY
AND FEES
COMPENSATION
FOR LOSS
OF OFFICE
BENEFITS
ANNUAL
BONUS
PENSION
COST
TOTAL
2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
73
72
174
170
34
9
59
103
67
113
105
115
113
103
101
22
27
29
25
25
27
8
51
20
25
21
22
10
55
7
1
12
23
23
20
39
20
3
11
3
84
85
11
275
256
7
4
7
7
153
173
169
7
7
7
17
16
165
23
28
26
23
8
25
13
12
22
27
29
41
76
91
160
156
149
25
25
27
759
748
59
147
151
139
78
52
55
1,097
1,091
HIGHEST PAID DIRECTOR
Aggregate emoluments
Pension cost
DIRECTORS’ PENSIONS
2016 2015
£’000 £’000
264
245
11
11
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.
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 2 April 2016 under the Plan to executive directors were as follows:
NUMBER
AT 28
MARCH
2015
NUMBER
GRANTED
IN PERIOD
MID-MARKET
PRICE (£) OF
OPTIONS
AWARDED
NUMBER
EXERCISED
IN PERIOD
OPTIONS
LAPSED
IN PERIOD
NUMBER
AT 2
APRIL
2016
P I Wild
M A J Cropper
P J Willink
I M Maddock
M Thompson
K D Watson
74,362
10,695
34,846
9,676
32,469
11,084
17,152
4,644
6,067
6,067
6,648
6,825
£5.083
£5.083
£5.083
£5.083
£5.083
£5.083
11,594
7,730
-
16,000
-
13,000
-
-
-
-
-
-
72,190
15,339
24,913
15,743
26,117
17,909
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
M Thompson
K D Watson
60%
60%
100%
100%
100%
100%
40%
40%
-
-
-
-
50
51
Governance - Directors’ Remuneration Report
Spotlight on Technical Fibre Products
30 YEARS OF FUTURE TECHNOLOGIES
A LANDMARK YEAR FOR TECHNICAL FIBRE PRODUCTS
(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
2015 business plan 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 2015 business plan 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 2015 business plan 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 2015 business plan has been achieved.
SAYE OPTIONS
The details of the SAYE options that are open to the Executive Directors at 2 April 2016 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 2 April 2016
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
27 June 2016
VICKI WRIGHT – MATERIALS SPECIALIST
MARK JAMES – RESEARCH SPECIALIST
AS9100 AEROSPACE ACCREDITATION
– RAISING OUR PROFILE IN
STRATEGICALLY IMPORTANT MARKETS
Other key applications are in Aerospace and Defence;
strategically important markets for TFP. At present over 30%
of sales come from this sector and this share is projected to grow.
To support this, TFP achieved the prestigious AS9100
Aerospace accreditation in January 2016. This is a stringent
quality standard which demonstrates to the industry that
TFP has the knowledge and experience necessary to satisfy the
demanding processes & regulatory controls required specifically
by Aerospace manufacturers. Achieving this underpins
TFP’s global reputation as the go to specialist in developing
nonwovens for the highly technical and challenging applications
synonymous with the Aerospace and Defence industries.
SPECIAL REPORT BY MARTIN THOMPSON,
MANAGING DIRECTOR OF TFP
2016 marks 30 years since Technical Fibre Products Ltd
became a registered company, created with a view to
diversifying James Cropper PLC’s product offering.
In the years since, this objective has been achieved in more
ways than one. Our technically advanced materials are used
in applications far beyond those associated with Paper; ranging
from aerospace to satellites, sporting goods, wind turbines
and sports cars.
GROWTH STRATEGY
Today, we remain a company very much focused on the future.
This is demonstrated by a growth strategy which targets
markets such as carbon composites and aerospace, predicted to
show strong growth annually, with a strong focus on expanding
into emerging markets such as China.
The forward thinking nature of the business is also evidenced
in the recent investments both in capacity expansion and in
innovative complementary technologies, as well as in the
continued development of new materials to fulfil market need.
The last financial year has seen many significant advancements
for TFP in capacity, technology and quality; creating a solid
base for future growth.
EACH YEAR BRINGS NEW AND DIVERSE
APPLICATIONS FOR OUR PRODUCTS -
THE LIGHTEST WEIGHT AND HIGHEST
QUALITY NONWOVENS IN THE WORLD
The applications of our products are increasingly diverse and
this year has been no exception, with TFP’s wet-laid nonwovens
making it into space on NASA’s Jason-3 satellite, as well as being
used in (literally) more down to earth applications such as fuel
cells, bikes, bridge de-icing, premium cars and hockey sticks.
52
53
Spotlight on Technical Fibre Products
SPOTLIGHT ON TFP
INVESTING IN FUTURE TECHNOLOGIES
TFP’s manufacturing capability is not limited to nonwovens;
the company has recently developed and implemented a
number of innovative new complementary technologies.
These include a nanocoating line, which is the first commercial
facility of it’s kind in the world. The line is designed to coat
materials with nanoscale particles, such as carbon nanotubes,
which can impart additional functionality to a nonwoven or
improve performance. A further new technology, also based
in Schenectady NY, is a particle plating line, developed to
functionalise particles using advanced plating methods.
NEW DEVELOPMENTS IN NONWOVENS
TFP’s knowledge and expertise in developing new nonwovens
is second to none. It is this capability to design materials to
meet a specific processing, aesthetic or performance need that
sets TFP apart from competitors.
New developments for 2015/16 included an extended range
of lightweight thermoplastic veils, developed for composite
toughening. Their effectiveness has been validated by a
study at the University of Manchester and demand for these
materials is driven by a variety of industries ranging from
aerospace to sporting goods.
DOUBLING CAPACITY AND INCREASING
CAPABILITY – DRIVEN BY SALES GROWTH
Last, and certainly not least, the year has also seen the
installation and commissioning of a new state of the art
manufacturing line.
The third line was formally opened at the 170th event by
Sir James Cropper and effectively doubles TFP’s production
capacity. This was a necessary step to meet rapidly increasing
demand and facilitate further sales growth.
The new state of the art line is based on the current
proprietary design, but has been engineered to extend not just
capacity but capability as well. With improved control over
drying, a high-tech automatic reel up to enable continuous
running and an increase in production width to over 2 metres,
the new line provides both enhanced process control
and enables TFP to access new markets.
STEVE ROBINSON, NO 3 MACHINE ASSISTANT
MARTIN THOMPSON AND SIR JAMES CROPPER
54
Spotlight on Technical Fibre Products
Financial Statements
NEW HORIZONS
TFP NONWOVENS IN SPACE
FINANCIAL STATEMENTS
“ THE APPLICATIONS OF
OUR PRODUCTS ARE
INCREASINGLY DIVERSE
AND THIS YEAR HAS BEEN
NO EXCEPTION, WITH TFP’S
WET-LAID NONWOVENS
MAKING IT INTO SPACE ON
NASA’S JASON-3 SATELLITE,
AS WELL AS BEING USED IN
(LITERALLY) MORE DOWN
TO EARTH APPLICATIONS
SUCH AS FUEL CELLS, BIKES,
BRIDGE DE-ICING, PREMIUM
CARS AND HOCKEY STICKS.”
MARTIN THOMPSON
MANAGING DIRECTOR
TECHNICAL FIBRE PRODUCTS
Image courtesy of NASA/JPL-Caltech
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CASH FLOWS
STATEMENT OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
SHAREHOLDER INFORMATION
57
59
60
6 1
62
63
65
89
57
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF JAMES CROPPER PLC
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
Chartered Accountants
Edward VII Quay
Navigation Way
Preston
PR2 2YF
27 June 2016
We have audited the financial statements of James Cropper
PLC for the 53 weeks ended 2 April 2016 set out on pages
60 to 88. 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.
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.
Opinion on financial statements
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 2 April 2016 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
59
Financial Statements
Financial Statements
JAMES CROPPER PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
JAMES CROPPER PLC
STATEMENT OF FINANCIAL POSITION
53 week
period to
2 April
2016
Continuing
Operations
53 week
period to
2 April
2016
Exceptional
Items
53 week
period to
2 April
2016
Total
Note
£’000
£’000
£’000
52 week
period to
28 March
2015
Total
£’000
87,920
505
1,771
(35,795 )
(4,519 )
(25,155 )
(2,306 )
(16,996 )
5,425
(793 )
1
4,633
(724 )
3,909
2
20
4
2
3
3
4
5
6
6
1,000
(1,765 )
(765 )
(765 )
(150 )
(915 )
87,920
1,505
1,771
(35,795 )
(4,519 )
(25,155 )
(2,306 )
(16,996 )
(1,765 )
4,660
(793 )
1
3,868
(874 )
2,994
32.6p
31.8p
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
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
Exceptional costs
Operating Profit
Interest payable and similar charges
Interest receivable and similar income
Profit before taxation
Tax expense
Profit for the period
Earnings per share - basic
Earnings per share - diluted
OTHER COMPREHENSIVE INCOME
Profit for the period
3,909
(915 )
2,994
1,881
Items that are or may be reclassified to profit or loss
Foreign currency translation
Items that will never be reclassified to profit or loss
114
114
(47 )
Retirement benefit liabilities – actuarial gains/(losses)
17
6,554
6,554
(3,244 )
Deferred tax on actuarial gains/losses on
retirement benefit liabilities
Income tax on other comprehensive income
Other comprehensive expense for the year
18
5
(1,488 )
77
5,257
(1,488 )
77
560
214
5,257
(2,517 )
Total comprehensive income for the
period attributable to equity holders of the Company
9,166
(915 )
8,251
(636 )
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
Group
As at
2 April 2016
£’000
Note
Group
As at
28 March 2015
£’000
Company
As at
2 April 2016
£’000
Company
As at
28 March 2015
£’000
8
9
10
18
11
12
13
14
15
15
17
19
123
23,650
-
78
23,851
14,102
19,595
3,186
-
36,883
297
21,707
-
1,174
23,178
13,089
15,717
2,721
-
31,527
54
1,752
7,350
1,609
10,765
-
38,792
642
261
39,695
184
1,703
7,350
2,878
12,115
-
31,399
1,903
290
33,592
60,734
54,705
50,460
45,707
15,067
-
3,886
613
19,566
6,605
7,870
14,475
34,041
2,306
1,079
378
(343 )
23,273
26,693
12,445
-
2,720
130
15,295
6,106
14,442
20,548
35,843
2,292
1,034
264
(269 )
15,541
18,862
18,075
-
74
-
18,149
4,094
7,870
11,964
30,113
2,306
1,079
-
-
16,962
20,347
13,910
-
1,139
-
15,049
1,104
14,442
15,546
30,595
2,292
1,034
-
-
11,786
15,112
Total equity and liabilities
60,734
54,705
50,460
45,707
The financial statements on pages 60 to 88 were approved by the Board of Directors on 27 June 2016 and were signed on its behalf by:
M A J Cropper
Chairman
Company Registration No: 30226
The accompanying notes forms part of the financial statements.
60
The accompanying notes forms part of the financial statements.
61
Financial Statements
Financial Statements
STATEMENT OF CASH FLOWS
For the period ended 2 April 2016 (2015: for the period ended 28 March 2015)
Group 2016
£’000
Group 2015
£’000
Company 2016
£’000
Company 2015
£’000
2,994
1,881
438
1,643
874
694
(7 )
196
1,305
(1,323 )
(65 )
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:
(Increase) / decrease in inventories
(Increase) / decrease in trade and other receivables
Increase in trade and other payables
Interest received
Interest paid
Tax paid
2,306
1,305
(1,323 )
(166 )
-
326
274
-
(1,021 )
(3,861 )
2,770
2
(333 )
(429 )
Net cash generated from / (used by) operating activities
3,718
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
(133 )
(3,953 )
-
-
2,502
919
(1,362 )
41
(2 )
405
155
-
236
196
3,043
-
(414 )
(448 )
7,846
(136 )
(2,483 )
41
-
Net cash (used in) / generated from investing activities
(4,086 )
(2,578 )
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
59
4,790
(3,284 )
-
(74 )
(772 )
168
-
(2,497 )
-
(167 )
(708 )
Net cash (used in) / generated from financing activities
719
(3,204 )
Net increase / (decrease) in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the start of the period
Cash and cash equivalents at the end of the period
Cash and cash equivalents consists of:
351
114
465
2,721
3,186
2,064
(35 )
2,029
692
2,721
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
1,903
-
(847 )
274
(3,500 )
-
(2,819 )
4,723
914
(66 )
(429 )
(1,206 )
(125 )
(125 )
-
3,500
3,250
59
4,000
(2,075 )
(4,574 )
-
(772 )
(3,362 )
(1,318 )
57
(1,261 )
1,903
642
Cash at bank and in hand
3,186
2,721
642
STATEMENT OF CHANGES IN EQUITY
GROUP
All figures in £’000
29 March 2014
Profit for the period
Exchange differences
Actuarial losses on retirement benefit
liabilities (net of deferred tax)
Other comprehensive income tax
Share
capital premium
Share Translation
reserve
Own Retained
Shares earnings
Total
2,243
915
311
(102 )
16,907
20,274
- - -
- 1,881 1,881
- - (47 )
- - (47)
-
-
- -
-
(2,684 )
(2,684 )
-
-
- 214
214
Total other comprehensive income
- - (47)
-
(2,470 )
(2,517 )
Dividends paid
Share based payment charge
Tax on share options
Proceeds from issue of ordinary shares
Consideration paid for own shares
Total contributions by and distributions
to owners of the Group
At 28 March 2015
Profit for the period
Exchange differences
Actuarial gains on retirement benefit
liabilities (net of deferred tax)
Other comprehensive income tax
Total other comprehensive income
Dividends paid
Share based payment charge
Tax on share options
Proceeds from issue of ordinary shares
Distribution of own shares
Consideration paid for own shares
Total contributions by and distributions
to owners of the Group
- - -
-
(708 )
(708 )
- - -
- 156
156
-
49
-
-
119
-
49
119
2,292
1,034
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14
-
-
-
-
-
-
264
-
114
-
-
114
-
-
-
-
(167 )
(225 )
-
-
(225 )
168
(167 )
(167 )
(777 )
(776 )
(269 )
15,541
18,862
2,994
-
2,994
114
5,066
5,066
77
77
5,143
(772 )
274
135
5,257
(772 )
274
135
59
-
(116 )
-
-
-
-
-
-
-
-
45 -
- -
-
-
-
-
42
(116 )
(42 )
-
At 2 April 2016
2,306
1,079 378
(343 )
23,273
26,693
14
45 -
(74 )
(405 )
(420 )
The accompanying notes forms part of the financial statements.
62
The accompanying notes forms part of the financial statements.
63
Financial Statements
Notes to the Financial Statements
STATEMENT OF CHANGES IN EQUITY
COMPANY
All figures in £’000
At 29 March 2014
Profit for the period
Actuarial losses on retirement benefit liabilities
(net of deferred tax)
Other comprehensive income tax
Total other comprehensive income
Dividends paid
Share based payment charge
Tax on share options
Share
Share Retained
capital premium earnings
Total
2,243
915
13,391
16,549
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,643
1,643
(2,684 )
(2,684 )
214
214
(2,470 )
(2,470 )
(708 )
155
(225 )
-
(708 )
155
(225 )
168
Proceeds from issue of ordinary shares
49
119
Total contributions by and distributions
to owners of the Group
49
119
(778)
(610 )
At 28 March 2015
Profit for the period
Actuarial gains on retirement benefit liabilities
(net of deferred tax)
Other comprehensive income tax
Total other comprehensive income
Dividends paid
Share based payment charge
Tax on share options
Proceeds from issue of ordinary shares
Distribution of own shares
Total contributions by and distributions
to owners of the Group
2,292
1,034
11,786
15,112
-
-
-
-
-
-
-
- 438 438
-
-
-
-
5,066
5,066
77
77
5,143
(772 )
5,143
(772 )
- 274 274
-
135
135
14 45
- 59
-
-
(42 )
(42 )
14 45
(405 )
(346 )
At 2 April 2016
2,306
1,079
16,962
20,347
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 53 week accounting
period ending 2 April 2016, (2015: 52 week accounting period
ended 28 March 2015).
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 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. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the
entity. In assessing control, the Group takes into consideration
potential voting rights that are currently exercisable.
The acquisition date is the date on which control is transferred
to the acquirer. 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 four 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
64
The accompanying notes forms part of the financial statements.
65
Notes to the Financial Statements
Notes to the Financial Statements
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
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.
IAS19R has been adopted for periods beginning on or after 1
January 2013. Remeasurements arising from defined benefit
plans comprise actuarial gains and losses, the return on plan
assets (excluding interest) and the effect of the asset ceiling
(if any, excluding interest). The Group recognises them
immediately in other comprehensive income and all other
expenses related to defined benefits in employee benefit
expenses in profit or loss.
When the benefits of a plan are changed, or when a plan is
curtailed, the portion of the change benefit related to past
service by employees, or the gain or loss on curtailment,
is recognised immediately in profit or loss when the plan
amendment or curtailment occurs.
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.
Transactions of the Company-sponsored EBT trust are treated
as being those of the Company and are therefore reflected in
the parent company and financial statements. In particular,
the trust’s purchases and sales of shares in their Company are
debited and credited directly to equity.
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.
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. Up until the 31 December 2012
the Group’s emissions were in line with its permitted EUETS
allowance and hence there was no impact on profit. After
entering phase 3 of the EUETS annual emissions in a calendar
year are now expected to exceed allowances received and the
impact is taken to the SCI under “Other expenses”. At 2 April
2016 the intangible asset was valued at £20,000 (2015 £59,000)
and the associated liability at £20,000 (2015 £59,000). 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
67
Notes to the Financial Statements
Notes to 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 four 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.
•
James Cropper 3D Products – a manufacturer of
moulded fibre products.
• 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.
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
section for the basis of the going concern assumption.
Exceptional items
Provisions for insurance deductibles, uninsured costs and
insurance risks have been recorded in a separate column on the
face of the Statement of Comprehensive Income, along with
the grant awarded by Cumbria Local Enterprise Partnership
and Cumbria County Council, following the effects of Storm
Desmond. The grant has been recorded in Other Income
and the insurance deductibles and provisions recorded in
Exceptional Costs.
New standards and interpretation not applied
A number of new standards, amendments to standards and
interpretations have been issued during the year ended 2 April
2016 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.
Amendments to IAS12 ‘Recognition of Deferred Tax Assets
for Unrealised Losses’ have not yet been endorsed but the
IASB effective date will be 1 January 2017.
Amendments to IAS1 ‘Presentation of Financial Statements’
was endorsed on 18 December 2015. It is not expected that
there will be any significant change to current practice, but
should facilitate improved financial statement disclosures.
James Technical Group Other Eliminations Continuing
Operations
Services
Cropper
Fibre
3D Products
Products
£’000
£’000
£’000 £’000
£’000
£’000
2. SEGMENTAL REPORTING (CONTINUED)
Operating Segments
Period Ended 2 April 2016
James
Cropper
Paper
Products
£’000
69,182
Revenue
- External
- Business Income Insurance Note (1)
-
69,182
-
-
-
17,988
750
18,738
-
-
-
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
2,592
(438 )
5,904
(2,608 )
-
-
-
(839 )
2,592
(438 )
5,904
(3,447 )
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49
-
49
-
-
-
-
-
87,170
750
87,920
5,499
(839 )
4,660
(793 )
1
3,868
(874 )
2,994
Total Assets
Total Liabilities
52,295
2,739
37,745
50,460 1,990
(84,495 )
(41,390 )
(3,099 )
(34,037 )
(30,113 )
(343 )
74,941
60,734
(34,041 )
Period ended 28 March 2015
Revenue
- External
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
Total Assets
Total Liabilities
James
Cropper
Paper
Products
£’000
James Technical Group Other Eliminations Continuing
Operations
Services
Cropper
Fibre
3D Products
Products
£’000
£’000
£’000 £’000
£’000
£’000
68,505
-
14,547
-
-
-
83,052
2,419
-
2,419
-
-
-
2,719
(1,184 )
(418 )
-
-
-
(55 )
3,899
2,719
(1,602 )
-
(55 )
(418 )
3,481
(906 )
-
2,575
(694 )
1,881
50,299
(40,533 )
27,928
45,707 1,916
(26,076 )
(30,595 )
(269 )
(71,145 )
61,630
54,705
(35,843 )
68
69
Notes to the Financial Statements
Notes to the Financial Statements
2. SEGMENTAL REPORTING (CONTINUED)
4. PROFIT BEFORE TAX
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 and post – employment benefit net assets.
UK
Europe
Asia
The Americas
Australasia
Africa
Total
Revenues from
external customers
2015
£’000
2016
£’000
42,852
44,083
17,781
15,016
6,510
7,193
18,244
14,631
1,220
1,595
563
534
Non – current assets
2015
£’000
2016
£’000
21,224
20,863
-
-
-
1
2,627
2,314
-
-
-
-
87,170
83,052
23,851
23,178
(1) Business Income Insurance covers the loss of income that the business suffered after Storm Desmond. It is designed to put
the business in the same financial position it would have been in if no loss had occurred.
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
Other Interest received
Total interest income
Finance costs – net
2016
£’000
2015
£’000
188
139
229
176
(3,042 )
(3,309 )
3,508
3,810
793
906
1
1
-
-
792
906
The following items have been charged / (credited) in arriving at profit before tax:
Staff costs
2016
£’000
2015
£’000
25,155
22,607
Depreciation of property, plant and equipment
- owned assets
1,753
1,926
Profit 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
Exceptional income - grant received to alleviate impact of flood
Exceptional costs - provisions for uninsured losses and risks
Sale of PMD online business
Foreign exchange differences
Trade receivables impairment
- leased assets
- amortisation of intangibles
- plant & machinery
381
172
-
163
395
182
(2 )
138
4,540
3,757
(130 )
(73 )
(128 )
(136 )
1,765
1,281
(1,000 )
1,765
(250 )
(247 )
150
-
-
-
17
11
Government grants relate to assistance received for research projects and the development of new technology.
The exceptional items relate to additional income / costs arising as a consequence of the flood the impacted the Group following
the aftermath of Storm Desmond in December 2015.
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:
2016
£’000
2015
£’000
Audit Services
- Fees payable to the company’s auditor for the audit of parent company and consolidated accounts
18
18
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 pension matters
- Fees in respect of other assurance services
53
-
25
18
114
44
25
-
11
98
70
71
Notes to the Financial Statements
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 (2015: lower) than the standard rate of corporation tax
in the UK of 20% (2015: 21%). The differences are explained below:
Profit before tax
Profit on ordinary activities multiplied by rate of corporation tax in the UK
of 20% (2015: 21%)
Effects of:
Adjustments to tax in respect of prior period
Effects of other tax rates
Overseas tax
Expenses not deductible for tax purposes
Income not taxable
Other
Total tax charge for the period
Note
18
2016
£’000
1,098
33
1,131
(60 )
(3 )
(194 )
(257 )
2015
£’000
714
(1 )
713
(47 )
27
1
(19 )
874
694
(1,488 )
135
77
560
(225 )
214
2016
£’000
2015
£’000
3,868
2,575
773
540
25
(194 )
107
214
(52 )
1
874
26
-
158
15
(46 )
1
694
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.
2016
Earnings Weighted Per Share
amount
average
number
of shares
‘000
£’000
pence
2015
Earnings Weighted Per Share
average
amount
number
of shares
‘000
£’000
pence
Basic EPS
Earnings attributable to ordinary shareholders
Effect of dilutive securities
- Options
2,994
9,191
32.6
1,881
9,046
20.8
-
222
-
-
303
-
Diluted EPS
2,994
9,413
31.8
1,881
9,349
20.1
7. DIVIDENDS
Final paid for the period ended 28 March 2015 / period ended 29 March 2014
Interim paid for the period ended 2 April 2016/period ended 28 March 2015
Final dividend payment paid pence per share for the period ended 28 March 2015
/ period ended 29 March 2014
Interim dividend payment paid pence per share for the period ended 2 April 2016
/ period ended 28 March 2015
2016
£‘000
571
201
6.3p
2.2p
2015
£’000
508
199
5.7p
2.2p
In addition, the directors are proposing a final dividend in respect of the financial period ended 2 April 2016 of 7.1p per share
(2015: 6.3p per share) which will absorb an estimated £648,000 (2015: £571,000) of shareholders’ funds. If approved by members
at the Annual General Meeting, it will be paid on 12 August 2016 to shareholders who are on the register of members at 15 July
2016. 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
73
Notes to the Financial Statements
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
Cost
At 29 March 2015
Additions - externally generated
At 2 April 2016
Aggregate amortisation
At 28 March 2015
Charge for Period
At 2 April 2016
Net book value at 2 April 2016
Net book value at 28 March 2015
3,872
37
3,909
3,685
138
3,823
86
187
307
-
307
256
34
290
17
51
2,882
96
2,978
7,061
133
7,194
2,823
135
6,764
307
2,958
7,071
20
59
123
297
3,764
30
3,794
3,639
121
3,760
34
125
Total
£’000
6,646
126
6,772
2,882
96
2,978
2,823
135
6,462
256
2,958
6,718
20
59
54
184
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
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 5 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 1 year.
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.
9. PROPERTY, PLANT AND EQUIPMENT
Group
Freehold land & buildings
£’000
Plant & machinery
£’000
Cost
Brought forward at 28 March 2015
Additions at cost
Disposals
Effects of movements in foreign exchange
At 2 April 2016
Accumulated Depreciation
Brought forward at 28 March 2015
Charge for Period
Disposals
At 2 April 2016
Net book value at 2 April 2016
Net book value at 28 March 2015
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
19,053
23,650
16,854
21,707
Freehold land & buildings
£’000
Plant & machinery
£’000
Total
£’000
88,995
3,954
(1,721 )
123
91,351
67,288
2,134
(1,721 )
67,701
Total
£’000
86,977
2,483
(716 )
251
88,995
65,683
2,321
(716 )
67,288
77,857
3,954
(1,712 )
123
80,222
61,003
1,878
(1,712 )
61,169
75,892
2,430
(716 )
251
77,857
59,665
2,054
(716 )
61,003
16,854
21,707
16,227
21,294
11,138
-
(9 )
-
11,129
6,285
256
(9 )
6,532
4,597
4,853
11,085
53
-
-
11,138
6,018
267
-
6,285
4,853
5,067
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
2016
£’000
5,031
30
(62 )
(381 )
Group
2015
£’000
5,828
-
(402 )
(395 )
4,618
5,031
2016
£’000
373
-
-
(23 )
350
Company
2015
£’000
811
-
(402 )
(36 )
373
74
75
Notes to the Financial Statements
Notes to the Financial Statements
9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Company
Cost
Brought forward at 28 March 2015
Additions at cost
Disposals
At 2 April 2016
Accumulated Depreciation
Brought forward at 28 March 2015
Charge for Period
Disposals
At 2 April 2016
Net book value at 2 April 2016
Net book value at 28 March 2015
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
Freehold land & buildings
£’000
Plant & machinery
£’000
1,663
-
-
1,663
393
30
-
423
1,240
1,270
1,985
125
(7 )
2,103
1,552
46
(7 )
1,591
512
433
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
Total
£’000
3,648
125
(7 )
3,766
1,945
76
(7 )
2,014
1,752
1,703
Total
£’000
4,285
(473 )
81
(245 )
3,648
2,164
104
(77 )
(246 )
1,945
1,703
2,121
10. INVESTMENTS
Investments in subsidiary undertakings:
Group
2015
£’000
2016
£’000
Company
2015
£’000
2016
£’000
At 2 April 2016 and 28 March 2015
-
-
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
James Cropper 3D Products 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
England
USA
USA
USA
USA
England
England
England
England
100
Manufacture of specialist paper and boards
100
Sales and marketing organisation
100
Paper converter
100
Manufacturer of moulded fibre products
100
Manufacture of advanced materials
100
Holding Company
Sales and marketing organisation
100
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
2015
£’000
2016
£’000
7,479
2,004
4,619
7,592
1,382
4,115
14,102
13,089
Inventories are stated after a provision for impairment of £232,000 (2015: £46,000). The cost of inventories recognised as expenses
and included in cost of sales for the year ended 2 April 2016 was £63,446,000 (2015: £67,292,000). 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
2015
£’000
2016
£’000
14,956
14,610
(80 )
(68 )
14,876
14,542
-
3,024
1,695
-
262
913
Company
2015
£’000
2016
£’000
-
-
-
-
-
-
36,005
30,704
2,270
517
262
433
19,595
15,717
38,792
31,399
Management believe there is no further credit risk provision required in excess of normal provision for doubtful receivables.
76
77
Notes to the Financial Statements
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
2015
£’000
2016
£’000
3,807
-
525
3,501
7,234
5,795
-
458
287
5,905
Company
2015
£’000
2016
£’000
1,126
11,739
133
3,495
1,582
2,079
10,355
116
268
1,092
15,067
12,445
18,075
13,910
14. OTHER FINANCIAL LIABILITIES
Interest rate swap
Group
2015
£’000
2016
£’000
-
-
There were no interest rate swaps during the year.
The gain arising in the Income Statement on fair value hedging instruments was £nil (2015: £11,000).
15. BORROWINGS
Note
Group
2015
£’000
2016
£’000
Company
2015
£’000
2016
£’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
3,042
844
1,825
895
3,886
2,720
4,708
1,897
3,375
2,731
6,605
6,106
-
74
74
1,070
69
1,139
4,000
94
930
174
4,094
1,104
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
Company
Within one year
Greater than one year and
less than five years
Minimum
lease payments
2016
£’000
Interest Principal
Minimum
Interest Principal
2016
£’000
2016
£’000
lease payments
2015
£’000
2015
£’000
2015
£’000
939
95
844
1,027
132
895
1,995
98
1,897
2,919
188
2,731
84
10
74
84
15
69
98
4
94
189
15
174
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
2016
£’000
2016
£’000
Book Value Fair Value
2015
£’000
2015
£’000
Note
Financial assets
Bank loans and overdrafts due within one year or on demand:
Current
Trade receivables
Cash and cash equivalents
12
14,956
3,186
14,876
3,186
14,610
2,721
14,542
2,721
18,142
18,062
17,331
17,263
Financial liabilities
Current
Trade payables
Short term borrowings
Non-current
Long term borrowings
Company
Financial assets
Current
Cash and cash equivalents
13
15
15
3,807
3,886
3,807
3,886
5,795
2,720
5,795
2,720
7,693
7,693
8,515
8,515
6,605
6,605
6,106
6,106
Book Value Fair Value
2016
£’000
2016
£’000
Book Value Fair Value
2015
£’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
642
642
642
642
1,903
1,903
1,903
1,903
7,350
7,350
7,350
7,350
1,126
74
1,126
74
2,079
1,139
2,079
1,139
1,200
1,200
3,218
3,218
4,094
4,094
1,104
1,104
78
79
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.
Notes to the Financial Statements
Notes to the Financial Statements
16.2 CREDIT RISK
16.3 LIQUIDITY 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 2 April 2016 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
2016
£’000
9,946
1,739
3,191
2015
£’000
9,452
2,117
2,973
14,876
14,542
2016
£’000
12,761
1,786
409
14,956
(80 )
14,876
2015
£’000
12,473
2,104
33
14,610
(68 )
14,542
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
Created / (released) during the period
Utilised during the period
Balance at end of period
2016
£’000
68
162
(150 )
80
2015
£’000
79
(11 )
-
68
Included in the outstanding trade receivables balance are debtors with an overdue amount of £2,115,000 (2015: £2,069,000)
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.
80
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 2 April 2016, 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
2016
2016
£’000
£’000
3,042
690
4,018
-
844
756
1,141
-
Total
2016
£’000
3,886
1,446
5,159
-
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
7,750
2,741
10,491
5,200
3,626
8,826
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
2016
2016
£’000
£’000
-
-
4,000
-
4,000
Total
2016
£’000
74
80
4,014
-
74
80
14
-
168
4,168
Group
2015
£’000
2016
£’000
3,807
5,795
3,807
5,795
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
Company
2015
£’000
2016
£’000
1,126
2,079
1,126
2,079
Borrowing facilities
The Group has the following undrawn committed borrowing facilities available at 2 April 2016:
Group at 2 April 2016
Floating rate £’000
Group at 28 March 2015
Floating rate £’000
Expiring within one year (renewable annually)
3,513
4,658
The Group’s expiry profile of the drawn down facilities is as follows:
Group
at 2 April 2016
£’000
Group
at 28 March 2015
£’000
Company
at 2 April 2016
£’000
Company
at 28 March 2015
£’000
September 2015
December 2015
June 2016
August 2016
April 2017
December 2017
March 2018
January 2019
August 2019
November 2019
May 2020
450
621
2,023
512
800
-
300
450
28
16
-
5,200
-
-
-
-
-
-
-
-
-
-
4,000
4,000
450
-
-
-
800
-
300
450
-
-
-
2,000
-
-
2,123
-
-
1,592
-
-
22
13
4,000
7,750
81
Notes to the Financial Statements
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 2 April 2016.
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 28 March 2015 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
Euro
£’000
RMB
£’000
4,745
1,220
(336 )
-
2,444
173
35
(3 )
(809 )
(3,033 ) - -
-
-
-
-
(682 )
-
-
-
-
GBP
£’000
7,687
1,758
(2,659 )
(8 )
(845 )
(4,026 )
(1,897 )
Total
£’000
14,876
3,186
(3,807 )
(3,041 )
(845 )
(4,708 )
(1,897 )
1,914
1,670
170
10
3,764
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
This represents the net exposure to foreign currencies, reported in pounds Sterling, and arising from all Group activities.
At the 2 April 2016 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
USD
£’000
Euro
£’000
40
(2 )
-
-
-
-
38
21
(2 )
-
-
-
-
19
GBP
£’000
581
(1,122 )
-
(74 )
(4,000 )
(94 )
Total
£’000
642
(1,126 )
-
(74 )
(4,000 )
(94 )
(4,709 )
(4,652 )
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
2
-
-
-
-
-
2
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 )
A one percent strengthening of the pound against the Euro and the US Dollar at 2 April 2016 would have had the following
impact on equity and profit by the amounts shown below.
Group
2 April 2016
2 April 2016
28 March 2015
28 March 2015
Equity
£’000
SCI
£’000
USD
Euro
USD
Euro
(19 )
(17 )
Nil
(18 )
(44 )
(16 )
(25 )
(17 )
Company
2 April 2016
2 April 2016
28 March 2015
28 March 2015
Equity
£’000
SCI
£’000
USD
Euro
USD
Euro
-
-
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. No interest rate swaps were
outstanding at the year end. The net exposure to interest rates at the Statement of Financial Position date can be summarised
as follows:
The net exposure to interest rates at the balance sheet date can be summarised as follows:
Group
2016
£’000
Group
2015
£’000
Company
2016
£’000
Company
2015
£’000
Interest bearing liabilities - floating
Borrowings
Finance lease
Interest bearing liabilities - fixed
Borrowings
Finance lease
7,714
1,846
9,560
35
896
931
5,157
2,327
7,484
42
1,299
1,342
Interest bearing liabilities
10,491
18,826
The effective interest rates at the balance sheet date were as follows:
Bank overdraft
Borrowings
4,000
-
4,000
-
168
168
4,168
2016
%
1.5
3.7
2,000
-
2,000
-
243
243
2,243
2015
%
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.
2 April 2016
28 March 2015
Group
SCI
£’000
Company
SCI
£’000
96
75
40
20
82
83
Notes to the Financial Statements
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
2016
£’000
2015
£’000
508
29
286
25
Other pension costs totalled £265,000 (2015: £226,000) 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 2 April 2016 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
2015
%
2016
%
Works Scheme
2015
2016
%
%
2.90
1.90
3.55
3.0
2.0
3.3
2.90
1.90
3.55
3.30
3.4
3.30
1.90
2.0
1.90
3.0
2.0
3.3
3.4
2.0
In respect of mortality for the Works members the assumptions adopted at 2 April 2016 are 145% of the SAPS “S1” series table,
with future improvements in line with the CMI core 2015 projection model with long-term trend improvements of 1.25% pa.
For the Staff members the SAPs “S1” series table with a 95% rating has been used, with future improvements in line with the
CMI core 2015 projection model with long term trend improvements of 1.25% pa. 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
2016
£’000
2015
£’000
2014
£’000
2013
£’000
2012
£’000
(102,141 ) (106,788 )
(85,482 )
(85,112 )
(78,005 )
94,271
92,346
73,842
74,759
70,307
(7,870 )
(14,442 )
(11,640 )
(10,353 )
(7,698 )
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
2015
%
2016
%
Works Scheme
2015
2016
%
%
62
-
4
1
-
9
25
64
-
4
1
-
9
22
73
-
-
1
-
4
23
74
-
-
1
-
4
23
The pension plan assets do not include any investments in the shares of the Company (2015: 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 28 March 2015 / 29 March 2014
Total expense as above
Contributions paid
Actuarial losses recognised in SCI
At 2 April 2016 / 28 March 2015
2016
£’000
1,363
2015
£’000
979
(3,042 )
3,508
(3,309 )
3,810
466
501
1,829
1,480
2016
£’000
2015
£’000
(14,442 )
(1,829 )
1,847
6,554
(11,640 )
(1,480 )
1,922
(3,244 )
(7,870 )
(14,442 )
The actual return on plan assets was £2,418,000 (2015: £18,900,000). The Company expects to pay £835,000 (2015: £928,000)
in contributions to the Staff Scheme and £1,055,000 (2015: £1,137,000) 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 £8,689,000 (2015: £15,243,000).
Works Scheme
2016
2016
Staff Scheme
2015
Assets DBO Assets DBO Assets DBO Assets DBO
Works Scheme
2015
2015
Staff Scheme
2016
2015
2016
At 28 March 2015 / 29 March 2014
47,075
(58,443 )
45,271
(48,345 )
37,604
(46,018 )
36,238
(39,464 )
Expected return on assets
Current service costs
Benefits paid
Contributions by plan participants
Employer contributions
Interest cost
1,552
(104 )
-
1,490
-
1,686
-
1,623
-
(754 )
(33 )
(472 )
-
(568 )
-
(411 )
(1,466 )
1,466
(1,228 )
1,228
(1,407 )
1,407
(1,397 )
1,397
329
(329 )
1,025
-
162
822
(162 )
317
(317 )
-
1,044
-
168
879
(168 )
-
-
(1,922 )
-
(1,586 )
-
(2,053 )
-
(1,757 )
Actuarial (losses)/gains
(485 )
4,216
(139 )
2,962
7,831
(10,894 )
7,760
(7,942 )
At 2 April 2016 / 28 March 2015
47,926
(55,766 )
46,345
(46,375 )
47,075
(58,443 )
45,271
(48,345 )
Experience adjustments
Arising on plan assets
Percentage of scheme assets
Arising on plan liabilities
Percentage of scheme liabilities
2016
£’000
2015
£’000
2014
£’000
2013
£’000
2012
£’000
(624 )
15,591
(0.66% ) 16.88%
(3,830 )
(5.19% )
1,855
2.48%
(1,759 )
(2.50% )
7,178
(18,836 )
7.03% (17.64% )
2,621
3.07%
(143 )
(0.17% )
-
-
84
85
Notes to the Financial Statements
Notes to the Financial Statements
18. DEFERRED TAXATION
The movement on the deferred tax account is shown below:
At 28 March 2015 / 29 March 2014
Deferred tax on actuarial gains on retirement liabilities
Deferred tax on share options
SCI credit / (charge)
Group
2015
£’000
2016
£’000
1,174
(1,488 )
135
257
820
560
(225 )
19
Company
2015
£’000
2016
£’000
2,878
(1,488 )
135
84
2,552
560
(60 )
(174 )
At 2 April 2016/28 March 2015
78
1,174
1,609
2,878
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 £2,888,000 (2015: £2,268,000), tax at 20% of £578,000
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 28 March 2015
SCI credit
Deferred tax on share options
At 2 April 2016
Deferred tax assets
At 28 March 2015
SCI Credit
Deferred tax on actuarial gains on retirement liabilities
At 2 April 2016
Net deferred tax asset
19. CALLED UP EQUITY SHARE CAPITAL
Group and Company
Authorised
10,000,000 (2015:10,000,000) ordinary shares of 25p each
Issued and fully paid
At 28 March 2015
Issued during the period
At 2 April 2016
Potential issue of ordinary shares
Accelerated
capital allowances Other
£’000
£’000
Total
£’000
(1,933 )
147
-
219
93
135
(1,714 )
240
135
(1,786 )
447
(1,339 )
Pension
£’000
Total
£’000
2,888
17
(1,488 )
2,888
17
(1,488 )
1,417
1,417
Total
£’000
78
2016
£’000
2015
£’000
2,500
2,500
Number of
ordinary shares
9,166,766
59,076
£’000
2,292
14
9,225,842
2,306
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 172,211 ordinary shares of 25p by 2018 (2015: 173,999 ordinary shares of 25p
by 2017). There were 40,594 share options exercised in the period (2015: nil). Further information on directors share options can
be seen in the Directors Remuneration Report.
The Save As You Earn (SAYE) schemes were introduced in 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
Risk free rate of interest
Sept ‘13
3 year scheme
Sept ‘13
5 year scheme
57p
1 September
2013
71p
1 September
2013
199.52p
313.5p
26%
2%
199.52p
313.5p
26%
2%
3.25 years
5.25 years
0.8%
1.5%
During the period 43,076 options were exercised (2015: 195,616 options were exercised).
20. EMPLOYEES AND DIRECTORS
Staff costs during the period
Wages and salaries
Social Security costs
Pension costs
Note
Group
2015
£’000
2016
£’000
Company
2015
£’000
2016
£’000
21,105
19,403
3,550
3,322
1,886
1,688
317
17
2,164
1,516
1,033
271
451
25,155
22,607
4,900
4,044
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
Full Time Equivalent
2015
Number Number
2016
Headcount
2015
Number Number
2016
362
99
57
358
92
57
518
507
372
101
73
546
359
92
75
526
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
2016
Property
£’000
2016
Plant &
Machinery
£’000
2015
Property
£’000
2015
Plant &
Machinery
£’000
10
313
1,724
2,047
-
524
-
524
26
391
1,185
1,602
-
501
-
501
86
87
Notes to the Financial Statements
Shareholder Information
21. COMMITMENTS UNDER OPERATING LEASES (CONTINUED)
2015 - 2016 SHAREHOLDER INFORMATION
Company
Commitments under non-cancellable operating leases expiring:
Within one year
Later than one year and less than five years
After five years
22. CAPITAL COMMITMENTS
2016
Property
£’000
2016
Plant &
Machinery
£’000
2015
Property
£’000
2015
Plant &
Machinery
£’000
-
291
665
956
2016
£’000
-
524
-
524
-
391
-
391
-
501
-
501
Group
2015
£’000
2016
£’000
Company
2015
£’000
Contracts placed for future capital expenditure not
provided in the financial statements.
1,270
1,791
12
33
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 (2015: £40,000) 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 £918 (2015: £45,550) to Ellergreen Hydro, a company in which M A J Cropper is Managing
Director, in the period for a maintenance project. The Company paid £16,407 (2015: £23,909) 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 has rented the roof space of one of the buildings to Burneside Community Energy Ltd, who have
installed solar panels. The company is importing the electricity generated by the solar panels and paying Burneside Community Energy Ltd.
No financial transactions have arisen in the year. M A J Cropper is a director of Burneside Community Energy Ltd.
The Company also has the following transactions with related entities:
2016
James Cropper Speciality Papers Limited
James Cropper Converting Limited
Technical Fibre Products Limited
James Cropper 3D Products Limited
James Cropper EBT Limited
2015
James Cropper Speciality Papers Limited
James Cropper Converting Limited
Technical Fibre Products Limited
James Cropper EBT Limited
Management
charges
£’000
Receivable
£’000
Loans and net
intercompany
funding
£’000
4,143
656
942
-
-
5,741
Management
charges
£’000
4,309
763
896
-
5,968
1,333
71
1,377
151
-
2,932
Receivable
£’000
1,746
467
325
-
2,538
5,143
9,184
5,641
1,022
343
21,333
Loans and net
intercompany
funding
£’000
8,071
8,997
474
269
17,811
Reporting
Interim Results announced and sent to
Ordinary Shareholders
10 November 2015
Final results announced
Annual Report issued by
28 June 2016
5 July 2016
Annual General Meeting - at Bryce Institute, Burneside, Kendal, Wednesday 27 July 2016 at 11.00am.
Dividends on Ordinary Shares
Interim dividend paid on 8 January 2016 to Ordinary Shareholders registered on 10 December 2015.
Final dividend to be paid on 12 August 2016 to Ordinary Shareholders registered on 15 July 2016.
Bankers and Advisers
James Cropper plc
Bankers
Svenska Handelsbanken AB (publ)
Barclays Bank plc
HSBC Bank plc
Independent Auditor
KPMG LLP, Preston
Tax Advisers
PriceWaterhouseCoopers LLP, Newcastle upon Tyne
+44 (0)1539 722002 (Tel)
info@cropper.com
Burneside Mills
Kendal, Cumbria LA9 6PZ
Great Britain
www.cropper.com
Company Registration No: 30226
NOMAD & Stockbrokers
Stockdale Securities Limited, London
Corporate Lawyers
Bond Dickinson, Newcastle upon Tyne
DWF LLP, Manchester
Registrars
Capita Asset Services, Beckenham
Pension Adviser
Willis Towers Watson, Manchester
88
89
Notice of Annual General Meeting
NOTICE OF ANNUAL GENERAL MEETING
127 TH ANNUAL
GENERAL MEETING
JAMES CROPPER PLC
WEDNESDAY 27 JULY 2016
AT 11.00AM
THE BRYCE INSTITUTE. BURNESIDE, KENDAL
CUMBRIA LA9 6PZ
90
91
Notice of Annual General Meeting
Notice of Annual General Meeting
NOTICE OF ANNUAL GENERAL MEETING
Resolution 11
That the directors be and they are hereby empowered
pursuant to section 570 and section 573 of the Companies Act
2006 to allot equity securities (within the meaning of section
560 of that Act) for cash pursuant to the authority conferred
by Resolution 10 above or by way of a sale of treasury shares
as if section 561(1) of that Act did not apply to any such
allotment provided that this power shall be limited to:
(a)
the allotment of equity securities in connection with an
offer of securities in favour of the holders of Ordinary
Shares on the register of members at such record
dates as the directors may determine where the equity
securities respectively attributable to the interests of
the Ordinary Shareholders are proportionate (as nearly
as may be practicable) to the respective numbers of
Ordinary Shares held by them on any such record dates,
subject to such exclusions or other arrangements as
the directors may deem necessary or expedient to deal
with treasury shares, fractional entitlements or legal or
practical problems arising under the laws of any overseas
territory or the requirements of any regulatory body or
stock exchange or by virtue of Ordinary Shares being
represented by depositary receipts or any other matter;
and
the allotment (otherwise than pursuant to sub-paragraph
(a) of this Resolution 11) to any person or persons of
equity securities up to an aggregate nominal amount
of £193,139, and shall expire upon the expiry of the
general authority conferred by Resolution 8 above, save
that the Company shall be entitled to make offers or
agreements before the expiry of such power which would
or might require equity securities to be allotted after such
expiry and the directors shall be entitled to allot equity
securities pursuant to any such offer or agreement as if
the power conferred hereby had not expired.
BY ORDER OF THE BOARD
Jim Aldridge
Company Secretary
5 July 2016
Registered Office:
Burneside Mills
Kendal
Cumbria LA9 6PZ
NOTICE IS HEREBY GIVEN that the 127th Annual
General Meeting of the Company will be held at
The Bryce Institute, Burneside, Kendal, Cumbria LA9 6PZ
on Wednesday 27 July 2016 at 11 am to consider and,
if thought fit, pass Resolutions 1 to 10 inclusive as ordinary
resolutions and Resolution 11 as a special resolution.
The Chairman of the Company will act as Chairman of
the Meeting other than Resolution 3 which will be chaired
by another director of the Company.
Resolution 1
To receive and consider the statement of accounts and reports
of the Directors and the auditors for the 53 weeks ended
2 April 2016.
Resolution 2
To declare a final dividend for the year ended 2 April 2016 of
7.1 pence for each Ordinary Share payable on 12 August 2016
to all Ordinary Shareholders on the register of the Company
at close of business on 15 July 2016.
Resolution 3
To re-elect Mark A J Cropper as a director of the Company.
Resolution 4
To re-elect Philip I Wild as a director of the Company.
Resolution 5
To re-elect Martin Thompson as a director of the Company.
(b)
Resolution 6
To re-elect James E Sharp as a director of the Company.
Resolution 7
To reappoint KPMG as auditors of the Company to hold
office until the conclusion of the next Annual General Meeting
of the Company.
Resolution 8
To authorise the Directors to determine the remuneration of
the auditors of the Company.
Resolution 9
To consider and approve the Directors’ Remuneration Report
for the 53 weeks ended 2 April 2016.
Resolution 10
That the directors be and they are hereby generally and
unconditionally authorised in accordance with section 551
of the Companies Act 2006 to exercise all the powers of the
Company to allot shares in the Company and to grant rights
to subscribe for, or to convert any security into, shares in the
Company up to an aggregate nominal amount of £193,139
provided that this authority shall expire at the end of the
next Annual General Meeting of the Company or, if earlier,
15 months from the date of this Resolution, save that the
Company shall be entitled to make offers or agreements
before the expiry of such authority which would or might
require shares to be allotted or such rights to be granted after
such expiry and the directors shall be entitled to allot shares
and grant rights pursuant to any such offer or agreement as if
this authority had not expired; and all unexercised authorities
previously granted to the directors to allot shares and grant
rights be and are hereby revoked.
Notes:
Proxies
1. To be entitled to attend and vote, whether in person or
by proxy, at the AGM, members must be registered in
the Register of Members of the Company at 6.00 pm on
25 July 2016 (or, if the meeting is adjourned, at 6.00 pm
on the date which is two days prior to the adjourned
meeting). Changes to entries on the Register of Members
after this time shall be disregarded in determining the
rights of persons to attend or vote (and the number of
votes they may cast) at the AGM or adjourned meeting.
2. A member entitled to attend and vote at the meeting
convened by the above notice is entitled to appoint
another person as his proxy to exercise all or any of his
rights to attend and to speak and vote at a meeting of
the Company. Any such member may appoint more
than one proxy provided that each proxy is appointed to
exercise the rights attached to a different share or shares
held by such member. You may not appoint more than
one proxy to exercise rights attached to any one share.
To appoint more than one proxy, please photocopy the
form of proxy and indicate in the box next to the proxy’s
name the number of shares in relation to which he or she
is authorised to act as your proxy. Please also indicate
by ticking the box provided if the proxy instruction
is one of multiple instructions being given. All forms
must be signed and should be returned together in
the same envelope.
3. A proxy need not be a member of the Company. Your
proxy could be the Chairman, another director of the
Company or another person who has agreed to attend
to represent you. Your proxy must vote as you instruct
and must attend the meeting for your vote to be counted.
Appointing a proxy will not prevent a shareholder from
attending in person and voting at the meeting. If you
wish your proxy to speak on your behalf at the meeting
you will need to appoint your own choice of proxy (not
the Chairman of the meeting) and give your instructions
directly to that person.
4. A form of appointment of proxy is enclosed. Details of
how to appoint a proxy are set out in the notes to the
proxy form. If you return more than one valid proxy
appointment in respect of the same share for use at the
same meeting and in respect of the same matter, that
received last by the registrar before the latest time for the
receipt of proxies shall be treated as replacing or revoking
the other or others as regards to that share.
5. The form of proxy includes a vote withheld option.
Please note that a vote withheld is not a vote in law and
will not be counted in the calculation of the proportion
of votes for and against any particular Resolution.
6. The appointment of a proxy and the original or duly
certified copy of the power of attorney or other authority
(if any) under which it is signed or authenticated should
be deposited with the Company’s registrar at the address
shown on the proxy form not later than 11.00 am on 25
July 2016 or 48 hours before the time for holding any
adjourned meeting. The deadline for receipt of proxy
appointments (see above) also applies in relation to
amended instructions.
7. CREST members who wish to appoint a proxy or
proxies by utilising the CREST electronic proxy
appointment service may do so by utilising the
procedures described in the CREST Manual on the
Euroclear website (www.euroclear.com/CREST).
CREST Personal Members or other CREST sponsored
members, and those CREST members who have
appointed a voting service provider(s), should refer to
their CREST sponsor or voting service provider(s),
who will be able to take the appropriate action on their
behalf. In order for a proxy appointment made by
means of CREST to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be
properly authenticated in accordance with Euroclear
UK & Ireland Limited’s (EUI) specifications and must
contain the information required for such instructions,
as described in the CREST Manual. The message
regardless of whether it constitutes the appointment of
a proxy or an amendment to the instruction given to a
previously appointed proxy must, in order to be valid,
be transmitted so as to be received by the issuer’s agent
(ID RA10) by the latest time(s) for receipt of proxy
appointments specified in the notice of meeting. For
this purpose, the time of receipt will be taken to be the
time (as determined by the timestamp applied to the
message by the CREST Applications Host) from which
the issuer’s agent is able to retrieve the message by
enquiry to CREST in the manner prescribed by CREST.
The Company may treat as invalid a CREST Proxy
Instruction in the circumstances set out in regulation
35(5)(a) of the Uncertificated Securities Regulations 2001.
8. CREST members and, where applicable, their CREST
sponsors or voting service providers should note that
EUI does not make available special procedures in
CREST for any particular messages. Normal system
timings and limitations will therefore apply in relation
to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take
(or, if the CREST member is a CREST personal member
or sponsored member or has appointed a voting service
provider(s), to procure that his CREST sponsor or
voting service provider(s) take(s)) such action as shall
be necessary to ensure that a message is transmitted by
means of the CREST system by any particular time. In
this connection, CREST members and, where applicable,
their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST
Manual concerning practical limitations of the CREST
system and timings.
92
93
Notice of Annual General Meeting
Corporate representatives
9. A member of the Company which is a corporation
may authorise a person or persons to act as its
representative(s) at the AGM. In accordance with
the provisions of the Companies Act 2006, each
such representative may exercise (on behalf of the
corporation) the same powers as the corporation could
exercise if it were an individual member of the Company,
provided that they do not do so in relation to the
same shares.
Total Voting Rights
10. As at 9.00 am on the Latest Practicable Date, being the
last practicable day prior to the publication of this notice,
the Company’s issued share capital comprised 9,227,445
Ordinary Shares of 25 pence each. Each ordinary share
carries the right to one vote at a general meeting of the
Company and, therefore, the total number of voting
rights in the Company as at 9.00 am on the Latest
Practicable Date, being the last practicable date prior
to the publication of this notice is 9,227,445.
Directors’ contracts
11. Copies of the contracts of service for directors and
a statement of directors’ interests are available for
inspection during normal business hours at the registered
office of the Company and they may be inspected at the
place of the Annual General Meeting for at least
15 minutes prior to the meeting and at the meeting.
94
ANNUAL REPORT PRODUCTION
All the paper used in this report has been made in England by James Cropper PLC.
Cover
Colorplan Factory Yellow, 350gsm
Endpapers
Colorplan Tabriz Blue, 135gsm
Inner pages
Colorplan:
Cool Grey, 135gsm
Pristine White, 135gsm
Natural, 135gsm
Cool Blue, 135gsm
Financial Statements
Colorplan Park Green, 135gsm
Design
Plain Creative
Photography
Pantling Studio
James Cropper Archives
Steven Barber Photography
Print
Dixons Printing Company Ltd
96
J A M E S C R O P P E R P L C
Regi stered Office: Burn es ide Mi lls, Ken dal, Cu mb ria L A9 6P Z
Regi stered in Engl an d and Wales No . 3 0226
W W W . C R O P P E R . C O M