ANNUAL REPORT AND ACCOUNTS 2 02 1
P I O N E ER I NG
M A T E R I A L S
T O S A F E G U A R D
O U R F U TU R E
PIONEERIN G MATERIALS TO SAFEGUARD OUR FUTURE
AS WE LOOK TO A FUTURE, NOT QUITE POST-COVID,
WE MUST ADDRESS SOCIETAL CONCERNS AND
ADAPT TO NEW WAYS OF THINKING.
S A F E T Y
& H Y G I E N E
N U M B E R O N E
P A C K A G I N G
PAPERGARD™ PROTECTED PAPERS REDUCE THE
VIABILITY OF COVID-19 BY OVER 95% IN ONLY
15 MINUTES, A ND BY 99.9% WITHIN 2 HOURS.
Location
Manufacturing
R&D
Sales Office
Partners
1
Burneside, UK (Head Office)
2
Crewe, UK
3
Launceston, UK
4 Oslo, Norway
5
Helsinki, Finland
6
Ljungby, Sweden
7
Copenhagen, Denmark
8
Brussels, Belgium
9
Prague, Czech Republic
10
Paris, France
11
Strasbourg, France
12 Milan, Italy
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
16
17
1
2
3
5
4
6
7
8
9
15
10 11
12
13
14
18
19
20
21
23
22
Location
Manufacturing
R&D
Sales Office
Partners
13
Budapest, Hungary
14
Bucharest, Romania
15 Moscow, Russia
16
Schenectady, USA
•
•
•
17
Philadelphia, USA
18 Dubai, UAE
19
Shanghai, China
20 Guangzhou, China
21
Hong Kong, China
22 Melbourne, Australia
23
Johannesburg, South Africa
•
•
•
•
•
•
•
•
•
•
Purpose and Values
PURPOSE AND VALUES
James Cropper has always had a strong set of values and
cared about more than just making a profit, but given
these somewhat challenging times, we felt it was more
important than ever to come together and really explore
what our values are and to establish a common purpose
- a simple idea which unites us all and can guide us into the
future. We also have an opportunity to do more to make
a positive contribution to the world around us and know
having a strong sense of purpose will help navigate us.
We knew that for our values and purpose to be truly
meaningful, they could not be created in the boardroom
alone, they needed to come from our employees. So, using
video conferencing to overcome the challenges of Covid-19,
we brought together from across all our business sites and
geographical locations, over 40 representatives.
We held three workshops in which we shared stories
and had discussions about our heritage, what makes us
proud, the needs of our customers and the challenges
faced by them and us, but most importantly we spent
time exploring what the world needs from James Cropper
and how we can be a force for good.
The purpose and values we have today are a direct output
from these sessions.
Our purpose
PIONEERING MATERIALS
TO SAFEGUARD
OUR FUTURE
Our values
FORWARD THINKING.
RESPONSIBLE.
CARING.
Going forward we want everyone across the James Cropper group to
be part of an ongoing conversation about what our purpose and values
mean to them. Making time for quality conversations about what matters
to us is something we believe will help us remain relevant, feel connected
and inspire us all to take action.
In these conversations we will be shining a light on all the great work
we know already takes place that shows we truly are forward thinking,
responsible and caring. We will also take time to look at how we
build on our values; growing ideas and opportunities to live our purpose.
CONTENTS
STRATEGIC REPORT
03
04
05
06
08
12
17
20
26
28
32
35
38
43
44
45
47
Financial Highlights
Financial Summary
Chairman’s Letter
Chief Executive’s Review
Chief Financial Officer's Review
The Pension Report
Risk Management
Stakeholders Relationship Statement
Technical Fibre Products
ColourformTM
James Cropper Paper
Sustainability - ESG Committee
Streamlined Energy & Carbon Report
Pride Excellence Awards
People
GOVERNANCE
Board of Directors
Corporate Governance Statement
Report of the Audit Committee
Report of the Remuneration Committee
QCA Principles
Directors’ Report
FINANCIAL STATEMENTS
63
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Group Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes In Equity
Notes to the Financial Statements
Shareholder Information
Strategic Report - Financial Highlights
Strategic Report - Financial Summary
FINANCIAL HIGHLIGHTS
FINANCIAL SUMMARY
Total revenue
£78.8m
2021
2020
2019
2018
2017
25%
78.8
104.7
101.1
96.3
92.4
2021
2020
2019
2018
2017
Geographical % segmentation of revenue
UK
Europe
Americas
Asia
Other
10%
20%
30%
40%
50%
60%
Adjusted profit before tax (iii)
£4.0m
2021
2020
2019
2018
2017
4.0
4.0
40%
6.7
5.8
6.6
(excluding IAS 19 Pension adjustments and exceptional items)
Diluted EPS
16.4p
2021
2020
2019
2018
2017
16.4
24.3
Net borrowings (ii)
£7.5m
68%
50.6
43.0
49.0
32%
2021
2020
2019
2018
2017
11.1
8.6
7.5
7.4
4.8
Non GAAP Measures:
Profit before tax
£1.7m
1.7
2.6
2021
2020
2019
2018
2017
Gearing (i)
17%
2021
2020
2019
2018
2017
17
21
20
12
(excluding IAS 19 Pension adjustments)
Capital expenditure
£3.1m
2021
2020
2019
2018
2017
3.1
1.9
5.2
5.3
69%
5.5
5.5
4.5
35%
26
66%
9.2
(i) Gearing is calculated as the proportion of net debt to Total Shareholders' Equity, excluding the IAS19 Pension deficit.
(ii) Net borrowings, are calculated as total loans and borrowings less cash and cash equivalents.
Included in net borrowings from 2020 are lease liabilities for right of use assets under IFRS 16.
The Group has initially applied IFRS 16 at 31 March 2019 and recognised £4.2m of lease liabilities on the balance sheet.
The Group has applied IFRS 16 using the modified retrospective approach, under which comparative information is
not restated and the cumulative effect of applying IFRS 16 is recognised in retained earnings at the date of initial application.
(iii) Adjusted profit before tax equates to profit before tax excluding the IAS 19 impact and excluding exceptional items.
Summary of results
All figures in £’000
Revenue
Adjusted operating profit (APM 1)*
(excluding IAS 19 impact and exceptional items)
Adjusted profit before tax (APM 2)*
(excluding IAS 19 impact and exceptional items)
Impact of IAS 19
Profit before tax
Earnings per share - diluted
Statement of Financial Position
All figures in £’000
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
2021
78,768
4,510
2020
2019
104,667
7,240
101,095
4,262
2018
96,312
6,133
2017
92,363
6,849
4,023
6,674
3,962
5,825
6,566
(802 )
1,719
16.4 p
(1,215 )
5,459
50.6 p
(1,386 )
2,576
24.3 p
(1,248 )
4,541
(1,025 )
5,541
43.0 p
49.0 p
2021
70,780
(18,444 )
52,336
(14,933 )
37,403
(7,502 )
29,901
2020
72,084
(19,032 )
53,052
(7,600 )
45,452
(11,055 )
34,397
2019
2018
2017
64,871
(16,236 )
48,635
(18,798 )
29,837
(8,561 )
21,276
59,899
(15,585 )
44,314
(16,162 )
28,152
(4,806 )
23,346
64,304
(19,433 )
44,871
(18,421 )
26,450
(7,364 )
19,086
17 %
25 %
26 %
32 %
21 %
40 %
12 %
21 %
20 %
39 %
3,127
9,195
5,229
1,935
5,315
* Alternative performance measures (APMs) are defined on page 12.
(i) The IAS 19 pension adjustments are explained in detail in the Financial Review section, pages 17 to 19. The total amount excluded from
the IAS pension Charge is £802k (2020: £1,215k). The adjustment, which we refer to in these accounts as the "IAS 19 impact" represents
the difference between the pension charge as calculated under IAS 19 and the cash contributions for the current service cost only as
determined by the latest triennial valuation. The Directors consider that the adjusted pension charge better reflects the actual pension
costs for ongoing service compared to the IAS 19 charge. This adjustment is made internally when we assess performance and is also
used in the EBITDA and EPS targets used in management incentive schemes.
(ii) The IAS 19 pension adjustment £802k (2020: £1,215k) comprises:
All figures in £’000
Current service charge
Normal contributions
Interest charge
IAS 19 pension adjustment
Period ended 27 March 2021
Period ended 28 March 2020
1,034
(471 )
239
802
1,188
(517 )
544
1,215
Further details can be found on page 18 (The IAS 19 impact on profits).
04
05
Strategic Report - Chairman’s Letter
Strategic Report - Chairman’s Letter
This time last year I not only expressed
concern about the impact of Covid but
many other factors, not least Brexit.
Thankfully this has passed without undue
interruption or adverse effect, even while
the transition was a real rollercoaster ride.
This is truly a credit to all the teams that
managed the situation. Not surprisingly
the workload was considerable, further
increased by our commitment to help
our customers manage the process.
Another concern at the time of writing
last year was whether we could grow
our way out of the current crisis in a way
that respects the environment, people and
communities. This is a huge topic that
does not invite easy or quick solutions.
However, we have begun to map several
ways forwards that will allow us to make
material improvements in the coming years.
First, we held a series of workshops over
the summer of 2020 to debate and agree
the Group’s purpose and values. This was
a highlight of the year for me. It is easy to
be cynical about such words and certainly
purpose statements are a new fashion, but
truthfully we are a purposeful and values
driven company and the outputs truly
came from the heart of the company –
specifically a huge cross-section of our
employees from every level, function and
geography. It was the first time we have
run such an exercise in this way, and the
outputs were as rich as they were clear
and simple. We now have three core
values – to be forward-thinking, caring and
responsible – that truly speak for the ethos
of the Group, as does the purpose defined:
to be makers of pioneering materials to
safeguard our future. There is already
a close fit between these and much of
what we do, but there is also much
work required to truly live by them.
In terms of next steps, this is being ably
overseen by a newly convened ESG
sub-committee of the board, as well as
other strategies that continue to gather
pace, not least a programme to deliver
significant decarbonisation by 2030 and
Paper’s ambition to use 50% waste fibre
by 2025. Our growth and product
development strategies are also ever more
aligned with helping our customers and
consumers reduce environmental impact,
whether via greener papers and packaging
or the advanced materials TFP
has developed for a wide range
of renewable energies.
In particular, TFP is fast forging
itself a position in the emerging
green hydrogen industry (a field
receiving much press of late),
both as makers of fuel cell and
hydrogen electrolyser components.
The latter was significantly enhanced
by the acquisition of electrochemical
pioneer PV3 Technologies in January
2021 and the formation of a dedicated
business TFP Hydrogen to focus on
this area. I am especially excited by
the transaction as it begins to move
the Group beyond materials into
electrochemistry with all kinds
of potential for further innovation
and growth.
Dividend
It will be no surprise to learn that no
interim dividend has been paid in the
year and no final dividend is proposed.
The Board will consider reinstating
a dividend as finances and other
limitations permit.
“I CAN’T SPEAK FOR OTHER COMPANIES OR INSTITUTIONS
BUT THE STRENGTH OF CHARACTER AND POSITIVE
OUTLOOK HERE HAS BEEN BEYOND COMPARE. ”
Outlook
Looking forwards, the potential
we have across multiple products
and markets is huge, as is the potential
for us to do better within. The challenge
now is to ensure that we understand
how we realise this and what is missing
along the way.
Crucially, we are able to recommence
capital investments put on hold last year.
TFP’s fourth production line will shortly
be commissioned and Paper’s wholesale
upgrade to its finishing capabilities
is back on track.
That we find ourselves in this position
speaks volumes for the unprecedented
commitment of everyone across the Group.
I can’t speak for other companies
or institutions but the strength of
character and positive outlook here
has been beyond compare. We have
never looked downwards or inwards
even if we have been stuck behind our
screens far too much. The work has
been relentless, made all the more
intensive by social distancing and
the need for constant adaptation.
Once again I offer my sincerest thanks and
gratitude to all and everyone associated with
our business. Our mantra since the earliest
days of the Covid crisis has been to “emerge
stronger”. This time last year it was far from
a foregone conclusion that we could.
However, I can now say with some
confidence that we have every chance
to do so, even while the pandemic
and its aftershocks are far from over.
Mark Cropper, Chairman
21 June 2021
CHAIRMAN’S LETTER
Dear Shareholders,
As I wrote this letter last year,
the pandemic was already upon us.
The outlook was very uncertain but
nothing was being left to chance. We had
already implemented an eye-watering
list of adaptations in the first few weeks
of lockdown, with much more being
planned to bring forward thereafter.
I am pleased to report that in the event
the year has passed as well as we might
have hoped. We have managed to keep
operating throughout and most importantly
our workforce has stayed safe. While we
have had positive Covid cases, transmission
has been controlled and no severe illness
has resulted.
In financial terms, we have been able to
report a profit before tax of £1.7m for the
year. This was down by 69% versus the
prior period while Group turnover fell
by 25%, split between Paper (-32%),
TFP (-7%), and ColourformTM (+9%).
The results are on the positive side of break-
even thanks to the critical role government
employment assistance schemes in the UK
and the US played in supporting the Group.
This totalled £2.9m and played a critical role
helping the Group retain employees.
The accounts also record £1.1m of
exceptional costs relating to a restructuring
programme brought forward as a result
of the pandemic. This largely related to
a strategic change moving us away from
a matrix structure and closer to vertically
integrated businesses with each Division
have greater autonomy over its vision and
growth. The changes were predominantly
in Paper and central Group functions.
The decision to move ahead with this
was not taken lightly, but it was essential to
restructure in order to secure a future for the
Group. As it happened more than 90% of
those leaving chose voluntary redundancy.
Many had worked for James Cropper for
decades and the number included our COO
Dave Watson, who played a critical role in
the transformation of the Group since joining
us in 2014. I wish to thank everyone who
left for everything they have contributed
over many years and their goodwill and
support for a process that is never easy.
06
07
Strategic Report - Chief Executive’s Review
Strategic Report - Chief Executive’s Review
YEAR IN REVIEW
Revenue
(2020: £104.7m)
£78.8m
-25%
Adjusted operating profit (APM 1)*
(excluding IAS 19 impact and exceptionals) (2020: £7.2m)
£4.5m
-38%
Adjusted profit before tax (APM 2)*
(excluding IAS 19 impact and exceptionals) (2020: £6.7m)
£4.0m -40%
Profit before tax
(2020: £5.5m)
Net borrowings
(2020: £11.1m)
Diluted earnings per share
(2020: 50.6p)
Full year dividend per share
(2020: 2.5p)
£1.7m
-69%
£7.5m
-32%
16.4p
-68%
nil
-
No final dividend proposed
CHIEF EXECUTIVE’S REVIEW
Having dealt with the challenges
from the pandemic, I am pleased
to report our results for the period.
The immediate actions taken
by the Board and our employees
enabled the company to continue
to trade in a Covid-secure environment
throughout the period leaving us in
a strong position to continue to
accelerate our growth plans.
Our priorities throughout the pandemic
have been foremost with the health
and wellbeing of our employees.
Additionally, our focus has been on
supporting our customers, managing
costs, preserving cash, and latterly
accelerating our growth plans, with our
aim to emerge from the pandemic as a
stronger company.
The company responded swiftly, with the
Executive directors forming a crisis team
initially meeting daily and latterly weekly
to provide direct leadership on all aspects.
Sub teams were tasked to provide
frequent risk assessments and implement
preventative measures way beyond
mandatory requirements to reduce
the risk of infection, providing
a Covid Secure workplace.
In addition, a weekly communication
to all global employees provided
updates on cases, protective measures,
and each business.
The impact on customer demand
was seen across the group, with Paper
being the most significantly impacted.
Overall, the company saw a 25% reduction
in demand, with Paper being impacted
by a 32% reduction across the portfolio,
and TFP a reduction of 7% driven
mainly from the aerospace market.
However, many markets in TFP
were unaffected, and some, including
hydrogen, continued to grow. In addition,
ColourformTM continued to grow, despite a
lower growth rate due to the impact from
the pandemic.
The most significant impact was experienced
within the first half of the year, with a steady
improvement through the second half.
With the continuation of robust business
development throughout, continued
innovation and investments restarted,
I am optimistic the company is
exceptionally well placed to emerge
stronger and accelerate growth in
each business.
Revenue and Operating Profit
The financial impact of the pandemic on
the business shows a 25% fall in revenues
and a fall of 69% in profit before tax.
As a consequence, earnings per share
have fallen by 68% to 16.4p per share
(2020: 50.6p per share).
Group revenue for the financial period
was £78.8m, down 25% on the prior period.
Revenue for the Paper division fell by 32%
in the period to £51.4m generating a small
profit, prior to exceptional cost, of £0.4m
compared to an operating profit of £3.4m
in the prior period. Revenue for the TFP
division fell by 7% in the period to £24.6m
generating an operating profit of £6.9m,
prior to exceptional cost, compared to
£7.8m in the prior period. Revenue for
ColourformTM grew by 9% in the period to
£2.8m, generating an operating loss of £1.4m,
prior to exceptional cost, compared to an
operating loss of £1.4m in the prior period.
Capital expenditure
Capital investments during the period were
generally suspended for most of the year,
including the extension to the TFP building
and the additional line. Expenditure in the
period amounted to £3.1m compared
to £9.2m in the prior period.
*For definitions of alternative performance measures please refer to page 12 on the Chief Financial Officer Review report.
Group Strategy
Our group philosophy is to provide each business with the flexibility and autonomy to maximise its potential.
Across the group, all businesses and functions share a common purpose and values. However, the structure of the group
has moved from a matrix to vertically integrated businesses. Each business owns its own individual vision and strategic
growth plan, which are supported by the group’s functions.
PIONEERING MATERIALS TO SAFEGUARD OUR FUTURE
Our purpose
FORWARD THINKING. RESPONSIBLE. CARING.
Our values
TFP are driving sales growth in niche
markets and building capacity and
capability, including in the recently
acquired entity.
Target markets include hydrogen fuel
cells, hydrogen production (PEM),
wind energy and aerospace. Page 28
ColourformTM is accelerating
new projects to return rapid sales
growth in sustainable packaging.
Paper is focused on developing
its portfolio to deliver margin
improvement.
Target markets include packaging
for beauty, perfumes and high
value wine & spirits. Page 32
Target markets include
luxury packaging, art,
design and print. Page 35
The approach for each business to act independently sharpens the target market focus and aligns the organisational, operational,
and technical needs for each. Each business operates a divisional board, whose primary role is to set the mid-term strategy
(circa five years) to deploy and achieve.
Investment for growth
Following a pause during the pandemic, all investment plans were
restarted by the start of the new financial year. In TFP, the additional
production line to create 50% increased capacity will be operational
by summer 2021 and ready to support our forward growth plans.
TFP will generate additional growth through the acquisition of PV3
technologies, now known as TFP Hydrogen. Paper is creating an
increased capability to provide enhanced finishing such as embossing
and coatings, supporting the development of a more technically
advanced and higher-margin portfolio. ColourformTM is focused
on both capacity and capability increase to deliver further customer
offerings for sustainable packaging.
08
09
Strategic Report - Chief Executive’s Review
Innovation for growth
Innovation sits at the heart of
the company, with around 100
employees directly involved with
innovation programmes.
Despite the headwinds from the
Pandemic, the company has continued
to drive innovation across the group.
Our dedicated technology & innovation
team operate independently to the
businesses to deliver step-change.
Key activities include decarbonisation,
water usage reduction and reuse,
and engagement with key universities
and institutions developing processes
for upcycling waste materials.
Within the businesses, new products
and technologies have been launched.
PaperGardTM was launched earlier in
the year and is proven to be effective
at reducing the presence of Covid-19
on the surface of Paper by 99.9%.
New plating technologies have been
launched to provide more efficient and
greater durability for the production of
hydrogen through PEM water hydrolysis.
Disruptive sustainable packaging has
been launched with customers such as
the champagne house Ruinart, providing
packaging nine times lighter and 60%
reduced carbon footprint compared to its
previous traditional packaging with zero
plastic and 100% recyclable.
People
The last year has seen some significant
development in our approach to
our organisation.
Employees across each business and
geography came together to explore
and define our Purpose and Values.
Through a series of highly engaged
online workshops representing over
10% of all employees helped to develop
our Purpose; “Pioneering Materials
to Safeguard our Future” and our values:
“Forward-thinking”, “Responsible”,
and “Caring”.
It is with these that we will further shape
our decision making for future business,
our accountabilities, and our people.
The Company has traditionally taken
great care to look after its people,
to safeguard the environment in which
it operates, to act responsibly and to
develop sustainable manufacturing
practices, and so it is deeply encouraging
to have these values:
“Forward-thinking”, “Responsible”, and
“Caring” affirmed. This year we formally
established an Environmental, Social and
Governance (ESG) committee to provide
board oversight of Group ESG priorities
and to monitor overall performance.
Our priorities and some of the early work
of the ESG committee is described on
pages 38 to 42 of this report.
We undertook an exercise to restructure
the organisation to support accelerated
growth and remove cost and complexity
during the year.
Costs within the Paper business have
been reduced by £2m, whilst new
opportunities have been created to
support the delivery of our growth plans.
The overall group structure has moved
from a matrix organisation to three
vertically integrated businesses.
Additionally, throughout the year,
we have recognised outstanding
achievements from our employees
through our Pride Awards. I was delighted
to see 32 of our employees were presented
a Pride Award within the year (page 44).
Supporting early careers is a key priority
for the company through apprenticeships
and graduate recruitment as we build
future talent. The company currently
support 24 apprentices across a range of
disciplines, and 4 new technical graduates
have joined the company in the last year.
Despite the challenges of the pandemic
and the difficult actions the Company has
had to take this year, it is rewarding to see
how far we have come in organisational
development, setting this Group up for
a stronger and more prosperous future.
This has removed some complexity within
the group and provides increased autonomy
and responsibility for each business.
Phil Wild, Chief Executive Officer
21 June 2021
10
11
Strategic Report - Chief Financial Officer’s Review
Strategic Report - Chief Financial Officer’s Review
CHIEF FINANCIAL OFFICER’S REVIEW
Revenue
2021
Divisional Revenue Summary £’000
2020
£’000
Change Change
%
£’000
Paper Products
51,376
Technical Fibre Products (TFP)
24,570
ColourformTM
2,822
75,545
26,536
2,586
(24,169 )
(32% )
(1,966 )
236
(7% )
9%
Group Revenue
78,768
104,667
(25,899 )
(25% )
The Group revenues of £78,768k are 25% down on the previous year (2020: £104,667k).
The trade in each division has been impacted by the pandemic.
Paper Division
Technical Fibre Products (TFP)
ColourformTM
James Cropper Paper Products
is a custom speciality papermaker
and converter and one of the world’s
foremost makers of premium
coloured paper, renowned globally
as experts in custom papermaking.
Paper’s sales were £51,376k in the
period (2020: £75,545k) down 32%
on prior year. The pandemic conditions
hit all market segments in Paper,
with the impact of high street closures,
and very low duty free sales particularly
affecting packaging in the year.
Demand was low for the best part
of the year with the most noticeable
uptick experienced in the four months
between December 2020 and
March 2021.
TFP develops and manufactures non-
wovens and other advanced cutting edge
materials that play an important part in
progressive applications for fuel cell and
green technologies, defence, fire protection
and transportation. It is a highly diversified
business with profitable niche positions in
a range of market sectors. Page 30 provides
an introduction to our newly acquired
subsidiary TFP Hydrogen Products Ltd.
TFP’s sales were £24,570k in the period
(2020: £26,536k). The pandemic conditions
hit thermal insulation markets and caused
extended and further shocks to aerospace
sectors, however the fuel cell business
evidenced year on year growth during
the period and it is rewarding to see
how well this business continued to fare
despite the challenges of the pandemic.
ColourformTM produces plastic-free
packaging made from 100% renewable
FSC® wood fibre and post-consumer
recycled paper delivering renewable,
recyclable and biodegradable products.
The Division offers brands across
a range of consumer beauty,
wines and spirit markets a new
higher standard for sustainable
packaging. Every ColourformTM
project is bespoke in terms of colour,
shape, surface, finish and functionality.
ColourformTM sales were £2,822k
(2020: £2,586k) and have grown
9% in the year demonstrating
continued growth in the most
difficult of market conditions.
Alternative Performance Measures (APMs)
Total impact of IAS 19 on profit £’000
APMs make clear to the readers of the accounts what
the underlying performance of the business actually is.
These accounts contain 2 main adjusting factors being the
impact of IAS 19 which is separated out and exceptional items.
These measures are used internally to evaluate business
performance and the following APM’s are used in this report:
APM 1
“Adjusted operating profit” - Adjusted operating
profit refers to operating profit before interest and
prior to the impact of IAS 19 and exceptional items.
APM 2
“Adjusted profit before tax” - Adjusted profit before
tax refers to profit before tax prior to the impact
of IAS 19 and exceptional items.
APM 3
“Adjusted profit before tax after exceptional items”
- Adjusted profit before tax refers to profit before tax
prior to the impact of IAS 19.
APM 4
Adjusted EBITDA - EBITDA is a common term
that refers to operating profit before interest, tax,
depreciation and amortisation. Adjusted EBITDA is
EBITDA prior to the impact of IAS 19 and exceptional
items. The impact of IAS 19 and exceptional items are
presented in the Profit summary table.
200
0
(200)
(400)
(600)
(800)
(1,000)
(1,200)
(1,400)
(1,600)
2011
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
IAS 19 is separated out from operating profit measures as IAS 19
obscures performance. The impact of IAS 19 varies from one
reporting period to another. This chart sets out the variable impact
of IAS 19 on profits over the last 10 years, during this time the
average impact is a negative hit to Profit before tax of £882k.
The most favourable year is a reported surplus of £128k and the
largest hit to profit before tax was in 2019 and reported an impact of
£1,386k. This year the impact is close to the 10 year average at £802k.
Profit
Profit Summary
Paper Products
Technical Fibre Products (TFP)
ColourformTM
Other Group expenses
Adjusted operating profit APM1
Net finance costs (excluding IAS 19 impact)
Adjusted profit before tax APM2
Exceptional costs
Adjusted profit before tax
after exceptional items APM3
Net IAS 19 pension adjustments
Net current service charge required
Net interest
Net IAS 19 pension impact
Profit before tax
2021
£’000
2020
£’000
Change
£’000
Change
%
393
6,892
(1,441 )
(1,334 )
4,510
(487 )
4,023
(1,502 )
2,521
(563 )
(239 )
(802 )
1,719
3,406
7,753
(1,378 )
(2,541 )
7,240
(566 )
6,674
-
(3,013 )
(861 )
(63 )
1,207
(2,730 )
79
-88%
-11%
-5%
48%
-38%
14%
(2,651 )
-40%
-
-
6,674
(4,153 )
-62%
(671 )
(544 )
(1,215 )
5,459
108
305
413
16%
56%
34%
(3,740 )
-69%
Adjusted profit before tax (see APM3 Alternative Performance Measures), was £2,521k, a 62% fall on prior period
(2020: £6,674k) and was profitable on account of the valued government job support schemes both in the UK and the USA
bringing in assistance of £2,915k to the Group in the year, and preventing significant change to organisational resource.
In the face of the pandemic and business realignment, an organisational restructuring programme was completed
and the details of this are reported in this report under exceptional items.
Profit before tax is reported of £1,719k (2020 £5,459k) a 69% drop on prior year.
Other income
Depreciation and amortisation
Other expenses
Other income is reported on a separate
line in the Statement of Comprehensive
Income and normally captures revenues
from research projects and royalty income.
In the last year these were very small
amounting only to £121k (2020: £486k).
In the period the Group received £2,915k
of government support from UK and US
schemes bringing employment assistance
and ensuring at the hardest of times the
retention of trained employees now ready
to help the Group pick up pace and
grow as we emerge from this crisis.
With the addition of government
receipts other income is £3,036k
in the year (2020: £486k).
Depreciation and amortisation rises
to £4,489k in the year from £3,950k in
the prior period. Depreciation policies
remain consistent with previous years.
The increase in depreciation comes
largely from ColourformTM as tooling
equipment is depreciated over the
expected economic life of the tool,
which is expected to be 2 years.
In the prior financial year a significant
investment was made in tooling which
is now depreciating. All other plant
and equipment follow the same
depreciation policies as the rest of the
group (see note 1 Accounting policies
under notes to the financial statements).
Other expenses of £15,252k
(2021: £19,869k) align with decreased
trade under the pandemic. The Group
experienced significant natural savings
in costs as a result of reduced activity
in distribution, effluent, sales and
marketing and business travel.
The Group also deferred a number
of planned expenditures to reduce
spend, notably in training, consultancy,
recruitment and repairs and maintenance.
The net effect is a year on year saving of
£4,568k. As we emerge out of our year
end March 2021 and focus on business
development and growth these expenditure
areas will come back on stream.
12
13
Strategic Report - Chief Financial Officer’s Review
Strategic Report - Chief Financial Officer’s Review
Exceptional Items
Currency
Exceptional items relate to items that
are not part of the regular expenditure
of the Group, these are based on activities
that occurred in the period and have had
a significant cash impact, the activities
are not expected to be recurring.
The costs of a restructuring programme
come to £1,118k and the programme is
now complete having moved from a matrix
structure to vertically integrated businesses
where each business owns its own
individual vision and strategic growth
programme, which is enabled by
specialist Group functions.
During the year the Group made a strategic
acquisition the costs of acquisition came
to £384k and relate to advisory, legal,
accounting, valuation and other
professional or consulting fees over
the acquisition of PV3 technologies
now TFP Hydrogen Limited.
This table compares the opening and
closing exchange rates for the financial
period. Sterling remained relatively stable
against the Euro for the best part of the year
prior to strengthening significantly in the
final quarter. Sterling remained close to its
opening dollar rate in March 2020 for
the first quarter of the year prior to
strengthening in July and finishing
the year strongly.
62% of the Group’s sales are exports
bringing in Dollars and Euros to the
Group. Euros are used to purchase Euro
priced pulp and raw materials and Dollar
receipts are used to fund the purchase of
Dollar priced pulp, this creates a natural
hedge across the Group.
Potential exposure to foreign currency
surpluses, or deficits, are dealt with via
foreign currency trades using forward
selling or forward purchasing contracts.
$
¤
1.2359
1.1149
1.3826
1.1741
(11.87% )
(5.31% )
Opening rate
March 2020 v. £
Closing rate
March 2021 v. £
Currency
weakened v. £
Currency movements had a positive impact
on operating profit in all divisions and a
negative impact in PLC, combined this
resulted in an immaterial impact across
the Group overall. Currency movements
had a minor 0.4% impact on sales with the
Dollar and Euro weakening in the period.
EBITDA (Earnings before interest, tax, depreciation and amortisation)
The Group monitors EBITDA as it provides a good indication of cash generated from the Group’s operations.
EBITDA
2021
£’000 £’000
2020 Change Change
%
£’000
Adjusted operating profit
4,510
7,240
(2,730 )
(38% )
APM1
Depreciation and amortisation
4,489
3,950
539
14%
Adjusted EBITDA APM4
8,999
11,190
(2,191 )
(20% )
The Group’s adjusted operating profit decreased 38%
year on year. The Group’s depreciation costs were 14%
higher than in the prior period. ColourformTM contributes
to the increase in depreciation charges as tooling equipment
is developed and owned by the Company and depreciated
over the expected economic life of the tool, which is
expected to be 2 years, all other Plant and equipment
follow the same depreciation policies as the rest of the
group. The group delivered an Adjusted EBITDA (APM 3)
of £8,999k (2020: £11,190k) down 20% on prior year.
Tax
The Group’s total tax charge for the period is £153k (2020: £630k) an effective tax rate of 9% on profit before tax.
A number of expenses non-deductible have been recognised relating to the acquisition of TFP Hydrogen Limited
and assets that do not qualify for capital allowances.
All costs related to restructuring have been treated as deductible as they relate to the reorganisation of the business.
The effective rate is lower than the standard rate of corporation tax in the UK (19%) primarily as a result of the
release of historic provisions and amounts not recognised in respect of overseas entities.
Statement of financial position (SFP)
Non-pension assets have decreased from £72,084k to £70,779k. The largest
decrease of £3,741k coming from trade and other receivables driven by
lower economic activity than prior year and increases in the provision
for expected credit loss.
On the 18th January 2021 TFP Limited acquired 100% of the share capital
of PV3 Limited, now trading as TFP Hydrogen Limited. Following the
acquisition of TFP Hydrogen Limited £1,264k of goodwill has been
brought onto the SFP and a further £933k (after amortisation) of intangible
assets covering technology, brands and customer relationships.
After deferred tax the Net IAS 19 deficit has increased by £7,333k to
£14,933k. The increase is principally caused by a fall in the discount rates
due to a downward swing in corporate bond yields compared to the prior
year position, an increase in expected future inflation and a further increase
in liabilities to allow for the impact of Guaranteed Minimum Pensions
(GMPs) equalisation in respect of historic transfers. A greater analysis of
IAS 19 is provided within the “pensions section” of this report. Note 20
also provides a full retirement benefit disclosure to the financial statements.
As a result of these movements on the pension scheme deficits, and weaker
pandemic driven performance in the year, shareholders’ funds show an
overall decrease of £4,497k to £29,900k.
SFP
Non-pension assets
- excluding cash
Non-pension liabilities
- excluding borrowings
Net IAS 19 pension deficit
(after deferred tax)
2021
£’000
2020
£’000
70,780
72,084
(18,444 )
(19,032 )
52,336
53,052
(14,933 )
(7,600 )
37,403
45,452
Net borrowings
(7,502)
(11,055 )
Equity shareholders’ funds
29,901
34,397
Gearing % - before IAS 19 deficit
Gearing % - after IAS 19 deficit
17 %
25 %
26 %
32 %
Capital expenditure £’000
3,127
9,195
Cash Flow
In the period the Group’s net cash outflow was £2,199k
(2020: inflow £6,612k), the weaker pandemic driven performance
in the year initiating a cash outflow which was alleviated with the
assistance from government support schemes and other arrangements
with stakeholders, all of which prevented a much more damaging
position. In the early months of the pandemic we took swift action
to reduce costs and protect liquidity. This included the deferral of
all discretionary spending, suspension of major capital expenditure,
suspension of dividend payments, and seeking support from local
authorities, the pension scheme trustee, government agencies and
the banks. Government support is explained under Other Income.
Past service deficit payments of £498k were made in agreement with
the trustee as part of the cash safeguarding measures, payments
restart at £1,300k in accordance with the schedule from April 2021.
Capital investment in the period was £3,127k (2020: £9,195k).
Investments are driven by the requirement to enable growth,
largely in the form of generating revenue by increasing
capacity, improving capability or generating cost savings.
Other expenditure supports resilience, safety and workplace
improvements. Investments immediately at the start of
the year were curtailed or deferred to safeguard cash.
This included the build of an additional nonwoven production
line in TFP, this work recommenced in January 2021 and will be
completed in the 3rd calendar quarter of this year delivering an
additional 50% capacity in TFP to support future growth.
Cash Flow
Net cash inflow from
operating activities
Net cash outflow from
investing activities
Net cash inflow / (outflow)
from financing activities
Net increase / (decrease)
in cash and cash equivalents
Opening cash and
cash equivalents
Closing cash and
cash equivalents
2021
£’000
2020 Change
£’000
£’000
7,939
13,065
(5,126 )
(4,486 )
(9,195 )
4,709
3,453
3,870
(417)
(4,990 )
2,742
(7,732 )
(2,199 )
6,612
(8,811 )
8,964
2,352
6,612
6,765
8,964
(2,199 )
An acquisition was made in TFP Hydrogen Limited with a small
upfront cost for 100% ownership and an earn out payable in the
future subject to performance, this allows TFP to accelerate its
position into the rapidly growing hydrogen market, providing
significant growth potential and helping to further build our future.
The closing cash position for the Group is £6,765k (2020: £8,964k).
Net debt
During the period net debt decreased by £3,553k to £7,502k.
The Group adopted IFRS 16 and incorporates £3,771k
(2020: £4,328k) of right-of-use leases in its 2021
borrowings figure.
Net debt before RoU leases
2021
£’000
2020
£’000
Cash and cash equivalents
6,765
8,964
All borrowings excluding RoU leases
(10,496 )
(15,691 )
The Groups banking arrangements monitor net debt excluding
right of use leases. On this basis net debt is reduced to £3,731k
from £6,727k in the previous year, a reduction of £2,996k.
Net debt on an equivalent
comparison basis
(3,731 )
(6,727 )
14
15
Strategic Report - Chief Financial Officer’s Review
Strategic Report - The Pension Report
Funding and facilities
The Group funds its operations and investments from operating
cash flow and from borrowings and leases. The Group has 2
revolving credit facilities secured with a high street bank of
which one is a Coronavirus Large Business Interruption
Loan (CLBIL) facility. Revolving credit facilities provide the
Group with optional draw down at short notice, repayment
flexibility, reduced margins and facilities on an unsecured basis.
Total revolving credit facilities amount to £9,000k of which
£1,808k is drawn down at the period end. The CLBIL is a
£4,000k facility of which £3,900k is unutilised and it was secured
in October 2020 to bring additional cash protection should it be
required in the face of continued uncertainty.
Cash and cash equivalents decreased from £8,964k to £6,765k
in the year whilst long term borrowings (falling due after more
than a year) decreased by £10,297k to £5,966k. The Group has
one large, short term debt maturity on the horizon of $6m which
is expected to be renewed in Dec 2021. The expiry profile of
existing borrowings is detailed in note 19.3 to the financial
statements. The group is in compliance with all its banking
covenants at the period end.
Undrawn facilities comprise of unused overdraft facilities of
£3,600k plus the total unused credit facilities of £7,660k, this
means a total of £11,260k remains unutilised at the year-end date.
Having taken account of current borrowings to be paid within
12 months of the balance sheet date the Group has £9,724k
available to the Group beyond 12 months.
Funding
Borrowings: repayable
within one year
2021
£’000
2020 Change
£’000
£’000
8,301
3,756
4,545
Borrowings: non current
5,966
16,263
(10,297 )
Facilities drawn down
14,267
20,019
(5,752 )
Undrawn facilities
11,260
5,367
5,893
Facilities
25,527
25,386
141
Cash and cash equivalents
6,765
8,964
(2,199 )
Undrawn facilities
11,260
5,367
Funds available at year end
18,025
14,331
5,893
3,694
Borrowings: repayable
within one year
(8,301 )
(3,756 )
(4,545 )
Funds available at year end
9,724
10,575
(851 )
Within 12 months from the date of signing the financial
statements, two ongoing facilities ($6m and £5m) are due
for renewal (December 2021 and May 2022) and, based on
discussions with the bank, the Directors expect these to
be renewed.
Going concern
The Directors carry out a review of the
Group’s financial position for the three years
to March 2024, providing a comprehensive
review of revenue, expenditure and cash
flows taking into account specific business
risks, requirements and latest economic
forecasts. These inform the Group’s cash
and debt requirements.
The Group’s financial position, cash flows,
liquidity and borrowing facilities are
described in the financial statements and
also clarified in this section of the annual
report. At 27 March 2021 James Cropper
had £7,660k of undrawn committed
facilities and an un-utilised overdraft
facility of £3,600k.
The principal loan arrangements and
maturity dates are described in note 19.3
of the financial statements. Taking into
account current borrowings to be paid
within 12 months of the balance sheet
date the Group has £9,724k available
to the Group beyond 12 months.
Within 12 months from the date of signing
the financial statements, two ongoing
facilities ($6m and £5m) are due for renewal
(December 2021 and May 2022) and,
based on discussions with the bank,
the Directors expect these to be renewed.
The Group’s three year plan has been
tested for plausible downsides scenarios
including further expected effects of the
pandemic, hampered market growth,
increasing carbon cost and commodity
prices. In the event that a scenario partly
or fully takes place the Group has various
options available to maintain liquidity
and continue operations.
We have assessed the combined impact
of these scenarios on the Group’s key
financial metrics of EBITDA, net debt
and net debt to underlying EBITDA.
The Group remains within its key
financial covenant which is its net debt
to underlying EBITDA ratio must
not exceed 3.5 times. The break-even
calculation indicates that EBITDA would
need to fall 85% compared to the three
year plan before triggering the covenant.
The Board is satisfied that the Group
will be able to respond to such scenarios
through various means which may include
a reduced or deferred capital expenditure
programme to ensure that the Group
continues to meet its ongoing obligations.
The Board is satisfied that the Group
will have sufficient liquidity to meet
its needs over the planning horizon.
The directors have a reasonable
expectation that the Group remains
viable over the planning horizon.
The Board is satisfied it has sufficient cash
resources to meet its obligations as they
fall due throughout this duration and the
Board has a reasonable expectation that
the Company and the Group has adequate
resources to continue in operational
existence for at least 12 months from the
date of signing the financial statements.
THE PENSION REPORT
The Group operates two funded pension schemes providing defined benefits for a 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 Statement of Financial Position IAS 19 deficit
The combined pension scheme deficits on an IAS 19 measure has worsened over the year from £9.4m to £18.4m (before deferred tax). This table
shows the overall value of the schemes’ assets which have increased by 3% in the period whilst the schemes liabilities increased by 12%.
IAS 19 pension valuation 2021
Staff
Scheme
Works
Scheme
Both Schemes
Change
2021
2020
%
Discount Rate
1.95 %
2.05 %
2.00 %
2.53 %
Assets
Liabilities
£000 s
55,096
(56,479 )
£000 s
62,047
£000 s
117,143
£’000
113,968
(79,100 )
(135,579 )
(121,470 )
(Deficit) / Surplus
(1,383 )
(17,053 )
(18,436 )
Effect of limit on recoverable surplus
-
-
-
Net (Deficit) / Surplus
Funding Level - %
(1,383 )
98 %
(17,053 )
(18,436 )
78 %
86 %
94 %
(7,502 )
(1,880 )
(9,382 )
3 %
12 %
97 %
(8 % )
The markets reacted to Covid-19 at the
year-end March 2020 in a way that drove
corporate bond yields up in the short term
and impacted the valuation for the prior
year end positively. This illustrates how
sensitive IAS 19 outcomes can be as a
result of short term market volatility,
thus triggering a negative swing in the
following period. The combined increase
in the schemes’ overall deficit is principally
caused by a fall in the discount rates due to
the downward swing in corporate bond
yields, an increase in expected future
inflation and a further increase in liabilities
to allow for the impact of Guaranteed
Minimum Pensions (GMPs) equalisation
in respect of historic transfers.
In line with previous years, the IAS
19 valuation includes a correction for
sex-inequalities inherent in Guaranteed
Minimum Pensions (GMPs) which was
accounted for in the year end March
2019 where an estimate of £133k for
the financial cost to correct the gender
inequalities inherent in Guaranteed
Minimum Pensions (GMPs) was taken
to the P&L. Following a further ruling
in November 2020, pension schemes are
now required to equalise GMPs for past
transfer value payments. As no
allowance was included for this
in the previous estimate, a further
adjustment was required this year.
The adjustment amounts to a further
cost of £68k and is also taken to the P&L.
The “true” cost of GMP equalisation will
take a few years to fully evaluate, however
the Company would expect any variances
compared to the estimate outline above
would flow through the OCI statement.
A full retirement benefit disclosure
is provided in note 20 to the
financial statements.
16
17
Strategic Report - The Pension Report
Strategic Report - The Pension Report
IAS 19 assumptions
The IAS 19 impact on profits
The bi-annual IAS 19 valuations are
adopted for statutory reporting purposes
and do not form part of the ongoing
management of the pension schemes.
The standard requires the Group’s
actuaries to make a number of
assumptions on a very different basis to
the on-going valuations and under IAS
19 the deficit is likely to be volatile and
can be very different from one reporting
period to the next. Discount rates for
IAS 19 are based on corporate bond yields
which do not reflect the investment
strategy of the schemes. The impact of
Covid-19 on markets at the March 2020
year-end illustrates how sensitive IAS 19
outcomes can be as a result of short term
market volatility. 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).
The actuarial gains and losses arising
from variances against previous actuarial
assumptions are passed through to the
Statement of Financial Position with
corresponding movements in reserves.
Actuarial changes in previous assumptions
will pass through Other Comprehensive
Income (OCI).
The Group’s total reported profit before tax is based on the adjustments
required for IAS 19, and these adjustments fall within operating costs and
finance costs. The total charge against profits for the year end 27 March 2021
includes an additional adjustment of £802k (2020: £1,215k) to bring the cost
into line with IAS 19.
Operating costs
The cost of providing pension benefits is included within “employee benefits
costs” in the Statement of Comprehensive Income. These 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 £563k (2020: £671k)
determined by IAS 19 based on assumptions at the start of the period
and which is over and above the future service contributions for the
defined benefit schemes. These additional costs are;
• 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 changes.
• Curtailment and settlement costs.
• Any government pension protection levies paid over the period.
Finance costs
Finance costs which affect profit, consist of the net of:
• Interest income on pension scheme assets
• Interest cost on the accrued pension scheme liabilities
The income from scheme assets and cost on the accrued liabilities allowed
for in the net interest cost is based on the discount rate at the start of the
period, this impacts the costs shown in the income statement. A charge of
£239k is charged to the income statement this period (2020: £544k).
The retirement benefits note to the financial statements can be found on pages
104 to 107.
Defined benefit schemes the triennial “on-going” valuation
The Company recognises its responsibility
to fund its defined benefit pension
plan deficits and adopts the triennial
valuations as the key basis upon which
pensions are managed. The on-going
triennial valuations are an important
part of aligning the latest position on
route to the longer term target which
ensures that when pension payments
peak the Company has made sure
that these payments can be satisfied
at the peak and into future years
with a low reliance on support
from the Company.
UK legislation requires the Scheme
Trustee to carry out actuarial funding
valuations at least every three years
and to target full funding over an
appropriate time period, taking into
account the current circumstances
of the Group schemes, and the current
circumstances of the Group. The April
2019 triennial “on-going” valuation has
now been completed and has determined
the combined deficit of the schemes to
be £19.9m. This compares to the previous
triennial valuation of April 2016 when
the combined triennial deficit was £15.8m.
The April 2019
triennial "on-going"
valuations
Staff
Scheme
£000s
Works
Scheme
£000s
Total
£000s
The IAS 19
pension
valuation 2019
Discount Rate
2.45 %
2.55 %
2.50 %
Discount Rate
Assets
51,133
56,831
107,964
Liabilities
(53,878 )
(73,999 )
(127,877 )
Deficit
(2,745 )
(17,168 )
(19,913 )
Assets
Liabilities
Deficit
Staff
Scheme
£'m
2.45 %
53.0
(60.7 )
(7.7 )
Funding Level - %
95 %
77 %
84 %
Funding Level - %
87.4 %
The defined benefit 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 expected rate of inflation in the
future and the mortality assumptions
for members of the schemes. Changes in
these assumptions will impact the deficit
positively or negatively. The decrease in
discount rates from 3.55% in April 2016
to 2.5% in April 2019, together with
an increase in future inflation expectations
over the period, was the main factor
driving up liabilities, whilst a reduction
in life expectancies as a result of a
robust review of mortality rates helped
to mitigate against the full increase
in liabilities driven by the change in
financial assumptions.
As part of the triennial valuation,
the Company agreed with the Trustee
to pay annual deficit recovery
plan contributions to reduce past
service deficits of £1.3m per annum.
In addition, the Company will
also continue to cover the cost
of the annual PPF levy.
A Deficit reduction payment holiday
of £930k was taken in the year to March
2021 to preserve cash and mitigate the
impact of Covid-19.
Key risks relating to the pension schemes
The Company is exposed to a number
of risks relating to the pension schemes,
including investment risks, demographic
risks and inflation risks for those
benefits linked to inflation. Covid-19 is
likely to cause considerable volatility in
the markets in the short to medium term
affecting all these risks.
Most of the economic risks are hedged by
the schemes’ liability driven investment
strategies, which brings some protection
however it is not practical or cost effective
to hedge all pension scheme risks.
Risk management activity over the years
has comprised of the following;
• The Schemes were closed to new
• For both the staff and the works
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.
• From 1 July 2017 the staff scheme rate
of pensionable accrual was reduced
from 1/60th to 1/75th for each future
year of pensionable service.
scheme increases in pension once it
is in payment, for future benefits
accrued, will be in line with the annual
increase in the Consumer Price Index,
these actions protect the Group’s
exposure to future costs.
• In April 2018 a new liability driven
investment strategy was adopted which
aims to significantly reduce risk whilst
maintaining a similar level of overall
return and protecting asset values.
18
19
Strategic Report - Risk Management
Strategic Report - Risk Management
PANDEMIC RISK
Risk description and Impact
Decreased ▼
A pandemic may cause the Group to experience a significant health exposure and safety
risk to our people, a shortage of labour, supply chain disruptions, increased cyber-attacks
and changes in demand for our products. Extended pandemic phases could have a material
adverse effect on the Groups business.
Mitigation
The executive committee continue to
monitor our exposure to Covid-19 and
the impact of the pandemic on the Group
and evaluate actions to mitigate the risk,
providing guidance, implementing
preventative policies and keeping as a
minimum in line with the government
regulations and recommendations from
the country’s health service in which our
employees operate.
The company has measures in place to
minimise the risk of infection including
social distancing, sanitisation, PPE,
travel & visitor control, working from
home and remote working capabilities.
The Group’s supply chain, credit risk
events, and exposure to business
interruptions are continuously
monitored with prompt interventions
taken when necessary. A risk review
is updated regularly and updated on the
company website. Employees working
from home have tools to enable
collaboration with the customers,
suppliers and the rest of the workforce
whilst cyber security awareness and
training has been increased along with
additional monitoring and testing of
our infrastructure.
For any new infectious diseases that
are likely to develop into a pandemic
the Group has developed strong internal
controls and measures during the current
pandemic that can be deployed.
RISK MANAGEMENT
EMPLOYEE HEALTH & SAFETY
Risk description and Impact
Stable —
Employee health, safety and wellbeing are paramount, and the Group embraces the ethos
that nothing we do is worth getting hurt for.
Viability
The Group’s strategy is to be a key
player in sectors that drive solutions to
today’s societal needs, be it compostable
packaging or the manufacture of high
performance technical veils for industries
advancing the transition to a greener more
sustainable future. The Group will build
on our competitive advantages to better
serve our customers and this is supported
by a strong capital expenditure programme.
The Board has assessed the Group’s
prospects and viability. The Board believes
that a three year’s planning horizon to
March 2024 is an appropriate period over
which to evaluate the Group’s viability.
This includes revival and opportunities
to thrive as we emerge from a downturn
in the year to March 2021 and grow
stronger in future years.
The Group’s three year plan has been tested
for plausible downsides scenarios including
further expected effects of the pandemic,
hampered market growth, increasing
carbon cost and commodity prices.
In the event that a scenario partly or fully
takes place the Group has various options
available to maintain liquidity and continue
operations. We have assessed the combined
impact of these scenarios on the Group’s
key financial metrics of EBITDA,
net debt and net debt to underlying
EBITDA. The Group remains within its
key financial covenant which is its net
debt to underlying EBITDA ratio must
not exceed 3.5 times. The break-even
calculation indicates that EBITDA would
need to fall 85% compared to the 3 year
plan before triggering the covenant.
The Board is satisfied that the Group
will be able to respond to such scenarios
through various means which may include
a reduced or deferred capital expenditure
programme to ensure that the Group
continues to meet its on-going obligations.
The Board is satisfied that the Group
will have sufficient liquidity to meet
its needs over the planning horizon.
The directors have a reasonable expectation
that the Group remains viable over the
planning horizon.
Risk Management
The Board has overall responsibility for risk
management which is key to ensuring good
governance and to achieving the Group’s
strategy. The Board coordinates activity
across the Group ensuring risk management
remains relevant to each business and the
Group as a whole, and that it is responsive
to changing business conditions. During the
early phases of the Covid-19 pandemic the
Executive Team led daily crisis response
meetings and the Executive team continue
to follow an ongoing process for identifying,
evaluating and managing significant risks
faced by the Group.
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 and can provide key protection.
High risks in financial and operational areas
are normally more dependent on insurance.
Risks in commercial and personnel areas,
because of their nature, are more likely
to be managed by self-insurance.
Principal Risks
The principal risks which 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, this report only addresses
the Group’s most significant risks.
If an incident were to arise this could potentially result in harm to employees, contractors,
property, lost production time, financial penalties, restitution costs, and harm to the
Group’s reputation.
Mitigation
The Group has an extensive Health &
Safety programme built around the
ISO18001 framework which is proactively
driven across every division. We track
leading indicators such as health & safety
training, hazard reporting & improvement
suggestions whilst also monitoring
incidents, and near misses to enhance
our learnings across the Group.
“Space”, however further actions have
been adopted such as working from home,
on-site testing, technology led proximity
monitoring, creation of outside space and
increased levels of sanitisation.
The health and safety team have moved
from a group resource to being an
integral part of each business.
Covid risk is led by the executive team,
with extensive involvement across the
group. Government initiatives have been
adopted including “Hands”, “Face” and
This has led to a greater ownership and
adoption from each business, and the
ability to adapt the approach taken to
suit the risk needs within each business.
20
21
Strategic Report - Risk Management
Strategic Report - Risk Management
CLIMATE CHANGE RISK
TRANSITION RISKS
New risk this year —
First time reporting on climate
change risk externally.
Climate change related
risks come in 2 main forms:
Transition risks and Physical
risks. Both forms have
the potential to affect our
business in various ways.
Risk description and Impact
Climate change is forcing governments to place extreme pressure on Companies via
rising taxation and regulation, without any immediate available alternative solutions.
Whilst climate change related demand presents an opportunity for many of our markets,
the Company faces the risk of becoming non-viable, in the face of taxations and
regulation, prior to being able to switch to climate friendly operational practices.
Our manufacturing operations are energy intensive and result in both scope 1 and scope
2 greenhouse gas emissions. The UK SECR report is published on page 43 of this report.
Post Brexit the UK ETS scheme continues with a carbon tax scheme that drives up
the price of carbon. We face 2 emerging risks
1. The risk that carbon taxation rises sharply and starve the Company of
the funds to invest prior to the development of suitable alternative solutions
2. The risk that our competitors outside of the UK do not have carbon cost constraints
Mitigation
Post Brexit the UK is driving the UK
Emissions Training Scheme (UK ETS)
scheme to continue with a carbon tax
scheme that drives up the price of carbon.
In advance of the transition the company
has purchased forward a number for EU
ETS credits that are held in a European
warehouse will be available to be sold in
Europe and contribute to the cost of
emissions in the UK ETS.
A Long-Term Energy Group has been
researching strategic diversification
away from gas to alternative fuels and
investigating sustainable energy saving
solutions. The Group has now secured
BEIS support (a grant) to undertake a
focused 12 month study which tests
in more detail some feasible concepts
for decarbonising our manufacturing
processes. At the end of 12 months,
we expect a report on the viability
of the concepts. We believe this study
is a significant milestone in our route
to decarbonise by 2030.
Members of the Company work closely
with industry representative Groups
which in turn liaise with government on
the question of facilitating a smooth
transition to a green economy without
losing advanced and innovative
manufacturing sites in the UK.
Such matters discussed include:
1. Controls with the rise in the cost of
carbon. Ensure institutional entities
do not control an illiquid UK market
and leave industry short of credits.
2. Evaluate if carbon tax could operate in
a similar manner to the apprenticeship
fund allowing carbon tax receipts to
be allocated to a fund upon which
the company can draw down on for
approved decarbonisation investments.
3. Evaluate the role of incentives and
the connection to best available
techniques BAT. Incentives should
be used to encourage adoption of
the latest most efficient means
of operation. Provide incentivised
aid to offset any additional costs for
taking on a low carbon process.
4. Recognition that decarbonisation in one
country is not the same as decarbonising
globally. The UK have committed to put
a price on domestic emissions, the UK
could put a border tax on emission
intensive imports from countries that do
not. This will go some way to removing
the competitive disadvantage of UK
carbon intensive operations and
equalising the responsibility.
PHYSICAL RISKS
Risk description and Impact
The risk that precipitations drive acute heatwaves, floods, droughts and water shortages
and that any of these events could result in an indirect or direct hit to our ability to
supply and manufacture at any one of our manufacturing locations, or could result
in risk to employee safety, a surge in input prices, property damage or create a
business interruption event.
Our largest UK manufacturing site is situated next to the River Kent (SSSI) and can be
at risk of flood or drought with the potential to cause significant business interruption,
incur unexpected costs and result in operational disruption, which could compromise our
ability to deliver against our commitments to customers, shareholders and stakeholders.
The Group embraces the ethos that we aim to operate in harmony with our environmental
surroundings in all locations. If an environmental incident were to arise this could
potentially result in a negative impact to the surrounding environment, the local
community and the Group’s reputation.
Mitigation
Our sources of pulp, fibres, and
chemicals come from many diverse
suppliers operating in different regions,
with multiple sources helping to provide
some protection from interruptions in
supply as a result of the physical risks of
climate change on supply.
The Group has an extensive
Environmental programme built around
the ISO14001 framework which is
proactively driven across every division.
We have an overarching goal of zero
reportable environmental incidents and
aim to continuously engage with all
employees through training, process
observations and environmental safety
awareness to help achieve zero incidents.
The Group proactively collaborates
with external bodies such as the
Environmental Agency and South
Cumbria Rivers Trust and Natural
England to proactively engage on
improved environmental governance.
Some of our manufacturing processes
require water and the river Kent is our
main source of supply in the Burnside
operation. The river has occasionally
flooded placing our operations at risk and
the river has occasionally fallen to low
enough levels to threaten production.
Monitoring equipment has been installed
at points in the river agreed with
the Environment Agency to monitor
the water flow rates and water levels
in the River Kent.
1. Flood risk has been mitigated at
our Burnside site, via the relocation
of primary equipment to levels
higher than the highest flood waters
experienced, along with actions
to bund and protect where removal
to new sites was not possible.
2. In the event that river levels
start to approach low water alerts,
our operational schedules are adjusted
to reduce water requirements to an
absolute minimum at the expense
of operational efficiency if required.
In the medium term our Technology
and Innovation team are investigating
the development of circular systems
that use less water, that eliminate waste,
that minimise freshwater use, and are
also seeking new manufacturing
techniques that reduce water use.
22
23
Strategic Report - Risk Management
Strategic Report - Risk Management
ENERGY PRICE VOLATILITY
Risk description and Impact
Stable —
PULP PRICE VOLATILITY
AND SUSTAINABILITY
Stable —
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, shale gas reserves and actions by
major oil and gas exporting countries.
Price fluctuations on key input costs which cannot be passed onto customers in
all cases can affect our business assumptions, margins and investment decisions.
Mitigation
A Gas Purchasing Committee seeks to
secure forward the unit cost of wholesale
natural gas in anticipation of future demand.
At the time of this plan the committee
has secured prices for 70% of expected
requirements for the year to March 2022.
Risk description and Impact
One of the Group’s divisions is subject to unexpected and prolonged price volatility
of pulp and the availability of other specific fibre grades. Price is subject to global supply
and demand.
Factors that influence these include natural disasters, climate, political instability,
conflicts, economic conditions and actions by major pulp producers. Price fluctuations
on key input costs cannot be entirely passed onto customers in all cases and can affect
the profitability of the Group.
Mitigation
The Board regularly receives updates
and market pricing information on pulp
and fibre. The Paper division aims to
maximise the recovery of paper price
changes through timely commercial
negotiations and recover costs via market
price increases.
Pulp substitution from recovered sources,
such as coffee cups or office waste,
mitigates some of the impact of virgin
pulp costs and has remained stable over
the past year despite significant volatility
in paper demand: the target is 50%
recovered fibre by 2025.
The division has increased its capacity to
process reclaimed fibre through its plant
and works collaboratively with the waste
fibre supply chain to secure grades that
are suitable for re-use.
The Paper division is also investing
significant time and R&D effort on
qualifying alternative sources of fibre
to reduce its reliance on virgin fibre.
A number of new, unique sources
have been identified this year.
A hedge is in place for 30% of our pulp
requirements for the 9 months to
December 2021.
EXCHANGE RATE VOLATILITY
Risk description and Impact
Stable —
The Group operates on a global basis, and earns revenues, incurs costs and makes
investments in a number of currencies; the three 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.
Mitigation
The Group matches receipts and payments
in the same foreign currency due in the
same period. The Group’s treasury function
uses a variety of swaps and forward options
to hedge anticipated unmatched cash flows.
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.
PENSION
Stable —
INFORMATION SECURITY
AND CYBER RISK
Increased ▲
Risk description and Impact
The Group operates 2 defined benefit pension schemes which are in deficit.
The April 2019 ongoing valuation is now completed. The combined deficit is £19.9m.
Actuarial deficits are sensitive to a number of key factors: the value of the assets, the
discount rate used to calculate the scheme's liabilities (based on corporate bond yields),
the rate of inflation and the mortality assumptions for members of the schemes. Changes in
these assumptions, the recognition of equalisation and market conditions could mean that
the deficit increases further the next triennial valuation is due to commence in April 2022.
Mitigation
The Group’s strategy is to ensure the
profitable and sustainable growth of the
Group which in turn protects pensions
earned. The Pension Subcommittee
collaborates with the scheme Trustees
to explore opportunities which may
be favorable to reducing risk and or
assist in closing the deficit.
A number of risk reduction exercises
have been enacted since membership
of the Schemes was closed to new
members in 2000 – these have been
listed in the Pension Report.
Risk description and Impact
The Schedule of Contributions
contains a commitment from the
company to make core contributions
and to cover PPF levy expense,
from April 2021 of £1.4m a year.
This plan extends out to 2032.
A new contingent mechanism anchored
to dividend distributions commences
in 2024 and enables further distributions
to the deficit to be made.
The Group also agrees an investment
strategy with the trustees taking
account of risk.
The cyber threat landscape is increasing and changing with the pandemic continuing to
provide wide scale exploit vectors. Research is also supporting evidence of the increasing
cyber threat to manufacturers particularly. Our divisions continue to be significantly
dependent on expanded remote working IT services at this time.
Mitigation
The organisation has implemented a solid
programme to support current business
working conditions and increased risk.
We continue to advance a robust IT
security and data protection roadmap in
line with the evolving threat landscape.
For and on behalf of the Board
Isabelle Maddock, Chief Financial Officer
21 June 2021
24
25
Strategic Report - S172(1) Statement
Strategic Report - S172(1) Statement
PROMOTING THE SUCCESS OF OUR GROUP
S172(1) STATEMENT
All divisions of the Group were impacted by the pandemic. The Board welcomed
the support of national governments in the UK and USA and sought financial
support using the Job Retention Scheme in the UK and the Paycheck Protection
Program in the USA.
OUR APPROACH
OUR SHAREHOLDERS
OUR EMPLOYEES
Restructuring
The Board is responsible for leading
stakeholder engagement which is
fundamental to the way we do business.
We supply to customers across the globe
to both small businesses and multinational
organisations. Strong partnerships are
key to the success of our business with
customers and suppliers, and have
been through our 176 year history.
Our employees are the lifeblood of our
business and our most valuable resource.
From new starters and graduates starting
their career to employees who have
followed their family through several
generations, every employee is key to
the success of the business. In these
unprecedented times, their health and
wellbeing are a key factor we strive to
protect. Being the largest private business
in the local area and the Cropper family
still local and involved in the business,
the Group supports the local community
and other charities. Our environment
and sustainability are factors that we
are constantly pursuing to improve.
On these pages you will also find examples
of how we considered our stakeholders
when making key decisions during the year.
As a Board, we have a duty to promote
the success of the Group for the benefit
of our members. In doing so, however,
we must have regard for the interests
of our employees, for the success of our
relationships with suppliers and customers,
for the impact of our operations on the
community, and for the desirability of
maintaining a reputation for high standards
of business conduct. These stakeholder
considerations are woven throughout
all of our discussions and decisions.
Like any business, sometimes we have
to take decisions that adversely affect
one or more of these groups and, in such
cases, we always look to ensure that
those impacted are treated fairly.
Engagement with our institutional
and private shareholders is an ongoing
process, occurring through a range of
channels including face-to face meetings
at investor days, calls with directors,
emails and our AGM.
Board considerations
Due to the pandemic, the Board decided
to hold our AGM last year behind closed
doors with just the Board of Directors
present. In addition, the Investor briefings
were held remotely by video conference.
Following the AGM, the Board
acknowledged the high proportion of
votes cast for against or abstention on
three resolutions. The Board is addressing
this with further details included in
the Corporate Governance Statement,
the Report of the Audit Committee and the
Report of the Remuneration Committee.
Whilst some actions have already taken
place, the majority of actions were delayed
due to the focus on the pandemic.
Further reading:
Pages 50 to 54
Corporate Governance Statement
Page 55
Report of the Audit Committee
Page 56 to 59
Report of the Remuneration Committee
As part of the liquidity preservation
measures adopted as a consequence
of the pandemic, the Board suspended
dividend payments throughout the year
and are not proposing any dividend to
the shareholders at this year’s AGM.
As we write this report, it is the intention
of the Board to invite all shareholders to
our next AGM on 28 July. It is important
that more of our shareholders take the
opportunity to express their voting
preferences by using the proxy cards that
will be sent out with the notice of the AGM.
The Group’s website is regularly updated
and provides additional information
on the Group.
Board considerations
Our employees are our biggest asset and
fundamental to the success of the Group.
During these unprecedented times, the
Board have ensured that the health and
wellbeing of our employees is of the
highest priority.
The Board implemented steps to protect
the health of our employees in accordance
with government guidelines including
ensuring employees work from home
where possible during lockdowns and
adhere to social distancing guidelines
during their time spent at work.
One way systems of movement were
implemented where possible, facemasks
became compulsory whenever moving
around indoors or in close proximity
of other employees, temperature monitors
where installed at factory and office
entrances and lateral flow test kits
were made available to employees.
Communications with all employees
has been elevated in these times,
using social media to ensure all employees
are kept up to speed with latest advice
and any changes to practices and the
work environment. The Company
has maintained its regular briefings to
employees including the bi-annual
financial briefings and presentations,
this year presented in a series of short
video recordings.
Regular consultative meetings were
held with union representatives on all
aspects of Group developments and on
actions to be taken during the pandemic.
This included a Group wide agreement
to suspend any increased pay awards
and defer the bonuses earned following
the record results of last year. It was
also agreed that short term incentive
awards for the year ended March 2021
would be suspended.
Prior to the emergence of the pandemic, The Board had been planning a
restructuring exercise to support accelerated growth and remove cost and
complexity. It was decided by the Board to accelerate and extend this exercise.
Exceptional costs incurred during the year amounted to £1.1m with projected
annual cost reduction of £2m, importantly new opportunities have been
created to support the delivery of our growth plans.
Further reading:
Pages 35 to 37 Paper Divisional report.
Pages 08 to 10 CEO Review
Purpose and values
The Board initiated a series of workshops to explore and define our Purpose and
Values. Through a series of online workshops, involving 10% of the workforce,
employees across all divisions and geographies helped develop our:
Purpose: “Pioneering Materials to Safeguard our Future” and our
Values: “Forward Thinking”, “Responsible” and “Caring”.
Further reading:
Pages 08 to 10 CEO review
At the start of this report, Purpose and Values
OUR CUSTOMERS AND SUPPLIERS
Our business model depends on strong
partnerships with our customers and
suppliers. For generations we have prized
our relationships with stakeholders,
measured with many by decades. In recent
years our growth has been underpinned
by close collaborations with more global
corporations. We have a common goal
for increased sustainability and protection
of the environment. Growth in our
CupCycling™ product range and our
Colourform™ range are examples of how
our close partnership with customers drives
sustainable environmentally friendlier
solutions to meet our customers’ needs.
Our raw materials are ethically sourced
including all our pulp supplies from
responsibly managed forestry, certified to
FSC® and PEFC® standards.
We continue to increase our work in
the area of preventing modern slavery.
Our latest Modern Slavery Statement
can be found on our website.
During this challenging year, the Group
has kept in regular contact with its
customers and suppliers to ensure that our
customers are supported with their material
requirements as and when required and our
suppliers are able to continue deliveries of
materials to meet our needs. In addition,
reviews of trading terms were undertaken
to support our customers and suppliers
where required.
OUR COMMUNITY
The impact of our operations on
the communities in which we work
is an important consideration in our
Board discussions. Our Community
Support Committee regularly receives
requests from schools, charities and
organisations seeking support
for activities that benefit our
local communities.
In the year, charitable donations of
£10,000 were made to local charities
and organisations in addition to the
free paper donated to various schools
and organisations.
In these times of lockdown, the Group
provided free paper to the residents
of Kendal who visited the three main
supermarkets in the town. In addition,
further paper was sent to Lancaster Royal
Infirmary for use by children in the
hospital wards. Some PPE equipment
was also shared with local surgeries who
were struggling for supplies. In addition,
a number of our employees supported the
running of a Covid test centre in Kendal.
Beyond the impact of Covid-19, the Board
approved the third phase of solar panels
to be installed. These panels are owned by
Burneside Community Energy Ltd who
sell all the power generated to the Group
with any profits ploughed back into the
local community. These panels are to
be installed this summer.
Our vision for doing business is one that
delivers growth whilst also serving society,
and is strongly aligned with the sustainable
development goals.
By using our resources as a business
to address issues such as biodiversity,
reforestation, upcycling and climate
change we are delivering benefits to
our stakeholders and society.
26
27
TECHNICAL FIBRE PRODUCTS LTD
DIVISIONAL REPORT
The global pandemic created
a headwind for this business –
this was the first time since
I joined TFP in 2013 that we didn’t
grow our sales revenue year on year.
Our sales into Aerospace and High
Temperature Insulation markets were
most significantly impacted, along with
Wind Energy. However, TFP is a diverse
business and significant gains in Fuel Cell,
Defence and Medical markets mitigated
what might have been a much larger deficit.
Growth in the renewable energy sector
will be further strengthened by the
acquisition of TFP Hydrogen Products,
expanding TFP’s portfolio for low carbon,
and specifically hydrogen, technologies
at a time when this sector is rapidly
gaining momentum.
Aerospace
The Aerospace sector was impacted strongly
by the effect of Covid-19 on both business
and leisure travel, with a 66% reduction in
passenger traffic in 2020. This resulted in an
immediate and significant reduction in
activity across the aerospace supply chain.
Boeing delivered a total of 157 airplanes
in 2020, down from 380 in 2019 and down
over 80% from a record 806 jets in 2018.
By comparison, Airbus posted stronger
than expected deliveries of 566 jets in 2020,
remaining the world’s largest maker of
planes. Nevertheless, deliveries at Airbus
fell 34% from a record a year earlier,
when travel demand was high, particularly
in fast growing markets across Asia.
Orders for aircraft at Airbus in 2020
were only 35% of the prior year’s intake.
There have been some initial signs of
recovery however, as Boeing resumed
737 MAX deliveries in December 2020
and Airbus reported a planned monthly
increase in A320 family production rates
as this year progresses.
The industry is predicted to make a
recovery to previous levels, but this is
not going to be immediate and initial
forecasts suggest that it could be 2024
before production and passenger traffic
returns to pre-Covid levels.
Fuel Cell
Whilst the impact of Covid-19 has
had a detrimental impact on some key
markets for TFP, it has not slowed
momentum in the fuel cell market,
and the hydrogen economy as a whole.
The team at TFP marked the Covid year with a group photo beside the new line as it nears completion
This is driven by the impetus for an
increasingly low carbon economy; with
legislative changes, energy security and the
decreasing costs of hydrogen improving its
competitiveness. The result was a further
significant uplift in sales to this market,
helping to mitigate the impact of the
pandemic on sales in other areas.
TFP’s materials are used extensively
as a GDL substrate in both portable
Proton Exchange Membrane (PEM)
fuel cells and static Phosphoric Acid fuel
cells (PAFC), providing power for vehicles
and buildings respectively. Both markets
are predicted to continue their strong
growth with CAGRs of over 19%
forecast until 2027.
The acquisition of TFP Hydrogen
Products has expanded our product
portfolio for fuel cells with the addition
of anode and cathode catalysts, as well
as component coatings and catalysts for
PEM water electrolysers.
Wind Energy
Sales into the wind energy sector started
the year promisingly. However as the
year progressed the pandemic had
a marked impact on the industry,
causing supply disruptions and
construction delays. In Europe,
the main geographic market for TFP’s
sales into this sector, installations
were down 30% on previous years.
This has resulted in a decrease in sales
compared to previous years. However,
a relatively quick recovery is predicted.
Forecasts for 2021 suggest a return to
pre-Covid (2019) levels, with up to
70% growth in wind power capacity
expected in the next 5 years.
year following a temporary pause
on capital expenditure due to Covid-19.
The project is progressing well and
commissioning of the new line will begin
in summer 2021. This additional capacity
will support the significant growth
seen in the renewable energy sector,
especially as other key markets such as
Aerospace move into the recovery phase.
People
I would like to take this opportunity
to thank all of my colleagues in TFP
for their contribution - particularly
through this pandemic year, which added
a number of additional challenges.
Non-woven Capacity Expansion
Martin Thompson, TFP Managing Director
The project to expand capacity by
building a new factory and adding a
further nonwoven line at our Burneside
site restarted in the second half of the
28
29
Technical Fibre Products - Hydrogen Products
PEM WATER ELECTROLYSERS
TFP Hydrogen Products’ materials are
used extensively in an application called
PEM water electrolysis, but what is this
and how does it work?
An electrolyser is an electrochemical
device which is used to convert electricity
and water into hydrogen and oxygen.
It is a bit like a fuel cell, but works in
the opposite way – rather than using
hydrogen to generate energy it uses energy
to generate hydrogen (and oxygen) from
water. Essentially it provides a means to
store the energy inputted as hydrogen for
future use in other applications, such as
fuel cells.
This capacity to store energy as hydrogen is
particularly important for applications such
as wind energy, which is a key market for
PEM electrolysers. Wind is an inherently
variable source of energy making it difficult
to harness this energy effectively - for
example sudden spikes may go uncaptured.
PEM Electrolysers provide the solution
to this; they have the ability to manage
high current densities which means that
they can cope effectively with dynamic
energy sources such as wind or solar.
When generated from a renewable energy
source such as wind the hydrogen
produced can be termed ‘green’ hydrogen
and this pathway results in virtually
zero greenhouse gas emissions.
In addition to their ability to cope
effectively with variable energy sources,
PEM Electrolysers are also highly efficient
(in excess of 80%) and offer the further
advantage of generating hydrogen gas
with a very high purity, which is essential
if it is to be used in fuel cells.
H2
H2
Exploded view of a PEM water electrolyser,
TFP Hydrogen Products produce the
coated Porous Transport Layers (PTLs)
components as well as the catalysts for
the anode and cathode.
Renewable
energy source
Renewables
suppy power to
the electrolyser
Electrolyser
and green
energy storage
Distribution
Refuelling
Net zero
emissions from
fuel cell vehicles
MULTIPLE ENTRY POINTS TO THE HYDROGEN ECONOMY
Whilst the products that TFP and TFP
Hydrogen Products manufacture may
be quite different there are many
synergies in the companies’ approach,
markets and philosophy. They share the
same emphasis on customer collaboration
& product development, as well as a
strong focus on sustainability, helping to
facilitate the realisation of the hydrogen
economy to reduce carbon emissions
and effectively ‘safeguard our future’.
In last year’s annual report we highlighted
the hydrogen economy as an area of
significant growth globally - this hasn’t
changed. It is anticipated that the use
of hydrogen will increase almost 8 fold
by 2050, from the 10EJ1 used presently
to 78EJ1 in 2050, at which point it will
fulfil 18% of the world’s total final
energy demand.
1 EJ = Exajoule = 1018 joules
In order to make the mainstream use of
hydrogen a reality, the technologies used
to generate and utilise it must demonstrate
both high performance and affordability.
This is where both TFP and TFP Hydrogen
fit in; producing products that increase the
efficiency and durability of the technologies
within this market.
The hydrogen economy is not just about
the production of hydrogen, it encompasses
all the steps in the chain; from wind
turbines generating the power to produce
and store hydrogen via PEM water
electrolysis, to the use of this hydrogen
in fuel cell vehicles and stationary
applications. Adam Black, TFP’s Business
Development Director, explains how the
acquisition of TFP Hydrogen Products
strengthens TFP’s position in this market:
“TFP’s materials are already used extensively
in both wind turbine blade manufacture
(to increase durability and add function)
and in fuel cells as the GDL substrate.
The addition of TFP Hydrogen Products
provides a further entry point into the
hydrogen economy for TFP in the form
of component coatings for PEM water
electrolysers, designed to increase their
efficiency & lifetime and ultimately
reduce the long term cost of green
hydrogen generation. This expands TFP’s
product offering and knowledge base in
hydrogen related technologies, creating
opportunities for further growth and
value creation.”
In essence, TFP is now involved in the
generation of renewable energy, its storage
as hydrogen and subsequent use in clean
and efficient power generation for vehicles
or buildings.
From left to right: Phil Wild, Nick Van Dijk, Martin Thompson and David Hodgson
INTRODUCING TFP HYDROGEN PRODUCTS LTD
In January 2021 TFP acquired PV3
Technologies Ltd, now known as TFP
Hydrogen Products Ltd. The acquisition
has enabled TFP to increase its portfolio
of products for hydrogen technologies
as well as creating new opportunities
for growth and market penetration
in the renewable energy sector.
TFP Hydrogen Products has been
operating for 10 years and is based in
Launceston, Cornwall. The company
is founded on extensive knowledge and
expertise in both electrochemical and
nano materials and specialises in the
development and manufacture of materials
for electrochemical technologies,
particularly those used in the generation
of ‘green’ hydrogen - hydrogen produced
from a renewable energy source.
The company’s key capabilities lie in the
development, manufacture and application
of specialist coatings and catalyst powders,
which are often designed specifically for
a customer’s electrochemical system to
ensure optimum performance. The coatings
are typically based on Platinum Group
Metals (PGMs) and are applied to critical
components in the system, such as the
electrodes, providing a number of benefits
including significantly improving the
efficiency, durability and ultimately
lifetime of a given system.
Electrochemical systems are used across
a wide number of markets, and this means
that, like TFP, TFP Hydrogen Products’
materials are used in a very diverse range
of applications. These applications range
from fuel cells and batteries to wound
care, water purification and even the
regeneration of coral reefs.
The primary market for TFP Hydrogen
Products’ materials is Proton Exchange
Membrane (PEM) water electrolysis,
an area which is part of the hydrogen
Economy and set to show strong growth,
with a projected CAGR of over 10%
between 2020 and 2030 due to its role
in hydrogen generation.
30
31
ColourformTM
ColourformTM
RUINART SECOND SKIN CASE
Globally recognised for design
innovation and sustainability
Luxury champagne house,
Maison Ruinart, spent two and
a half years working with the design
development team at ColourformTM
together with Pusterla 1880, to create a
disruptive packaging that wraps around
the champagne bottle like a second skin.
Nothing like the Second Skin previously
existed in the market and the team literally
began with a blank page.
Since its launch the Second Skin case
has gained worldwide recognition with
multiple award wins and media coverage
across consumer, industry and global
lifestyle publications.
With a focus on sustainability continuing
to be front and centre for consumers and
brands, Ruinart and ColourformTM moulded
packaging have been hailed as setting an
example and inspiring not only the entire
wine industry but other sectors to adopt
innovative sustainable packaging solutions.
100% eco-designed packaging
In addition to its elegant look, the new packaging is extraordinarily
environmentally friendly. Eco-conception from start to finish, it is
exceptionally light, in fact nine times lighter than the previous generation
of Ruinart gift boxes (just 40g, compared with 360g previously).
The paper case is made entirely from sustainably managed forestry sources
and being a single material, enables complete and efficient recycling in the
standard paper waste stream.
The carbon footprint of the case has been reduced by 60% across the
entire lifecycle, from sourcing of materials and transformation to transport,
delivery and end of life processing.
Maison Ruinart President Frédéric Dufour says the new packaging
marks a decisive stage in the champagne house’s environmental approach:
“Innovative, authentic and environmentally-conscious, the second skin
case crystallizes our commitment to sustainability.”
This new packaging for Ruinart single bottle gift boxes was launched
in September 2020 for 75cl bottles, the Second Skin will be rolled
out across the magnums (1.5 litres) in 2021.
Packaging codes reinvented
The case is shaped unlike any box
currently used by the wines and spirits
market. Second Skin perfectly replicates
the shape of the Ruinart champagne
bottle, and the lightness of the case is
thanks to its moulded paper construction.
The case is resistant to humidity and is
impermeable to light allowing it to be placed
in an ice bucket for several hours and protect
the champagne flavour against damage from
light strike. This means it is not designed to
be removed when the champagne is served,
introducing a new and even more prestigious
serving ritual and most importantly,
preserving the champagne taste.
The packaging surface has been designed to
look very natural and non-repeating and
replicates the richness and finesse of the
chalk walls of the historic Ruinart natural
wine cellars in Reims.
The development of the unique 100% button
closure took time and dedication to achieve
the perfectly secure fit. With an aesthetic
snap fastening, it beautifully opens and closes
to reveal the bottle nestled in its second skin.
The finish of the case is impeccable, achieved
by cutting with a high-pressure waterjet to
deliver seamless edges.
A huge thank you to all our employees who helped us through the pandemic
MOULDED PACKAGING PRODUCTS
DIVISIONAL REPORT
Having been a part of the team that
developed the idea of ColourformTM
and commissioned the first of the stages
to establish the business, I was absolutely
delighted to rejoin the team as Managing
Director in the first quarter of 2020 to
help drive the development and the
growth of the business.
The foundations of the business were strong
and we have now seen sales grow from
<£300k per annum to £2.8m in 2 years – even
growing by 9% during the massive global
disruption caused by Covid-19 in 2020.
Colourform's growth was materially
affected by the pandemic – the core
repeating business was down by 40% in the
spring campaign and 15% in the winter
campaign, other customers whose demand
was through retail stores saw their business
drop to a tiny fraction of the previous year.
However, a strong pipeline with new
projects coming on stream more than
compensated for these headwinds,
and these will form the basis of even
more future growth as the world picks
itself back up again.
We have taken this year to continue to align
the skills within the team with the drivers
for future growth. Outstanding designs
supported by world class technical expertise
will allow us to demonstrate the potential
for moulded fibre packaging that many
sectors have never considered or believed
possible. Our confidence in our ability to
excel in these areas was given a massive
boost by pretty much a “clean sweep”
of the luxury packaging awards in 2020.
Patrick Willink,
ColourformTM Managing Director
32
33
Award winning innovation
This success has given globally recognised
brands the confidence to work directly with
us to help develop a brand new generation
of packaging concepts that are a perfect fit
for the post-Covid world.
COLOURFORMTM VISION
As we turn our minds to the future, we have developed a vision for our business which will help provide the direction and the
focus and will continue to deliver growth on the pre-Covid trajectory whilst remaining loyal to our heritage and our values.
•
With moulded fibre at its heart,
and unbridled creativity, ColourformTM
never stops exploring new ways to
help brands stand out with beautiful
and inventive packaging
•
We seek to excite pioneering brands
with the unimaginable potential of
this truly sustainable packaging
•
Our personalised design, unique colour
capability and customised decoration,
set ColourformTM apart from
conventional alternatives
JAMES CROPPER PAPER PRODUCTS
As was undoubtedly the case for many,
if not most businesses around the world,
the last 12 months has been a period of
extremes, characterised and dominated by
the impacts of the Coronavirus pandemic.
As we finalised our annual report and
accounts for 2020 we were facing into an
uncertain year ahead, wondering how bad
the pandemic would get and the extent
of the challenges we might face.
We saw extremes in terms of the speed of
contraction of certain market segments as
parts of the world were either emerging
from lock down, such as China and the
Far East or entering into lockdown for
the first time, such as the United Kingdom.
Our first quarter saw sales revenues drop
to less than half of plan.
Fortunately, the resilience of our business
is a testament to the diversity of our
portfolio, both geographically and
in terms of market segments served.
Early on in the pandemic our premium
print and luxury packaging segments
dropped sharply as retail and hospitality
locked down. Latterly, our education
market segment declined as schools and
colleges closed.
Conversely, we saw a resurgence in our
art, craft and design portfolio as well as
publishing as lock down prompted more
stay-at-home activities.
Another extreme was the speed and agility
shown by all employees across the site to
confront the realities of the pandemic.
Our immediate actions were to safeguard
the health and wellbeing of our employees
by adopting Covid-safe working practices
across the site.
A heroic effort was made to mobilise home
working wherever possible and to provide
screens, signs and space for those coming
into the workplace.
Entirely new working practices and
cleaning routines were adopted in double
DIVISIONAL REPORT
quick time and our communication efforts
to keep the whole organisation informed
were ramped up.
As volumes were impacted and demand
became erratic, our challenge was to
continue to support our customers with
on-time delivery and service, but balance our
operations to control costs and maintain
efficiency. Again the whole team made
significant efforts and sacrifices to help us
manage cost and preserve cash, this included
judicious use of government support
schemes in the early part of the year.
We demonstrated our ability to pioneer
solutions in response to the pandemic
with the accelerated launch of our
Rydal collection of papers for premium
packaging, including an option made from
100% recycled fibres. We re-engineered our
Docugard™ silver ion treatment to make
it available across a broader range of our
papers and re-positioned it as PaperGard™.
PaperGard™ contains Biomaster®
antimicrobial technology, and independent
tests have proven it to be highly effective
at reducing the presence of SARS-CoV-2,
the virus that causes Covid-19, on the
surface of paper.
This fighting spirit was, again, testament
to our ability to get on the front foot
and regain control of our business.
One enduring outcome of the current
global situation is the heightened focus
on responsible sourcing and end-to-end
lifecycle of products and packaging.
There is a palpable increase in dialogue
around the use of recovered fibre
irrespective of whether it is post-consumer
or post-industrial waste.
During the year, our ambition to drive
towards 50% of the fibre used in our
papermaking to come from recovered
streams moved forward apace with some
exciting trials of new fibre streams from
unique waste paper sources. I have been
encouraged by the growing interest from
customers and suppliers who are keen
to work with us based on our growing
reputation in this space, pioneered with
the advent of CupCycling™ in 2017.
Despite Covid-19 we continued to invest in
ground-breaking research & development
which supports our Vision of being the best
bespoke paper mill in the world, recognised
for our unrivalled expertise in colour and
leading innovation in sustainable fibre.
This investment included the hiring of a new
Technical Director brought in to build an
innovation culture across our technical team
and was part of an organisation restructure
which we undertook in the third quarter
2020, designed to make us stronger and
more competitive for the future.
An unfortunate but inevitable outcome
of our restructure was a reduction in
headcount which was managed entirely
through voluntary redundancy and entirely
in line with our stated values; forward
thinking, caring and responsible. I want to
take this opportunity to acknowledge the
constructive support from our Trade Union
during this difficult time.
As we look forward, I believe the pandemic
will continue to impact our business in the
coming year, but we have weathered the
storm extremely well and have laid a
solid foundation to grow back stronger.
We are looking to accelerate our investment
in new capability in the coming year and
we have not deviated from our value
growth strategy.
I want to thank our many customers
for their continued support during the
pandemic. I also want to praise and thank
the entire James Cropper Paper team for
their courage, resilience, hard work and
commitment over the last year and look
forward to continued success in the
year to come.
Steve Adams, Paper Managing Director
34
35
James Cropper Paper
The Future of Sustainable Luxury
Every luxury brand on earth is talking about sustainability, touching it
one way or another. Walpole is the official sector body for UK luxury,
and is leading the way in bringing the industry together to share ideas
and best practice.
Recently it launched a Sustainability Manifesto and published a report
of the progress made by its members. In the report our CupCyclingTM
innovation was highlighted as leading the transition towards a circular
economy, and supporting luxury brands such as Burberry in the
development of their packaging.
Since the launch of the new packaging, we have recycled 58 million
coffee cups into papers for Burberry packaging.
From left to right: Damian Cook our new Technical Director with members of the Paper Finishing team
Jimmy McNamara, Dan Stacey, Angela Bain, Ash Walsh and Rob Batstone our Operations Director.
PAPER - HIGHLIGHTS
The Silver Lining for Packaging
The packaging for the 2020 Walpole Book of British Luxury brought together
our latest innovations in sustainable and hygienic paper for packaging.
The box was designed by renowned packaging expert Evelio Mattos and manufactured
by the International Direct Packaging team and is mono-material, made from 100%
PCW papers from the Rydal Collection which include CupCyclingTM fibre and PaperGardTM
technology. There are no inks or glues meaning it is 100% recyclable in the paper waste
stream, with no disassembly necessary.
As a shining example of sustainable luxury, the Walpole Yearbook packaging was
recognised in the Graphic Design USA 2021 Awards for leading the way in
Package Design.
36
37
Creative Gift Packaging
With over 20 years’ expertise as suppliers
of decorative and protective shredded
paper to the gift market, Shredhouse has
been well positioned to benefit from the
Covid-19 pandemic’s huge shift towards
e-commerce sales.
As a long-standing customer of James
Cropper, Shredhouse supply shredded
paper products, manufactured from an
array of our FSC® certified coloured papers
including CupCyclingTM, to market sectors
including health & beauty, food & drink,
crafts & toys and gifts. During the past year
Shredhouse have taken on additional staff
and invested in new production facilities to
accommodate an increase in online orders.
Business Development Manager for
Shredhouse, Jon Watton, comments:
“Now more than ever, customers expect
products and packaging which demonstrate
care and consideration for the environment,
with shredded paper products’ popularity
increasing significantly due to their low
environmental impact and sustainability.”
Sustainability - ESG Committee
Sustainability - ESG Committee
ENVIRONMENTAL, SOCIAL AND
GOVERNANCE COMMITTEE
James Cropper cares strongly about people, sustainable manufacturing and responsible business practices.
This drives our approach to decision making across the whole planning horizon.
Our Aim
The Environmental, Social and Governance (ESG) Committee is established to unify
all aspects of environmental, social and governance best practice across the Group.
The Board has responsibility for the overall strategy; the ESG is a subcommittee
of the Group Board constituted in September 2020, chaired by Isabelle Maddock.
Using the UN Sustainable Development Goals as a guideline, the Committee carried
out a materiality analysis identifying which goals are most significant to our stakeholders.
The Group has identified 3 pillars and 9 priority areas.
All matters of ESG have been and continue to be important to us, yet for the first time,
through the committee's work we are pulling together a cohesive approach across the Group.
This year we choose to report more deeply on 3 priority areas; decarbonisation and energy,
employee well-being, and materials with purpose. As our approach matures we look forward
to providing updates against all these areas.
Our 9 Priority Areas
Sustainable Manufacturing
People and Society
Responsible Business Practices
Decarbonisation and energy
Employee well-being
Materials with purpose
To have a robust net zero aligned
strategy and achieve net zero,
on direct emissions by 2030
We support our people’s physical, mental
and emotional wellbeing; balancing their
work and personal responsibilities to
help them to work safely and effectively
To make products that are part
of the sustainability solution
and create pioneering materials
aligned to societal needs; delivered
in a fair, healthy and inclusive way
Water
Enhancing livelihoods
Business ethics and risk
To reduce our water footprint by
developing and embracing innovative
solutions to close our water loop;
minimising fresh water abstraction,
reusing process water and recycling
our effluent water back into the process
We are committed to providing
meaningful work, generating a positive
organisational culture and working
environment which promotes diversity,
inclusivity, personal development
and respect
To operate responsibly, steering
governance, best practice and in
line with our purpose and core
values throughout our operations
Waste and resource management
Local community
Supply chain
To commit to valuing waste
across our operations and employ
innovative solutions to minimise
and repurpose waste
To be a force for good in society,
and particularly by making a positive
contribution in our local community,
supporting social cohesion, economic
prosperity and inclusive growth
To ensure our suppliers operate
to the same ethical and sustainable
standards that the Company adheres
to and encourage the adoption of
sustainable practices
Isabelle Maddock
Chief Financial Officer, PLC
“
I care strongly about
sustainable manufacturing
and I am proud to have such
a value driven and diverse
team joining me on
this committee.
”
Mark Cropper
Chairman, PLC
“
I am very excited to support
our ESG committee as
approaching ESG in the
right way will only
strengthen our group and
long term growth prospects.
”
“
Rachel Armer
Head of HR, PLC
We all have a part
to play in protecting
our planet for future
generations.
”
Julie Tomlinson
Marketing Communications
& Sustainability Manager,
Paper
Our business can
make a real and
lasting difference
to society, delivering
sustainable growth in
a responsible way.
”
“
“
Environmental
Sustainability and
Ethical Behaviour is
in our company
DNA. Innovation
and change in these
critical areas will be
required to reach our
future business
aspirations.
Adrian Dolan
Technical Services
Manager, Paper
”
The committee comprises
of 2 board members and 7
non-board members.
A blend of knowledge
and strengths from
across the Group.
Steve Crook
Head of Operations, TFP
“
I am a strong believer
of fairness and respect
in the workplace.
”
“
We can build on strong
foundations and
continue to adapt,
develop and innovate
in these areas to drive
the business forward.
”
Natalia Williams
Market Researcher,
Technology and Innovation
“
James Cropper must
reduce and ultimately
stop burning fossil
fuels for its power
needs going forward.
”
Richard Graham
Site Utilities Manager, PLC
“
I believe that good
corporate governance
is essential for the
long term success
of the business.
”
Jim Aldridge
Company Secretary, PLC
The Committee
The Committee is to provide oversight and analysis of the 9 priority areas and to monitor overall performance to ensure delivery of robust
ESG credentials.
38
39
Sustainability - ESG Committee
Sustainability - ESG Committee
Sustainable Manufacturing
Decarbonisation and energy • Water • Waste and resource management
People and Society
Employee well-being • Enhancing livelihoods • Local community
Priority Area
Strategic Intent
UN Sustainable Development Goals
Priority Area
Strategic Intent
UN Sustainable Development Goals
Decarbonisation and energy
To have a robust net zero aligned
strategy and achieve net zero,
on direct emissions by 2030
Employee well-being
We support our people’s physical, mental
and emotional wellbeing; balancing their
work and personal responsibilities to help
them to work safely and effectively
Tonnes/CO2e/year
29,235
2
3
1
4
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
1
2
3
4
All purchased electricity from
grid to be 100% renewable
Complete feasibility March 2022
Targets for every Division April 2022
Plan defined and enter the
engineering design phase
>5,000
2021
‘22
‘23
‘24
‘25
‘26
‘27
‘28
‘29
2030
We believe we are at a really exciting
time of transition, where the world is
demanding decarbonisation initiatives
and real change is afoot.
Not only do all our businesses provide
materials which are intended as solutions
to some of the world’s social and
environmental challenges, but also
there is now a real challenge is to
decarbonise our own operations.
We are committed today to a huge
reduction in net emissions from our
own activities over the next decade.
We want to concentrate on the direct CO2
emissions from our own combustion of
natural gas, however we also will be looking
to source clean electricity to supplement our
own clean generation. The Company is
committing to a programme that will result
in a huge reduction in emissions from our
own activities over the next decade.
We expect to achieve significant
progress by 2030, and for this to happen
it will take a number of work streams
to come together:
• An immediate focus on reducing
primary energy usage today.
• It will take innovation. After 2 years
of early research we are ready to embark
on a feasibility to assess a number of
different technical solutions.
• A watch for other new and emerging
solutions. The Company is also
researching the development of
new technologies for both energy
generation and optimising usage.
• Only once we have done all this will
we consider offsetting to achieve the
final stages of getting to net zero.
“WE ARE COMMITTED TODAY TO A HUGE REDUCTION IN NET
EMISSIONS FROM OUR OWN ACTIVITIES OVER THE NEXT DECADE.”
Working with our supply chain is equally as important. We will need
to cover all other indirect emissions from the goods we purchase,
our raw materials, to services used and distribution and logistics.
• Selecting a partner to help us with science based methodology
to measure supply chain carbon emissions. We intend to measure,
better understand, question and set targets for reduction.
We expect to achieve significant progress in working with
the supply chain emissions by 2035, and this starts today by:
• Adopting supply chain as a key strategic intent and establishing
priorities across the Group to meet that intent.
We know that when people are healthy
and well, they are able to contribute
more – whether that’s to their families,
their work or society at large.
At James Cropper we are committed
to promoting a positive environment
in our workplaces, to support people’s
physical, mental and emotional wellbeing.
Since 2019 we have been a member
of the Better Health at Work Award
scheme, and currently hold a Bronze
Award. This has helped us fostering
positive physical and mental wellbeing
across our workforce.
Our people have also have access to
a range of services to support their
broader wellbeing and mental health.
This includes access to physiotherapists
and annual medicals, an Employee
Wellbeing Helpline and trained on
site mental health first aiders.
We also make sure to encourage and engage
our people in their health and wellbeing
by providing a range of balanced nutritious
meals in our canteens, offering health
benefits, such as the cycle to work
scheme and getting our people involved in
initiatives - such as Healthy Eating Week.
We also encourage our people to
incorporate physical activity in to
their daily lives; providing discount
to local gyms. We even have a James
Cropper outdoor swimming club.
Employees are encouraged to join
initiatives such as running and walking
clubs, squash tournaments and site
wide plank challenges.
Through our ESG commitments we
are dedicated to building a workplace
environment that enhances the wellbeing
of our people. Our aim is to be awarded the
silver better health at work award this year.
“THROUGH OUR ESG COMMITMENTS
WE ARE DEDICATED TO BUILDING
A WORKPLACE ENVIRONMENT
THAT ENHANCES THE WELLBEING
OF OUR PEOPLE.”
40
41
Sustainability - ESG Committee
Sustainability - SECR Report
Pride Excellence Awards
Responsible Business Practices
Materials with purpose • Business ethics and risk • Supply chain
Priority Area
Strategic Intent
UN Sustainable Development Goals
Materials with purpose
To create sustainable material solutions
aligned to societal needs delivered in
a fair, healthy and inclusive way
Over the last year, people’s attention
quite rightly turned to dealing with
Covid-19, and for a short while the
focus shifted slightly from the climate
crisis, however consumer interest in
environmentally responsible innovations
has not fallen by the wayside, in fact
the focus on this is as strong as ever!
We have led the way in manufacturing
materials since 1845 and are proud of our
pioneering heritage. Today our products
reach far and wide, forming the fibres
of daily life around the world.
Our actions and commitments are
restorative and regenerative, aligned
with the SDGs and designed to improve
the health of the planet today and for
future generations.
Science is our great ally. Over the
past five years we have invested over
£13 million in research and development
activities, with over 15% of our employees
involved in these programmes. We’re using
the know-how we have today, combined
with the seeds of innovation and pioneering
technology to improve our future.
Our wealth of experience across the
different sectors enables organisations to
benefit from our group’s business synergies,
and our smart solutions work in harmony
to improve efficiency and reduce our impact
on the environment.
cups through our unique zero waste
CupCyclingTM facility and given them
a wonderful second life as beautiful
papers for retail brands such as Selfridges,
Burberry, Mulberry and renowned
stationer Hallmark Cards.
From crafting beautiful papers from
responsible sources, devising clever ways to
turn waste into a resource to reproduce a
circular flow of materials that would
otherwise be lost, creating specialist
materials that support the advancement of
green energy or developing next-generation
sustainable packaging as an alternative to
single-use plastics, we never stop evolving so
we can all look forward to a smarter future.
Our primary raw material is wood pulp,
and through our sustainable sourcing
policies 100% of fresh fibre is certified to
internationally recognised FSC® and PEFC®
schemes, aiming to protect high carbon
ecosystems like forests and drive biodiversity
and forest growth in our supply chain.
By 2025 50% of the fibre for papermaking
will be from recovered streams. To date we
have recovered 150 million recycled coffee
Green energy and specifically the
Hydrogen economy is a key growth
area for TFP, and currently represents
20% of revenue. Our materials are used
to enable cheaper and efficient green
hydrogen production, as well as in fuel
cell technology to power vehicles and
infrastructure. In fact, 50% of the world’s
fuel cells incorporate TFP materials.
Our bio-based moulded fibre technology
is thriving as a material to replace plastics
as well as providing innovative lightweight
mono-material packaging options for
consumer products. ColourformTM has
been used in applications for international
beauty brands such as L’Oréal to specialist
beauty innovator Floral Street, and has
been internationally recognised for its
multi-award winning eco-responsible
pack design for champagne house
Maison Ruinart.
“OUR ACTIONS AND COMMITMENTS ARE RESTORATIVE AND REGENERATIVE,
ALIGNED WITH THE SDGS AND DESIGNED TO IMPROVE THE HEALTH
OF THE PLANET TODAY AND FOR FUTURE GENERATIONS.”
STREAMLINED ENERGY & CARBON REPORT
Energy use
The underlying energy data used to
calculate carbon emissions includes
electricity, gas and other fuels purchased
for use on-site and for transport.
Energy used in the year was 156.6GWh
(2020: 210.9GWh), lower than the previous
year, predominantly due to the impact of
Covid-19 on production levels.
Energy efficiency action
During the year, it has been agreed that
further roof space will be let to Burneside
Community Energy Ltd to place more
solar panels on our roof space with all
solar energy generated purchased by
the Company. Installation is expected
to be completed in the summer 2021.
In the year, 574,000kWh of solar energy
was purchased (2020: 298,000kWh).
In addition, the Company purchases
hydro energy from Ellergreen Estate,
purchasing a total of 275,000kWh of hydro
energy in the year (2020: 229,000kWh).
Greenhouse gas emissions
Scope 1 Direct emissions
52 weeks ended 52 weeks ended
28 March 2020
tCO2e
27 March 2021
tCO2e
Direct emissions from burning of fossil fuels
Transport: company owned or leased vehicles
Total Scope 1 Direct emissions
Scope 2 Indirect emissions
Grid electricity purchased
Scope 2 Indirect emissions
Gross Carbon emissions
Avoided emissions from
renewable electricity purchased
Total avoided emissions
Net Carbon emissions
Greenhouse gas
emissions intensity ratio
27,512
553
28,065
1,639
1,639
29,704
(234)
(234)
29,470
36,007
568
36,575
2,611
2,611
39,186
(145 )
(145 )
39,041
52 weeks ended 52 weeks ended
28 March 2020
tCO2e
27 March 2021
tCO2e
42
4343
Carbon emissions per £100,000 revenue
37.41
37.30
Pride Excellence Awards
People - Continuous Learning
PRIDE EXCELLENCE AWARDS
Over the last year and throughout
the pandemic we have received some
incredible nominations and 32 employees
were awarded a quarterly Pride award.
Whilst we have been unable to celebrate our
annual awards in our usually way, it didn’t
stop us taking time to recognise the amazing
contribution our employees make to the
Company, their fellow work colleagues
and to the communities we operate in,
and rewarding our values in action.
GOLD AWARD
Paul Waiting (Engineering Coordinator)
Jos Addison (Maintenance Craftsperson)
When one of their work colleagues
became extremely unwell at work,
Paul and Joss acted without delay.
Their focus, determination and their
ability to remain calm under very emotional
circumstances helped save a colleague’s life.
You are true heroes - thank you.
SILVER AWARD
EFT Team (TFP US)
The EFT Team worked collaboratively and tirelessly to meet our customer driven
improvement. Working weekends and evenings, they developed new quality assurance
testing regimens and introduced a related repeatable sample procedures, meeting the
technical, production and quality aspirations for a key supplier to the aerospace industry.
CONTINUOUS LEARNING
BRONZE AWARD
Paul Sayner (Reel Transporter Driver)
Paul provided an innovative solution that
embraced us being responsible with our
resources and reducing waste. To stop
finished reels of paper from rolling and
getting damaged he used raised road
marking paint on the floor. This stopped the
large reels from rolling, reducing our volume
of broke paper (waste material) and saved
the Company money. More importantly,
it decreases the risk of accidents from
rolling reels, whilst ensuring our finished
products arrive with our customers in high
quality condition.
During the calendar year, James Cropper
PLC undertook a full review of its current
organisational structure; with the primary
purpose to ensure the company remains
competitive and designed for growth.
We reshaped and realigned our operating
model to reduce complexity and cost;
accelerating growth to ensure the business
is fit for the future.
We worked with our recognised Trade
Unions through meaningful consultation
as well as with those directly affected by
the organisation changes, to ensure job
losses were mitigated. New opportunities
were also created, to ensure that we have
skills and capabilities to deliver against our
ambitious plans for growth.
44
45
People - Early Careers & People Development
EARLY CAREERS & PEOPLE DEVELOPMENT
We continue to invest in our next
generation workforce and are committed
to providing opportunities across the
James Cropper Group. We currently
have 24 Apprentices across our
business in Engineering, Papermaking,
2 Manufacturing Operations and Finance.
4 new Technical Graduates started in
January 2020 undertaking roles in the
Paper Lab, Quality and Process capability.
Within the last 12 months they have been
developing their academic knowledge in
Paper Technology and Green Belt Principles.
In the calendar year, we also introduced
people and organisation planning,
to ensure we take account of the people,
skills and capabilities we will need to
deliver our future plans.
46
CONTENTS
STRATEGIC REPORT
03
Financial Highlights
Financial Summary
Chairman’s Letter
Chief Executive’s Review
Chief Financial Officer's Review
The Pension Report
Risk Management
Stakeholders Relationship Statement
Technical Fibre Products
ColourformTM
James Cropper Paper
Sustainability - ESG Committee
Streamlined Energy & Carbon Report
Pride Excellence Awards
People
47
48
50
55
56
60
61
63
GOVERNANCE
Board of Directors
Corporate Governance Statement
Report of the Audit Committee
Report of the Remuneration Committee
QCA Principles
Directors’ Report
FINANCIAL STATEMENTS
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Group Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes In Equity
Notes to the Financial Statements
Shareholder Information
Board of Directors
Board of Directors
BOARD OF DIRECTORS
Mark Cropper
Chairman
Phil Wild
Chief Executive Officer
Isabelle Maddock
Chief Financial Officer
Dr Andrew Hosty Senior
Independent Non-Executive Director
Jim Sharp
Non-Executive Director
Lyndsey Scott
Non-Executive Director
Appointed: October 2006
Independent: No
Committee Memberships: Nominations
(Chair), Remuneration, Pension, ESG
Qualifications: MA
Appointed: October 2012
Independent: No
Committee Memberships:
Executive (Chair)
Qualifications: BEng (Hons)
Experience: Mark is the sixth generation
of the Cropper family to hold this position.
Following university, he pursued a
career in environmental finance and
renewable energy.
External appointments: Ellergreen Hydro
Projects Ltd (Director), Cropper Paper
Foundation (Director), Kendal Futures
CIC (Director), Rydal Hydro Ltd
(Director), Scandale Hydro Ltd (Director)
Experience: Phil previously worked for
3M where he held directorships and roles
covering EMEA, industrial, healthcare,
automotive and security market sectors.
External appointments:
CBI (North West Counsellor),
Teenage Cancer Trust (North West Board)
Appointed: July 2014
Independent: No
Committee Memberships: Executive,
Pension (Chair), ESG (Chair)
Qualifications: BSc, FCMA
Experience: Isabelle is a fellow of the
Chartered Institute of Management
Accountants with experience in finance
across a variety of sectors including
manufacturing, software, retail, facilities
management and publishing, before joining
the Company in 2006.
External appointments:
CBI Economic Growth Board (Vice Chair)
Appointed: August 2018
Independent: Yes
Committee Memberships: Audit,
Remuneration, Nomination
Qualifications: PhD
Appointed: September 2009
Independent: No
Committee Memberships: Audit (Chair),
Remuneration, Nomination, Pension
Qualifications: MA
Appointed: August 2019
Independent: Yes
Committee Memberships: Remuneration
(Chair), Audit, Nomination
Qualifications: BA DPM Grad IPM
Experience: Andrew pursued a career in
industry culminating in his appointment
as COO of Morgan Ceramics and COO
of Morgan advanced Materials PLC.
Most recently he was founding CEO
of the Sir Henry Royce Institute for
Advanced materials.
External appointments: Rights and issues
Investment Trust PLC (Director), Mom
Incubators Ltd (Director), RHI Magnesita
PLC (Director), Nexeon Ltd (Director)
Experience: Jim began his career in
financial services with J. Henry Schroder
& Co. from 1992 to 2002, where he was
a Director. Since then he has held senior
roles with a number of private equity
backed businesses.
External appointments:
In The Style (Chairman), YouGarden
(Chairman), Feelunique (Chairman),
The Brunner Investment Trust PLC
(Director)
Experience: Lyndsey has spent most of her
career in multi-national organisations and
management consultancy across different
sectors, most recently with International
Personal Finance PLC as Chief Human
Resources Officer. She brings experience
in strategy creation, planning and delivery
of large scale cultural and performance
change management and governance.
External appointments: International
Personal Finance PLC (Chief HR Officer)
Martin Thompson
MD, TFP Division
Appointed: June 2013
Independent: No
Committee Memberships:
Executive
Qualifications: MBA
Experience: Prior to joining the group
in 2003, Martin held directorships
covering technical, general management
and multi-site divisional director roles.
External appointments: -
Patrick Willink
MD, ColourformTM Division
Steve Adams
MD, Paper Division
Jim Aldridge
Company Secretary
Sir James Cropper
Honorary President
Appointed: March 1998
Independent: No
Committee Memberships:
Executive, Pension
Qualifications: BSc MBA
Experience: Patrick is a member of the
Willink family, joining the Group in 1990,
appointed Chief Technology Officer in
2014 and instrumental in the creation of the
ColourformTM division. He was President
of the Confederation of Paper Industries
Ltd from 2014 to 2019.
External appointments: Confederation
of Paper Industries Ltd (Director)
Appointed: January 2017
Independent: No
Committee Memberships: Executive
Qualifications: BA (Hons)
Experience: Steve previously worked
for 3M where he held directorships
and roles both in the UK and Europe
covering display, traffic and vehicle safety,
telecommunications, electronics and
energy markets.
External appointments: -
Jim 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.
Sir James resigned from the Board in
2013 after 47 years of distinguished
service within the Company.
Sir James was appointed the first
Honorary President of James Cropper
PLC in 2013. Sir James was HM
Lord-Lieutenant of Cumbria from
1994 until 2012.
48
49
Corporate Governance Statement
Corporate Governance Statement
CORPORATE GOVERNANCE STATEMENT
"I AM PLEASED TO INTRODUCE THE CORPORATE
GOVERNANCE REPORT FOR THE PERIOD ENDED
27 MARCH 2021. THIS REPORT INCLUDES MY STATEMENT
AND THE CORPORATE GOVERNANCE REPORT."
The year just ended has been dominated
by the impact of Covid-19. The Board
took swift actions to protect the health
and wellbeing of our employees, to
support customers and to reduce costs
where possible to protect liquidity and
to safeguard the future of the business.
As we were protecting the business from
the impact of Covid-19, work on the future
of the business also continued including
a restructuring plan, particularly in the paper
division, which was in the pipeline and
accelerated due to the pandemic. In addition
a large number of our employees met over
the months to draft a new Purpose and
Values statement as reported at the start
of the Annual Report. Likewise, the TFP
Division acquired a new business in
Cornwall. How our employees worked
changed with more employees working
from home where possible during the
lockdown periods and new methods of
communicating and keeping all employees
up to speed with the latest developments.
The pandemic changed how the Board met
during the year, with all meetings taking
place via virtual media.
The Board were able to continue to hold
regular meetings online with constructive
and challenging discussions within our
culture of openness, transparency and
respect among the Board members.
Due to the pandemic, our AGM last year
was unfortunately closed to visiting
shareholders. Following the AGM, the
Board recognised a large number of votes
cast for abstention or against for some
of the resolutions proposed. The Board
acknowledged these votes and began
consulting with key shareholders,
external advisers and our Nomads.
Our response to the negative voting
was unfortunately delayed due to the
impact of the pandemic. However, an
action plan has been set to address the
issues raised where it is felt changes may
need to be made. The majority of the action
plan will be enacted in the year just started.
The matters raised mainly concern the
independence of two of the Non-Executive
Directors, including myself, and also the
construct of my remuneration. The action
plan can be seen on page 51.
As a Board, we remain committed to
maintaining high standards of corporate
governance. The Directors place a significant
emphasis on ensuring that the Group has the
appropriate governance structures in place.
The Board adopted the QCA Corporate
Governance Code in 2018 considering it
to be a pragmatic and practical governance
tool committed to high standards of
corporate governance facilitating efficient,
effective and entrepreneurial management
of the Company.
Board responsibility
and strategic direction
The Board acknowledges its collective
responsibility for ensuring the long-term
success of the Group by demonstrating
strong leadership, setting strategy and
business models, managing performance
and ensuring the necessary resources are
in place to deliver. It also holds itself
accountable for looking after the needs of
all its stakeholders, including employees,
pensioners, shareholders and the broader
community and environment.
The Strategic Report is on pages
04 to 46 in the Annual Report.
Sub-committees
There are six sub-committees reporting
to the Board:
• Executive Committee
• Remuneration Committee
• Audit Committee
• Nomination Committee
• Pensions Committee
• ESG Committee
All committees continue to exercise their
duties in compliance with all relevant
legislation, regulation and guidance.
During the year the Environmental, Social
and Governance Committee (“ESG”)
was set up. Further details about the
sub-committee can be found on pages
38 to 42 of the Annual Report.
All sub-committees continue to be
supported by both internal and,
where relevant, external advisers to
ensure their duties are satisfactorily
and professionally fulfilled.
Stakeholder engagement
The Board is keen to ensure ongoing
and effective communication with
all stakeholders. Further reading on
stakeholder engagement can be found
in our Section 172 (1) statement on
pages 26 to 27.
Both I and the Non-Executive Directors are
fully supportive of the strategic direction
being taken by the executive team.
Mark Cropper, Chairman
21 June 2021
Actions re. Negative Voting at 2020 AGM
Matter raised
Board response
Independence
of Jim Sharp
Jim has been a member of the Board for 11 years. He brings a wealth of knowledge
and experience from his background in investment banking, corporate finance, and
significant experience in investment, managing and growing successful businesses,
particularly in the luxury retail sector, an important market for James Cropper.
His appointments elsewhere only speak of the very high regard in which he is
held in the wider business community and echo the considerable value he brings
to James Cropper. Jim continues to challenge company strategy and execution
without fear or favour and play a key role in ensuring the governance and risk
management is at the highest standard possible.
Given his background and experience, Jim is considered to be the most appropriate
Non-Executive Director to act as Chair of the Audit Committee.
The Executive Committee frequently refer to Jim’s experience and knowledge
and see Jim as a key independent adviser on matters of all kinds.
Independence
of Mark Cropper
Mark is Chairman of the Group and the sixth generation of the Cropper family to
hold the post. Mark has been a member of the Board for 14 years. He is also the
largest shareholder of the Company amounting to a significant minority holding.
Mark is non-executive chair but his service contract with the company includes
provision for him to support the functioning and development of the group
beyond his responsibilities as chair. This includes business development and
other ambassadorial relationship and partnership support where his long-term
family association with the business adds considerable value to the Group.
When requested, he also provides advice drawing on his career in the energy
sector and plays a key role in supporting the company’s purpose, values and
emerging social and environmental agenda. The construct of his remuneration
package reflects this element of his work.
As with all Directors and in line with Group policies, Mark does not take
part in discussions and actions where there may be a conflict of interest.
Mark has played a critical role over many years in the challenging of and evolution
of Group strategy and ensuring the Board and directors are of sufficient strength
and depth to deliver to short, medium and long term plans. In all matters he
demonstrates independence of character and judgement and continues to do so
despite his length of service and concurrency with other directors.
It was acknowledged that negative voting on approval of the Remuneration
Committee report was due to the pay and reward construct of Mark Cropper.
Mark’s time involvement in the Company is substantially more than the other
Non-Executive Directors, as detailed above. When Mark was appointed as
a Director, his pay and reward construct was split in proportion to the time
spent as a Non-Executive Director of the Board and the time spent on other
matters, not least as an ambassador for the Group. In line with the split, Mark
was also provided with a Director Benefit allowance, LTIP awards and pension
contributions, all calculated against the time he supports the company beyond
non-executive responsibilities.
Approval of the
Remuneration
Committee Report
Independence
of the Board
The current Board comprises 5 Executive Directors and four Non-Executive
Directors. Two of the Non-Executive Directors have served on the Board for
longer than 9 years, namely Jim Sharp and Mark Cropper.
Whilst the Board considers Jim and Mark to be independent in character and
judgement, the tenure of both Directors has led to negative voting.
Actions
1. In accordance with
good governance,
Jim is proposed for
re-election annually
at the AGM.
2. Jim was re-appointed
as the Chair of the
Audit Committee
in December 2020,
with the position of
Chair to be reviewed
annually.
1. Mark resigned as
a member of the
Audit Committee
in December 2020.
2. Mark will remain
as a member of
the Remuneration
Committee but does
not participate in
matters where there
may be a conflict of
interest.
1. The pay and reward
structure for Mark
will be reviewed
during the year
ending March 2022.
1. The Board to
review the needs
and requirements
of an additional
independent Non-
Executive Director
during 2021,
with a proposed
appointment to be
made during 2022.
50
51
Corporate Governance Statement
Corporate Governance Statement
Governance Statement
The Chief Executive Officer
The Company’s shares are listed on AIM
and are subject to the AIM Rules of the
London Stock Exchange. Under AIM
rule 26, the Company has adopted the
QCA Corporate Governance Code
(2018 edition). The choice of code
to adopt was important to us.
We wanted to be sure that we would
proactively embrace whatever code we
opted for and not end up with a code that
would stifle us and result, on a comply or
explain basis, with us describing why
certain requirements were not appropriate.
We believe that the QCA Code provides
us with the right governance framework:
a flexible but rigorous outcome-orientated
environment in which we can continue
to develop our governance model to
support our business.
Role of the Board
The role of the Board is to establish
the vision and strategy for the Group,
to deliver shareholder value and be
responsible for the long-term success of the
Group. Individual members of the Board
have equal responsibility for the overall
stewardship, management and performance
of the Group and for the approval of its
long-term objectives and strategic plans.
The Board continues to have a balance of
Executive and Non-Executive Directors.
Currently, The Board comprises a Non-
Executive Chairman, three Non-Executive
Directors and five Executive Directors.
The members of the Board maintain
the appropriate balance of experience,
independence and knowledge of the
Company to enable them to discharge
their respective duties and responsibilities
and to ensure that the requirements
of the business can be met.
Division of responsibilities
There is a clear division of responsibilities
between the role of the Chairman and that
of the Chief Executive Officer of the
Group. The primary responsibility of the
Chairman is to lead and manage the Board
and that of the Chief Executive is to
manage the business of the Group.
The Chairman
Mark Cropper is the Chairman. He is
responsible for leading and managing the
Board and ensuring its effectiveness in all
aspects of its role. He works closely with
the Chief Executive on developing Group
strategy and provides general advice
and support.
Phil Wild is the Company’s Chief Executive.
His principal responsibility is to manage the
Group’s business and to lead the Executive
Committee in delivering the Group’s
strategic and operational objectives.
The Non-Executive Directors
Two of the Non-Executive Directors,
including the Chairman, although deemed
not to be independent under the QCA
Code, are considered by the Board to
be independent in both character and
judgement and provide unequivocal
counsel and advice to the Board.
All of the Non-Executive Directors
constructively challenge the Executive
Directors and help develop proposals on
strategy, including satisfying themselves
on the integrity of financial information
and ensuring financial controls and
systems of risk management are robust.
All Non-Executive Directors are members
of the Remuneration and Nomination
Committees, and all the Non-Executive
Directors except Mark Cropper are
members of the Audit Committee.
The operation of the Board
The Board has the authority for ensuring
that the Group is appropriately managed
and achieves the strategic objectives it sets.
To achieve this, the Board reserves certain
matters for its own determination including
matters relating to Group strategy, approval
of interim and annual financial results,
dividend policy, major capital expenditure,
budgets, monitoring performance, treasury
policy, risk management, corporate
governance and the effectiveness of its
internal control systems. The Board
performs its responsibilities through an
annual programme of meetings and
by continuous monitoring of the
performance of the Group.
Board Committees
The Board has delegated specific authority
to the Audit Committee, Nomination
Committee, Remuneration Committee,
Pension Committee and the ESG Committee.
Jim Sharp is the Chair of the Audit
Committee which also comprises the
other Non-Executive Directors, except
Mark Cropper. The Audit Committee has
the primary responsibility for monitoring
the quality of internal controls, ensuring
that the financial performance of the
Group is properly measured and reported
on and reviewing reports from the Group’s
auditors relating to the Group’s
accounting and internal controls.
The Audit Committee meets at
least three times a year.
Mark Cropper is the Chair of the
Nomination Committee which also
comprises the other Non-Executive
Directors. The Nomination Committee
will identify and nominate, for approval
by the Board, candidates to fill Board
vacancies as and when they arise.
The Nomination Committee will
meet as and when required.
Lyndsey Scott is the Chair of the
Remuneration Committee which also
comprises the other Non-Executive
Directors. The Remuneration Committee
reviews the performance of the Executive
Directors and determines their terms and
conditions of service, including their
remuneration and the grant of options.
The Remuneration Committee will meet
at least twice a year.
Isabelle Maddock is the Chair of the
Pension Committee which also comprises
Mark Cropper, Jim Sharp and Patrick
Willink. The Pension Committee has
the primary responsibility for reviewing
and approving the objectives of the
James Cropper PLC Pension Schemes
on all material matters of importance.
It monitors performance of the Schemes
and considers recommendations and
reports from management in relation to
policy and strategy concerning pensions
and investment matters. The Pension
Committee meets as and when required
throughout the year.
Isabelle Maddock is the Chair of the
ESG Committee, which also comprises
the Chairman of the Board. Details of the
rest of the Committee members can be
found on page 39 in the ESG Report.
Board and Committee Meetings
The Board held eight Board meetings
throughout the year, scheduled to coincide
with the internal financial reporting timetable
of the Company and key events including
interim and final results, and the AGM.
Specific strategic topics are reviewed at
every Board meeting, in addition to two
strategy days also held during the year.
The Board’s responsibilities are discharged
with reviews of monthly reports from the
Executive Committee including conference
calls with the Chief Executive and Group
Finance Director with further ad hoc
meetings held as and when required.
Board Meetings (8) Meetings attended
Appointment of Non-Executive Directors
Mark Cropper
Phil Wild
Steve Adams
Isabelle Maddock
Martin Thompson
Dave Watson
Patrick Willink
Andrew Hosty
Jim Sharp
Lyndsey Scott
8
8
8
8
8
2
8
8
8
8
Board members are supplied with financial
and operational information in good time
for review in advance of meetings both
via an electronic portal and in hard copy.
All Directors have access to the advice
and services of the Company Secretary.
The Board approves the appointment
and removal of the Company Secretary.
The Non-Executive Directors are able
to contact the Executive Directors,
Company Secretary or Senior Managers
at any time for further information.
Effectiveness
Board Composition
A strong feature of the Board’s effectiveness
in delivering the strategy is our inclusive
and open style of management and a free
flow of information between the Executive
and Non-Executive Directors.
The size of our Board encourages
individuals to discuss matters openly and
freely and to make a personal contribution
through the exercise of their personal skills
and experience. No individual or group of
individuals dominate the Board’s decision
making process.
All Directors communicate with each
other on a regular basis and contact with
senior executives within the Group is
sought and encouraged.
Diversity
Vacancies on the Board are filled
following a rigorous evaluation of
candidates who possess the required
balance of skills, knowledge and experience,
using recruitment consultants where
appropriate. The process for the appointment
of Non-Executive Directors is managed
by the Nomination Committee.
The Company recognises the importance
of diversity at Board level and the Board
comprises individuals with a wide range
of skills and experience from a variety of
business backgrounds. Our current female
representation on the Board is 29%.
Non-Executive Directors are appointed to
the Board following a formal, rigorous and
transparent process, involving external
recruitment agencies, to select individuals
who have a depth and breadth of relevant
experience, thus ensuring that the selected
candidates will be capable of making an
effective and relevant contribution to the
Board. The process for the appointment of
Non-Executive Directors is managed by
the Nomination Committee.
Terms of appointment and time
commitment
All Non-Executive Directors are employed
on contracts of one month’s notice by
either side. All Non-Executive Directors
are expected to devote such time as is
necessary for the proper performance of
their duties. Directors are expected to
attend all Board meetings and committee
meetings of which they are members and
any additional meetings as required.
Induction and professional development
New Directors are given a formal induction
process including details of how the Board
and Committees operate, meetings with
Senior Management and information on
Group strategy, products and performance.
Training and development needs of
Directors are reviewed regularly.
The Directors are kept appraised of
developments in legal, regulatory and
financial matters affecting the Group from
the Company Secretary, the Chief
Executive, the Finance Director and the
Group’s external auditors and advisers.
Professional advice
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.
Board and Committee evaluation
The performance evaluation of the
Board, its Committees and Directors is
undertaken by the Chairman annually
and implemented in collaboration with
the Committee Chairs.
During the year a comprehensive Board
effectiveness evaluation was undertaken.
The evaluation process commenced with
the completion of a questionnaire for each
separate review, compilation of a summary
of the results and feedback obtained
followed by discussion between the
participants. The Board recognises that
evaluation of its performance is important
in enabling it to realise its maximum
potential. The process gives the Directors
the opportunity to identify areas for
improvement both jointly and individually
through the use of questionnaires and
open discussion.
Election and re-election of Directors
At each Annual General meeting the
shareholders shall vote on resolutions
to both elect any Director who has been
appointed since the last Annual General
Meeting and also re-elect any Director
who has not been appointed, elected or
re-elected at one of the two previous
Annual General Meetings.
Any Non-Executive Directors with
service greater than nine years are
subject to re-election at each Annual
General Meeting.
Risk Management
The Group’s corporate objective is to
maximise long-term shareholder value.
In doing so, the Directors recognise that
creating value is a reward for taking and
accepting risk. The Directors consider risk
management to be crucial to the Group’s
success and give a high priority to ensuring
that adequate systems are in place to
evaluate and limit risk exposure.
Internal Control
The Board are responsible for the Group’s
system of internal control and for
reviewing its effectiveness. In the context
of the Group’s business any such system
can only reasonably be expected to manage
rather than eliminate risks arising from its
operations. It can therefore only provide
reasonable and not absolute assurance
against material loss or misstatement.
Going Concern
In carrying out their duties in respect
of going concern, the Directors carry
out a review of the Group’s financial
position and cash flow forecasts for the
foreseeable future. These are based
on a comprehensive review of revenue,
expenditure and cash flows, taking into
account specific business risks and the
current economic environment.
52
53
Report of the Audit Committee
Report of the Remuneration Committee
For further details on Going Concern
and the possible impact of the Covid-19
pandemic, please refer to the CEO Review
(pages 08 to 10) and the CFO Review
(pages 12 to 16).
Relations with shareholders
The Board appreciates that effective
communication with the Company’s
shareholders and the investment
community as a whole is a key objective.
The Chairman’s Statement, the Chief
Executive’s Statement and the Strategic
Report and Financial Review, together with
the information in the Annual Report of
the Group, provide a detailed review of
the business. The Executive Directors have
overall responsibility for ensuring effective
communication and the Company
maintains a regular dialogue with its
shareholders, mainly in the periods
following the announcement of the interim
and final results, but also at other times
during the year. The Board encourages
the participation of shareholders at its
Annual General Meeting, notice of
which can be found on the Company’s
website. The Company’s website
‘www.jamescropper.com’ is regularly
updated and provides additional
information on the Group.
Notification of the Annual General
Meeting will be circulated to shareholders
three weeks before the date of the meeting.
Feedback from the shareholders attending
the Annual General Meeting and attendees
at presentations to major shareholders
and potential investors are discussed
by the Board.
Annual General Meeting
At every AGM, Directors provide updates
on the progress of the business and insights
into different areas of the business, and
allows the opportunity for questions on this
or any of the resolutions before the meeting.
The Company proposes separate resolution
for each issue and specifically relating to the
Reports and Accounts. The Company
ensures all proxy votes are counted and
indicates the level of proxies on each
resolution along with the abstentions after
it has been dealt with on a show of hands.
After the meeting, shareholders have the
opportunity to talk informally to the Board
and raise any further questions or issues
they may have.
Andrew Hosty is the Senior Independent
Non-Executive Director.
Jim Aldridge, Company Secretary
21 June 2021
REPORT OF THE AUDIT COMMITTEE
"I AM PLEASED TO INTRODUCE THE AUDIT COMMITTEE
REPORT FOR THE PERIOD ENDED 27 MARCH 2021.
DURING THE YEAR, THE AUDIT COMMITTEE HAS BEEN
REVIEWING THE ADDITIONAL CHALLENGES FACED BY
THE BUSINESS AS A RESULT OF THE COVID -19 PANDEMIC
AND MONITORING THE ACTIONS TAKEN BY THE EXECUTIVE
DIRECTORS IN RESPONSE TO IT TO ENSURE THAT THE
BUSINESS EMERGES AS A STRONGER COMPANY ABLE
TO DELIVER ITS GROWTH PLANS."
The Audit Committee provides
independent scrutiny and challenge to
ensure that the Group presents a true and
fair view of its performance, focusing on
the accuracy, integrity and communication
of financial reporting.
Composition
The Committee comprises the
following members:
• Jim Sharp (Chair)
• Lyndsey Scott
• Dr Andrew Hosty
At the AGM last year, a high proportion
of votes cast were against or abstained
on three resolutions. The Board
acknowledges and is addressing this.
The Board has held discussions with
key shareholders and consulted with
our Nomad and other external advisors.
We understand the reasons for the voting
results and have put in place an action plan
to address them, where it is believed that
changes should be made, or explain further
where it is agreed that there are compelling
reasons not to change. Full details of this
plan are laid out on page 51 of the Annual
Report. The pandemic has delayed the
implementation of some items in this plan,
most of which will come into effect in the
financial year beginning April 2021.
The following changes affecting the Audit
Committee have been implemented:
• Our Chairman, Mark Cropper, stepped
down from the Audit Committee in
December 2020.
• It was agreed that the appointment of
Chair of the Audit Committee will
be reviewed annually to ensure their
continued independence of character
and judgement.
Two of the Committee members are
independent Non-Executive Directors,
with the chair having been a Non-
Executive Director for eleven years.
Following a Board review and discussions
with external advisers, it was agreed by the
Board that the Chair of the Committee for
the next year shall remain with Jim Sharp,
who is considered to be independent in
judgement and character by the Board.
All Committee members have relevant
knowledge both of the sectors in which
the Group operates and of the Group itself,
and are considered to have appropriate
knowledge and understanding of
financial matters.
The Committee is regularly supported by
the Chief Executive, Chief Financial
Officer and Company Secretary.
This composition allows the Committee to
maintain appropriate levels of objectivity
and independence when providing
assurance over the Group’s systems,
operations and financial probity.
Role of the Committee
The Committee operates under formal
terms of reference, reviewed annually.
The Committee’s agenda included the
regular matters reserved for its review
during the annual financial reporting cycle
which has ensured it has appropriately
discharged its responsibilities during
the year, having operated in compliance
with relevant legal, regulatory and
other responsibilities.
Auditors
BDO were appointed as auditors by
the Board in 2018, and reappointed
by shareholders at the Annual General
Meeting in July 2020.
External audit
The Committee is responsible for
overseeing relations with the external
auditor, including the approval of their
terms of engagement and makes
recommendations to the Board on their
remuneration and appointment and,
where appropriate, reappointment based
on reviews of audit effectiveness.
The Committee meets with the Auditor
every year to review and agree the audit
plan. In addition, the Auditor reports back
to the Audit Committee on the outcome
and findings following each audit.
The Committee continues to provide
independent and robust challenge to
management and our auditors to ensure
there are effective controls in place
and appropriate judgements made.
Principal risks
The principal risks were reviewed during
the year and are considered by the Board
throughout the year. Our principal
risks can be found on pages 20 to 25
in the Strategic Report section of the
Annual Report.
We continue to develop our cultural
people-driven approach to risk
management, which we believe
encourages focus on prevention
rather than reaction to risks arising.
Jim Sharp, Chair to the Audit Committee
21 June 2021
54
55
Report of the Remuneration Committee
Report of the Remuneration Committee
REPORT OF THE REMUNERATION COMMITTEE
"I AM PLEASED TO INTRODUCE THE DIRECTORS’
REMUNERATION REPORT FOR THE PERIOD ENDED 27
MARCH 2021. THIS REPORT INCLUDES MY STATEMENT,
THE ANNUAL REMUNERATION REPORT AND SETS
OUT OUR DIRECTORS’ REMUNERATION POLICY."
Our policy is set out in the
following pages, with a summary
of key principles provided below:
• Fixed levels of remuneration are set at an
appropriate level for each individual. In
setting these levels, the Remuneration
Committee takes into account the levels
of fixed remuneration for similar
positions with comparable status,
responsibility and skills. This will
ensure that we can attract and retain
the right individuals needed to
grow the Group.
• Recognising our strategic objectives and
the need to deliver progressive returns
for our shareholders, the Executive
Directors are eligible to participate in
an Annual Bonus Scheme and a Long
Term Incentive Plan (LTIP).
Business context and Remuneration
Committee decisions on remuneration
It is our intention that the remuneration
policy reflects and is aligned with the
Group’s long-term strategy and supports
the achievement of the strategic objectives.
The remainder of this report is split
into the following two sections:
• Annual Report on Remuneration
providing details of the payments
made to Directors in the period
ended 27 March 2021.
• Directors’ Remuneration Policy
setting out the Group’s current
remuneration policy.
Lyndsey Scott, Chair of the
Remuneration Committee
21 June 2021
Throughout a year dominated by the
unprecedented challenges presented
by Covid-19, the Remuneration
Committee was impressed by the
extensive actions taken by the Directors
and all James Cropper employees to
prioritise health and safety and to
safeguard our business financially.
Swift and thorough action was taken to
introduce safe practices of work on site,
remote working was immediately enabled
and a clear business strategy was built and
deployed. Commitment to intensive and
continuous communications protocols, led
by the Chief Executive Officer, has been
very well received by all colleagues and has
delivered strong stability in volatile times.
The Chief Finance Officer and her team
prepared a number of scenarios to assess
the potential impact of the pandemic and
these scenarios, with associated well
executed plans, supported our ability to
protect the health and wellbeing of our
colleagues, support customers and suppliers
and reduce costs, all with the aim of
managing cash to protect liquidity and
safeguard the future of the business.
Working within this landscape the
Remuneration Committee was reassured to
see high levels of restraint relating to pay
by the Executive Directors. Specifically, in
consultation with the unions, it was agreed
that the previously agreed pay increase
would be suspended for at least 12 months
and the bonus achieved from the record
results of 2020 would be deferred until the
Board were comfortable that the Group
could pay the bonuses without
compromising liquidity. The decision
affected all employees, including directors.
In addition, with the Group needing to use
furlough arrangements and the JRS scheme,
a number of senior managers and Directors,
including the Non-Executive Directors and
the Chairman also voluntarily reduced their
salaries, or reduced their holidays, during
the major furlough periods in support of
the business. In addition, all pay reviews
and bonus schemes, apart from the Long
Term Incentive Awards were suspended
for all employees, including Directors.
As we move forward, The Remuneration
Committee will be focused upon supporting
performance for a strong recovery and also
the retention of talent for a strong and
sustainable future.
The Remuneration Committee would like
to thank the Executive Directors, managers
and all employees for their dedication,
commitment and resilience throughout this
difficult year, which has protected the
business and help prepare for continued
growth. A true example of our Values of
Forward Thinking, Responsible and Caring.
At the AGM last year, three resolutions
raised a high proportion of voting
against or abstention, which the Board
acknowledges and will be addressing.
As one of the independent directors of
the Board, I have been reviewing the
matter, particularly with one of the
resolutions being approval of the
Remuneration Report.
Throughout the year, the Board have
held discussions with key shareholders,
and consulted with external advisors and
our nomads. The reasons for the negative
voting have been understood with an action
plan in place to address, where it is agreed
that changes should be made, or explain
further where it is agreed that there
are strong reasons not to change.
However, due to the impact of the
pandemic, most of the action plan is to
take place in the year beginning April 2021.
Focus for the new year
Following discussions around the negative
voting at the last AGM, a part of the action
plan is that the Board has agreed to
undertake a review of the remuneration
construct of the Group Chairman in the
next 12 months. The Chairman remains
a key member of the Remuneration
Committee and, like all directors,
abstains from any matters discussed
that may give rise to any conflict
of interest. The complete action plan can
be found on page 51 of the Annual report.
The Committee plans to review all reward
schemes for the Executive directors in the
new financial year, to be approved for the
year beginning April 2022. For the period
ended 27 March 2021, all pay reviews and
bonus schemes, apart from the Long
Term Incentive Awards were suspended.
The Committee and the Board felt that
it is important to retain our talented
leadership and also mindful of retaining
a strong pipeline for succession planning.
For this reason, the three year LTIP award
was continued in the period just ended.
It is important to retain our talented
workforce and be able to recruit the
best candidates for vacancies.
With this in mind, the bonus schemes for
the Executive Directors and senior managers
will be reinstated for the coming year, until
the full review of all awards is completed.
Our directors’ remuneration policy
Our remuneration policy is designed to
attract and retain individuals with the
talent, experience and leadership skills
required to enable us to achieve our
strategic objectives. We believe that this,
in turn, will help stimulate sustainable
value creation over the long term.
Annual Remuneration Report for 2021
Remuneration Committee
The Remuneration Committee
comprises the following members:
• Lyndsey Scott
• Mark Cropper
• Jim Sharp
• Dr Andrew Hosty
The Remuneration Committee has
responsibility for setting the remuneration
policy for all Executive Directors and the
Chairman of the Board, including pension
rights and any compensation payments.
This includes reviewing the performance
of the Executive Directors and determining
their terms and conditions of service, their
remuneration and the grant of any options,
having due regard to the interests of
the shareholders.
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
of their own salary or rewards.
In setting the remuneration policy,
the Remuneration Committee takes into
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 27 March 2021 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.
account the objective to attract, retain and
motivate executive management of the
calibre required to run the Group
successfully. Our remuneration policy is
closely aligned with our long term strategic
goals and our approach to risk management.
The Remuneration Committee also
recognises that a significant proportion
of remuneration should be structured so as
to link rewards to corporate and individual
performance and be designed to promote
the long-term success of the Group.
The Remuneration Committee meets at
least twice a year and otherwise as required.
• To recognise the importance of ensuring
that employees of the Group are
effectively and appropriately rewarded.
• To operate a remuneration policy that is
a mix of fixed and variable pay. Variable
pay is both short term and long term.
• To align Directors’ interests with those
of the Group.
• To have a pay for performance approach.
• To provide a market competitive level
of remuneration to enable the Group to
attract and retain high level individuals, to
support the ongoing success of the Group.
Remuneration policy
Service Contracts
The Remuneration Committee will
periodically review the policy to confirm
that our remuneration framework
continues to support the delivery of our
business objectives. The next review will
take place in the year beginning April 2021.
In developing this policy, the Remuneration
Committee takes into account the best
interests of the business and the agreed
terms and conditions of employment for
each Director of the Group. Our overall
remuneration philosophy aims:
Director
Notice Period
M A J Cropper (Chairman)
12 months
P I Wild
S A Adams
I M Maddock
M Thompson
P J Willink
6 months
6 months
6 months
12 months
12 months
Non-Executive Directors are employed on
contracts of one month’s notice by either side.
James Cropper
FTSE AIM All Share
FTSE All Share
2000
1800
1600
1400
1200
1000
800
600
400
200
0
d
e
s
a
b
e
R
03/11
03/12
03/13
03/14
03/15
03/16
03/17
03/18
03/19
03/20
03/21
56
57
Report of the Remuneration Committee
Report of the Remuneration Committee
Details of Directors’ Remuneration
PURPOSE AND LINK TO STRATEGY
OPERATION
Salary and Fees
Benefits
Annual Bonus
Pension Costs
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
£’000
Executive
M A J Cropper
P I Wild
S A Adams
I M Maddock
M Thompson
K D Watson1
(resigned 1 August 2020)
77
204
152
155
159
218
80
204
161
161
161
161
11
40
22
22
22
9
11
40
22
22
22
22
P J Willink
148
135
22
22
Non-Executive
Dr A Hosty
J E Sharp
L J Scott
(appointed 1 August 2019)
D R Wilks
(resigned 31 July 2019)
29
34
29
31
36
21
-
13
-
-
-
-
-
-
-
-
1,205
1,164
148
161
1 Includes severance costs of £73k
Long Term Incentive Plan
-
-
-
-
-
-
-
-
-
-
-
-
-
45
42
35
13
35
5
10
10
10
10
8
5
10
10
10
10
10
93
254
184
187
191
235
96
299
235
228
206
228
30
17
10
187
203
-
-
-
-
-
-
-
-
-
-
-
-
29
34
29
-
31
36
21
13
200
70
71
1,423
1,596
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 period to 27 March 2021 under the Plan to Executive Directors were as follows:
Options at
28 March
2020
Options
granted
in period
Mid-market
price (£)
of options
granted
13,286
14,153
£10.795
6,993
6,993
6,993
6,993
7,449
7,449
7,449
-
£10.795
£10.795
£10.795
-
Options
exercised
in period
Options Options at
lapsed in 27 March
2021
period
-
-
-
-
-
-
-
-
-
27,439
14,442
14,442
14,442
(6,993 )
-
All figures in £’000
P I Wild
S A Adams
I M Maddock
M Thompson
K D Watson1
1 Resigned 1 August 2020
Cash-settled options under the LTIP
Conditional cash awards (“Cash Awards”) grant participating employees a conditional right to be paid a cash amount based on the proceeds
of the sale of a specified number of Ordinary Shares following vesting of the award. Under the LTIP Plan, Conditional Cash awards were
granted to the following Executive Directors:
All figures in £’000
M A J Cropper
P J Willink
Options at
28 March
2020
Options
granted
in period
Mid-market
price (£)
of options
granted
Options
exercised
in period
Options Options at
lapsed in 27 March
2021
period
3,364
5,877
3,583
6,948
£10.795
£10.795
-
-
-
-
6,947
12,825
Base Salary
To reflect market value of the role and individual’s
performance and contribution and enable
the Group to recruit and retain directors
of sufficient calibre required to support
achievement of both short and long-term goals.
The salary of each Executive Director will be reviewed annually by the Remuneration Committee
without any obligation to increase such salary.
Base salaries are benchmarked against companies of a comparable size with a targeted
approach of median positioning against the market, subject to satisfactory performance.
There may be reviews and changes to base salary during the year if considered appropriate
by the Remuneration Committee.
The Remuneration Committee will take account of relevant comparator group data as well
as pay increases awarded to other employees within the Company.
Non-Executive Directors’ Salaries
To attract and retain the right individuals
required to support the achievement of
both short and long-term goals.
Benefits
Salaries for Non-Executive Directors are based on market practice and are reviewed by the Board each year.
The maximum aggregate amount of salaries that the Company may pay to all the Directors who do not
hold executive office for their services is £200,000 per annum, or such larger amount as the Company
may by ordinary resolution decide.
To attract and retain the right individuals and
level of talent required to support achievement
of both short and long term goals.
Each Executive Director is awarded a benefit allowance which allows individuals to select from a range of
personal benefits including, but not limited to, private medical insurance and a company car. Any unused
monetary sum is paid to the individual at the end of the tax year via the PAYE system.
The benefit allowance is reviewed periodically by the Remuneration Committee.
Pension
To attract and retain the right individuals and
level of talent required to support achievement
of both short and long term goals.
Annual Executive Bonus Plan
To reward the delivery of the Group’s
annual financial and strategic goals.
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. Director pension arrangements are in line with the pension arrangements for
the general workforce, depending on what pension scheme they are a member of. Non-Executive Directors
are not in any of the Company pension schemes.
The annual cost borne by the Company is shown in the Directors’ Remuneration table.
The annual bonus award will depend on the level of performance delivered against specific targets
measured against three categories:
•
•
•
Up to 10% of base salary on achieving budgeted earnings;
Up to 10% of base salary for year on year improvement in earnings.
Up to 5% of base salary on achieving working capital targets.
The Executive Directors are eligible to participate in the Employee Group Bonus Scheme, with any
award made under this scheme deducted from the award made under the Annual Executive Bonus Plan.
The Annual Executive Bonus Plan is reviewed periodically by the Remuneration Committee.
Long Term Incentive Plan (LTIP)
To incentivise the delivery of key
performance measures over the long term.
Under the plan, awards to acquire ordinary shares in the Company, or cash equivalent, can be made to
Executive Directors and other employees within the Group, as selected by the Remuneration Committee.
To retain key executives and increase their share
ownership in the Company, aligning their
interests with those of shareholders.
The number of options that can be awarded to any participant in a financial year under the Plan,
determined by reference to the Company’s 20 day average mid-market share price at the time
of the award, is limited to a maximum of 75% of the participant’s base salary.
The LTIP awards are subject to the achievement of certain performance conditions as set out below.
CONDITIONS FOR LTIP AWARDS
Earnings per share conditions
•
•
•
Awards will vest in full on the third anniversary of the granting of the award, provided the growth in the Company’s earnings per share, adjusted for IFRS
pension adjustments and exceptional items over that period, exceeds the increase in the retail price index (“RPI”) plus 20% per annum;
Awards will vest proportionally between 25% and 100% on the third anniversary of the granting of the award, provided the adjusted earnings
per share over that period equate to or exceed the increase in RPI plus 6% but less than 20% per annum;
Awards will lapse on the third anniversary of the granting of the award if the growth in the Company’s adjusted earnings per share does not
equate to at least the increase in RPI plus 6% per annum.
EBITDA
For the purposes of the LTIP award, EBITDA is defined as:
Operating Profit before interest, tax, depreciation and amortisation and excluding IFRS pension adjustments and exceptional items.
58
59
Compliance with the QCA Corporate Governance Code
COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE
PRINCIPLE
COMPLIANCE
Directors’ Report
DIRECTORS’ REPORT
1. Establish a strategy and
business model which
promote long-term value
for shareholders
2. Seek to understand and
meet shareholder needs
and expectations
3. Take into account
wider stakeholder and
social responsibilities
and their implications
for long-term success
•
•
•
•
•
•
•
•
The Group strategy is set out on pages 04 to 25 in the Strategic Report section of our Annual Report.
The Executive Committee hold quarterly away days to focus on the Group’s rolling strategic plan.
The Board holds two strategy days each year.
The strategy is communicated to all employees at half yearly employee briefings.
Investor roadshow meetings are undertaken at least twice per year following the preliminary and interim announcements.
Shareholders are invited to the AGM held in Burneside where all Board members interact with our shareholders on a one
to one basis and take questions as they arise.
Shareholder feedback is received from our Nomads and all shareholder feedback is discussed at Board meetings.
Further reading:- Section 172(1) statement on pages 26 to 27 of the Annual Report.
Employees
•
Regular meetings take place
with employees to share strategy,
keep employees updated and
seek feedback.
The Company conducts a biennial
employee survey with the latest
level of engagement (2019) at 68%.
•
Customers
•
Communications with our
customers is fundamental to our
success. The Group engages in
continuous communications with
our customers to understand their
needs, share our plans, and nurture
the collaborative partnership.
Suppliers
• Our collaborative attitude allows us
to claim a 100 year partnership with a
supplier and at the same time build
new partnerships with new suppliers.
Community
•
The Company has very close links
with the local community built on
our 175 year presence at Burneside.
The Group supports local
organisations through its
community support team with
donations this year amounting to
£10,000.
Environment
• We are proud to introduce
initiatives such as ColourformTM
and CupCyclingTM, recycling
coffee cups or promoting the use of
pulp based packaging rather than
plastic. From efficient water usage
to use of solar energy, sustainability
and environmental protection are
key to our future.
• Further reading – Section 172 (1)
statement on pages 26 to 27
of the Annual Report.
4. Embed effective risk
management, considering
both opportunities and threats,
throughout the organisation
5. Maintain the Board as a
well-functioning, balanced
team led by the Chair
6. Ensure that between them the
Directors have the necessary
up-to date experience, skills
and capabilities
7. Evaluate Board performance
based on clear and relevant
objectives, seeking
continuous improvement
8. Promote a corporate culture
that is based on ethical
values and behaviours
• The Group significant risks are reviewed throughout the year.
• Risk is a fixed item agenda for the Executive Committee meetings.
• The significant risks are disclosed in the Strategic Report within the Annual report on pages 20 to 25.
• The Board is led by our Non-executive Chairman, Mark Cropper.
• The Board comprises four Non-Executive Directors and five Executive Directors.
• The members of the Board maintain the appropriate balance of experience, independence and knowledge of the Company.
Details of the composition, operation and responsibilities, together with details of the Sub-Committees can be found in the
•
Governance section of the Annual Report on pages 48 to 62.
•
•
•
•
•
•
•
•
•
•
•
The current Board has significant sector, financial and PLC experience.
Between them, the Executive Directors have many years of broad experience in the nonwoven fibre manufacturing industry.
With the support of our NOMAD and advisors, the Board training and development needs are maintained.
Biographies on all Directors are shown on pages 48 to 49 of the Annual Report.
A comprehensive board evaluation is undertaken annually commencing with a questionnaire, compilation of a summary
of results and feedback at a board meeting. The results are discussed and actions taken to improve in areas where required.
The process gives the Directors the opportunity to identify areas for improvement both jointly and individually through
the use of questionnaires and open discussion.
The Remuneration Committee evaluates Executive Director performance alongside remuneration and reward.
With regards to financial performance, the Audit Committee meets with the Auditors to review the plan for
the year-end audit, followed up by a meeting to review the results of the audit.
Training and development needs of Directors are reviewed regularly.
Our values and culture are embodied in the Group’s management behaviour, our recruitment and employee
development processes.
Our values and behaviours help us ensure we provide a safe, rewarding and interesting place to work as well
as an environment that attracts new talent.
• Our values can be found at the start of the Annual Report.
9. Maintain governance
structures and processes
that are fit for purpose and
support good decision
making by the Board
• The Board meets six times per year plus a further two strategy days.
• The Group has robust internal controls, delegated authorities and authorisation processes.
• The controls are subject to review both internally and externally by our Auditors.
• A culture of continuous improvement is encouraged.
• The Group website describes the roles and terms of reference for the Committees.
• Continuous improvement can be found on page 50 of the Annual Report.
10. Communicate how the
Company is governed and is
performing by maintaining a
dialogue with shareholders and
other relevant stakeholders
• Communications with shareholders are explained in Principle 2 above.
•
In addition to the interim and full year investor roadshows, meetings with our NOMADS, prospective investors and other
stakeholders arise during the year.
The work of the subcommittees is described in the Governance section of the Annual report on pages 48 to 62.
The website includes historical announcements, copies of the Annual and Interim reports and copies of any presentations made.
•
•
The Directors present their Annual
Report and the audited financial
statements of James Cropper Group
for the 52 weeks ended 27 March 2021.
Principal activities
The principal activity of the Group
comprises the manufacture of specialist paper
and advanced materials. There have not
been any significant changes in the Group’s
principal activities in the year under review.
The Directors are not aware, at the date
of this report, of any likely major changes
in the Group’s activities in the next year.
Review of business and future
developments
The Chairman’s Statement on pages 06 to 07,
the Strategic Report on pages 04 to 46 and
the Chief Financial Officer’s Review on
pages 12 to 16, report on the performance
of the Group for the period ended 27 March
2021 and its prospects for the future.
The Chairman’s Statement, the Strategic
Report and this report have been prepared
solely to provide additional information
to shareholders to assess the Group’s
strategies and the potential for those
strategies to succeed. These statements are
made by the Directors in good faith based
on the information available to them up to
the time of their approval of this report
and such statements should be treated with
caution due to the inherent uncertainties,
including both economic and business risk
factors, underlying any such forward
looking information.
The Board
The Directors who served during
the year under review were:
Mark Cropper; Phil Wild; Steve Adams;
Isabelle Maddock; Martin Thompson;
Dave Watson (Resigned 1 August 2020);
Patrick Willink; Dr Andrew Hosty;
Jim Sharp; Lyndsey Scott.
Details of the Director’s remuneration are
shown in the Report of the Remuneration
Committee on pages 56 to 59. Details of
the Directors’ interests in the share
capital of the Company are set out below.
The biographies of the Directors as at the
date of this report are on pages 48 to 49.
No interim dividend was paid on
during the year and the Directors
are not recommending a final dividend
for the year. Full details of dividends
in respect of the year ended 27 March
2021 are given in note 7 of the
financial statements.
Corporate governance
A report on Corporate Governance
is set out on pages 48 to 62, and forms
part of this report by reference.
Health & Safety
The Group is committed to providing a
safe working environment for all employees.
Group policies are reviewed regularly to
ensure that policies relating to training, risk
assessment and accident management are
appropriate. Health & safety issues are
reported at each Board meeting and
Executive Committee meeting.
Charitable and political donations
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 £10,000
(2020:£21,000) were made for
various local charitable purposes.
Engagement with key stakeholders
In accordance with the Large and
Medium-sized Companies and Groups
(Accounts and Reports) Regulations
2008 (as amended by the Companies
(Miscellaneous Reporting) Regulations
2018), the Company’s statement on
engagement with, and having due regard
to, the interests of key stakeholders is
contained within the Section 172(1)
statement in the Strategic Report on pages
26 to 27 (also known as the Section 172
statement). The section 172 statement also
summarises how the directors have had
regard to the need to foster the Group’s
business relationships with suppliers,
customers and others and the effect this
regard as had, including on the principal
decisions made in the period.
Results and dividends
The results for the period are shown
in the Statement of Comprehensive
Income on page 71.
Employee involvement and policy
regarding disabled persons
The Group’s employees are its most
important asset.
The Group operates an equal opportunities
policy that aims to treat individuals fairly
and not to discriminate in any way.
Regular consultative meetings are held
with the trade union representatives to
advise them on all aspects of Group
developments. Communications with
all employees continues through monthly
and bi-annual briefings on performance,
safety and any other relevant developments.
It is the Group’s policy to give equal
opportunity when considering applications
from disabled persons where the job
requirements are considered to be within
their ability. In the event of employees
becoming disabled, every effort is made
to ensure that their employment with
the Group continues and that appropriate
training is arranged. It is the policy
of the Group that the training, career
development and promotion of a disabled
person should, as far as practicable,
be identical to that of a person who
does not suffer from a disability.
For further information on (i) how
directors have engaged with employees
and (ii) how directors have regard,
including on the principal decisions
taken by the company during the
financial period, please refer to the
section 172 (1) statement on pages 26 to 27.
Environmental policy
James Cropper Group recognises
the importance of its environmental
responsibilities and designs and implements
policies to reduce any damage that might be
caused by the Group’s activities. Initiatives
designed to minimise the Group’s impact
on the environment include safe disposal
of waste, recycling and reducing energy
consumption. Further details can be found
in the sustainability report on pages 38
to 42 and the streamlined energy carbon
report on page 43.
Share capital
Full details of the authorised and
issued share capital of the Company
are set out in note 22 to the consolidated
financial statements.
Authority to allot shares
A resolution will be proposed to
renew an existing authority which
expires at the Annual General Meeting
to give the Directors authority to exercise
the powers of the Company to allot
unissued shares.
60
60
61
Directors’ Report
Directors power to disapply
pre-emption rights
A resolution will be proposed at the
Annual General Meeting 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.
Going Concern
The Chairman’s Statement and the Chief
Executive’s Statement on pages 06 to 10,
outline the business activities of the Group
along with the factors which may affect
its future development and performance.
The Chief Financial Officer’s Review (pages
12 to 16) discusses the Group’s financial
position, along with details of its cash flow
and liquidity. Note 19 to the financial
statements sets out the Group’s financial
risks and the management of those risks.
Having prepared management forecasts and
made appropriate enquiries, the Directors
are satisfied that the Group has adequate
resources for the foreseeable future.
Accordingly, they have continued to adopt
the going concern basis in preparing the
Group and Company financial statements.
Disclosure of information
to the Auditor
BDO LLP has expressed its willingness
to continue in office. Its appointment
and authority for the Directors to agree
its remuneration will be proposed at
the Annual General Meeting.
Each of the Directors as at the date of
approval of this Annual report confirms that:
• So far as the Director is aware there is no
relevant audit information of which the
Company’s Auditor is unaware; and
• The Director has taken all steps
he/she ought to have taken as a
Director in order to make himself/herself
aware of any relevant audit information
and to establish that the Company’s
Auditor is aware of that information.
Annual General Meeting
Notice of Annual General Meeting,
which sets out the resolutions to be
proposed at the forthcoming Annual
General Meeting will be posted to
shareholders at least three weeks before
the date of the AGM.
The meeting will be held at The Bryce
Institute, Burneside, Kendal, Cumbria
LA9 6QZ on Wednesday 28 July 2021
at 11am.
Substantial Interests
Shareholdings in excess of 3% of the issued capital at 1 May 2021 were as follows: -
Name of Shareholding
Number of Shares
% holding
Note
Cropper Family – Beneficial and Non Beneficial Interests
Willink Family – Beneficial and Non Beneficial Interests
Acland Family – Beneficial Interests
Total
Liontrust Asset Management Ltd
Unicorn Asset Management Ltd
3,037,456
521,583
52,386
3,611,425
1,119,868
370,549
31.8
5.5
0.6
37.8
11.7
3.9
1
1. The Cropper, Willink and Acland families are related and are deemed to be acting in concert with a total holding of 37.8% in the Company.
Details of Directors’ Interests
The interests in the shares of the
Company of those Directors serving
at 27 March 2021 were as follows:
Any material related party
transactions between the Directors
and the Company are set out in
note 28 to the consolidated financial
statements. Further information
relating to the interests of the
Directors regarding options on
ordinary shares is given in the Report
of the Remuneration Committee
on page 56. Non-beneficial interests
include shares held jointly as
trustee with other Directors.
Approved by the Board of Directors
on 21 June 2021 and were signed on
its behalf by
Mark Cropper, Chairman
At 27 March 2021
Options on
Ordinary
Shares
Ordinary
Shares
At 28 March 2020
Options on
Ordinary
Shares
Ordinary
Shares
Director
Interest
M A J Cropper
Beneficial
Non-beneficial
1,851,146
559,571
-
-
1,834,802
559,571
-
-
25,572
27,439
25,572
13,286
1,099
11,741
31,127
58,079
69,434
500
64,951
11,380
64,951
500
64,951
14,442
14,442
14,442
-
-
-
-
-
-
-
-
1,099
12,241
31,127
58,079
69,434
500
64,951
11,380
64,951
500
64,951
6,993
6,993
6,993
-
-
-
-
-
-
-
-
P I Wild
S A Adams
Beneficial
Beneficial
I M Maddock
Beneficial
M Thompson
Beneficial
P J Willink
Dr A Hosty
J E Sharp
L J Scott
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Beneficial
Non-beneficial
62
CONTENTS
STRATEGIC REPORT
03
Financial Highlights
Financial Summary
Chairman’s Letter
Chief Executive’s Review
Chief Financial Officer's Review
The Pension Report
Risk Management
Stakeholders Relationship Statement
Technical Fibre Products
ColourformTM
James Cropper Paper
Sustainability - ESG Committee
Streamlined Energy & Carbon Report
Pride Excellence Awards
People
GOVERNANCE
Board of Directors
47
Corporate Governance Statement
Report of the Audit Committee
Report of the Remuneration Committee
QCA Principles
Directors’ Report
FINANCIAL STATEMENTS
63
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Group Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes In Equity
Notes to the Financial Statements
Shareholder Information
64
65
71
72
73
74
76
112
Statement of Directors’ Responsibilities
Independent Auditor’s Report
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
INDEPENDENT AUDITOR’S REPORT TO
THE MEMBERS OF JAMES CROPPER PLC
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 financial statements for each
financial year. Under that law the Directors
have elected to prepare the Group and
Company financial statements in accordance
with International Financial Reporting
Standards as adopted by the European
Union (IFRSs as adopted by the EU).
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 Company and of their profit or loss
of the Group for that period.
The Directors are also required to prepare
financial statements in accordance with the
rules of the London Stock Exchange for
companies trading securities on AIM.
In preparing these financial statements,
the Directors are required to:
• select suitable accounting policies
and then apply them consistently;
• make judgements and accounting
estimates that are reasonable
and prudent;
• state whether they have been prepared in
accordance with IFRSs as adopted by the
EU, subject to any material departures
and explained in the financial statements;
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the
Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the Company and
enable them to ensure that the financial
statements comply with the Companies
Act 2006. They are also responsible for
safeguarding the assets of the Company
and hence for taking reasonable steps
for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for ensuring
the Annual Report and the financial
statements are made available on a website.
Financial statements are published on
the Company’s website in accordance
with legislation in the United Kingdom
governing the preparation and
dissemination of financial statements,
which may vary from legislation in
other jurisdictions. The maintenance
and integrity of the Company’s website
is the responsibility of the Directors.
The Directors’ responsibility also extends
to the ongoing integrity of the financial
statements contained therein.
Opinion on the 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 27 March 2021 and of the Group’s
profit for the year then ended;
• the Group financial statements have been
properly prepared in accordance with
international accounting standards in
conformity with the requirements of
the Companies Act 2006;
• the Parent Company financial
statements have been properly prepared
in accordance with United Kingdom
Generally Accepted Accounting
Practice; and
• the financial statements have been
prepared in accordance with the
requirements of the Companies
Act 2006.
We have audited the financial statements
of James Cropper PLC (the ‘Parent
Company’) and its subsidiaries (the
‘Group’) for the year ended 27 March 2021
which comprise the Group Statement of
Comprehensive Income, the Group and
Parent Company Statement of Financial
Position, the Group Statement of Cash
Flows, the Group and Parent Company
Statement of Changes in Equity and notes
to the financial statements, including a
summary of significant accounting policies.
The financial reporting framework that
has been applied in the preparation of the
Group financial statements is applicable
law and international accounting standards
in conformity with the requirements of
the Companies Act 2006. The financial
reporting framework that has been applied
in the preparation of the Parent Company
financial statements is applicable law and
United Kingdom Accounting Standards,
including Financial Reporting Standard
101 Reduced Disclosure Framework]
(United Kingdom Generally Accepted
Accounting Practice).
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards
are further described in the Auditor’s
responsibilities for the audit of the
financial statements section of our report.
We believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remain independent of the Group and
the Parent Company in accordance with the
ethical requirements that are relevant to our
audit of the financial statements in the UK,
including the FRC’s Ethical Standard as
applied to listed entities, and we have
fulfilled our other ethical responsibilities
in accordance with these requirements.
64
65
Independent Auditor’s Report
Independent Auditor’s Report
Conclusions relating to going concern
In auditing the financial statements,
we have concluded that the Directors’
use of the going concern basis of accounting
in the preparation of the financial statements
is appropriate. We consider going concern
to be a key audit matter due to the impact
of Covid-19 on the Group with respect to
the decreased trade. In addition, the inputs
to the forecasts are highly judgemental,
with changes potentially having a
material impact on the conclusion below.
Our evaluation of the Directors’ assessment
of the Group and the Parent Company’s
ability to continue to adopt the going
concern basis of accounting included the
following procedures:
• Challenged the assumptions used in the
Directors’ base case forecast by agreeing
forecasted figures to order pipelines,
comparing actual performance achieved
post year end to the forecast, and
checking that any forecast repayments
of facilities had been considered;,
• Obtained an understanding of the
required financing facilities by reviewing
third party documentation, including the
nature of the facilities, repayment terms,
covenants and attached conditions;
• Assessed the facility and covenant
compliance headroom calculations
with the existing and proposed covenants
on both a base case scenario and the
Directors’ reverse stress test as a result
of the ongoing COVID-19 pandemic;
• Challenged the appropriateness of the
Directors’ assessment of going concern
by testing the mechanical accuracy,
assessing historical forecasting accuracy,
understanding the directors’ consideration
of downside sensitivity and the impact
on facilities and covenants; and
• Considered the adequacy of the disclosures
in the financial statements against the
requirements of the accounting standards.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or conditions
that, individually or collectively, may cast
significant doubt on the Group’s and the
Parent Company’s ability to continue as a
going concern for a period of at least twelve
months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities
of the Directors with respect to going
concern are described in the relevant
sections of this report.
Overview
Coverage
Key audit matters
Materiality
2021 2020
An overview of the scope of our audit
Group profit before tax
Group revenue
Group total assets
Valuation of Defined
Benefit pension scheme
Acquisition accounting
Revenue recognition
including the adoption
and first year application
of IFRS 15
95 % 92 %
90 % 88 %
91 % 89 %
Yes Yes
Yes No
No Yes
Going Concern
Yes Yes
Revenue recognition is no longer considered
to be a key audit matter because IFRS 15
is no longer a new standard for the Group.
Group financial statements as a whole
£200,000 (2020: £260,000), being 5% of 3 year
average of Profit before tax excluding IAS 19
adjustments (2020: 5% of Profit before tax)
Our Group audit was scoped by obtaining an understanding
of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of material
misstatement in the financial statements. We also addressed
the risk of management override of internal controls,
including assessing whether there was evidence of bias
by the Directors that may have represented a risk of
material misstatement.
The Group manages its operations from one principal location
in the UK as well as locations in the USA and China and has
common financial systems, processes and controls covering
all significant components. The audit of all significant
components was performed by the Group audit team.
In assessing the risk of material misstatement to the
Group financial statements, and to ensure we had adequate
quantitative coverage of significant accounts in the financial
statements, of the 19 (2020: 16) components of the Group,
we determined that 5 (2020: 5) components represented
the principal business units within the Group.
For these 5 significant components, we performed a full
scope audit of the complete financial information. For the
remaining components, the group audit team have performed
specified audit procedures on specific accounts within that
component that we considered had the potential for the
greatest impact on the group financial statements, either
because of the size of these accounts or their risk profile.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts
of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
KEY AUDIT MATTER
HOW WE ADDRESSED THE KEY AUDIT MATTER IN THE AUDIT
Defined Benefit Pension Scheme Valuations
As described in Note 2 (accounting policies)
and Note 20 (retirement benefit obligations),
The Group has two defined benefit pension plans
in the UK; the staff scheme and the works scheme.
At 27 March 2021, the Group recorded a net
retirement obligation of £18.4m (2020: £9.4m),
comprising scheme assets of £117.1m (2020: £113.9m)
and scheme liabilities of £135.6m (2020: £121.4m).
The pension valuation is dependent on market
conditions and key assumptions made with input
from the actuary, in particular relating to investment
markets, discount rate, inflation expectations and life
expectancy assumptions.
The setting of these assumptions is complex and
requires the exercise of significant management
judgement with the support of third party actuaries.
A small change in the assumptions and estimates used
to calculate the Group’s pension obligation could have
a significant effect on the Group’s net pension deficit.
As such, the valuation of defined benefit pension
scheme is considered a key audit matter.
Acquisition accounting
As described in Note 24 (business combinations), the
Group has acquired a new subsidiary during the year.
There were £957k of separable intangibles identified,
and £1.3m of goodwill recognised.
The valuation of the intangibles is dependent on a
number of key assumptions, in particular relating to
earn out clauses, discount rate, fair value adjustments
and expected returns.
The setting of these assumptions is complex and
requires the exercise of significant management
judgement with the support of third party experts.
A small change in the assumptions and estimates used
to calculate the valuation of the intangibles could have
a significant effect on the balance sheet.
As such, the acquisition accounting and the resulting
valuation of the intangible assets is considered a key
audit matter.
We assessed the appropriateness of the assumptions underpinning
the valuation of the scheme liabilities.
Specifically we challenged the discount rate, inflation and mortality
assumptions applied in the calculation by using a third party pension
specialist to benchmark the assumptions applied against comparable third
party data and assessed the appropriateness of the assumptions in the
context of the Group’s own position.
In addition we tested the membership data utilised in the valuation of the
scheme to source data by agreeing the membership data to the audited pension
scheme accounts, traced cash amounts paid by the scheme to bank statements
and obtained third party confirmation of the valuation of the pension assets
from the investment managers, along with the investment manager’s internal
AAF reports to gain assurance over the valuation of the assets.
Key observations: No issues were identified from our testing.
We tested a sample of items from the acquisition balance sheet to ensure cut
off between the pre acquisition and post acquisition period had been
correctly performed. We also agreed a sample of transactions from the
acquisition balance sheet to supporting documentation to gain assurance
over the opening position.
We checked that the treatment of deal fees and acquisition costs had
been correctly allocated to the profit and loss account, not capitalised as
debt or equity.
We checked that the amount of contingent consideration (earn outs)
had been calculated correctly by discussing the basis of the calculation with
management and applying sensitivities, and we checked that the earn out
had been included in the cost of the investment. We performed sensitivity
analysis on the earn out scenarios to determine the impact of material
changes to assumptions.
We tested and challenged the inputs to the purchase price allocation exercise
performed to determine the existence and valuation of any separable
intangibles acquired as part of the transaction. We used an internal
valuations specialist to assist us with the challenge on the discount rate
and the model used; they compared the methodology used to industry
guidelines and the outputs to other comparable transactions.
We reperformed the calculation of the resulting investment and goodwill
balance to ensure in line with IFRS 3.
Key observations: No issues were identified from our testing.
66
67
Independent Auditor’s Report
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that
are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group materiality
£200,000 (2020: £260,000)
Basis for materiality
5% of 3 year average of Profit before tax excluding IAS 19 adjustments (2020: 5% of Profit before tax)
Rationale for benchmark adopted
Pre-tax profit is determined to be a stable basis of assessing business performance and is considered to
be the most significant determinant of performance used by shareholders. A 3 year average has been
used to acknowledge the impact of Covid-19 on the 20/21 performance. The IAS 19 adjustment has
been included as this is not representative of the underlying trade of the Group and is a metric used
by the Director’s throughout the financial statements.
Performance materiality
£130,000 (2020: £169,000)
Parent materiality
£75,000 (2020: £97,000)
Basis for materiality
37.5% of Group materiality (2020: 37% of Group materiality)
Rationale for benchmark adopted
Statutory parent company materiality was calculated at 3.5% of Net assets (2020: 3.5% of Net assets)
as its primary function is that of a holding company and therefore return on assets is of the most
interest to the shareholders. However, for the purposes of the group audit, parent company materiality
was restricted to component materiality, which has been calculated based on a percentage of group
materiality (as in prior year).
Performance materiality
£48,750 (2020: £63,050)
Component materiality
Reporting threshold
Our audit work on each significant
component was executed at levels of
materiality applicable to each individual
entity which was lower than group
materiality. Component materiality ranged
from £25,000 to £182,000 (2020: £32,000 to
£227,000). Parent company materiality was
therefore £75,000 (2020: £97,000).
We agreed with the audit committee that
we would report to the committee all
individual audit differences identified
during the course of our audit in excess
of £6,000 (2020: £7,800). We also agreed to
report differences below these thresholds
that, in our view, warranted reporting on
qualitative grounds.
Rationale for performance materiality
benchmark adopted
In considering individual account balances
and classes of transactions we apply a lower
level of materiality in order to reduce to an
appropriately low level the probability
that the aggregate of uncorrected and
undetected misstatements exceeds
materiality. Performance materiality
was therefore set at 65% (2020: 65%) of
materiality for both the Group and Parent.
The level reflects the aggregation risk of
errors. No specific materiality was applied
to defined areas of the financial statements.
Other information
The directors are responsible for the
other information. The other information
comprises the information included in the
annual report and accounts other than
the financial statements and our auditor’s
report thereon. Our opinion on the
financial statements does not cover the
other information and, except to the extent
otherwise explicitly stated in our report,
we do not express any form of assurance
conclusion thereon. Our responsibility is to
read the other information and, in doing so,
consider whether the other information is
materially inconsistent with the financial
statements or our knowledge obtained
in the course of the audit, or otherwise
appears to be materially misstated.
If we identify such material inconsistencies
or apparent material misstatements,
we are required to determine whether
this gives rise to a material misstatement
in the financial statements themselves.
If, based on the work we have performed,
we conclude that there is a material
misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
In the light of the knowledge and
understanding of the Group and Parent
Company and its environment obtained
in the course of the audit, we have not
identified material misstatements in the
strategic report or the Directors’ report.
Matters on which we are required
to report by exception
We have nothing to report in respect of the
following matters in relation to which 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.
Other Companies Act 2006 reporting
Responsibilities of Directors
Based on the responsibilities described
below and our work performed during the
course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to
report on certain opinions and matters as
described below.
Strategic report and Directors’ report
In our opinion, based on the work
undertaken in the course of the audit:
• the information given in the Strategic
report and the Directors’ report for the
financial year for which the financial
statements are prepared is consistent
with the financial statements; and
• the Strategic report and the Directors’
report have been prepared in accordance
with applicable legal requirements.
As explained more fully in the
Statement of Directors’ Responsibilities,
the Directors are responsible for the
preparation of the financial statements
and for being satisfied that they give a true
and fair view, and for such internal control
as the Directors determine is necessary
to enable the preparation of financial
statements that are free from material
misstatement, whether due to fraud
or error.
In preparing the financial statements, the
Directors are responsible for assessing the
Group’s and the Parent Company’s ability
to continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern basis
of accounting unless the Directors either
intend to liquidate the Group or the Parent
Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or
error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance
is a high level of assurance, but is not a
guarantee that an audit conducted in
accordance with ISAs (UK) will always
detect a material misstatement when it
exists. Misstatements can arise from fraud
or error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the
basis of these financial statements.
Extent to which the audit was capable of
detecting irregularities, including fraud
Irregularities, including fraud, are instances
of non-compliance with laws and regulations.
We design procedures in line with our
responsibilities, outlined above, to detect
material misstatements in respect of
irregularities, including fraud. The extent
to which our procedures are capable of
detecting irregularities, including fraud
is detailed below:
Based on our understanding and
accumulated knowledge of the Group
and Parent Company and the sector in
which it operates we considered the risks
of acts by the Group and Parent Company
which were contrary to applicable laws and
regulations, including fraud, and whether
such actions or non-compliance might have
a material effect on the financial statements.
These included but are not limited to those
that relate to the form and content of the
financial statements, such as Group
accounting policies, UK GAAP, the
Companies Act 2006, relevant taxation
legislation, Health and Safety and the
Bribery Act 2010.
68
69
We determined that the principal risks
were related to posting inappropriate
journal entries, management bias in
accounting estimates, and revenue cut off.
Our audit procedures included, but were
not limited to:
• Agreement of the financial statement
disclosures to underlying supporting
documentation;
• Challenging assumptions and judgements
made by management in their significant
accounting estimates, in particular in
relation to the stock provision, the IFRS
9 expected credit loss provision, the
discount rate and forecasted EBITDA
used in the purchase price allocation
exercise, the recognition of tooling
revenue under IFRS 15 and the valuation
of the derivatives held on balance sheet
at year end;
• Identifying and testing journal entries,
in particular any journal entries posted
with unusual account combinations or
including specific keywords;
• Testing a sample of revenue transactions
within a specified cut off window pre
and post year end to determine if they
have been recorded in the correct period;
• We also communicated relevant
identified laws and regulations and
potential fraud risks to all engagement
team members and remained alert to any
indications of fraud or non-compliance
with laws and regulations throughout the
audit. As part of this discussion, we
identified potential for fraud in
accounting estimates;
• Discussions with management, including
consideration of known or suspected
instances of non-compliance with laws
and regulation and fraud ;
• Review of minutes of Board meetings
Our audit procedures were designed to
respond to risks of material misstatement in
the financial statements, recognising that
the risk of not detecting a material
misstatement due to fraud is higher than
the risk of not detecting one resulting from
error, as fraud may involve deliberate
concealment by, for example, forgery,
misrepresentations or through collusion.
There are inherent limitations in the audit
procedures performed and the further
removed non-compliance with laws and
regulations is from the events and
transactions reflected in the financial
statements, the less likely we are to become
aware of it.
A further description of our responsibilities
is available on the Financial Reporting
Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent
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 Parent 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 Parent Company and the
Parent Company’s members as a body,
for our audit work, for this report,
or for the opinions we have formed.
Stuart Wood (Senior Statutory Auditor)
For and on behalf of BDO LLP,
Statutory Auditor
throughout the period; and
Manchester, UK
• Obtaining an understanding of the
control environment in monitoring
compliance with laws and regulations.
BDO LLP is a limited liability
partnership registered in England and Wales
(with registered number OC305127).
Group Statement of Comprehensive Income
James Cropper PLC
Group Statement of Comprehensive Income
Revenue
Provision for impairment
Other income
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Energy costs
Employee benefit costs
Depreciation and amortisation
Other expenses
Operating Profit
Interest payable and similar charges
Interest receivable and similar income
Profit before taxation
Tax expense
Profit for the period
Earnings per share - basic and diluted
All results are from continuing operations
Other comprehensive income
Profit for the period
Items that are or may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Pulp hedge fair value adjustment
Cash flow hedges – effective portion of changes in fair value
Items that will never be reclassified to profit or loss
Retirement benefit liabilities – actuarial (losses)/gains
Deferred tax on actuarial losses/(gains) on retirement benefit liabilities
Other comprehensive income/(expense) for the year
Total comprehensive (expense) / income for the period
attributable to equity holders of the Company
Note
2
14
4
23
4
2
3
3
4
5
6
15
20
52 week period to
27 March 2021
£’000
52 week period to
28 March 2020
£’000
78,768
(431 )
3,036
598
(28,290 )
(3,078 )
(28,417 )
(4,489 )
(15,252 )
2,445
(730 )
4
1,719
(153 )
1,566
16.4 p
104,667
(308 )
486
(1,330 )
(38,200 )
(4,539 )
(30,388 )
(3,950 )
(19,869 )
6,569
(1,136 )
26
5,459
(630 )
4,829
50.6p
1,566
4,829
(80 )
501
258
(8,750 )
1,663
(6,408 )
(4,842 )
181
-
(295 )
13,057
(2,481 )
10,462
15,291
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
70
71
Statement of Financial Position
Statement of Cash Flows
Group as at
27 March 2021
£’000
Group as at Company as at
27 March 2021
£’000
28 March 2020
£’000
Company as at
28 March 2020
£’000
Note
James Cropper PLC
Statement of Cash Flows
For the period ended 27 March 2021 (2020: for the period ended 28 March 2020)
James Cropper PLC
Statement of Financial Position
Assets
Goodwill
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments in subsidiary undertakings
Deferred tax assets
Total non-current assets
Inventories
Trade and other receivables
Provision for impairment
Other financial assets
Cash and cash equivalents
Corporation tax
Total current assets
Total assets
Liabilities
Trade and other payables
Other financial liabilities
Loans and borrowings
Total current liabilities
Long-term borrowings
Retirement benefit liabilities
8
9
10
11
12
21
13
14
14
15
5
16
17
18
18
20
Contingent consideration on business acquisition 16
21
22
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Equity
Share capital
Share premium
Translation reserve
Reserve for own shares
Hedging reserve
Retained earnings
Total shareholders’ equity
Total equity and liabilities
1,264
1,946
30,696
4,160
-
3,729
41,795
15,469
16,053
(961 )
501
6,765
1,425
39,252
81,047
15,780
16
8,301
24,097
5,966
18,436
401
2,246
27,049
51,146
2,389
1,588
504
(1,151 )
501
26,070
29,901
81,047
-
495
31,882
4,907
-
1,921
39,205
13,956
19,363
(530 )
-
8,964
1,872
43,625
82,830
16,544
275
3,756
20,575
16,263
9,382
-
2,213
27,858
48,433
2,389
1,588
584
(1,251 )
-
31,087
34,397
82,830
-
1,013
1,774
236
7,350
3,706
14,079
-
50,863
(260 )
-
2,861
1,384
54,848
68,927
22,989
16
94
23,099
211
18,436
-
102
18,749
41,848
2,389
1,588
-
(1,151 )
-
24,253
27,079
68,927
-
366
1,925
301
7,350
1,934
11,876
-
51,455
(350 )
-
6,638
1,509
59,272
71,148
23,421
275
174
23,870
7,983
9,382
-
114
17,479
41,349
2,389
1,588
-
(1,251 )
-
27,073
29,799
71,148
The Parent Company reported a profit for the period ended 27 March 2021 of £4,072k (2020: £3,416k).
The financial statements on pages 63 to 111 were approved by the Board of Directors on 21 June 2021 and were signed on its behalf by:
M A J Cropper
Chairman
Company Registration No: 30226
Cash flows from operating activities
Net profit
Adjustments for:
Tax
Depreciation and amortisation
Transaction costs on business acquisition
Net IAS 19 pension adjustments within SCI
Past service pension deficit payments
Foreign exchange differences
Loss on disposal of property, plant and equipment
Gain on early termination of right of use assets
Bank interest income
Bank interest expense
Share based payments
Changes in working capital:
(Increase) / decrease in inventories
Decrease in trade and other receivables
(Decrease) / increase in trade and other payables
Tax paid
Group
2021
£’000
Group
2020
£’000
Note
1,566
4,829
153
4,489
384
802
(498)
783
-
(19 )
(4 )
491
245
(1,448)
3,401
(2,406 )
-
630
3,950
-
1,215
(1,424 )
(74 )
23
-
(26 )
592
(252 )
2,475
149
1,719
(741 )
Net cash generated from operating activities
7,939
13,065
Cash flows from investing activities
Purchase of intangible assets
Purchases of property, plant and equipment
Acquisition of business net of cash and cash equivalents
24
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of new loans
Repayment of borrowings
Repayment of lease liabilities
Interest received
Interest paid
Distribution of own shares
Dividends paid to shareholders
7
(42 )
(3,085 )
(1,359 )
(4,486 )
6,390
(10,313 )
(818 )
4
(353 )
100
-
(190 )
(9,005 )
-
(9,195 )
9,121
(3,301 )
(1,488 )
26
(434 )
-
(1,275 )
Net cash (used) / generated from financing activities
(4,990 )
2,649
Net (decrease) / increase in cash and cash equivalents
Effects of exchange rate fluctuations on cash held
Net (decrease) / increase 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:
Cash at bank and in hand
Cash and cash equivalents at the end of the period
(1,537 )
(662 )
(2,199 )
8,964
6,765
6,765
6,765
6,519
93
6,612
2,352
8,964
8,964
8,964
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
72
73
Statement of Changes in Equity
Statement of Changes in Equity
James Cropper PLC
Statement of Changes in Equity - Group
All figures in £’000
At 30 March 2019
Adjustment on initial
application of IFRS 16 1
Share
capital premium
Share Translation
reserve
2,389
1,588
-
-
403
-
Own
Shares
(1,251 )
-
At 31 March 2019
2,389
1,588
403
(1,251 )
Hedging
reserve
Retained
earnings
Total
-
-
-
18,147
21,276
(519 )
(519 )
17,628
20,757
Comprehensive income for the period
- -
-
-
-
4,829
4,829
Total other comprehensive income
- - 181
-
Dividends paid
- -
-
-
-
-
10,281
(1,275 )
10,462
(1,275 )
Share based payment charge
- -
-
-
-
(376 )
(376 )
Total contributions by and
distributions to owners of the Group
- -
-
-
At 28 March 2020
2,389
1,588
584
(1,251 )
-
-
(1,651 )
(1,651 )
31,087
34,397
Comprehensive income for the period
- -
-
Total other comprehensive income
- -
(80 )
-
-
-
1,566
501
(6,829 )
1,566
(6,408 )
Dividends paid
-
-
-
-
Distribution of own shares
-
-
Share based payment charge
- -
-
-
100
-
Total contributions by and
distributions to owners of the Group
-
-
-
(100 )
-
-
-
-
-
-
246
246
-
100
246
346
At 27 March 2021
2,389
1,588
504
(1,151 )
501
26,070
29,901
1 The Group has initially applied IFRS 16 at 31 March 2019, using the modified retrospective approach. Under this approach,
comparative information is not restated and the cumulative effect of applying IFRS 16 is recognised in retained earnings at
the date of the initial application.
James Cropper PLC
Statement of Changes in Equity - Company
All figures in £’000
At 30 March 2019
Adjustment on initial application of IFRS 161
At 31 March 2019
Comprehensive income for the period
Total other comprehensive income
Dividends paid
Share based payment charge
Total contributions by and
distributions to owners of the Group
Share
capital
Share
premium
2,389
-
2,389
-
-
-
-
-
1,588
-
1,588
-
-
-
-
-
Own
Shares
(1,251 )
-
(1,251 )
-
-
-
Retained
earnings
14,701
24
14,725
3,416
10,583
(1,275 )
- (376 )
-
(1,651 )
At 28 March 2020
2,389
1,588
(1,251 )
27,073
Comprehensive income for the period
-
Total other comprehensive income
Distribution of own shares
Share based payment charge
Total contributions by and
distributions to owners of the Group
-
-
-
-
-
-
-
-
-
-
-
100
4,072
(7,137 )
-
- 245
245
100
245
345
At 27 March 2021
2,389
1,588
(1,151 )
24,253
27,079
1 The Company has initially applied IFRS 16 at 31 March 2019, using the modified retrospective approach. Under this approach,
comparative information is not restated and the cumulative effect of applying IFRS 16 is recognised in retained earnings at
the date of the initial application.
Total
17,427
24
17,451
3,416
10,583
(1,275 )
(376 )
(1,651 )
29,799
4,072
(7,137 )
100
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
74
75
Notes to the Financial Statements
Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
1 Accounting policies
The principal accounting policies adopted
in the preparation of these financial
statements are set out below. These policies
have been consistently applied to all the
years presented, unless otherwise stated.
Statement of compliance
These financial statements are
consolidated financial statements for
the Group consisting of James Cropper
PLC, a company registered in the UK,
and all its subsidiaries. The consolidated
financial statements have been prepared
in accordance with international
accounting standards in conformity
with the requirements of the Companies
Act 2006. The financial statements of
the parent company have been prepared
in accordance with Financial Reporting
Standard 101 Reduced Disclosure
Framework (“FRS 101”).
Basis of preparation
The accounting “year” for the Group
is a 52 week accounting period ending 27
March 2021, (2020: 52 week accounting
period ended 28 March 2020).
The consolidated financial statements
have been prepared on a going concern
basis under the historical cost convention
except for the revaluation of certain
financial instruments to fair value.
In determining the appropriate basis
of preparation, the impact of the
Covid-19 pandemic has been the major
consideration. The Board has concluded
that it is appropriate to adopt the going
concern basis, having undertaken a rigorous
assessment of the financial forecasts with
specific consideration to the trading
position of the Group in the context of the
current Covid-19 pandemic. The Directors,
after reviewing the Group’s operating
forecasts, investment plans and financing
arrangements, consider that the Company
and Group have sufficient funding available
for at least 12 months from the date
of signing the financial statements.
Accordingly, the Directors are satisfied that
it is appropriate to adopt the going concern
basis in preparing the Annual Report and
Accounts. Further details of the actions
taken can be found in the Chief Executive’s
Review (pages 08 to 10) and the Chief
Financial Officer’s Review (pages 12 to 16).
The financial statements are presented
in Pounds Sterling, being the currency
of the primary economic environment
in which the Group operates. All values
are rounded to the nearest thousand
pounds, except where otherwise indicated.
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.
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 intragroup transactions
are eliminated in preparing the
consolidated financial statements.
Subsidiaries are entities controlled by
the Group. Control exists when the
Group has the power, directly or indirectly,
to govern the financial and operating
policies of an entity so as to obtain benefits
from its activities. The financial statements
of subsidiaries are included in the
consolidated financial statements from
the date that control commences until
the date that control ceases.
(a) Revenue recognition
Revenue represents income derived from
contracts for the provision of goods or
services by the Company and its
subsidiary undertakings to customers in
exchange for consideration in the ordinary
course of the Group’s business. Upon
approval by the parties to a contract, the
contract is assessed to identify each
promise to transfer either a distinct good
or service, or a series of distinct goods or
services that are substantially the same
and have the same pattern of transfer to
the customer. Revenue from the sale of
goods is recognised when control of the
goods have been transferred to the buyer.
Goods are identified as products made
from either natural fibres, (e.g. paper or
moulded paper products, or man-made
fibres, (e.g. highly technical nonwoven
products made by the TFP division).
In addition, revenue for services are also
received (e.g. revenue for design and set up
of moulded fibre ColourformTM products).
Any revenue received for such services are
recognised over the term of the contract.
Revenue is recognised when:
• the Group has transferred
control to the buyer;
• all significant performance
obligations have been met;
• the Group retains neither continuing
managerial involvement nor
effective control over the goods;
• It is probable that the economic
benefits associated with the
transaction will flow to the Group;
• The amount of revenue can
be measured reliably.
Transfer of control varies depending
on the individual terms of the contract
of sale. For sales in the UK, transfer
of control occurs when the goods
are despatched to the customer.
However, for some international
shipments, transfer of control occurs either
upon loading the goods onto the relevant
carrier or when the goods have arrived in
the overseas port. The point of transfer
of control for international shipments
is dictated by the terms of each sale.
Although the majority of the group’s
contracts with customers are not complex,
with revenue being fixed for a specific
quantity of goods, the Group has
identified a number of contracts in
which customers are given volume
rebates and/or other promotional rebates
based on quantities purchased over a
contractually agreed period of time.
(b) Operating segments
IFRS 8 Operating Segments requires that
entities reflect the ‘management approach’
to reporting the financial performance of
its operating segments. Management has
determined the segments that are reported
in a manner consistent with the internal
reporting provided to the chief operating
decision-maker, identified as the Executive
Committee that makes strategic decisions.
The committee considers the business
principally via the three main operating
segments. Operating segments are those
components of the Group that are engaged
in providing a group of related products
that are subject to risks and returns that
are different to other operating segments.
Geographical areas are components where
the eventual product destination is in
a particular geographic environment
which is subject to risks and returns
that are different from other such areas.
Costs 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.
(c) Emission quotas
The Group participates in phase III
of the EU Emissions Trading Scheme.
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. Allowances not
utilised 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.
(d) Foreign currencies
The consolidated financial statements are
presented in Pounds Sterling, which is
the Group’s presentational currency.
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.
(e) 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
Customer relationships
Technology
Brand
10 years
10 years
10 years
3 years
Computer software
3 – 10 years
Emission Allowances
0 – 1 year
(f) Property plant and equipment
Property, plant and equipment are stated
at cost less accumulated depreciation
and impairment losses. 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
14 – 40 years
Plant and machinery
2 – 20 years
Residual values and useful lives
are reviewed annually.
(g) 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.
(h) 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.
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
76
77
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.
(i) Research & development tax credit
Research and development expenditure
credit (RDEC) is recognised within other
operating income.
(j) IFRS 16 ‘Leases’
The Group adopted IFRS 16
from 31 March 2019 using a modified
retrospective transition approach,
under which the cumulative effect of
initial application was recognised in
retained earnings at 31 March 2019.
The main impact of IFRS 16 for the
Group is the recognition of all future
lease liabilities on the balance sheet.
Corresponding right-of-use assets have
also been recognised on the balance
sheet representing the economic benefits
of the Group’s right to use the underlying
leased assets.
On transition to IFRS 16, the Group has
elected to apply the following practical
expedients permitted by the standard:
- Excluding any operating leases
with a remaining lease term of
less than 12 months.
- Excluding any low value leases
(less than £5,000).
For the period ended 27 March 2021,
the Group had no low values leases and
two leases with a lease term of less
than 12 months.
On transition to IFRS 16 the weighted
average incremental borrowing rate
applied to lease liabilities where no
rate is included in the lease contract
was 3.6%.
For any new contracts entered into
on or after 31 March 2019, the Group
considered whether a contract is or
contains a lease. A lease is defined as a
contract that conveys the right to use
of an asset for a period of time in
exchange for consideration.
To apply this definition, the Group
assesses whether the contract meets
three key evaluations:
Notes to the Financial Statements
- the contract contains an identified asset,
which is either explicitly identified in
the contract or implicitly specified by
being identified at the time the asset
is made available to the Group;
- the Group has the right to obtain
substantially all of the economic
benefits from use of the identified
asset throughout the period of use,
considering its rights within the
defined scope of the contract;
- the Group has the right to direct the
use of the identified asset throughout
the period of use.
For all periods prior to 31 March 2019,
the Group classified its vehicle and
equipment leases as finance leases.
These leases are on terms that transfer
substantially all the risks and rewards of
ownership. The accounting treatment for
finance leases is similar to the accounting
treatment for leases under IFRS 16.
Leased assets are capitalised at inception
and payments apportioned between
finance charges and reduction of the lease
liability. The interest element is charged to
the income statement and the capitalised
leased assets are depreciated over the
shorter of the estimated useful economic
life of the asset or the lease term. For
finance leases, the carrying amounts of the
right-of-use assets and the lease liabilities
on transition at 31 March 2019 were equal
to the carrying amounts of the finance
lease assets and finance lease liabilities
recognised at the 30 March year end.
The Group also previously held leases in
relation to long leasehold property leases
and operating assets. Under IFRS 16, there
is no longer a distinction between operating
and finance leases. As a result, the operating
leases have been remeasured on transition
with future lease payments discounted at
the incremental borrowing rate applicable
on 31 March 2019. The following table
presents the reconciliation of lease liabilities
at 30 March 2019:
£’000
Transition
The opening balance sheet position
as at 31 March 2020 has been restated
on transition to IFRS 16. The Group
recognised additional right-of-use assets,
lease liabilities and deferred tax liabilities,
recognising the difference in retained
earnings. Comparative periods have not
been restated.
Increase / (decrease)
£’000
Assets
Property, plant and equipment
(4,274 )
Right of use assets
7,967
Liabilities
Lease liabilities
- current
Lease liabilities
– non current
Finance lease liabilities
– current
Finance lease liabilities
– non current
Deferred tax liabilities
Equity
(980 )
(5,150 )
778
1,142
(2 )
Retained earnings
(519 )
(k) 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.
(l) 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.
Minimum lease payments under
non-cancellable operating
leases at 30 March 2019
Minimum lease payments under
non-cancellable finance
leases at 30 March 2019
Discounted using the
incremental borrowing
rate at 31 March 2019
Assessment of lease
term on transition
Lease liabilities recognised under
IFRS 16 at 31 March 2019
4,346
(m) Investments
1,920
(1,228 )
1,092
6,130
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.
(n) Trade receivables
Trade receivables are recorded at their
initial fair value after appropriate
revision of impairment.
A provision for impairment is calculated
using an expected credit loss impairment
model. Under this impairment model
approach, per IFRS 9, it is not necessary
for a credit event to have occurred before
credit losses are recognised. Instead, an
entity always accounts for expected credit
losses and changes in those expected credit
losses. The amount of expected credit
losses is updated at each reporting date.
To measure expected credit losses the
Group refers to historical credit loss
experiences and adjust for current and
forward looking information on
macroeconomic factors affecting the
group’s customers including the state
of the economy and industrial specific
factors in countries where the group
operates. Trade receivables are amortised
at cost using the effective interest method,
less any impairment.
(o) Trade payables
Trade payables are stated at their fair
value. Trade payables are subsequently
stated at amortised cost using the effective
interest method.
(p) Other income
Other income includes the research and
development expenditure credit (RDEC),
royalties received and grants received for
funded projects and government grant
support due to Covid-19 impact.
(q) Hedge Accounting
Cash flow hedge:
Where a derivative financial instrument
is designated as a hedge of the variability
in cash flows of a recognised asset or
liability the effective part of any gain or
loss on the derivative financial instrument
is recognised in other comprehensive
income. Any ineffective portion of the
hedge is recognised immediately in the
income statement. Hedging relationships
are classified as cash flow hedges where
the hedging instrument hedges exposure
to variability in cash flows that is
attributable either to a particular risk
associated with a recognised asset or
liability such as interest payments or
variable rate debt.
Hedges of net investment in a foreign entity:
The effective portion of the gain or loss
on the hedging instrument is recognised
directly in equity, while the ineffective
portion is recognised in the income
statement. Amounts taken to equity
are transferred to the income statement
when the foreign entity is sold.
Notes to the Financial Statements
(r) Cash and cash equivalents
(v) Capital Management
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.
(s) 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.
(t) Interest
Interest is recognised in the Statement
of Comprehensive Income on an
accruals basis using the effective
interest method.
(u) Share based payments
and Own Shares Held
The Group operates two equity settled
share based payment schemes: A Share
Incentive Plan open to all employees and
a Long-Term Incentive Plan (LTIP) for
certain Directors and senior managers.
The SIP Trust (SIP) holds shares used to
allow employees to salary sacrifice any
annual profit bonus either in full or part
to acquire partnership shares in the
Company, which are held by the SIP Trust
for a period of 3-5 years.
The Employee benefit Trust (EBT) holds
shares for the granting and vesting of
shares under the LTIP scheme. The cost
of purchasing and transferring own shares
held by both the SIP and EBT are shown
as movements against equity.
The Group recognises an expense to
the Income Statement representing the
fair value of outstanding equity settled
share-based payment awards to employees
which have not vested as at the period end.
Group and Company’s capital includes
share capital, reserves and retained
earnings. The Group and Company’s
policies ensure 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 18 and
shareholdings can be referred to in
note 22. 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.
(w) 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.
The fair values are charged to the Income
statement over the relevant vesting period
adjusted to reflect actual and expected
vesting levels.
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.
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
78
79
Notes to the Financial Statements
Notes to the Financial Statements
(x) Retirement benefits
The Group operates various pension
schemes. The schemes are generally funded
through payments to trustee-administered
funds, determined by periodic actuarial
valuations. The Group has both defined
benefit and defined contribution plans.
A defined benefit plan is a pension plan
that defines an amount of pension benefit
that an employee will receive on retirement.
A defined contribution plan is a pension
plan under which the Group pays
fixed contributions.
The liability recognised in the Statement
of Financial Position in respect of defined
benefit pension plans is the present value
of the defined benefit obligation at the
Statement of Financial Position date less
the fair value of plan assets. The defined
benefit obligation is calculated annually
by independent actuaries using the
projected unit credit method. The present
value of the defined benefit obligation is
determined by discounting the estimated
future cash flows using interest rates of
high-quality corporate bonds that are
denominated in the currency in which the
benefits will be paid, and that have terms
to maturity approximating to the terms of
the related pension liability.
Actuarial gains and losses arising from
experience adjustments and changes in
actuarial assumptions are recognised in
the period in which they occur outside
of Statement of Comprehensive Income
in the Statement of Changes in Equity.
Past service costs are recognised
immediately in income, unless the changes
to the pension plan are conditional on
the employees remaining in service for
a specified period of time (the vesting
period). In this case, the past-service costs
are amortised on a straight-line basis over
the vesting period.
For defined contribution plans, the Group
pays agreed contributions to the schemes.
The Group has no further payment
obligations once the contributions
have been paid. The contributions are
recognised as an employee benefit
expense when they are due.
(y) Non-GAAP performance measures
In the reporting of financial information,
the Group has adopted certain non-
GAAP measures of historical or future
financial performance, position or cash
flows other than those defined or specified
under International Financial Reporting
Standards (IFRSs).
Non-GAAP measures are either not
defined by IFRS or are adjusted IFRS
figures, and therefore may not be directly
comparable with other companies’
reported non-GAAP measures, including
those in the Group’s industry.
Where non-GAAP measures have been
used, it is the belief of the Group that such
measures help provide a clearer
understanding of the underlying
performance.
Non-GAAP measures should be
considered in addition to, and are
not intended to be a substitute for,
or superior to, IFRS measures.
(z) 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 Group’s key sources of significant
estimates are as detailed below:
(i) Retirement benefits
IAS 19 Employee Benefits (Revised 2011)
requires the Group to make assumptions
including, but not limited to, rates of
inflation, discount rates and life
expectancies. The use of different
assumptions, in any of the above
calculations, could have a material effect
on the accounting values of the relevant
statement of financial position assets and
liabilities which could also result in a
change to the cost of such liabilities as
recognised in profit or loss over time.
These assumptions are subject to periodic
review. The Group takes specialist advice
and seeks to follow the most appropriate
method, applied consistently from
year to year. See note 20 for additional
information.
(ii) Contingencies
The Group have identified that the historical
valuation of the defined benefit pension
obligation did not capture the potential
additional liabilities arising in relation to
the normal retirement dates for male and
female members of the Staff Scheme.
An estimate of the additional liability
was included in the financial statements
for the year ended 31 March 2019.
The Group’s significant areas of
judgement would include:
(i) Revenue recognition
Judgement is required in deciding when
and at what rate some volume rebates
awarded to customers are accrued for.
When variable rates are awarded
depending on the projected total
volume over the contractual period,
a judgement of the probability of
achieving the required volumes is made.
Likewise, when recognising contributions
towards the set up and design costs for
ColourformTM which are recognised over
the length of the contract or levels of
production, judgement is required
to determine over what period the
revenue should be recognised.
(ii) Expected Credit Losses
When determining amounts of expected
credit losses, judgement is required to
ascertain the likelihood of losses,
based on historic information and
forward macroeconomic factors.
(iii) Right-of use assets
Significant judgement is exercised
in determining the lease term.
IFRS 16 defines the lease term as the
‘non-cancellable’ period beyond which
any extension is not reasonably certain.
Significant judgement is exercised in
determining the incremental borrowing
rate. IFRS 16 requires the borrowing rate
should represent what the lessee would
have to pay to borrow over a similar
term and with similar security, the funds
necessary to obtain an asset of similar
value in a similar economic environment.
(iv) Business combinations
Significant judgement is exercised
in determining the forecasted EBITDA
targets used to calculate the contingent
consideration and the discount rates and
weighted average cost of capital to
calculate the fair value of the deferred
consideration and the contingent
consideration.
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
(Paper): 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
(ColourformTM) – a manufacturer
of moulded fibre products.
•
Technical Fibre Products (TFP)
– 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.
“Adjusted Operating Profit before IAS 19”
refers to operating profits prior to 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.
Inter segment transactions are performed
in the normal course of business and at
arm’s length.
Operating Segments
Period ended 27 March 2021
All figures in £’000
Paper ColourformTM
TFP
Group
Continuing
Services Eliminations Operations
Revenue
External
Segment Profit
51,376
51,376
2,822
2,822
24,570
24,570
Adjusted Operating Profit before IAS 19
(309 )
(1,542 )
IAS 19 Pension adjustments to profit
Operating Profit
Interest expense
Interest income
Profit before tax
Tax on profit for period
Profit for the period
Total Assets
Total Liabilities
-
(309 )
-
(1,542 )
-
-
-
-
-
-
-
-
-
-
6,482
-
6,482
-
-
-
-
-
-
-
(1,416 )
(563 )
(1,979 )
-
-
-
-
-
-
-
78,768
78,768
(207 )
-
(207 )
-
-
-
-
-
3,008
(563 )
2,445
(730 )
4
1,719
(153 )
1,566
72,171
(62,799 )
5,414
(13,913 )
57,643
(48,159 )
68,927
(41,848 )
(123,108 )
115,573
81,047
(51,146 )
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
80
81
Notes to the Financial Statements
Notes to the Financial Statements
Operating Segments
Period ended 28 March 2020
All figures in £’000
Paper ColourformTM
TFP
Group
Continuing
Services Eliminations Operations
Revenue
External
Segment Profit
75,545
75,545
2,586
2,586
26,536
26,536
Adjusted Operating Profit before IAS 19
3,406
(1,378 )
IAS 19 Pension adjustments to profit
-
-
3,406
(1,378 )
-
-
-
-
-
-
-
-
-
-
7,753
-
7,753
-
-
-
-
-
Operating Profit
Interest Expense
Interest income
Profit before tax
Tax on profit for period
Profit for the period
Total Assets
Total Liabilities
-
-
(2,775 )
(671 )
(3,446 )
-
-
-
-
-
-
-
104,667
104,667
234
-
234
-
-
-
-
-
7,240
(671 )
6,569
(1,136 )
26
5,459
(630 )
4,829
52,873
(52,097 )
6,443
(13,490 )
58,525
(48,844 )
71,167
(41,349 )
(106,085 )
107,347
82,923
(48,433 )
The group’s country of domicile is the UK. Revenue from external customers is based on the customer’s location and arises entirely
from the sale of goods. Non-current assets are based on the location of the assets and exclude financial assets, deferred tax assets
and post-employment benefit net assets.
All figures in £’000
UK
Europe
Asia
The Americas
Australasia
Africa
Total
Revenues from
external customers
Non-current assets
excluding deferred tax
2021
29,955
22,001
5,819
19,996
777
220
2020
41,785
27,357
9,705
24,517
994
309
2021
33,772
-
-
2020
32,137
-
-
4,295
5,147
-
-
-
-
78,768
104,667
38,067
37,284
All figures in £’000
Additions to non-current assets
Paper ColourformTM
(792 )
(762 )
TFP
2,013
Group
Services
324
Total
783
3 Finance Costs
Finance costs include costs in respect of interest payable on borrowings and our defined benefit pension schemes.
Finance income includes interest received from short term deposits.
All figures in £’000
Finance costs
Interest payable on bank borrowings
Interest payable in relation to lease liabilities
Net finance costs arising on defined benefit schemes
Other finance charges
Total finance costs
Finance income
Finance income in respect of cash and short term investments
Total finance income
Net finance costs
4 Profit before taxation
The following items have been charged / (credited) in arriving at profit before tax:
Note
23
23
10
11
9
Staff costs
Restructuring costs
Depreciation of property, plant and equipment
- owned assets
- leased assets
- amortisation of intangibles
Loss on disposal of fixed assets
Repairs and maintenance expenditure on property, plant and equipment
Other income:
Research and development tax credits
Royalty income
Job Retention Scheme grants and PPP grants (USA)
Government grants received
Research and development expenditure
Foreign exchange differences
Trade receivables impairment
Government grants relate to assistance received for research projects and the development of new technology
Services Provided by the Group’s Auditor and network firms
During the year the group obtained the following services from the group's auditor at costs as detailed below:
All figures in £’000
Audit Services
Fees payable to the company’s auditor for the audit of parent company and consolidated accounts
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)
2021
2020
295
164
239
32
730
4
4
392
200
544
-
1,136
26
26
726
1,110
2021
£’000
27,299
1,118
3,474
785
230
-
3,379
-
(46 )
(2,915 )
(75 )
-
1,020
431
2020
£’000
30,388
-
2,706
1,089
155
23
4,645
(422 )
(61 )
-
(3 )
3,947
(307 )
308
2021
2020
29
4
76
20
-
53
109
73
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
82
83
Notes to the Financial Statements
Notes to the Financial Statements
5 Taxation
Analysis of charge in the period
All figures in £’000
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
Tax per Statement of Comprehensive Income
Tax on items charged to other comprehensive income
Note
2021
2020
354
94
448
(150 )
(145 )
-
(295 )
153
572
138
710
229
(42 )
(267 )
(80 )
630
21
6 Earnings per share
Basic earnings per share is calculated on the Group profit for the year attributable to equity shareholders of £1.2m
(2020: £4.8m) divided by 9.6m (2020: 9.6m), being the weighted average number of shares in issue during the year.
Diluted earnings per share reflects any commitments made by the Group to issue shares in the future. The weighted average number
of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. Current share options would be
vested by awarding shares already in existence. At 27 March 2021 there were no potential dilutive share options outstanding (2020: nil).
2021
Earnings
£’000
Weighted
average
number
of share
‘000
2020
Earnings
£’000
Weighted
average
number
of share
‘000
Amount
per share
pence
Amount
per share
pence
1,566
9,555
16.4
4,829
9,555
50.6
Earnings attributable to
ordinary shareholders
Basic and diluted EPS
1,566
9,555
16.4
4,829
9,555
50.6
Deferred tax on actuarial gains on retirement benefit liabilities
(1,663 )
2,481
Tax on items charged to equity
Deferred tax on share options
The tax for the period is lower (2020: lower) than the standard rate of corporation tax in the UK of 19% (2020: 19%).
The differences are explained below:
All figures in £’000
Continuing operations
Profit before tax
Profit on ordinary activities multiplied by rate
of corporation tax in the UK of 19% (2019: 19%)
Effects of:
Adjustments to tax in respect of prior period
Changes to tax rates
Deferred tax on share options
Expenses not deductible for tax purposes
Deferred tax liability recognised on acquisition
Deferred tax not recognised in overseas jurisdictions
Other
Total tax charge for the period
-
(125)
2021
1,719
2020
5,459
326
1,037
(51 )
-
12
178
13
(236 )
(89 )
153
96
(267 )
(106 )
45
-
(127 )
(48 )
630
7 Dividends
All figures in £’000
Final paid for the period ended 28 March 2020 / period ended 30 March 2019
Interim paid for the period ended 27 March 2021 / period ended 28 March 2020
Total dividends paid in the year
Final dividend payment paid pence per share for the period ended 28 March 2020 / period ended 30 March 2019
Interim dividend payment paid pence per share for the period ended 27 March 2021 / period ended 28 March 2020
In addition, the directors are not proposing a final dividend in respect of the financial period ended 27 March 2021
(2020: nil per share) which will absorb an estimated £nil (2020: £nil) of shareholders’ funds.
2021
2020
-
-
-
-
-
1,039
236
1,275
11.0 p
2.5 p
8 Goodwill
All figures in £’000
At 28 March 2020
Assets acquired through business combinations (see note 24)
At 27 March 2021
Note
Group
Company
24
-
1,264
1,264
-
-
-
Goodwill is recognised following the acquisition of PV3 Technologies Ltd (now known as TFP Hydrogen Products Ltd)
by Technical Fibre Products Ltd on 18 January 2021.
Goodwill has been calculated as the difference between the fair value of net assets acquired on acquisition and the fair value
consideration paid and expected to be paid. Goodwill is not amortised but is subject to an annual impairment review.
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
84
85
Notes to the Financial Statements
9 Intangible assets
Group
All figures in £’000
Software
Costs Secrets Relationships Technology Brands Allowances Total
Computer Development
Trade
Customer
Emission
Cost
At 28 March 2020
Additions
Assets acquired through business
combinations (Note 24)
Disposals/surrender of allowances
4,236
457
310
42
-
-
-
-
-
-
-
-
At 27 March 2021
4,278
457
310
Aggregate amortisation
At 28 March 2020
Charge for Period
At 27 March 2021
3,976
92
4,068
342
114
456
Net book value at 27 March 2021
210
1
Net book value at 28 March 2020
260
115
310
-
310
-
-
Group
-
-
-
-
-
-
120
5,123
1,360
1,402
567
359
31
-
957
-
567
-
12
12
-
359
-
31
(678 )
(678 )
802
6,804
-
7
-
-
5
5
-
-
-
4,628
230
4,858
555
352
26
802
1,946
-
-
-
120
495
Company
Company
Computer
Emission
Software Allowances
Total
Computer
Emission
Software Allowances
Total
Cost
At 28 March 2020
Additions
Disposals/surrender of allowances
42
-
4,096
120
4,216
Cost
At 30 March 2019
1,361
1,403
Additions
(678 )
(678 )
Disposals/surrender of allowances
-
(524 )
(524 )
3,906
190
25
3,931
619
809
At 27 March 2021
4,138
803
4,941
At 28 March 2020
4,096
120
4,216
Aggregate amortisation
Aggregate amortisation
At 28 March 2020
Charge for Period
At 27 March 2021
3,850
78
3,928
-
3,850
At 30 March 2019
-
-
78
3,928
Charge for Period
At 28 March 2020
3,825
25
3,850
-
-
-
3,825
25
3,850
Net book value at 27 March 2021
210
803
1,013
Net book value at 28 March 2020
246
120
366
Net book value at 28 March 2020
246
120
366
Net book value at 30 March 2019
81
25
106
Computer Development
Trade
Costs Secrets
All figures in £’000
Software
Cost
At 30 March 2019
Additions
Disposals/surrender of allowances
At 28 March 2020
Aggregate amortisation
At 30 March 2019
Charge for Period
At 28 March 2020
4,046
190
-
4,236
3,934
42
3,976
Net book value at 28 March 2020
260
115
Net book value at 30 March 2019
112
228
457
310
-
-
-
-
457
310
229
113
342
310
-
310
-
-
Emission
Allowances Total
25
4,838
619
809
(524 )
(524 )
120
5,123
-
-
-
4,473
155
4,628
120
495
25
365
The computer software capitalised principally relates to the ongoing development of the Group's Enterprise Resource Planning and
Financial systems.
The trade secrets relate to certain recipes and know how acquired within the TFP division.
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.
Customer Relationships, Technology and Brands were assets acquired through the purchase of TFP Hydrogen Products Ltd By Technical
Fibre Products Ltd on 18 January 2021 (see note 24).
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
86
87
Notes to the Financial Statements
Notes to the Financial Statements
10 Property plant and equipment
Group
All figures in £’000
Cost
At 28 March 2020
Transfers from right-of-use assets3
Additions at cost
Assets acquired from business combination
Effects of movements in foreign exchange
At 27 March 2021
Accumulated Depreciation
At 28 March 2020
Transfers from right-of-use assets3
Charge for period
At 27 March 2021
Net book value at 27 March 2021
Net book value at 28 March 2020
Note
Freehold land
& buildings
Plant &
machinery
Assets under
construction2
Total
11
23
11
14,466
89,382
5,502
109,350
-
497
-
-
131
798
71
(270 )
-
1,192
-
-
131
2,487
71
(270 )
14,963
90,112
6,694
111,769
7,447
-
231
7,678
7,285
7,019
70,021
131
3,243
73,395
16,717
19,361
-
-
-
-
77,468
131
3,474
81,073
6,694
30,696
5,502
31,882
2 Assets under construction comprise the expenditure to date on the extension of the TFP building and line 4.
3 Assets held under right-of-use assets where ownership is transferred to the Group/Company at the end of the lease
are transferred from right-of-use assets (note 11) to property, plant and equipment.
Group
All figures in £’000
Cost
At 30 March 2019
Adjustment on initial application of IFRS 161
As at 31 March 2019
Transfers from right-of-use assets3
Additions at cost
Disposals
Effects of movements in foreign exchange
At 28 March 2020
Accumulated Depreciation
At 30 March 2019
Adjustment on initial application of IFRS 161
As at 31 March 2019
Transfers from right-of-use assets3
Charge for period
Disposals
At 28 March 2020
Net book value at 28 March 2020
Net book value on initial application of IFRS 16 on 31 March 2019
Net book value at 30 March 2019
Notes
Freehold land
& buildings
Plant &
machinery
Assets under
construction2
Total
11
11
11
11
11,574
-
11,574
-
2,892
-
-
91,034
(6,419 )
84,615
4,582
95
(48 )
138
-
-
-
-
5,502
-
-
102,608
(6,419 )
96,189
4,582
8,489
(48 )
138
14,466
89,382
5,502
109,350
7,214
-
7,214
-
233
-
67,755
(2,145 )
65,610
1,961
2,473
(23 )
7,447
70,021
7,019
4,360
4,360
19,361
19,005
23,279
-
-
-
-
-
-
-
74,969
(2,145 )
72,824
1,961
2,706
(23 )
77,468
5,502
31,882
-
-
23,365
27,639
Company
All figures in £’000
Cost
At 28 March 2020
Transfers
Additions at cost
At 27 March 2021
Accumulated Depreciation
At 28 March 2020
Transfers
Charge for period
At 27 March 2021
Net book value at 27 March 2021
Net book value at 28 March 2020
Company
All figures in £’000
Cost
At 30 March 2019
Adjustment on initial application of IFRS 161
At 31 March 2019
Transfers
Additions at cost
At 28 March 2020
Accumulated Depreciation
At 30 March 2019
Adjustment on initial application of IFRS 161
At 31 March 2019
Charge for period
At 28 March 2020
Net book value at 28 March 2020
Net book value at 30 March 2019
Freehold land
& buildings
Note
Plant &
machinery
Total
11
11
1,694
2,668
4,362
-
-
131
10
131
10
1,694
2,809
4,503
508
-
22
530
1,164
1,189
1,929
2,437
131
139
131
161
2,199
2,729
610
739
1,774
1,925
Freehold land
& buildings
Note
Plant &
machinery
11
11
1,683
-
1,683
-
11
1,694
486
-
486
22
508
1,186
1,197
Total
4,289
(131 )
4,158
(9 )
213
2,606
(13 1)
2,475
(9 )
202
2,668
4,362
1,897
(84 )
1,813
116
1,929
739
709
2,383
(84 )
2,99
138
2,437
1,925
1,906
1 The group has initially applied IFRS 16 on 31 March 2019, which requires the recognition of right-of-use assets in place of finance
lease assets. As a result, on 31 March 2019, plant & machinery assets held under finance leases with a net book value of £4.3m have
been reallocated and recognised as right-of-use assets. The Group has applied IFRS 16 using the modified retrospective approach,
under which comparative information is not restated.
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
88
89
Notes to the Financial Statements
Notes to the Financial Statements
11 Right of use assets
Group
All figures in £’000
Cost
At 28 March 2020
Additions
Disposals
RoU reassessments
Transfers to property, plant & equipment2
Effects of movements in foreign exchange
At 27 March 2021
Accumulated Depreciation
At 28 March 2020
Charge for the period
Disposals
Transfers to property, plant and equipment2
At 27 March 2021
Net book value at 27 March 2021
Net book value at 28 March 2020
All figures in £’000
Cost
2,182
5,767
At 27 March 2021
Plant,
equipment
buildings & vehicles
Land &
Note
Total
10
10
3,924
432
(514 )
-
-
(257 )
3,585
401
413
(228 )
-
586
2,999
3,523
2,218
6,142
166
(69 )
(2 )
(131 )
-
598
(583 )
(2 )
(131 )
(257 )
834
372
(54 )
(131 )
1,235
785
(282 )
(131 )
1,021
1,607
1,161
4,160
1,384
4,907
Plant,
equipment
buildings & vehicles
Land &
Note
Total
Company
All figures in £’000
Cost
At 28 March 2020
Additions
Disposals
RoU reassessments
Transfers to property, plant & equipment2
Effects of movements in foreign exchange
Accumulated Depreciation
At 28 March 2020
Charge for the period
Disposals
Transfers to property, plant and equipment2
At 28 March 2020
Net book value at 27 March 2021
Net book value at 28 March 2020
All figures in £’000
Cost
Plant,
equipment
buildings & vehicles
Land &
Note
Total
10
10
131
-
(131 )
-
-
-
-
71
60
(131 )
-
-
-
60
495
166
(69 )
(2 )
(131 )
-
459
254
154
(54 )
(131 )
223
236
241
626
166
(200 )
(2 )
(131 )
-
459
325
214
(185 )
(131 )
223
236
301
Plant,
equipment
buildings & vehicles
Land &
Note
Total
Recognition of right-of-use assets on initial application of IFRS 16 on 31 March 20191
3,374
6,738
10,112
Recognition of right-of-use assets on initial application of IFRS 16 on 31 March 20191
10
Additions
Disposals
Transfers to property, plant & equipment2
Effects of movements in foreign exchange
At 28 March 2020
Accumulated Depreciation
Recognition of right-of-use assets on initial application of IFRS 16 on 31 March 20191
Charge for the period
Disposals
Transfers to property, plant and equipment2
At 28 March 2020
Net book value at 30 March 2019
Net book value on initial application of IFRS 16 on 31 March 2019
Net book value at 28 March 2020
10
10
441
(23 )
-
132
77
(15 )
518
(38 )
(4,582 )
(4,582 )
-
132
3,924
2,218
6,142
-
424
(23 )
-
401
-
3,374
3,523
2,145
665
(15 )
2,145
1,089
(38 )
(1,961 )
(1,961 )
834
1,235
-
-
4,593
7,967
1,384
4,907
1 The Group has initially applied IFRS 16 on 31 March 2019, which requires the recognition of right-of-use assets in relation to the
Group’s lease liabilities. As a result, on 31 March 2019, the Group recognised £10.1m of right-of-use assets related to those lease liabilities.
The Group has applied IFRS 16 using the modified retrospective approach, under which comparative information is not restated.
2 Assets where ownership is transferred to the Group/Company upon completion of the lease liability are transferred into Property,
plant and equipment (Note 10)
Additions
Disposals
At 28 March 2020
Accumulated Depreciation
Recognition of right-of-use assets on initial application of IFRS 16 on 31 March 2019
10
Charge for the period
Disposals
At 28 March 2020
Net book value at 30 March 2019
Net book value on initial application of IFRS 16 on 31 March 2019
Net book value at 28 March 2020
131
-
-
131
-
71
-
71
-
131
60
433
77
(15 )
495
84
185
(15 )
254
-
349
241
564
77
(15 )
626
84
256
(15 )
325
-
480
301
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
90
91
Notes to the Financial Statements
Notes to the Financial Statements
12 Investments
Investments in subsidiary undertakings
All figures in £’000
At 27 March 2021 and 28 March 2020
Group
2021
-
Group
2020
Company
2021
Company
2020
-
7,350
7,350
Investments in subsidiary undertakings are stated at cost. A list of principal subsidiary undertakings is given below:
13 Inventories
All figures in £’000
Materials
Work in progress
Finished goods
Group
2021
7,567
2,264
5,638
Group
2020
6,800
2,431
4,725
15,469
13,956
Company name
Country of
incorporation
Registered % holding
office of ordinary
shares
(see below)
Direct or
indirect
holding
Nature of business
James Cropper Speciality Papers Limited
England
(i)
100
Direct
Manufacturer of specialist
Inventories are stated after a provision for impairment of £1,522k (2020: £1,262k).
The cost of inventories recognised as expenses and included in cost of sales for the year ended 27 March 2021 was £59,464k
(2020: £89,348k).
paper and board
The Company does not have inventories.
James Cropper (Guangzhou) Trading Co Limited China
(iii)
100
Indirect
Sales and marketing
James Cropper Converting Limited
England
James Cropper 3D Products Limited
England
(i)
(i)
100
100
Direct
Direct
Technical Fibre Products Limited
England
(i)
100
Direct
organisation
Paper converter
Manufacturer of moulded
fibre products
Manufacturer of
advanced materials
TFP Hydrogen Products Limited
England
(i)
100
Indirect
Manufacturer of
electrochemical materials
100
Indirect
Holding company
Tech Fibers Inc
Technical Fibre Products Inc
USA
USA
(ii)
(ii)
14 Trade and other receivables
All figures in £’000
Trade receivables
Less: Provision for impairment of receivables
Trade receivables – net
Amounts owed by group undertakings
Provision for amounts owed by group undertakings
Other receivables
Prepayments
Group
2021
14,469
(961 )
13,508
-
-
245
1,339
Group
2020
17,267
(530 )
16,737
-
-
653
1,443
Company
2021
Company
2020
-
-
-
-
-
-
49,778
49,956
(260 )
254
831
(350 )
652
847
15,092
18,833
50,603
51,105
100
Indirect
Sales and marketing
The carrying value of trade and other receivables classified at amortised cost approximates fair value.
organisation
Manufacturer of metal
coated carbon fibres
Manufacturer of
metal coated fibres
Dormant company
Dormant company
Dormant company
Dormant company
Metal Coated Fibers Inc
USA
(ii)
100
Indirect
Electro Fiber Technologies LLC
USA
(ii)
100
Indirect
James Cropper EBT Limited
Melmore Limited
James Cropper Paper Limited
England
England
England
The Paper Mill Shop Company Limited
England
James Cropper Overseas Trading Limited
England
(i)
(i)
(i)
(i)
(i)
100
100
100
100
100
Direct
Direct
Direct
Direct
Direct
Marketing organisation
James Cropper Germany GmbH
Germany
(iv)
100
Indirect
Dormant company
(i) Burneside Mills, Kendal, Cumbria, England. LA9 6PZ
(ii) 679 Mariaville Road, Schenectady, NY 12306 USA
(iii) Level 54 Guangzhou IFC, 5 Zhujiang Road West, Zhujiang New Town. China
(iv) c/o DWF Germany Rechtsanwaltsgesellschaft mbH, Habsburgerring 2, 50674 Koln, Germany
TFP Hydrogen Products Limited, formerly PV3 Technologies Limited,
was acquired on 18 January 2021 by Technical Fibre Products Limited.
The Group does not hold any collateral as security.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for
trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and ageing.
The expected loss rates are based on the Group’s historical credit losses experienced. The historical loss rates are then adjusted for
current and forward-looking information on macroeconomic factors affecting the Group’s customers. The Group has identified the
current state of the economy and industry specific factors as the key macroeconomic factors in the countries where the Group operates.
Amounts owed by group undertakings include loans of £26m (2020: £26m) with a fixed term of one year with an interest charge of 3.6% pa.
Intercompany funding accounts of £22.6m (2020: £23m) and intercompany current accounts of £1.2m (2020: £0.8m) are settled within 30 days.
The Company has included a provision for impairment of amounts owed by group undertakings.
Further details of this can be found in note 19.2.
15 Other Financial Assets
All figures in £’000
Pulp Hedging fair value adjustment
Note
19
Group
2021
501
501
Group
2020
Company
2021
Company
2020
-
-
-
-
-
-
The gain arising in the Statement of Comprehensive Income on fair value hedging instruments was £nil (2019: £nil).
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
92
93
Notes to the Financial Statements
Notes to the Financial Statements
16 Trade and other Payables
All figures in £’000
Trade payables
Amounts owed to group undertakings
Other tax and social security payable
Other payables
Accruals
Deferred consideration1
Due within one year
Note
24
Group
2021
8,559
-
1,188
250
5,386
397
Group
2020
7,232
-
636
717
7,959
-
Company
2021
Company
2020
2,022
19,345
371
238
1,013
-
3,354
17,280
175
421
1,191
-
15,780
16,544
22,989
23,421
The fair values of trade and other payables approximate their carrying values presented.
1 Deferred consideration is the fair value of consideration on the acquisition of PV3 Technologies Ltd
(now known as TFP Hydrogen Products Ltd), acquired on 18 January 2021 and due to be paid by 27 October 2021.
All figures in £’000
Contingent consideration2
Due after one year
Note
24
Group
2021
401
401
Group
2020
Company
2021
Company
2020
-
-
-
-
-
-
2 Contingent consideration is the fair value of earn out consideration on the acquisition of PV3 Technologies Ltd
(now known as TFP Hydrogen Products Ltd, based on the estimated future performance of the subsidiary against earn out targets.
Note
2021
2020
19
19
16
-
16
41
234
275
17 Other Financial Liabilities
Group and Company
All figures in £0’000
Interest rate swaps used for hedging
Foreign exchange rate swaps for hedging
The liabilities are held at fair value.
18 Borrowings
All figures in £’000
Current
Reconciliation of net cash flow to net debt
Group
All figures in £’000
Loans repayable within 1 year
Loans repayable after 1 year
Lease liabilities repayable
within 1 year
Lease liabilities repayable
after 1 year
Total borrowings
Cash and cash equivalents
Net Debt
Group
All figures in £’000
Loans repayable within 1 year
Loans repayable after 1 year
Lease liabilities repayable
within 1 year
Lease liabilities repayable
after 1 year
Total borrowings
Cash and cash equivalents
28 March
2020
(3,008 )
(11,541 )
(14,549 )
(748 )
RoU
termination/
reassessment
-
-
-
-
Cash
flow
3,008
1,513
4,521
817
Exchange
Interest Reclassify movement
-
-
-
(147 )
(7,804 )
7,804
-
(614 )
195
316
511
-
27 March
2021
(7,609 )
(1,908 )
(9,517 )
(692 )
(4,722 )
323
(597 )
-
614
324
(4,058 )
(5,470 )
(20,019 )
8,964
(11,055 )
323
323
220
4,741
-
(1,537 )
323
3,204
(147 )
(147 )
-
(147 )
-
-
-
-
324
835
(4,750 )
(14,267 )
(662 )
6,765
173
(7,502 )
30 March
2019
Application
of IFRS 162
(767 )
(8,226 )
(8,993 )
(778 )
-
-
-
-
Cash
flow
767
(6,068 )
(5,30 )
969
Exchange
Interest Reclassify movement
28 March
2020
-
-
-
-
(2,966 )
2,966
-
(939 )
(42 )
(213 )
(3,008 )
(11,541 )
(255 )
(14,549 )
-
(748 )
(1,142 )
(4,210 )
-
(158 )
950
(162 )
(4,722 )
(1,920 )
(10,913 )
2,352
(4,210 )
969
(4,210 )
(4,332 )
-
6,519
(158 )
(158 )
-
11
11
-
11
(162 )
(5,470 )
(417 )
(20,019 )
93
8,964
(324 )
(11,055 )
Note
Group
2021
Group
2020
Company
2021
Company
2020
Net Debt
(8,561 )
(4,210 )
2,187
(158 )
Bank loans and overdrafts due within one year or on demand:
Bank overdraft
Unsecured bank loans1
Lease liabilities2
Non-current loans
Unsecured bank loans1
Lease liabilities2
-
7,609
692
8,301
1,908
4,058
5,966
-
3,008
748
3,756
11,541
4,722
16,263
-
-
94
94
100
111
211
-
-
174
174
7,900
83
7,983
19.3
19.3
19 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
1 Bank loans bear interest at rates between 1.50% and 2.75% above 30 day LIBOR rates.
2 The Group initially applied IFRS 16 at 31 March 2019 and recognised £4.2m of lease liabilities on the balance sheet.
The Group applied IFRS 16 using the modified retrospective approach, under which comparative information was not
restated and the cumulative effect of applying IFRS 16 was recognised in retained earnings at the date of initial application.
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 Directors’ report.
Exposure to the financial risks noted, arise in the normal course of the Group’s business.
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
94
95
19.1 Financial instruments by category
The fair values of the financial assets and liabilities of the Group are as follows:
Notes to the Financial Statements
Notes to the Financial Statements
Fair value through
profit or loss
Amortised cost
loans and receivables
Note
2021
2020
2021
2020
The table below analyses financial instruments carried at fair value, by valuation method.
Level 2: other techniques for which all inputs which have significant effect on the recorded fair value are observable, either directly or indirectly:
Group
All figures in £’000
Financial assets
Current
Trade receivables
Other receivables
Derivatives
Cash and cash equivalents
Financial liabilities
Current
Trade payables
Other payables
Accruals
Deferred consideration1
Derivatives
Short term borrowings
Non-current
Long term borrowings
Contingent consideration1
1 For details on valuation, please refer to note 24
Company
All figures in £’000
Financial assets
Current
Amounts owed by group undertakings
Other receivables
Prepayments
Derivatives
Cash and cash equivalents
Financial liabilities
Current
Trade payables
Amounts owed to group undertakings
Other payables
Tax and social security
Accruals
Derivatives
Short term borrowings
Non-current
Long term borrowings
14
14
15
16
16
16
16
17
18
18
16
-
-
501
-
501
-
-
-
397
16
-
413
-
401
401
-
-
-
-
-
-
-
-
-
275
-
275
-
-
-
13,508
245
-
6,765
20,518
8,559
250
5,386
-
-
8,301
22,496
5,966
-
5,966
16,737
653
-
8,964
26,354
7,232
717
7,959
-
-
3,756
19,664
16,263
-
16,263
Fair value through
profit or loss
Amortised cost
loans and receivables
Note
2021
2020
2021
2020
14
14
14
15
16
16
16
16
16
17
18
18
-
-
-
-
-
-
-
-
-
-
-
16
-
16
-
-
-
-
-
-
-
-
-
-
-
-
275
-
275
49,518
49,606
254
831
-
2,861
53,464
2,022
19,345
238
371
1,013
-
94
652
847
-
6,658
57,763
3,354
17,280
421
175
2,191
-
174
23,084
23,595
-
211
7,983
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other payables,
and loans and borrowings. Due to their short term nature, the carrying values of cash and cash equivalents, trade and other receivables,
and trade and other payables approximates their fair value.
All figures in £’000
Financial assets (Group)
Derivatives
Financial liabilities (Group and Company)
Derivatives
19.2 Credit risk
2021
Level 2
501
-
2021
Total
501
-
2020
Level 2
-
-
2020
Total
-
-
16
16
275
275
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 as at the 27 March 2021 (2020: 28 March 2020) were:
All figures in £’000
JC Speciality Papers
JC Converting
JC 3D Products
Technical Fibre Products
Trade receivables
Provision for impairment on trade receivables
The Company does not have trade receivables.
The majority of trade receivables are covered by credit insurance.
2021
8,104
1,398
590
4,377
14,469
(961 )
13,508
At 27 March 2021 the lifetime expected loss provision for trade receivables is as follows:
Expected loss rate
Gross carrying amount (£'000)
Loss provision
Not past due
Past due
0 - 30
Past due
31 - 60 days
Past due
over 60 days
6.5 %
13,416
872
8 %
983
80
10 %
57
6
20 %
13
3
2020
9,323
1,994
648
5,302
17,267
(530 )
16,737
Total
-
14,469
961
All trade receivables have been reviewed under the expected credit loss impairment model and a provision of £961k (2020: £530k)
has been recorded accordingly.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision
for trade receivables. The expected loss rates are based on the Group’s historical credit losses experienced. The historic loss rates
are then adjusted for current and forward looking information on macro-economic factors affecting the Group’s customers.
Movements in provision for impairment on trade receivables.
Group
All figures in £’000
Balance at Start of period
Increased during the period
Utilised during the period
Balance at end of period
2021
2020
530
431
-
961
222
319
(11 )
530
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
96
97
Notes to the Financial Statements
Notes to the Financial Statements
Provision for impairment - company disclosure:
Due to the uncertainty at this time that Covid-19 creates it is possible that market events may materialise that can't currently be foreseen.
Should events unfold that significantly adversely impact the cash flows of the trading divisions James Cropper PLC will support its trading
divisions. Given the high levels of uncertainty in these unprecedented times James Cropper PLC will therefore recognise an expected credit
loss in respect of intra-group loans should such assistance be required 12 months from now.
The Expected Credit Loss is based on a 1.0% probability (2020:1.0%) that the loan receivables become impaired which is in line with the
credit losses applied to the Group’s trade receivables to derive the lifetime expected loss provision for trade receivables.
Credit risk arises from the potential of subsidiary companies defaulting on intra-group loans.
Intra-group loan receivables at 27 March 2021 are:
All figures in £’000
JC Speciality Papers Limited
JC Converting Limited
JC 3D Products Limited
Technical Fibre Products Limited
Provision for impairment
Net Intra-group loans
Company
All figures in £’000
Balance at the start of the period
Credited/(released) during the period
(Utilised) during the period
Balance at the end of the period
19.3 Liquidity risk
2021
2020
12,000
12,000
3,000
4,000
7,000
3,000
4,000
7,000
26,000
26,000
(260 )
(350 )
25,740
25,650
350
(90 )
-
260
-
350
-
350
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 27 March 2021 (2020: 28 March 2020),
was as follows:
Group
All figures in £’000
2021
Lease
2020
Lease
Debt liabilities Derivatives Total Debt liabilities Derivatives Total
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
7,609
1,808
100
-
692
702
1,256
2,100
16 8,317
- 2,510
- 1,356
- 2,100
3,008
607
10,934
-
748
626
1,742
2,354
275 4,031
- 1,233
- 12,676
- 2,354
Company
All figures in £’000
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
9,517
4,750
16 14,283 14,549
5,470
275 20,294
2021
Lease
2020
Lease
Debt liabilities Derivatives Total Debt liabilities Derivatives Total
-
-
100
100
94
72
39
205
16
-
-
110
72
139
-
-
7,900
16
321
7,900
174
14
69
257
449
275
-
14
- 7,969
275 8,432
Trade payables
Trade payables at the reporting date was:
All figures in £’000
Trade payables at the reporting date was
Total contractual cash flows
Group
2021
8,559
8,559
Group
2020
Company
2021
Company
2020
7,232
7,232
2,022
2,022
3,354
3,354
Borrowing facilities
The Group has the following undrawn committed borrowing facilities available at 27 March 2021:
All figures in £’000
Expiring within one year
Expiring after one year
Group
at 27 March 2021
Floating rate
4,168
7,092
Group
at 28 March 2020
Floating rate
3,500
1,867
December 2020
June 2021
December 2021
May 2022
February 2023
October 2023
19.4 Currency risk
-
3,432
4,177
1,808
-
100
2,199
-
1,416
4,934
6,000
-
9,517
14,549
-
-
-
-
-
100
100
-
-
-
1,900
6,000
-
7,900
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 USA. 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.
Represented below is the net exposure to foreign currencies, reported in pounds sterling, and arising from all Group activities,
as at 27 March 2021.
All figures in £’000
Trade Receivables
Cash and cash equivalents
Trade Payables
Unsecured current loans
Lease liabilities current
Unsecured non-current loans
Lease liabilities non-current
Net exposure
USD
3,268
4,813
(2,914 )
(4,177 )
(107 )
(1,808 )
(2,579 )
(3,504 )
Euro
2,987
2,159
(1,141 )
-
-
-
-
4,005
RMB
-
36
-
-
-
-
-
36
GBP
7,253
(243 )
(4,504 )
(3,432 )
(585 )
(100 )
(1,479 )
(3,090 )
Total
13,508
6,765
(8,559 )
(7,609 )
(692 )
(1,908 )
(4,058 )
(2,553 )
2021
2020
All figures in £’000
The Group’s expiry profile of the drawn down facilities is as follows:
Group
Company
27 March 2021 28 March 2020 27 March 2021 28 March 2020
Company
Group
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
98
99
Notes to the Financial Statements
Notes to the Financial Statements
At the 28 March 2020 the Group's exposure to foreign currency risk was as follows:
19.5 Interest rate risk
All figures in £’000
Trade Receivables
Cash and cash equivalents
Trade Payables
Unsecured current loans
Lease liabilities current1
Unsecured non-current loans
Lease liabilities non-current
Net exposure
USD
5,574
3,584
(1,239 )
(809 )
(103 )
(3,641 )
(3,005 )
361
Euro
3,712
1,315
(1,045 )
-
-
-
-
RMB
18
109
-
-
-
-
-
GBP
7,433
3,956
(4,948 )
(2,199 )
(645 )
(7,900 )
(1,717 )
3,982
127
(6,020 )
This represents the net exposure to foreign currencies, reported in pounds Sterling, and arising from all Group activities.
At the 27 March 2021 the Company's exposure to foreign currency risk was as follows:
All figures in £’000
Cash and cash equivalents
Trade payables
Lease liabilities current
Unsecured non-current loans
Lease liabilities non-current
Net exposure
USD
1,849
(1 )
-
-
-
Euro
1,974
(3 )
-
-
-
GBP
(962 )
(2,018 )
(94 )
(100 )
(111 )
1,848
1,971
(3,285 )
At the 28 March 2020 the Company's exposure to foreign currency risk was as follows:
All figures in £’000
Bank overdrafts
Trade payables
Lease liabilities current
Unsecured current loans
Lease liabilities non-current
Net exposure
USD
1,875
(2 )
-
-
-
Euro
1,223
(26 )
-
-
-
1,873
1,197
GBP
3,560
(3,326 )
(174 )
(7,900 )
(83 )
(7,923 )
Total
16,737
8,964
(7,232 )
(3,008 )
(748 )
(11,541 )
(4,722 )
(1,550 )
Total
2,861
(2,022 )
(94 )
(100 )
(111 )
534
Total
6,658
(3,358 )
(174 )
(7,900 )
(83 )
(4,853 )
A one percent strengthening of the pound against the Euro and the US Dollar at 28 March 2020 would have had the following
impact on equity and profit by the amounts shown below.
Group
27 March 2021
27 March 2021
28 March 2020
28 March 2020
Equity
£’000
Income
£’000
Company
Equity
£’000
Income
£’000
USD
Euro
USD
Euro
11
(42 )
(4 )
(39 )
(1 )
(21 )
(43 )
(26 )
27 March 2021
27 March 2021
28 March 2020
28 March 2020
USD
Euro
USD
Euro
(18 )
(20 )
(19 )
(12 )
-
-
-
-
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.
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 matures in June 2021 (USD). Under the swap the maximum base rates the Group will pay on bank borrowings
of up to £3m is 0.66% and $3m is 1.99%. The exposure is measured on variable rate debt and instruments. The net exposure to interest rates
at the Statement of Financial Position date can be summarised as follows:
The net exposure to interest rates at the balance sheet date can be summarised as follows:
Group
2021
Group
2020
Company
2021
Company
2020
All figures in £’000
Interest bearing liabilities - floating
Borrowings
Interest bearing liabilities - fixed
Borrowings
Lease liabilities
9,517
9,517
-
4,750
4,750
14,549
14,549
-
5,470
5,470
100
100
-
205
205
305
2020
%
2.35
2.30
7,900
7,900
-
257
257
8,157
2019
%
1.85
2.20
Interest bearing liabilities
14,267
20,019
The effective interest rates at the balance sheet date were as follows:
Bank overdraft
Borrowings
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 £37k for the Group and £21k 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.
Group
27 March 2021
28 March 2020
Income statement
£’000
Company
37
64
27 March 2021
28 March 2020
Income statement
£’000
21
38
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
100
101
Notes to the Financial Statements
Notes to the Financial Statements
19.6 Derivative contracts
Derivative assets
All figures in £’000
Derivatives designated as hedging instruments
Pulp Hedge
Total derivatives designated as hedging instruments
Total derivative financial assets
Current portion
2021
2020
501
501
501
501
-
-
-
-
The Group has entered into a hedging arrangement for 30% of the pulp requirements for the nine months to December 2021.
The valuation is based on a mark to market basis with reference to forward curves adjusted for internal banking arrangements.
As of 27 March 2021, the only movement in the period is with the hedging instrument as noted above. The hedged item, being the pulp
purchases, has not yet occurred.
Derivative liabilities
All figures in £’000
Derivatives designated as hedging instruments
Interest rate swaps
Forward foreign exchange contracts
Total derivatives designated as hedging instruments
Total derivative financial liabilities
Less non-current portion
Interest rate swaps
Forward foreign exchange contracts
Current portion
2021
2020
16
-
16
16
-
-
16
41
234
275
275
(7 )
-
268
The Group has elected to adopt the hedge accounting requirements of IFRS9 Financial Instruments. The Group enters into hedge
relationships where the critical terms of the hedging instrument and the hedged item match, therefore, for the prospective assessment
of effectiveness a qualitative assessment is performed. Hedge effectiveness is determined at the origination of the hedging relationship.
Quantitative effectiveness tests are performed at each period end to determine the continuing effectiveness of the relationship. In instance
where changes occur to the hedged item which result in the critical terms no longer matching, the hypothetical derivative method is used
to assess effectiveness.
Cash flow interest rate swaps
The Group manages its cash-flow interest rate risk by using floating-to-fixed interest rate swaps.
Normally the Group raises long-term borrowing at floating rates and swaps them into fixed rates.
The hedging ratio is 1:1 with the Group having one interest rate swap of US$3,000,000 hedging the same amount
of underlying debt.
The ineffective portion is recognised in finance expense that arose from cash flow hedges amounts to a loss of £32k (2020: £84k loss).
Gains and losses that relate to designated and effective hedging instruments are recognised in other comprehensive income
and tracked separately.
At 27 March 2021, the main floating rates were LIBOR and US LIBOR. Gains and losses recognised in the cash flow hedging reserve in
equity on interest rate swap contracts as at 27 March 2021 will be released to the consolidated statement of comprehensive income as the
related interest rate expense is recognised.
The Group has not early adopted the IASB's Interest Rate Benchmark Reform amendments to IFRS9.
The effects of the cash flow interest rate swap hedging relationships are as follows as at 27 March 2021:
All figures in £’000
Carrying amount of the derivatives
Change in fair value of the designated hedging instrument
Change in fair value of the designated hedged item
Notional amount
Maturity date
2021
2020
16
24
(24 )
2,170
41
64
(64)
5,427
17/06/21
17/06/21
Cash flow forward foreign exchange contracts
Foreign exchange risk arises when individual group operations enter into transactions denominated in a currency other than their functional
currency. Where the risk to the Group is considered to be significant, Group treasury will enter into a matching forward foreign exchange
contract with a reputable bank.
The hedging ration is 1:1, with the Group committing to sell forward highly probable forecast Euro receipts to an equal value of the foreign
exchange contracts.
The hedged forecast transactions denominated in foreign currency are expected to occur at various dates in the next 12 months. Gains and
losses on the effective element of forward foreign exchange contracts as at 27 March 2021 are recognised in the consolidated statement of
comprehensive income and tracked separately in the period or periods during which the hedged forecast transactions affects the consolidated
statement of comprehensive income. This is expected to be within 12 months of the end of the financial year in respect of the forward
currency contracts taken out as at 27 March 2021.
No ineffective portion of the forward foreign exchange contract was recognised in the consolidated statement of comprehensive income in
the period.
The effects of the cash flow forward foreign exchange contract hedging relationships are as follows as at 27 March 2021:
All figures in £’000
Carrying amount of the derivatives
Change in fair value of the designated hedging instrument
Change in fair value of the designated hedged item
Notional amount
Maturity date
Net investment in a foreign operation
2021
-
-
-
-
-
2020
234
234
(234 )
6,279
15/03/21
The Group manages the risk that changes in exchange rates have on its net investment in foreign operations using loans
payable in the same currency as the functional currency of its foreign operations.
At the inception of the hedge the hedging ratio between the overseas assets and the foreign currency loan is a ratio of 1:1.
For the years ended 27 March 2021 and 28 March 2020 there were no significant amounts recognised in profit or loss relating
to the ineffective portion of hedges or portions excluded from the assessment of hedge effectiveness.
Gains and losses that relate to designated and effective hedging instruments is recognised in other comprehensive income
and tracked separately.
At 27 March 2021, the foreign operations were denominated in USD.
All figures in £’000
Carrying amount of the loan payable
Change in fair value of the designated hedging instrument
Change in fair value of the designated hedged item
Notional amount
Maturity date
2021
1,808
(1,201 )
1,437
2,893
2020
607
2,271
(2,110 )
3,237
22/12/21
22/12/21
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
102
103
Notes to the Financial Statements
Notes to the Financial Statements
20 Retirement benefits
The amounts recognised in the Statement of Financial Position (“SFP”) are determined as follows:
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:
All figures in £’000
Defined contribution schemes
Personal Pension contributions
2021
845
32
2020
832
31
Other pension costs totalled £835k (2020: £962k) and represent life assurance charges, government pension protection fund levies
and other current service costs.
Defined benefit plans
With effect from 1 April 2011 active members’ benefits were reduced such that future increases in pensionable salaries were restricted to a cap of
2% per annum. As from 1 April 2017 (Works Scheme) and 1 July 2017 (Staff Scheme) increases in pension once it is in-payment will be in line with
the annual increase in CPI. 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 were undertaken in April 2019 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:
All figures in £’000
2021
2020
2019
2018
2017
Defined benefit obligation (DBO)
Fair value of assets (FVA)
Deficit
Effect of limit on recoverable surplus
Net liability recognised in the SFP
Staff Scheme
Works Scheme
Deficit
Effect of limit on recoverable surplus
Net liability recognised in the SFP
(135,579 )
117,143
(18,436 )
-
(18,436 )
(1,383 )
(17,053 )
(18,436 )
-
(18,436 )
(121,470 )
113,968
(7,502 )
(1,880 )
(9,382 )
1,880
(9,382 )
(7,502 )
(1,880 )
(9,382 )
(132,646 )
(126,079 )
(128,026 )
109,998
106,607
105,832
(22,648 )
(19,472 )
(22,194 )
-
-
-
(22,648 )
(19,472 )
(22,194 )
(7,664 )
(14,984 )
(6,408 )
(13,064 )
(22,648 )
(19,472 )
(7,405 )
(14,789 )
(22,194 )
-
-
-
(22,648 )
(19,472 )
(22,194 )
The key risks relating to the pension schemes can be found in the Pension Report on pages 17 to 19.
Staff Scheme
Works Scheme
The fair value of the plan assets comprises the following categories of asset in the stated proportions:
All figures in %
CPI Inflation assumption
RPI Inflation assumption
Rate of increase in pensionable salaries
Discount rate
Pension increases for in-payment benefits capped at 5%, with a 3% floor
2021
2.65
3.15
1.65
1.95
3.60
Pension increases for in-payment benefits capped at 2.5%, with a 0% floor
2.00
2020
2021
1.8
2.55
1.40
2.50
3.45
1.55
2.70
3.15
1.65
2.05
3.40
2.05
2020
1.75
2.50
1.40
2.55
3.15
1.50
The mortality assumptions have been set in line with the best-estimate results of the Medically Underwritten Mortality study carried out
as part of the ongoing 2019 actuarial valuation. In respect of mortality for the Works members the assumptions adopted at 28 March 2020
are 142% of the SAPS “S3” series table, with future improvements in line with the CMI core 2019 projection model with long-term trend
improvements of 1.25% pa. For the Staff members the SAPS “S3” series table with a 142% rating has been used, with future improvements
in line with the CMI core 2019 projection model with long term trend improvements of 1.25% pa.
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 method adopted for determining the discount rate has been selected as the most appropriate following specialist advice and the
discount rate has been calculated based on a yield curve at an appropriate duration to the schemes’ liabilities. A decrease in the
discount rate by 0.25% would increase the defined benefit obligations by 3.7% for the staff scheme and 4.4% for the works scheme.
Pension payments are not expected to peak until 2040, and expected to continue until 2080.
All figures in %
Managed Growth
Annuities
Cash
Matching Assets
Staff Scheme
Works Scheme
2021
66.8
2.6
1.1
29.5
2020
66.4
2.6
1.3
29.7
2021
73.1
-
1.1
25.8
2020
71.8
-
1.4
26.8
The pension plan assets do not include any investments in the shares of the Company (2020: nil).
Apart from the annuities and cash, the assets of the schemes are held in an unquoted investment fund managed by the schemes’ fiduciary
manager and comprising combinations of the above assets. Within those funds, the indirect equity exposures are predominantly quoted.
The assets in the Matching Assets captions holdings of cash and swaps, designed to match the sensitivity of the schemes to movements in
long term interest rates and inflation expectations.
The amounts recognised in the Statement of Comprehensive Income are as follows:
All figures in £’000
2021
2020
Total included within employee benefit costs - current service costs, past service costs and administration costs
1,034
1,188
Interest income on plan assets
Interest cost on the defined benefit obligation
Total included within interest
Total
(2,837 )
3,076
239
1,273
(2,679 )
3,223
544
1,732
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
104
105
Notes to the Financial Statements
Notes to the Financial Statements
Analysis of the movement in the Statement of Financial Position liability
Sensitivity analyses
All figures in £’000
At 28 March 2020 / 30 March 2019
Total expense as above
Contributions paid
Actuarial gains / (losses) recognised in Other Comprehensive Income
At 27 March 2021 / 28 March 2020
2021
(9,382 )
(1,273 )
969
(8,750 )
2020
(22,648 )
(1,732 )
1,941
13,057
(18,43 6)
(9,382 )
The actual return on plan assets was £6,579k (2020: £5,372k). The Company expects to pay £474k (2020: £416k) in contributions to the Staff
Scheme and £810k (2020: £1,463k) in contributions to the Works Scheme in the next financial period. The minimum funding requirement
does not give rise to an additional liability under IFRIC 14.
Following the April 2019 triennial valuation, a deficit recovery plan was agreed with the Trustees which included additional contributions
of £1.3m pa to reduce the past service deficits from 1 April 2021.
The cumulative amount of actuarial losses recognised in the Statement of Comprehensive Income, since the adoption of IAS 19,
are £16,925k (2020: £8,175k).
All figures in £’000
Works Scheme
2021
Assets
2021
DBO
Staff Scheme
2021
Assets
2021
DBO
Works Scheme
2020
Assets
2020
DBO
Staff Scheme
2020
Assets
2020
DBO
At 28 March 2020 / 30 March 2019
60,456
(69,838 )
53,512
(51,632 )
57,009
(71,993 )
52,989
(60,653 )
Interest Income on plan assets
1,521
-
1,316
-
1,398
-
1,281
-
Current service costs
Benefits paid
Past service costs
Return on plan assets
Contributions by plan participants
Employer contributions
290
697
(290 )
-
112
272
(112 )
319
(319 )
-
1,324
-
Interest cost on the DBO
-
(1,760 )
-
(40 )
-
-
(1,269 )
(28 )
-
-
(1,758 )
-
122
617
-
-
(122 )
-
(1,465 )
-
1,713
(9,091 )
2,029
(5,328 )
2,056
3,444
637
8,800
At 27 March 2021 / 28 March 2020
62,047
(79,100 )
55,096
(56,479 )
60,456
(69,838 )
53,512
(51,632 )
Experience adjustments
All figures in £’000
Arising on plan assets
Percentage of scheme assets
2021
5,669
2020
2,693
2019
2,503
2018
(1,161 )
2017
9,505
4.84 %
2.36 %
2.28 %
(1.09 %)
8.98 %
Arising on plan liabilities
(14,419 )
12,244
(5,761 )
3,754
(21,383 )
Percentage of scheme liabilities
(10.64 %)
10.08 %
(4.34 %)
2.98 %
(16.70 %)
(124 )
(587 )
(31 )
(224 )
(1,109 )
(753 )
(26 )
(300 )
All figures in £’000
(2,506 )
2,506
(2,114 )
2,114
(1,541 )
1,541
(2,108 )
2,108
The sensitivity analyses below have been determined based on reasonable possible changes to the respective assumptions occurring at the
end of the reporting period, while holding all other assumptions constant. The sensitivity analyses may not be representative of the actual
changes in the net retirement benefits as it is unlikely that the changes in assumptions would occur in isolation of one another and some of
the assumptions may be inter-related.
Current assumption
Sensitivity
£’000
Effect on DBO
Staff Scheme
Discount rate
Price inflation
1.95%pa
3.15%pa (RPI)
2.65%pa (CPI)
0.25% decrease
2,139
0.25% increase
Mortality
142% of SAPS “S3” series table
Increase in life expectancy of 1 year
Works Scheme
Current assumption
Sensitivity
£’000
Effect on DBO
Discount rate
Price inflation
2.05%pa
3.15%pa (RPI)
2.70%pa (CPI)
0.25% decrease
3,597
0.25% increase
Mortality
142% of SAPS “S3” series table
Increase in life expectancy of 1 year
21 Deferred taxation
The movement on the deferred tax account is shown below:
Company
2021
Company
2020
At 28 March 2020 / 30 March 2019
(Charge)/credit to other comprehensive income
Charge to equity
Adjustments in respect of prior years
(Charge)/credit to income statement
Movement arising from acquisition of business
At 27 March 2021 / 28 March 2020
Group
2021
(292 )
1,663
-
145
150
(183 )
1,483
Group
2020
2,234
(2,481 )
(125 )
-
80
-
(292 )
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.
Deferred tax assets
Group
Company
All figures in £’000
At 30 March 2019
(Charge)/Credit to income statement
Charge to equity
Credit to other comprehensive income
At 28 March 2020
Adjustment in respect of prior years
Credit/(charge) to income statement
Charge to other comprehensive income
At 27 March 2021
Share
Pension options Other
Total
Share
Pension options Other
3,850
413
37
111
-
(125 )
(2,481 )
1,782
-
58
1,663
3,503
-
23
(7 )
57
-
73
159
(43 )
-
-
4,046
3,850
481
(125 )
413
-
(125 )
(2,481 )
(2,481 )
56
73
-
-
116
1,921
1,782
6
31
-
(1 )
146
-
58
1,663
1,663
153
3,729
3,503
129
1,934
-
1
-
(7 )
116
1,663
130
3,706
641
3,206
851
4,017
1,820
1,663
-
(7 )
128
-
3,604
37
111
-
23
(7 )
57
-
73
+3.6%
+1.1%
+5.7%
+4.5%
+1.1%
+5.1%
3,840
(2,481 )
(125 )
(5 )
591
-
1,820
Total
3,943
597
(125 )
(2,481 )
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
106
107
Notes to the Financial Statements
Notes to the Financial Statements
Deferred tax liabilities
All figures in £’000
Group
Accelerated capital
allowances
Company
Accelerated capital
allowances
Total
At 30 March 2019
Adjustment on initial application of IFRS 16
(Charge)/Credit to income statement
At 28 March 2020
Adjustment in respect of prior years
Charge to income statement
Movement arising from acquisition of business
At 27 March 2021
(1,812 )
-
(401 )
(2,213 )
144
5
(182 )
(2,246 )
(1,812 )
-
(401 )
(2,213 )
144
5
(182 )
(2,246 )
(104 )
(5 )
(5 )
(114 )
-
12
-
(102 )
Total
(104 )
(5 )
(5 )
(114 )
-
12
-
(102 )
24 Business combinations
Acquisition of PV3 Technologies Limited
Technical Fibre Products Limited acquired 100% of the share capital of PV3 Technologies Limited on 18 January 2021
for a total fair value consideration of £2,588,000 on a debt and cash free basis.
PV3, established in 2011, is based in Launceston, Cornwall, and is a specialist in materials for electrochemical technologies.
The company develops and manufactures a range of products which include coated electrodes, high performance catalyst powders
for use in fuel cells and electrolysis, as well as water electrolyser materials which improve system efficiency and durability, reducing
the cost of green hydrogen. PV3 serves a small number of customers, mainly within the hydrogen sector and is well placed to grow
within the hydrogen production market and has existing capacity in place to grow substantially. In addition to having complementary
technologies to TFP, PV3 also shares the same emphasis on customer collaboration and product development. On 23 February 2021,
the name of the Acquisition was changed from PV3 Technologies Limited to TFP Hydrogen Products Limited.
TFP Hydrogen Products Limited’s revenue for the year ended 27 March 2021 was £862,659 with a loss after tax of £307,939.
TFP Hydrogen Products Limited’s revenue of £59,797 and loss after tax of £199,878 since the date of acquisition have been
included in the Consolidated Income statement (page 108).
Details of net assets acquired, as adjusted from book to fair value, are as follows:
22 Share capital
Group and Company
Issued and fully paid
Number of ordinary shares
£’000
All figures in £’000
Net assets acquired
Note
Book value
Revaluation
Fair value
At 27 March 2021 and 28 March 2020
9,554,803
2,389
Property, plant and equipment
Potential issue of ordinary shares
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 92,060 ordinary shares of 25p by August 2023 (2020: 52,163 ordinary shares of 25p by August
2022). There were no share options exercised in the period (2020: nil). Further information on directors share options can be seen in the
Remuneration Committee Report.
Options at 30 Options granted Options exercised
in the period
in the period
March 2019
Options not Options lapsed
Options at
expected to vest
in the period March 2020
Share options
52,163
48,352
nil
nil
(8,455 )
92,060
The amount of gains made by Directors on no share options exercised in the year totalled £nil (2020: £nil).
The Statement of Comprehensive Income includes LTIP charges of £251,780 for the year in relation to Directors (2020: £255,885 credit).
23 Employees and directors
Staff costs during the period
All figures in £’000
Wages and salaries
Social Security costs
Pension costs (note 20)
Restructuring costs (note 27)
Group
2021
22,761
2,251
2,287
1,118
28,417
Group
2020
25,567
2,325
2,496
-
30,388
Company
2021
Company
2020
2,678
379
786
289
4,132
4,284
407
898
-
5,589
Intangible assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Trade and other payables
Deferred tax liabilities
Total liabilities
Net assets acquired
Goodwill arising on acquisitions
Total consideration
Comprising
Consideration paid in cash on 18 January 2021
PPA adjustments paid on 18 January 2021
Deferred consideration at fair value2
Contingent consideration at fair value3
Total consideration at fair value
Net cash outflow arising on acquisition
Consideration paid in cash
Cash acquired
Transaction costs paid
The average monthly number of people (including executive directors) employed in the Group during the year, analysed by division
was as follows:
Net cash paid per consolidated statement of cash flows
10
9
8
16
16
27
71
-
124
207
815
1,217
(667 )
-
(667 )
550
-
-
-
-
-
-
-
-
-
-
-
957
-
-
-
957
-
(183 )
(183 )
774
-
-
-
-
-
-
-
-
-
-
71
957
124
207
815
2,174
(667 )
(183 )
(850 )
1,324
1,264
2,588
1,600
190
397
401
2,588
1,790
(815 )
384
1,359
All figures in Number
James Cropper Paper Products
ColourformTM
Technical Fibre Products
James Cropper PLC
Full Time Equivalent
2021
2020
366
26
119
62
573
381
26
112
65
584
Headcount
1 Transaction costs of £384k were charged to the consolidated income statement.
2021
377
27
125
84
613
2020
391
27
117
91
626
2 Deferred consideration of £400k is due to be paid by 27 October 2021 and has been discounted at the cost of debt (1.6%).
3 Contingent consideration is based on the formula defined in the Sales and Purchase Agreement and estimated to be £663k,
discounted by the weighted average cost of capital (17%).
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
108
109
Notes to the Financial Statements
Group
2021
730
Group
2020
4,172
Company
2021
Company
2020
3
119
The Group has taken advantage of the exemption not to disclose intra-group transactions that are eliminated on consolidation.
TFP Hydrogen Products Ltd paid £5,500 to NRD Ventures Ltd, a company in which David Hodgson (Director of TFP Hydrogen
Products Ltd) is a Director, for rental of premises in Launceston, Cornwall, used as the main premises for TFP Hydrogen Products Ltd.
28 Related party transactions
Group
25 Capital commitments
All figures in £’000
Contracts placed for future capital expenditure
not provided in the financial statements
Capital commitments include contracts placed by TFP totalling £430k (2020:£1.7m) for the extension of the factory and the new line 4.
26 Contingencies and post balance sheet events
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.
Company
The Company paid £40,000 (2020: £40,000) to Sir James Cropper (Honorary President) 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 £5,090 (2020: £240) to Ellergreen Group, a company in
which M A J Cropper (Chairman and Non-Executive Director) is a Director, in the period for maintenance work. The Company paid
£26,207 (2020: £16,416) to Ellergreen Group, a company in which M A J Cropper is a director, for imports of electricity from the
hydro-electric plant owned and operated by the Trust.
At the date of authorisation of these financial statements, the impact of the Covid-19 pandemic is ongoing.
For further details, please refer to the Chief Executives Review (pages 08 to 10) and the Chief Financial Officer’s Review (pages 12 to 16).
The Company also has the following transactions with related entities:
27 Exceptional items
Period ended 27 March 2021
Restructuring costs1
Transaction costs2
Exceptional items
Group
£’000
Company
£'000
1,118
384
1,502
289
-
289
1 The costs incurred during the restructuring of operations have been charged to the consolidated income statement under Employee
benefit costs (note 23), considered exceptional due to being non-recurring costs.
2 The transaction costs incurred on the acquisition of PV3 Technologies Ltd (now known as TFP Hydrogen Products Ltd)
by Technical Fibre Products Ltd on 18 January 2021 have been charged to the consolidated income statement under other expenses,
considered exceptional due to being non-recurring costs.
2021
All figures in £’000
James Cropper Speciality Papers Limited
James Cropper Converting Limited
James Cropper 3D Products Limited
Technical Fibre Products Limited
James Cropper Overseas Trading Limited
2020
All figures in £’000
James Cropper Speciality Papers Limited
James Cropper Converting Limited
James Cropper 3D Products Limited
Technical Fibre Products Limited
James Cropper Overseas Trading Limited
Compensation for key management
Management
charges
Receivable /
(Payable )
Loans and net
intercompany
funding
4,676
484
457
1,659
-
7,276
757
45
23
268
57
1,150
(7,345 )
8,943
11,034
16,652
-
29,284
Management
charges
Receivable /
(Payable )
Loans and net
intercompany
funding
5,647
-
429
1,569
-
7,645
617
62
(11 )
(8 )
29
690
(5,027 )
9,429
9,981
17,838
-
32,220
In accordance with IAS 24, “Related Party Disclosures”, key management personnel are those persons having authority and
responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, and includes directors
(both executive and non-executive) of James Cropper PLC. The Board and those members of the executive committee who are not
directors comprise the key management personnel of the Group. The remuneration of the directors is disclosed in the Report
of the Remuneration Committee (page 56).
All figures in £’000
Salaries and fees
Short term employee benefits
Short term bonuses
Pension costs
Termination benefits
Total
2021
1,132
148
-
70
73
2020
1,164
161
200
71
-
1,423
1,596
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
110
111
2020 – 2021 Shareholder Information
Reporting
Interim Results announced and sent to
Ordinary Shareholders
Final results announced
Notification of AGM issued by
10 November 2020
21 June 2021
7 July 2021
Annual General Meeting - at TFP offices, Burneside Mills, Kendal, Wednesday 28 July 2021 at 11.00am.
Dividends on Ordinary Shares
No interim dividend paid.
No final dividend proposed.
Advisers
Independent Auditor
BDO LLP, Manchester
Tax Advisers
PriceWaterhouseCoopers LLP, Manchester
NOMAD & Stockbrokers
Shore Capital, London
Corporate Lawyers
DWF LLP, Manchester
Bond Dickinson, Newcastle upon Tyne
Registrars
Link Asset Services, Beckenham
Pension Adviser
Willis Towers Watson, Manchester
James Cropper PLC
Telephone. +44 (0)1539 722 002
Email. info@cropper.com
Burneside Mills
Kendal, Cumbria LA9 6PZ
Great Britain
www.jamescropper.com
Company Registration No: 30226
112
Annual Report Production
All the paper used in this report has been made in England by James Cropper PLC.
Cover
VANGUARD®. Gold. 380mic.
RYDAL PACKAGING COLLECTION. Shadow Black 100% Recycled PCW. 350gsm.
Endpaper
RYDAL PACKAGING COLLECTION. Natural White 100% Recycled PCW. 220gsm.
The high use areas of this report, the cover and end paper, have been treated with PapergardTM.
Protected papers reduce the viability of Covid-19 by over 95% in only 15 minutes, and by 99.9% within 2 hours.
Inner Pages
Strategic Report
TYPOGRAPHIA. Flat White. 120gsm.
Governance
VANGUARD®. Ivory. 135gsm.
Financial Statements
VANGUARD®. Silver Grey. 100gsm.
Design
Plain Creative Ltd
Photography
James Cropper Archives
Steven Barber Photography
Plain Creative Ltd
Print
Titus Wilson Ltd
114
Registered Office: Burneside Mill s, Kendal, Cu mbria LA 9 6P Z
Re gistered in Englan d an d Wales N o. 3 0226