ANNUAL REPORT AND ACCOUNT S 2022
MORE THAN EVER, OUR PURPOSE AND VALUES
SIT AT THE HEART OF THE WAY WE RUN OUR COMPANY,
FROM OUR LONG-TERM STRATEGY TO DAILY DECISION
MAKING, THEY REFLECT HOW WE MAKE A POSITIVE
CONTRIBUTION TO THE WORLD AROUND US.
Phil Wild, CEO
Our purpose
Our values
PIONEERING MATERIALS
TO SAFEGUARD
OUR FUTURE
FORWARD THINKING.
RESPONSIBLE.
CARING.
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# Location
Manufacturing
R&D
Sales Office
Partners
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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
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# 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
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CONTENTS
STRATEGIC REPORT
07
08
09
10
12
16
21
24
28
30
34
37
40
44
46
47
49
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 Nominations Committee
Report of the Remuneration Committee
QCA Principles
Directors’ Report
FINANCIAL STATEMENTS
65
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
£104.9m
2022
2021
2020
2019
2018
78.8
33%
104.9
104.7
101.1
96.3
Adjusted profit before tax (iii)
£4.0m
1%
2022
2021
2020
2019
2018
4.0
4.0
4.0
6.7
5.8
(excluding IAS 19 Pension adjustments and exceptional items)
Geographical % segmentation of revenue
2022
2021
2020
2019
2018
UK
Europe
Americas
Asia
Other
10%
20%
30%
40%
50%
60%
Profit before tax
£2.8m
2022
2021
2020
2019
2018
1.7
2.8
2.6
62%
5.5
4.5
Basic and diluted EPS
14.2p
2022
2021
2020
2019
2018
14.2
16.4
24.3
Net borrowings (ii)
£12.6m
2022
2021
2020
2019
2018
Non GAAP Measures:
13%
50.6
43.0
68%
12.6
7.5
8.6
11.1
4.8
Gearing (i)
28%
2022
2021
2020
2019
2018
11%
28
17
26
21
12
(excluding IAS 19 Pension adjustments)
Capital expenditure
£6.8m
2022
2021
2020
2019
2018
3.1
5.2
1.9
6.8
116%
9.2
Gearing is calculated as the proportion of net debt to Total Shareholders' Equity, excluding the IAS19 Pension deficit.
(i)
(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 impact of IAS 19 and 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)
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
2022
104,922
4,585
2021
78,768
4,510
2020
2019
104,667
7,240
101,095
4,262
2018
96,312
6,133
4,045
4,023
6,674
3,962
5,825
(354 )
(914 )
2,777
14.2p
2022
81,846
(24,613 )
57,233
(9,847 )
47,386
(12,572 )
34,814
(1,502 )
(802 )
1,719
-
(1,215 )
5,459
16.4 p
50.6 p
-
-
(1,386 )
(1,284)
2,576
24.3 p
4,541
43.0 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
64,871
(16,236 )
48,635
(18,798 )
29,837
(8,561 )
59,899
(15,585 )
44,314
(16,162 )
28,152
(4,806 )
21,276
23,346
28 %
36 %
17 %
25 %
26 %
32 %
21 %
40 %
12 %
21 %
6,761
3,127
9,195
5,229
1,935
* Alternative performance measures (APMs) are defined on page 17.
(i)
The IAS 19 pension adjustments are explained in detail in the Financial Review section, pages 21 to 23. The total amount excluded from
the IAS pension Charge is £914k (2021: £802k). 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 £914k (2021: £802k) comprises:
All figures in £’000
Current service charge
Normal contributions
Interest charge
IAS 19 pension adjustment
Period ended 26 March 2022
Period ended 27 March 2021
1,203
(656 )
367
914
1,034
(471 )
239
802
Further details can be found on page 22 (The IAS 19 impact on profits).
08
09
Strategic Report - Chairman’s Letter
Strategic Report - Chairman’s Letter
OUR MANTRA SINCE THE EARLIEST DAYS OF
THE COVID CRISIS HAS BEEN TO 'EMERGE STRONGER'
AND I NOW BELIEVE WE HAVE SUCCEEDED.
Mark Cropper, Chairman
CHAIRMAN’S LETTER
Dear Shareholders,
The year to 26 March 2022 has been
yet again another long and memorable
year for the Company and all those
associated with it.
The challenges have continued with
the tail end of the pandemic, not so
long ago joined by the onset of the
Ukraine war. Both have led to dramatic
rises in input costs, in particular in relation
to energy. I am pleased to report the
Group has responded with mitigating
actions at every step and as a result our
revenues are back to pre-pandemic levels,
profits have risen and demand remains
high across all divisions.
The result has been driven in part by the
record performance of the TFP division,
which has seen strong organic sales and
the successful integration of the newly
rebranded TFP Hydrogen subsidiary,
following the acquisition of Limited
(PV3) Technologies in January 2021.
In financial terms, the Group reports a
profit before tax of £2.8m for the period.
This was up by 62% versus the prior
period with Group turnover rising by 33%,
split between Paper (+37%), TFP (+27%),
and Colourform (+19%).
This year has also seen several changes
at Board level. James Gravestock was
appointed Managing Director of the TFP
division and an Executive Director of the
Group, following the departure of Martin
Thompson. On behalf of the Board, I would
like to welcome James and to thank Martin
for his significant contribution over the past
18 years, not least his part in the significant
and sustained growth of the TFP division.
There were also significant changes
on the non-executive side of the board.
Our Senior Independent Director Dr
Andrew Hosty stepped down during the
year and I would also like to thank him for
his valuable contributions in recent years.
Following on from this the Board
chose to appoint two new non-executive
directors in November: Sarah Miles,
CEO of Feelunique.com, a market leader
in cosmetics and beauty e-commerce,
and Martin Court, Chief Commercial
Officer of Victrex PLC, the FTSE 250
advanced materials group. In April 2022
Martin assumed the role of Senior
Independent Director.
They both bring with them a wealth
of commercial experience and I am
delighted they chose to join us at an
exciting moment in our growth journey.
Turning to other themes, our growth
and product development strategies
are also ever more aligned with helping
our customers and consumers reduce their
environmental impact, whether via greener
papers and packaging or the advanced
materials TFP has developed for a wide
range of renewable energy.
Colourform continues to grow, with some
highly creative innovative packaging
products launched in the luxury beauty
and premium alcoholic beverage markets.
The division has generated a positive
EBITDA for the first time as it continues
to grow towards sustainable profitability.
The growth of our new subsidiary
TFP Hydrogen has exceeded expectations
in the year. This adds to the strong position
TFP has built up over many years as a
maker of materials and components for
both fuel cells and hydrogen electrolysers.
This sector is fast gaining traction as
a key element of the global transition
away from fossil fuels.
Furthermore, TFP is on track to shift
the majority of its sales to applications
supporting the Global Net Zero Carbon
emissions movement within the next five
years; helping us as a business to safeguard
and protect the future of our planet.
During the year we have progressed
our programme to deliver significant
decarbonisation by 2030 and the Paper
division’s ambition to source 50% of its
fibre from waste by 2025. We are also
taking further steps, not least via our
ESG sub-committee, to better monitor
and measure and ESG targets and further
evolve policies and programmes that align
with our Purpose and Values.
The Board is recommending a
final dividend of 7.5 pence per share,
making a total dividend for the year
of 10.0 pence per share. A final dividend
has not been paid since 2019 owing
to the pandemic. Earnings per share
have fallen by 13% to 14.2 pence.
I would like to thank our Board and all
of our employees for the resilience they
have shown during what have been very
challenging months and years.
and I am confident that this has truly
been the case.
Looking forward, the outlook remains
positive across the Group. While there
are short term challenges in the Paper
division due to external factors, we have
put in place measures to mitigate these
and plans are well underway to transition
all of the divisions away from natural gas.
The geopolitical climate has cemented
and accelerated Government support
for cleaner and greener hydrogen energy
and TFP has the power to help facilitate
this energy transition, by reducing
costs and improving accessibility.
Overall the green agenda represents
a significant growth opportunity for
all our divisions. Colourform will
continue to grow year-on-year and
Paper’s strategy to enrich margins will
also be significantly underpinned by
its environmental initiatives.
Closer to home, we also continue
to address our own impacts.
Our mantra since the earliest days of the
Covid crisis has been to 'emerge stronger'
Mark Cropper, Chairman
21 June 2022
10
11
Strategic Report - Chief Executive’s Review
Strategic Report - Chief Executive’s Review
YEAR IN REVIEW
Revenue
(2021: £78.8m)
Adjusted operating profit APM 1*
Excluding IAS 19 impact and exceptionals
(2021: £4.5m)
Adjusted profit before tax APM 2*
Excluding IAS 19 impact and exceptionals
(2021: £4.0m)
Profit before tax
(2021: £1.7m)
Net borrowings
(2021: £7.5m)
£104.9m +33%
£4.6m
+2%
£4.0m
+1%
£2.8m +62%
£12.6m +68%
Basic and diluted earnings per share
(2021: 16.4p)
14.2p
-13%
Full year dividend per share
(2021: nil)
10.0p
-
CHIEF EXECUTIVE’S REVIEW
I am pleased to report our financial
results for the period, which yet again
underline the continued resilience of the
Group as we successfully navigated two
unprecedented events - the end of the
Covid pandemic, which saw resource and
supply chain challenges, and the Ukraine
War, which sparked an energy crisis and
has compounded global inflation.
The Group has experienced strong
demand throughout the period and across
all divisions, with over 30% sales growth
in the current year to 26th March 2022,
which is ahead of previous market
expectations.
Profit in 2021 included £2.9m of Covid-19
related government grants. No grants
were included in 2022, demonstrating a
strong underlying Adjusted profit before
tax (APM 2) improvement from £1.1m
(excluding grants) in 2021 to £4.0m in 2022.
While all of the divisions have felt the
impact of these events in some way,
the Paper division was significantly
affected, as it is, by far, our most
energy-intensive division.
The division is accountable for 88% of the
Group’s energy expenditure, with costs in
the period 70% higher than the pre-Covid
period ending March 2020.
Up to the end of the period, the Group
had negotiated a fixed price contract for
a significant proportion of the energy
purchased, mitigating the impact of
the crisis in the short term. Once this
agreement ended in Q4, the division
was exposed to the higher energy prices,
which has impacted Group results in the
current period (as announced on 23
March 2022).
As with all energy intensive businesses,
the Paper division continues to incur
higher than average energy costs, however,
fixed prices for Q1 in the current period
and an energy surcharge to all customers of
the division are mitigating the impact over
the medium term. The Paper division saw
a strong recovery following the impact
of Covid, with revenues at 93% of
pre-pandemic levels and excellent customer
retention rates. Programmes are well in
advance to transition all Group divisions
away from natural gas dependence.
The TFP division has had a record year
for revenue, including better than expected
results for the recently acquired TFP
Hydrogen subsidiary, resulting in a full
earn out payment for year one of the earn
out period, and an increase in provisions
for the future earn out expectations.
Revenues were up on the previous period
by 27%, surpassing the previous highest
turnover by more than £4m, and higher
than the pre-Covid period by 18%.
Estimates suggest hydrogen could
eventually account for 18% of primary
energy, underlining TFP’s role as an
exciting and key growth area for the Group.
The Colourform division continues to
grow with revenues up by 19% on the
previous period and 31% higher than the
pre-Covid period. The division has also
shown positive earnings before interest,
tax, depreciation, and amortisation.
With pioneering, award-winning products
and high profile brand partnerships
secured for the short to medium term and
energy security from being powered by
100% solar energy, Colourform is
projected to continue to grow year on year.
*For definitions of alternative performance measures please refer to page 17 on the Chief Financial Officer Review report.
Revenue and Operating Profit
Group revenue for the financial period was £104.9m, up 33%
on the prior period (2021: £78.8m), with profits before tax of
£2.8m, an increase of 62% on the prior period (2021: £1.7m).
Earnings per share have fallen by 13% to 14.2p per share
(2021: 16.4p per share).
Revenue for the Paper division rose by 37% in the period to £70.4m
generating an operating loss of £2.4m compared to an operating loss
of £0.4m in the prior period, for reasons previously disclosed.
Revenue for the TFP division rose by 27% in the period to
£31.2m generating an operating profit of £8.7m, before exceptionals,
compared to an operating profit of £6.9m in the prior period.
Revenue for Colourform grew by 19% in the period to £3.4m,
generating an operating loss of £0.8m, compared to an operating
loss of £1.4m in the prior period.
Capital investments during the period amounted to £6.8m
compared to £3.1m in the prior period.
The Group has completed the £25m financing deal with NatWest
Bank and HSBC Bank, supported by UK Export Finance.
The funding will be used to invest in additional investments
to support our strategic growth plans and ESG commitments
including decarbonisation.
Group Strategy
Our main markets within each business include:
Our company’s Purpose, Pioneering
Materials to Safeguard our Future
and Values, Forward Thinking,
Responsible and Caring, provide our
guiding principles for our growth
strategies across each business.
TFP
Paper
• Clean Energy (Hydrogen)
• Packaging
• Defence
• Aerospace
• Art
• Green Technologies
• Publishing
• Design & Advertising
• Beauty
Colourform
• Wines & Spirits
• Fragrances
While operating under the Group’s combined Purpose and Values, each business division acts independently,
focusing on niche markets and growth areas:
TFP
Paper
Colourform
TFP is accelerating sales, particularly in
clean energy, and building global capacity.
Case study: TFP sales into clean energy,
such as wind and hydrogen markets,
have grown by 75%, from £5.7m to
£10.0m in the past 12 months.
The division has also achieved a 70%
reduction in the volume of waste generated,
compared to 2015.
Paper is growing its market share in
luxury packaging and focusing on
delivering improved margins.
Case study: A key innovation of
Paper is creating value from waste.
As well as increasing the level of
upcycled material, such as coffee cups,
into luxury paper, the division has
launched Rydal Apparel, which is
a 100% recycled paper product
incorporating 20% used denim fabrics.
Colourform has diversified its client
base, by evolving from a sustainable
alternative to plastic packaging to
delivering sustainable, highly designed,
point of sale outer packaging.
Case study: The energy used to operate our
Colourform factory is now 100% powered
by green electricity, most of which is from
community owned solar panels within our
facility generating 1 megawatt - the UK’s
largest roof mounted PV system.
12
13
Strategic Report - Chief Executive’s Review
Ethical Markets
As each business is focused on growing
ethical and environmental markets,
we have undertaken a thorough ethical
markets review of our current business
and its supply chain, which has resulted
in exiting some markets.
Through an in-depth analysis of our
upstream supply chain, we discovered
a small number of products in what we
would classify unethical markets.
We have now appropriately exited these
over the period and are building our
market pipelines aligned to our values.
capability last year and established
a new dedicated manufacturing cell.
This increased capacity and capability
will be operational later this financial year.
As Colourform is focusing more
attention to outer finished sustainable
packaging, there have been investments
in both product design capability
and decorative product finishing.
The UK has a long history of being at
the forefront of the science and technology
revolution - inventing some of the world's
best technology, which we still use to
this day.
At James Cropper we combine 170 years
of experience with world leading innovation
and pioneering manufacturing technology,
which together can help to safeguard the
future of our planet.
Phil Wild, Chief Executive Officer
21 June 2022
Investing in Future Growth
Group investments in the year doubled
year on year, to £6.8m (2021: £3.1m).
In the year the additional production
line in TFP became operational,
adding 50% additional capacity
for non-woven materials.
In addition, TFP’s acquisition of
PV3 technologies, rebranded TFP
Hydrogen, was completed and
provides catalyse coating capability
for hydrogen PEM electrolysers.
A new TFP Hydrogen coating
line was started last year at our
USA manufacturing facility,
which will be operational later
this year and read to serve the
USA hydrogen market.
Paper’s luxury packaging products
require unique embossing and
sustainable coatings, and to support
market share growth, we began
to create additional manufacturing
Our People
At James Cropper we have a strong
company culture, which is reflected
in the Purpose and Values we have set
out and continue to build on and embed
into the entire Group.
We have also updated our Code of Ethics,
to create clear, guiding principles that
dictate how we engage with our clients,
our suppliers, and our colleagues.
We will be supporting and embedding
these ethics across the Group, with further
education and training during in the
current period.
To demonstrate our commitment to
improving the health and wellbeing of
our teams, our employee survey has been
improved to provide more targeted and
clearer feedback on areas that are working
well and can be replicated across the Group,
and areas in need of improvement.
Over 5% of our employees are starting their
first career journey with James Cropper,
including four graduates and 27 apprentices.
This, together with working alongside local
schools and colleges on STEM career
awareness, helps to encourage the next
generation into our business, bringing with
them innovation and ideas as well as securing
our future talent pipeline for the Group.
To support our strategic ESG ambitions
our long-term incentive programme
(LTIP) for senior leaders now incorporates
additional non-financial measures,
focusing on ESG improvements.
I would like to take the opportunity to
thank all the James Cropper employees
for their hard work during the year,
they have showed tremendous commitment
and flexibility, and to demonstrate our
thanks, we have awarded an extra day’s
holiday to all employees.
14
15
Strategic Report - Chief Financial Officer’s Review
Strategic Report - Chief Financial Officer’s Review
CHIEF FINANCIAL OFFICER’S REVIEW
Our financial performance.
Isabelle Maddock, CFO
James Cropper’s group of businesses manufacture
a range of products, including: bespoke coloured
and textured papers from Paper; engineered materials
that support green energy and the advancement
of technologies from TFP; and the next-generation
of inspirational sustainable packaging
from Colourform.
Each business is generating increasing
revenues from green value chains.
Group revenue was up 33% to £104,922k with sales growing strongly after the challenging prior year of the pandemic.
Summary table of results
Group Revenue
Adjusted EBITDA
Profit summary
Paper Products
Technical Fibre Products (TFP)
ColourformTM
Other Group expenses
Adjusted operating profit
Net finance costs (excluding IAS 19 impact)
Adjusted profit before tax
Exceptional costs
APM1
APM2
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
The full Statement of Comprehensive Income is on page 73
2022
£’000
2021
£’000
Change
%
APM4
8,636
8,997
104,922
78,768
33%
-4%
-730%
26%
-48%
-23%
2%
-11%
+1%
-
46%
-3%
54%
14%
62%
(2,338 )
8,684
(754 )
(1,007 )
4,585
(540 )
4,045
371
6,892
(1,441 )
(1,312 )
4,510
(487 )
4,023
(354 )
(1,502 )
3,691
2,521
(547 )
(367 )
(914 )
(563 )
(239 )
(802 )
2,777
1,719
Other income is £744k in the year and represents a combination
of royalty income, revenues from research projects and
development income from our Colourform business.
In the prior year other income was £3,036k of which £2,915k
related to employment assistance grants from the US and
the UK governments, thus the underlying comparative,
without employee assistance is £121k, the underlying growth
in other income is 515%.
The Group monitors adjusted EBITDA as it provides a measure
of the cash generating ability of the Group that is comparable year
on year. Despite demand increasing inflationary pressures on raw
materials, distribution and energy costs have had an extraordinary
impact on margins and adjusted EBITDA, which is down 4% this
year. Based on prevalent market growth evidenced in renewable
markets our projection is for adjusted EBITDA to increase ahead
of pre-pandemic levels in 2023.
With inflationary pressures in pulp, recycled pulp, chemicals
and dyes, material costs increased significantly year on year.
Energy costs held some protection with a 70% hedge against
normal operating levels, for 9 months of the year. Despite this
the rapid increases in the cost of gas, coupled with unusually
high levels of operating time to meet a large backlog in demand,
resulted in elevated gas prices hitting the Group’s performance
sharply in the last quarter.
All employees returned to their normal hours of employment
from the start of the year. Throughout the year operations
ran significant overtime to meet increasing levels of demand,
whilst also covering abnormal levels of sickness and absenteeism.
Depreciation and amortisation charges were slightly
down year on year mainly due to the timings of our capital
investment programmes.
Other expenses have increased from
£15,252k in 2021 to £20,960k in the
year to 26 March 2022.
Global supply chain disruptions caused
some inflationary pressure on distribution
and transport, whilst deferrals of
expenditure taken in the prior year on
recruitment, repairs and maintenance
have returned to normal levels.
In the prior period the Group
experienced significant natural savings
in distribution, effluent, sales and
marketing and travel as a result of
reduced covid related demand. In this
period demand has returned to healthy
levels and consequently expenditure on
such activities increased to meet and
continue to grow demand.
Net finance costs include normal interest
payable on debt and a fair value adjustment
on contingent consideration. Our newly
acquired subsidiary TFP Hydrogen
products Ltd performed above
management expectations in the year to
March 2022. The current business outlook
continues to improve and at the year end
this required the valuation upon
acquisition to be re-assessed.
An exceptional cost of £354k has
been posted to the SOCI to accommodate
a greater likelihood of stronger future
performance than previously evaluated
along with an expected increase in
deferred consideration. Management
find this adjustment a positive indication
on the future value of the business with
adjusted profit before tax (see APM2
Alternative performance measures)
being up 1% on prior period.
Adjusted profit before tax (see APM3
Alternative Performance Measures) was
£3,691k in the year up 46% on prior period.
Notwithstanding the string of economic
shocks and challenges this year the Group
is well positioned to supply green and
renewable markets and has benefited
from double digit revenue growth in all its
businesses, and delivered a strong increase
in profit before tax after exceptional items.
Pension adjustments are described in
detail in the Pension report.
After the impact of IAS 19 the Group
reports a Profit before Tax of £2,777k,
a 62% increase on prior year (2021:£1,719k).
Alternative performance measures
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 which occurred in the prior year.
These APM measures are used internally to evaluate business performance and 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.
APM4
APM2
APM3
“Adjusted profit before tax” - Adjusted profit before
tax refers to profit before tax prior to the impact of
IAS 19 and exceptional items.
“Adjusted profit before tax after exceptional items”
- Adjusted profit before tax refers to profit before tax
prior to the impact of IAS 19.
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.
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. Over the last 12 years, the average impact is a negative hit to Profit before Tax of £1,050k, within that time the most
favourable impact was in 2012 where a surplus of £128k was reported and the largest hit to profit before tax was in 2019 with a reported
impact of £1,386k. This year the impact is £914k.
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Strategic Report - Chief Financial Officer’s Review
TFP
Paper
Colourform
%
2022 2021 Change
%
2022 2021 Change
%
2022 2021 Change
Revenue
31,209 24,570
27%
Revenue
70,350 51,376
37%
Revenue
3,363
2,822
19%
EBITDA
9,905
7,855
26%
EBITDA
(796)
2,052
-139%
EBITDA
174
(43)
505%
Profit
8,684
6,892
26%
(Loss) / profit (2,338)
371
-730%
Loss
(754)
(1,441)
48%
TFP is a highly diversified partner
of choice for world class innovators
developing advanced material solutions
across a range of green and technology
driven markets.
It manufactures non-wovens and other
advanced cutting edge materials that
play an important part in progressive
applications in net zero solutions,
aerospace and defence, fire protection,
construction and transportation.
The aerospace sector is sluggishly
returning to pre pandemic levels
however TFP has moved on
opportunities to accelerate growth
in net zero solutions (wind, hydrogen,
fuel cells, carbon capture).
TFP’s revenues are £31,209k
in the period, a 27% increase on
prior period. Both EBITDA and profit
grew 26% on prior period with a
profit of £8,684k for 2022 (2021:£6,892k).
Colourform creates aesthetically
appealing moulded fibre packaging
as a more sustainable alternative to
thermoformed plastics, using sustainably
sourced fibres and green energy in the
manufacture of bespoke customer
guided solutions.
Colourforms’s sales were up 19% in
the year to £3,363k with a shift to outer
packaging solutions in the sales mix.
As we progress into year end March
2023 customer enquiries, conversion and
commercial projects continue to grow.
EBITDA has tipped into positive with
future years now expected to deliver
cash contributions to the Group.
The business carries a high level of
depreciation charge with the rapid
amortisation of development costs at
the start of commercial project execution
and Colourform made a loss in the year
of £754k (2021: loss £1,441k).
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 £70,350k
in 2022 (2021: £51,376k), an increase of
37% with an improvement in the quality
of our sales mix. As we progress into the
period to March 2023 overall demand
remains strong.
As demand increases, supply chain,
raw materials and energy costs also
increase and margins are low. In the last
quarter of the year profits had taken an
unexpected hit owing to a jump in energy
costs and other raw material inflation.
From April 22 gas is fixed forward on
a monthly basis and specific energy
surcharges applied across our customer
base to cover the additional cost of
manufacture, which given the wider global
context customers have accepted and
margins are returning to healthier levels.
Key customers are agreeing to a minimum
of 25% of recycled fibre content in their
makings. A large number of customers
are achieving a much higher recycled fibre
content as they align their sustainability
values to their purchasing choices.
We are releasing a new range Rydal
Apparel which contains 100% upcycled
fibres including 40% denim, an exciting
circular waste value proposition delivering
packaging papers from textile waste.
A loss in the period of £2,338k
(2021: profit £371k) due to the rapid
acceleration of energy costs in the
second half.
Currency
Opening Rate March 2021 v. £
Closing Rate March 2022 v. £
Currency strengthend(weakened) v £ %
US$
1.3826
1.3165
4.78%
€
1.1741
1.1998
(2.19%)
This table compares the opening and closing exchange rates for the
financial period. Sterling strengthened against the Euro over the year,
and strengthened against the dollar in the first half before weakening in
the second half of the year. 61% of the Group’s sales are exports (2021: 62%)
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 any foreign currency surpluses, or deficits, are dealt
with via foreign currency trades using forward selling or forward purchasing
contracts. Currency movements had 2% impact on sales reducing revenues
by £2.2m, yet the impact on operating profit was 0.1% in the period.
Tax
The Group’s total tax charge for the
period is £1,419k (2021: £152k) an effective
tax rate of 51% on profit before tax.
Adjustments have been made in respect
of prior period assumptions increasing
current tax liabilities, however with the
change in corporation tax to 25% enacted
this drives an adverse charge to current
tax as the deferred tax asset on pension
liabilities increased.
The effective rate is higher than the
standard rate of corporation tax in the
UK (19%) primarily as a result of the
impending change in corporation tax
from 19% to 25%.
Statement of financial position (SFP)
Non-pension assets have increased significantly by £11,610k to £82,390k. Investments progressed in the period increasing the group’s asset base.
Capital investment in the period was £6,750k (2021: £3,127k). Investments are driven largely to enable growth in the form of increasing
capacity, improving capability or generating cost savings. We have concluded the build of an additional nonwoven production line in
TFP, increased electrolyser capacity for TFPH in the UK and established capacity in the US. The build for the additional embossing
varnishing capability has commenced at our UK site and new energy technologies have been introduced in Paper helping us work
towards our net zero goals.
The group experienced a greater level of economic activity in the period
compared to the downturn experienced in the prior period, and inevitably
with this an increase within trade and other receivables of £6,553k and
inventory of £2,124k.
Conversely as economic activity returned to normal levels the group
experienced a large increase in trade and other receivables. The total
movement in Non-pension liabilities being £6,397k, taking Non pension
liabilities to £24,841k at the year end.
After deferred tax the Net IAS 19 deficit has decreased by £5,086k to
£9,847k (2021: £14,933k). The decrease is principally caused by an increase
in the discount rates due to an upward swing in corporate bond yields
compared to the prior year position, offset to some extent by an increase
in inflation expectations.
SFP
Non-pension assets
- excluding cash
Non-pension liabilities
- excluding borrowings
Net IAS 19 pension deficit
(after deferred tax)
2022
£’000
2021
£’000
81,846
70,780
(24,613 )
(18,444 )
57,233
52,336
(9,847 )
(14,933 )
47,386
37,403
Net borrowings
(12,572 )
(7,502 )
Equity shareholders’ funds
34,814
29,901
As a result of these movements on the pension scheme deficits, and the
increase in investment and general economic activity in the period,
shareholders’ funds show an overall increase of £5,229k to £35,130k.
Gearing % - before IAS 19 deficit
Gearing % - after IAS 19 deficit
Capital expenditure £'000
28%
36%
6,761
17%
25%
3,127
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
4,277
985
6,765
7,750
2022
£’000
2021 Change
£’000
£’000
3,351
7,939
(6,761 )
(4,486 )
(3,410 )
3,453
(4,990 )
(2,199 )
(4,588 )
(2,275 )
(6,863 )
(9,267 )
(3,184 )
8,964
(2,199 )
6,765
985
In the period the Group’s net cash
inflow was £985k (2021: outflow £2,199k).
Investment expenditure commenced
in the latter half of the prior year and
continued into this period to enable
growth through an increase in capacity
and capability.
Cash invested in working capital to
support the return to normal operations
also increased. Lease and borrowing
facilities increased in the year to support
all activities.
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Strategic Report - The Pension Report
Net debt, funding and facilities
The Group incorporates £3,949k (2021: £3,771k) of right-of-use leases in
its 2022 borrowings figure. The Groups banking arrangements monitor
net debt excluding IFRS 16. On this basis net debt has increased over the
year from £3,731k to £8,623k, an increase of £4,892k largely supporting
the capital and working capital requirements of each business as the
Group emerges stronger from the pandemic. Net debt including Right
of Use leases is £12,572k, an increase of £5,070k on the prior period.
Net debt before RoU leases
2022
£’000
2021
£’000
Cash and cash equivalents
7,750
6,765
All borrowings excluding RoU leases
(16,373 )
(10,496 )
Net debt on an equivalent
comparison basis
(8,623 )
(3,731 )
Funding and facilities
The Group funds its operations and investments from operating
cash flow and from borrowings and leases. The Group has a core
banking facility in the UK and further loan support in the US,
along with some lease arrangements, all with high street banks.
The Group has secured a core £25m banking facility under
UKEF’s Export Development Guarantee scheme which is aimed
at enabling additional bank liquidity to support exporters.
This finance arrangement is available for general corporate
purposes and will be used to support strategic growth and
innovation, capital expenditure and decarbonisation programmes.
The facility has an availability period of 3 years and an overall
tenor of 8 years, repayments are on a straight line basis from years
4 to 8. The Group’s key financial covenants are EBITDA: Interest
4x, and the Net Debt: EBITDA 3.5x. A £4m CLBIL was taken
out in Oct 2020 as a safety net during the covid pandemic, this has
been repaid in full. The Group is in compliance with all its
banking covenants at the period end.
Cash and cash equivalents increased from £6,765k to £7,750k in
the year. Long term borrowings (falling due after more than a
year) also increased by £12,761k to £18,727k. 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 £3,500k plus the total unused credit
facilities of £17,000k, this means a total of £20,500k 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 £26,655k available to the Group beyond 12 months.
Funding
Cash and cash equivalents
Borrowings: repayable
within one year
Borrowings: non current
2022
£’000
2021 Change
£’000
£’000
7,750
(1,595 )
6,765
(8,301 )
985
6,706
(18,727 )
(5,966 )
(12,761 )
Net debt
(12,572 )
(7,502 )
(5,070 )
Borrowings: repayable
within one year
Borrowings: non current
1,595
8,301
(6,706 )
18,727
5,966
12,761
Facilities drawn down
20,322
14,267
Undrawn facilities
20,500
11,260
6,055
9,240
Facilities
40,922
25,527
15,395
Cash and cash equivalents
7,750
6,765
985
Undrawn facilities
20,500
11,260
9,240
Funds available at year end
28,350
18,025
10,325
Borrowings: repayable
within one year
(1,595 )
(8,301 )
6,706
Funds available at year end
26,655
9,724
16,931
Going concern
The Directors carry out a review of the
Group’s financial position for the period
up to 12 months at the date of signing the
audit report, 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.
At 26 March 2022 James Cropper had
£17m of undrawn committed facilities.
The principal loan arrangements are
described in note 18 of the financial
statements. The Group has £7.75m of cash
available to support its short term needs.
The Group’s 12 month forecast from the
date of signing the audit report 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% 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 12 month forecast from the date
of signing the audit report. The Directors
have a reasonable expectation that the
Group remains a going concern over
the forecast period.
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 the foreseeable future.
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 improved over the year from £18.4m to £13.1m (before deferred tax). This table
shows the overall value of the schemes’ assets which have decreased by 7% in the period whilst the schemes liabilities decreased by 11%.
IAS 19 pension valuation 2022
Staff
Scheme
Works
Scheme
Both Schemes
Change
2022
2021
%
Discount Rate
2.75 %
2.75 %
2.75 %
2.00 %
Assets
Liabilities
Surplus / (Deficit)
Effect of limit on recoverable surplus
£000 s
50,146
(48,523 )
1,623
(1,388 )
£000 s
59,242
(72,607 )
(13,365 )
£000 s
109,388
(121,130 )
(11,742 )
£’000
117,143
(135,579 )
(18,436 )
-
(1,388 )
-
(7 %)
(11 %)
Net Surplus / (Deficit)
Funding Level - %
235
103 %
(13,365 )
(13,130 )
(18,436 )
82 %
90 %
86 %
(29 %)
5 %
An increase in corporate bond yields over the year, offset to
some extent by an increase in inflationary expectations, has led
to a reduction in the scheme’s liabilities. To a lesser extent, the
scheme’s assets have also decreased due to lower-than-expected
returns, but overall there has been a combined decrease in the
scheme’s deficit.
Pensions (GMPs), along with the estimated cost of equalising
GMPs for past transfer value payments. The “true” cost
of GMP equalisation will take a few years to fully evaluate,
however the Company would expect any variances
compared to the original estimates would flow through
the Other Comprehensive Income statement.
In line with previous years, the IAS 19 valuation includes a
correction for sex-inequalities inherent in Guaranteed Minimum
A full retirement benefit disclosure is provided in note 20
to the financial statements.
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21
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 26 March 2022
includes an adjustment of £914,000 (2021: £802,000) 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 £547,000 (2021: £563,000)
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 statement of comprehensive income.
A charge of £367,000 is charged to the statement of comprehensive income
this period (2021: £239,000).
The retirement benefits note to the financial statements can be found
on pages 106 to 109.
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 most recent funding valuations were carried out at April 2019 and 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 Trustee and
the Company have also begun work in respect of the April 2022 triennial funding valuation.
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 most
recent funding valuations were carried out at
April 2019 and 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 Trustee and the Company have also begun
work in respect of the April 2022 triennial
funding valuation.
The April 2019 triennial
"on-going" valuations
Discount Rate
Staff
Scheme
£000s
Works
Scheme
£000s
Total
£000s
2.45 %
2.55 %
2.50 %
51,133
(53,878 )
56,831
107,964
(73,999 )
(127,877 )
(2,745 )
(17,168 )
(19,913 )
Assets
Liabilities
Deficit
Funding Level - %
95 %
77 %
84 %
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.
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;
• 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.
• For both the staff and the works 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.
• The Schemes were closed to new members
• In April 2018 a new liability driven investment
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.
strategy was adopted which aims to significantly
reduce risk whilst maintaining a similar level
of overall return and protecting asset values.
22
23
Strategic Report - Risk Management
Strategic Report - Risk Management
RISK MANAGEMENT
Viability
The Group’s strategy is to be a key player
in sectors that drive solutions to today’s
societal needs, including sustainable,
compostable packaging, and high
performance technical materials for
advancement in industries focused
on the transition to a more greener
and sustainable future.
The Group will build on our competitive
advantages to better serve our customers
and this is supported by a 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 2025 is an appropriate period over
which to evaluate the Group’s viability.
The Group’s three year plan has been tested
for plausible downsides scenarios including
further expected effects of the energy crisis
and inflationary pressures, 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.
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.
PANDEMIC
Risk description and Impact
HEALTH & WELLBEING,
FINANCIAL
LIKELIHOOD: POSSIBLE
A pandemic may cause a significant health exposure and safety risks to our people.
In addition, it may result in labour shortages, supply chain disruptions and potential
likelihood of cyber attacks with more people working from home.
Decreased ▼
Mitigation
FIRE
FINANCIAL,
OPERATIONAL
LIKELIHOOD: UNLIKELY
Stable —
Risk mitigated by ensuring Covid-Safe practices are maintained and encouraging
vaccinations and regular LF tests
Actions: MONITOR
Continue to monitor the current status.
Risk description and Impact
A major fire on site could cause significant damage to the infrastructure of the business
and cause significant business interruption.
Mitigation
Risk mitigated by robust fire detection systems including sprinkler systems
in the most risky areas and site wide fire alarm system. Around 60 fire
marshals deployed around our sites. All sites insured for fire damage
and BI cover.
Actions: ACTION
Investigate latest options for fire detection, prevention and alarm improvements.
24
25
Strategic Report - Risk Management
Strategic Report - Risk Management
NET ZERO EMISSIONS
Risk description and Impact
WATER ABSTRACTION
Risk description and Impact
ENVIRONMENTAL,
FINANCIAL,
TRANSITIONAL
LIKELIHOOD: LIKELY
Stable —
The Group has a goal of net zero emissions for scope 1 and 2 by 2030.
The goal is dependent on developing new technologies with significant investment.
Failure of achieving goal would result in potential higher costs and penalties
and reputational impacts.
Mitigation
Risks mitigated by becoming a key member of a funded scheme to trial new
technologies to convert from gas/oil to electric usage for Paper machines.
Actions: ACTION
Commence engineering design phase. Continue to improve efficiencies in energy usage.
PENSION
FINANCIAL
LIKELIHOOD: UNLIKELY
Stable —
Risk description and Impact
Following the latest actuarial valuations, the 2 defined benefit pension schemes have
a significant deficit. Whilst both schemes are closed to new members, the deficit is
dependent on the assumptions for discount rates, inflation levels, mortality assumptions
and corporate bond yields.
CYBER
COMMERCIAL
LIKELIHOOD: UNLIKELY
Increased ▲
Mitigation
A payment plan agreed with the Actuaries to reduce the ongoing debt year on year.
Agree investment strategy with Trustees, taking into account risk.
Actions: MONITOR
Biannual IFRS and triennial actuary valuations to be monitored.
Consider other options to reduce the level of risk exposure.
Risk description and Impact
The cyber threat landscape is increasing and changing during the pandemic with increased
numbers working remotely. Research is also supporting evidence of increasing cyber
threats to manufacturing organisations.
Mitigation
Implementation of programme to support business working conditions with a robust
IT security and data protection roadmap in line with evolving threat landscape.
Actions: MONITOR
Continue to monitor the current threats and improve security protocols.
FLOOD
FINANCIAL,
OPERATIONAL
Risk description and Impact
The risk that flooding may impact our ability to supply and manufacture at Burneside,
or could result in risk to employee safety, property damage or business interruption.
LIKELIHOOD: UNLIKELY
Mitigation
Decreased ▼
Since storm Desmond, major changes in infrastructure with movement
in warehousing, electric sub station and flood watch team created.
Insurance cover mitigates the financial risks.
Actions: MONITOR
Maintain floodwatch when alerts raised to reduce any damage to a minimum.
FINANCIAL
OPERATIONAL
LIKELIHOOD: POSSIBLE
Stable —
The risk that limitations on water abstraction may impact our ability to supply
and manufacture at Burneside, or could result in business interruption.
Mitigation
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 addition, our T&I team are looking
at ways to reduce water usage and development of circular systems.
Actions: MONITOR
Monitor river levels in times of low rainfall and plan for alternative solutions
to river abstraction.
PULP PRICE VOLATILITY
AND SUSTAINABILITY
FINANCIAL,
OPERATIONAL
Risk description and Impact
Risk of unexpected and prolonged price volatility of pulp and availability of specific fibre
grades, subject to global supply and demand. Factors that influence these include natural
disasters, climate, political instability, conflicts, economic conditions and actions by
major pulp suppliers.
LIKELIHOOD: UNLIKELY
Mitigation
Stable —
Continue to secure alternative sources of reclaimed and waste fibres
to reduce reliance on virgin pulp.
Actions: ACTION
Continue to monitor the pulp pricing trends to identify the most attractive opportunity
to hedge for future purchases.
ENERGY PRICE
VOLATILITY
FINANCIAL
LIKELIHOOD: LIKELY
Increased ▲
Risk description and Impact
The energy price crisis is ongoing with gas prices affected by global supply and demand
with significant fluctuations due to the uncertainty surrounding the invasion of Ukraine
by Russia. The volatility has reduced the availability of fixing prices at a reasonable price.
The Company is currently fixng prices on a month by month basis until there is more
stability in the pricing.
Mitigation
Until the price of gas stabilises, opportunities to secure forward prices at a reasonable
price are limited. Currently the Company has placed an energy surcharge on all customers
in the Paper division which is being closely monitored on a month by
month basis.
Actions: ACTION
Monitoring the daily price of gas supplies with a view to achieving the best price forward on
a monthly basis until price stability is seen. Also monitor the price surcharge in line with
gas prices until the option to remove and set an acceptable longer term price is achieved.
26
27
Strategic Report - S172(1) Statement
Strategic Report - S172(1) Statement
PROMOTING THE SUCCESS OF OUR GROUP
S172(1) STATEMENT
OUR APPROACH
OUR SHAREHOLDERS
OUR EMPLOYEES
OUR CUSTOMERS AND SUPPLIERS
OUR COMMUNITY
Board considerations
Our employees are our biggest asset and
fundamental to the success of the Group.
The health and wellbeing of our employees
is of the highest priority. Throughout the
year steps to improve the health and
wellbeing of our employees have been
discussed and implemented. With the
completion of the TFP building extension,
a gym has been created which is available
to all our employees and due to open in
June 2022.
The Company undertook an employee
survey in the year and following review
by the Board, an action plan has been
drafted addressing the most important
concerns of our employees. The Company
has set aside funds to improve the facilities
and working environment for our
workforce with a list of priorities and
time plan currently being finalised.
Communications with all employees is
regularly provided, using social media
and face to face employee briefings,
to ensure all employees are kept up
to speed with latest developments.
This includes the bi-annual financial
briefings and presentations and a monthly
video update by the CEO.
Regular consultative meetings were
held with union representatives on
all aspects of Group developments.
Further reading:
Pages 47 to 48
People Report
Pages 12 to 14
CEO Review
The Board is responsible for leading
stakeholder engagement and 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
177 year history. Our employees are the
lifeblood of our business and our most
valuable resource. From new starters
and graduates starting their work life
to employees who have followed their
family through several generations,
every employee is key to the success
of the business and in these unprecedented
times, their health and wellbeing are a key
factor we strive to protect. Being the largest
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
The Board decided to hold our AGM last
year in the well ventilated new extension
to the TFP buildings under Covid safe
guidelines, including social distancing,
hand sanitiser usage and the wearing of
masks when moving around. In addition,
the Investor briefings were held both
face to face meetings and remotely by
video conference.
Throughout the year, the Board continued
to address the actions proposed last year
in response to the negative voting over
the last few years. This, with further
details has been included in the Corporate
Governance Statement, the Report of
the Audit Committee and the Report
of the Remuneration Committee.
Whilst most actions have already taken
place, the remainder of actions take
place from the start of April 2022.
Further reading:
Pages 52 to 55
Corporate Governance Statement
Page 56
Report of the Audit Committee
Pages 58 to 61
Report of the Remuneration Committee
As the impact of Covid recedes, the Board
recommenced the payments of dividends
with an interim payment paid in January
2022. In addition, the Board are proposing
a final dividend to the shareholders at this
year’s AGM.
As we return back to pre Covid normality,
the Board invite all shareholders to our
next AGM on 27 July. The Board
encourages our shareholders take the
opportunity to express their voting
preferences by either using the proxy
cards that will be sent out with the notice
of the AGM or attending the AGM itself.
The Group’s website is regularly
updated and provides additional
information on the Group.
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 £8,000 were
made to local charities and organisations
in addition to the free paper donated
to various schools and organisations.
The third phase of solar panels were
installed on the roof of the TFP buildings.
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. Discussions for a fourth phase
are underway to increase the number
of solar panels on our Burneside site.
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.
For and on behalf of the Board,
Isabelle Maddock,
Chief Financial Officer,
21 June 2022
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.
As the Group recovered from the impact
of the pandemic, the Group kept in regular
contact with its customers and suppliers to
ensure that our customers were supported
with their material requirements as and
when required and our suppliers were
able to continue deliveries of materials
to meet our needs.
With the onset of the energy crisis and
the global inflationary pressures regular
consultation with customers and suppliers
has been undertaken and continues as we
work together to share the impact during
these challenging times. Price increases
have been implemented with our suppliers
and our customers. In addition, an energy
price surcharge has been agreed with our
customers that is monitored regularly
as we share the burden of the volatile
energy prices.
28
29
James Gravestock and Phil Wild
James Gravestock and Phil Wild
opening our new on site gym facility
opening our new on site gym facility
TECHNICAL FIBRE PRODUCTS LTD
DIVISIONAL REPORT
Successful integration of the TFP
Hydrogen acquisition and strong
organic growth combined to deliver
a record year for the TFP Group.
This saw Revenue grow on a year on year
basis by 27% - surpassing our previous
highest turnover by more than £4m.
Margins remained broadly in line with
Prior Year despite significant raw material
& energy headwinds. Overheads, whilst
increasing, are under control vs. budgets
resulting in strong translation to earnings.
James Gravestock,
TFP Managing Director
MATERIALS THAT ENABLE A CLEANER, GREENER FUTURE
In last year’s annual report we introduced
TFP Hydrogen Products and the increased
portfolio of products for hydrogen
technologies that this provided TFP,
enabling multiple entry points into the
rapidly expanding hydrogen economy.
Hydrogen is a market that continues to
grow at an accelerated pace and along
with the broader renewable energy sector,
is central in strategic importance to both
TFP’s growth plans and our vision to
enable a cleaner, greener future.
A key element of our five year that
the majority of the company’s sales
will come from applications that
support the Global drive to ‘Net Zero’
carbon emissions.
That we play our part in enabling the
energy transition through reducing
the cost of hydrogen generation and usage,
and providing solutions for challenging
applications such as renewable energy,
carbon capture and the light-weighting
of vehicles.
What Is ‘Net Zero’?
Net zero is a term coined to describe
achieving a balance between how much
carbon is emitted into the atmosphere
and how much carbon is removed from it.
When the amount of carbon added to
the atmosphere equals that removed
then ‘net zero’ has been reached.
In order to achieve this balance carbon
emissions from transport, industry,
homes and agriculture will need to be
significantly reduced, and where emissions
can’t be cut altogether the residual carbon
will need to be extracted using technologies
such as carbon capture, usage and storage.
The move to achieve net zero is necessary
because carbon emissions are responsible
for climate change. As part of the drive to
reduce this, the UK government passed
legislation in June 2019 to commit to
reaching net zero emissions by 2050.
Essentially this means that the country
has to reduce our net greenhouse gas
emissions by 100% (compared to 1990
levels) by 2050 through transitioning
to clean energy and green technologies.
TFP and TFP Hydrogen’s materials support
and enable this transition via applications
such as PEM water electrolysis, hydrogen
fuel cells, electric vehicles, wind energy,
carbon capture and lightweighting.
30
31
Technical Fibre Products
Technical Fibre Products
Enabling Clean Energy and Green Technologies
TFP’s materials have a long track
record in providing solutions for
clean energy applications.
The company has been developing materials
for fuel cells for over 30 years and our
carbon paper is used as a gas diffusion
layer (GDL) substrate in many of the
world’s hydrogen fuel cells, facilitating
the use of hydrogen as a power source
in both vehicles and buildings.
TFP Hydrogen has enabled the expansion
of this portfolio to include materials
which also support the generation
of hydrogen, and in particular ‘green
hydrogen’ which is produced using
renewable energy via Proton Exchange
Membrane (PEM) water electrolysis.
The specialist component coatings which
TFP Hydrogen has developed, along with
a new range of high performance catalysts
launched later this year, significantly increase
the efficiency, durability and lifetime
of PEM water electrolysers.
This ultimately reduces the cost of green
hydrogen generation, which will play
a critical part of the global transition to
sustainable energy and achieving net zero.
In addition to clean energy, TFP’s products
find application in a variety of green
technologies which facilitate the drive
to net zero; examples include carbon
capture, which captures carbon dioxide
emissions preventing them reaching the
atmosphere, as well as technologies that
reduce carbon emissions such as electric
vehicles and lightweighting.
Lightweighting refers to a move away
from traditional materials in order to
eliminate unnecessary weight and
achieve better fuel efficiency.
Composites are a means to achieve this
and are well established in the aerospace,
automotive and wind turbine industries
as a means to reduce weight without
compromising on strength or performance.
TFP’s lightweight nonwovens are well
established in this sector; they are easily
incorporated into a composite and play
an important role in improving part
fabrication, finish and functionality,
imparting properties such as
electromagnetic interference (EMI)
shielding, corrosion & wear resistance
and even fire protection.
Reducing Manufacturing Impact
In addition to enabling these applications
which support the drive towards net
zero, TFP are also taking steps to improve
our environmental impact directly,
making changes to our manufacturing
processes in order to reduce waste.
A notable example of this is the work done
at Electro Fiber Technologies LLC, TFP’s
fibre plating subsidiary in Schenectady
NY, to reduce waste and minimize water
usage. The long term project has involved
working on increasing the plating
efficiencies of the process as well
as introducing analytical controls
into their waste management practices.
A pertinent example of how our advanced
materials provide solutions for composite
lightweighting is a new application
in Battery Electric Vehicles (BEVs)
where they can facilitate the move
from the use of metal to composite
in battery enclosures.
The batteries in BEVs are larger and heavier
(compared to ICE vehicles) so the use of
composites is necessary in order to achieve
the larger, protective structures required for
the batteries, whilst still ensuring that they
are lightweight.
This presents a number of challenges,
both in terms of meeting the necessary
fire and thermal management requirements
and also providing shielding to EMI.
TFP’s conductive and intumescent
nonwovens are able to provide a solution
for both challenges and can be incorporated
directly into the composite structure
to provide this required functionality.
Ultimately, helping to facilitate the
improved performance and safety of BEVs
which present a substantial reduction in
lifecycle greenhouse gas emissions
compared to conventional vehicles.
The result is a 70% reduction in the
volume of waste requiring treatment
compared to 2015 levels, and this
improvement has been achieved despite
a significant rise in production volumes.
The team have also managed to minimize
the water usage in the plating process
by recirculating deionized water in
rinses for purification and reuse.
These are all important steps in improving
the impact of our manufacturing,
and just one example from a number of
improvement projects underway involving
our processes, raw materials and products.
THE RESULT IS A 70% REDUCTION
IN THE VOLUME OF WASTE
H2
H2
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
It is clear that Hydrogen is becoming
a major enabler of the energy transition,
creating an energy storage capability
for excess renewable power generation,
a growing requirement fuelled by rapidly
expanding solar & wind capabilities
on a global scale.
In conjunction, recent geopolitical
challenges related to energy security
have accelerated governmental support,
such as the recent (May 5th 2022)
European Clean Hydrogen Alliance’s
Summit & subsequent Joint Declaration.
The European Commission’s RepowerEU
Communication proposed a Hydrogen
Accelerator, setting out a strategy to double
the previous EU renewable hydrogen
target to 10 million tons of annual domestic
production, plus an additional 10 million
tons of annual hydrogen imports.
Meeting these targets requires the EU
to significantly upscale its manufacturing
capacities for innovative zero and
low-carbon equipment such as electrolysers.
According to industry estimates,
producing 10m tons of renewable
hydrogen in the EU would require an
installed electrolyser capacity of 90 - 100
GWLHV1 , depending on utilization
factors and efficiency rates.
The current capacity of electrolyser
manufacturers in Europe is estimated at
1.75 GWLHV per year2. This electrolyser
manufacturing capacity must be scaled-up
significantly to meet the expected European
demand for renewable hydrogen.
This is both an unprecedented challenge
and a significant industrial opportunity.
Manufacturers of electrolysers and their
components in the EU are among the
global technology leaders in this field.
The ambition is to transform this
technological leadership into global
commercial leadership.
Manufacturers of electrolysers and
their components in Europe are ready to
expand their manufacturing capacities.
It is the objective of electrolyser
manufacturers in Europe to have in place
by 2025 a combined annual electrolyser
manufacturing capacity in Europe of 17.5
GW3, and to further increase that capacity
by 2030 in line with projected demand
for renewable and low-carbon hydrogen3.
To support the expected exponential
market growth driven by the Fitfor55
and RePowerEU policies and targets,
we continue to invest in expanding our
manufacturing capabilities with a new
nonwoven line now fully operational
in the UK.
North America remains a key market for
us and recognising their rapid scaling of
Electrolyser manufacturing we have also
increased our manufacturing capability at
our Schenectady site (in New York State).
We are adding a volume coating line
to replicate our UK TFP Hydrogen
technologies for local supply, and expect
to be scaling up operations in H1 this year.
1 Measured in terms of hydrogen output; up to 140 GW if measured in terms of electricity input.-This assuming an average electrolyser
utilisation factor of 43% and electrolyser efficiency of 70% (this is just for indicative purposes and not a commitment or reference to
any specific technology or business case).
2 Measured in terms of hydrogen output; 2.5 GW if measured in terms of electricity input and assuming an electrolyser efficiency of 70%
3 Extract from the European Clean Hydrogen Alliance - European Electrolyser Summit Brussels, Joint Declaration, 5 May 2022
32
33
ColourformTM
ColourformTM
MOULDED PACKAGING PRODUCTS
DIVISIONAL REPORT
When we first had the idea of launching
the Colourform business a few years ago,
it was fully intended that we would
use the knowledge built through
170 years of coloured and speciality
papermaking to create moulded fibre
packaging as a more sustainable
alternative to thermoformed plastics.
In the few years that have since passed,
our pioneering and adventurous spirit
has taken us to places we would never
have believed possible. Today our products
reach far and wide, forming the fibres
of daily life around the world.
The Colourform business continues to grow
– it is now really pleasing to report that in
the year just finished, our sales revenue was
up by 31% compared to the pre-covid
year, and with the projects currently in
the pipeline we expect to continue to
grow the business year-on year.
The business achieved a remarkable
amount of recognition for the Maison
Ruinart Second Skin. The recognition
continues with recent success by winning
the entire Beverages category at the
Dieline awards, and a Yellow Pencil
D&AD award, two of the world’s most
prestigious design awards. Building on
this excellence, 2022 sees the launch of
some extremely exciting and innovative
new Colourform products that steal the
limelight from the original Ruinart pack.
It is important to realise that we do not
work alone. Every one of our projects is
a close collaboration with our customers,
many of whom are not only looking for
sustainable packaging materials with
sophisticated and stylish design, but also
share our core values of being a caring
organisation that is forward looking
and responsible in everything we do.
Brands continuously review their packaging
portfolios to fully understand the impact
of the choices they make on the consumer
and the world we live in. We fully intend
to be part of the solutions they choose.
Patrick Willink,
Colourform Managing Director
34
35
100% Green Energy Production
We generate solar and hydro energy
here on site at James Cropper with
one of the UK’s largest roof mounted
PV systems powering our machines.
100% of the renewable energy we
generate is allocated for all Colourform
production, and any top up required
from the grid is all Tier 1, green energy.
The legislative environment is also
changing – a good example is the
introduction of Extended Producer
Responsibility which helps us all prevent
waste at source, promote design for the
environment and support the achievement
of public recycling targets. Our raison
d’etre was not motivated by the legislation
– it was motivated by our belief in doing
the right thing, and if doing the right
thing helps others meet their legislative
obligations, then that is a real bonus!
Colourform continues to grow year
on year – thanks to the efforts of the
entire team we kept producing throughout
the pandemic and that provided a great
platform from which to achieve further
double digit growth in the last twelve
months.
We look forward to working with more
and more people and brands as we continue
to grow, and together we will generate
more and more renewable, sustainable
packaging without having to compromise
on design, sophistication or beauty.
Source: Sphera 2022
IMPORTED*
SOLAR
O
R
D
Y
D * H
E
T
R
O
P
I M
IMPORTED*
WIND
ON SITE
SOLAR
ON SITE
HYDRO
53.4% ON SITE RENEWABLE ENERGY
46.6% TIER 1 RENEWABLE ELECTRICITY
JAMES CROPPER PAPER PRODUCTS
DIVISIONAL REPORT
It is almost impossible to conceive that off
the back of an extremely challenging year
in 2021, defined by the Covid-19 pandemic,
we would enter into a year of arguably
even greater uncertainty and volatility.
I witnessed many examples of outstanding
commitment and heroic efforts to get
product manufactured and shipped despite
crewing challenges and maintaining
machine uptime.
Post Covid and post Brexit disruption
persisted throughout the year and provided
a challenging backdrop as we began to
see a progressive return in demand for
our products across almost all of our
market segments but particularly in luxury
packaging. One unexpected but nonetheless
pleasing legacy of the pandemic was a
buoyant publishing market with demand
for book cover and end paper remaining
very strong.
I am pleased to say that our customers
remained intensely loyal to James Cropper
throughout this period without any loss
beyond the normal ebb and flow across
our customer base.
But that loyalty was for sure tested due to
the tragic escalation of events in Ukraine.
Dramatically increasing raw material and
energy costs inevitably meant that we
were forced to pass on these increases
through price rises. But the resilience
of our relationships with our customers,
whilst tested, remained steadfast and
I thank them for that.
This external turbulence coupled with
strong recovery also imposed considerable
strain on our organisation, which, as ever,
remained totally focused on satisfying our
customer’s burgeoning demand.
I am proud of and grateful to the great
team of people I have the pleasure and
privilege to lead.
Even though the business has been tested,
we have remained confident in our strategy
of driving value growth. After the successful
launch of our Rydal Packaging Collection
with 100% recycled formats, we have seen
steady growth in demand and some exciting
new business gains with luxury brands.
Consistent with our Vision of achieving
the goal of 50% of our fibre coming from
recovered sources by 2025, we have secured
some exciting new sources of waste fibre and
are seeing a growth in pull through demand
from customers for more recycled content
in their premium products – no longer a
push approach from James Cropper to
stimulate demand. I am also eagerly
anticipating the launch of our FibreBlend
offer, demonstrating James Cropper’s unique
capabilities in the upcycling and blending
of waste and fresh fibres, to produce
premium quality papers.
Building on our ground breaking
CupCycling™ technology, FibreBlend
will give us a market leading position in
sustainable paper innovation, supporting
our continued growth in the luxury
packaging and creative paper sectors.
We have further augmented our offer
with another ground-breaking development
through the launch of our Wainwright
Colours from Nature. Dyes derived from
non-edible Rosemary waste have been
used to create wonderful colours, giving the
same performance benefits in our paper as
industry standard synthetic dyes but being
truly sustainable and derived from a natural
waste stream.
The Wainwright name has been used to
complement another exciting development
from earlier in the year. We were delighted to
be asked to headline sponsor the Wainwright
Prize for Nature and Conservation Writing
which has such a perfect fit for our business.
We have been producing specialist papers in
the River Kent valley since 1845 at our mill
just outside Kendal, the town where Alfred
Wainwright lived and worked.
Our paper was used in the production of
the 50th anniversary edition of the Pictorial
Guides to the Lakeland Fells, iconic books
that still mean so much to walkers and
locals alike. But beyond these obvious
connections, this prize fits so well with
the ethos of our business.
It also coincided with the resurgence in
the publishing segment post-Covid and
allowed us to feature prominently and
raise awareness amongst target
publishing customers.
In support of our value growth strategy,
we have also maintained investments in
growth and resilience of our operations.
36
37
James Cropper Paper
We are looking forward to commissioning
our new embossing and varnishing capacity
expansion by the summer of 2022 which
will allow us to capitalise further on the
growth of our luxury packaging business.
Significant upgrades to our boiler house
will also build efficiency and resilience
into our power generation facility
and will complement ongoing, highly
innovative developments in capability
to reduce our carbon footprint in an
accelerated timeframe.
We have strengthened our team too with
the appointment of a new Supply Chain
Director which will allow us to transform
our supply chain operations to meet the
needs of an increasingly complex and
important procurement and global
logistics landscape.
The year ahead continues to look
challenging with inflationary pressure
and the ongoing uncertainty of conflict
in Ukraine, however, I am confident in
our plans and in the strength of our team.
I want to thank again our many customers
for their continued support during the last
year. 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
Presentation of the 2022 Wainwright Prize for Nature Writing at Racy Ghyll Farm, from left to right:
Julie Tomlinson, Richard Bracewell, Mark Cropper, James Rebanks, Alistair Giles and Rebecca Farish
PAPER - HIGHLIGHTS
Turning Paper Cups into Children’s Books
We have joined forces with McDonald’s Germany to give a second
life to the chain’s drinking cups by upcycling them into a selection
of children’s books that come free with the restaurant’s Happy Meals.
Following almost a decade of collaboration in recycling cups with
McDonald’s restaurants, we have been looking at ways to introduce
closed loop initiatives with the fast-food retailer that transforms the
paper cups into something much more long-lasting.
Using our game-changing CupCycling technology, over 10 million paper
cups used in restaurants for drinks and soft ice creams have been transformed
from a waste stream from the company into a terrific educational resource.
Working with such a globally renowned brand to drive a circular solution that
reduces waste has been incredibly exciting. Each book aims to spark the natural
curiosity children have about their environment, with an educational message
about the importance of nature and conservation.
Throughout society, people are increasingly rediscovering a love of
books and spending more time connecting with nature and green spaces.
The collaboration is very much aligned to our sponsorship of the
Wainwright Prize for writing on Nature and Conservation.
Wainwright Colours from Nature
To coincide with our partnership with the prestigious
Wainwright Literary Prize for writing on Nature
and Conservation, Colours from Nature is the latest
innovation from James Cropper to create value
from waste.
With plant-based dyes more commonly used in the textile
industry, the new collection marks the first application to
modern papermaking. It is also certified to the FSC® 100%
recycled label, recognising the importance of recycling in
the paper lifecycle.
Designed for the packaging and publishing sectors,
the collection offers a bleed-free and rub resistant paper
with lightfastness comparable to that achieved with
industry standard synthetic dyes.
The colours are inspired by author Alfred Wainwright’s
love for the Lake District landscape and James Cropper’s
desire to protect it. Differing dye additions, derived from
non-edible Rosemary waste, create two colours:
Limestone and Herdwick Brown.
By repurposing valuable waste streams, we continue
to support transition to a more circular economy.
From the use of renewable materials and producing
high quality products that are easy to recycle, we are
committed to sustainability at every turn, and our
expertise in colour is part of that.
100% Recycled Papers for Premium Packaging
With more and more brands needing
to be able to demonstrate the social
and environmental impact of their
products, last year we launched
our Rydal Packaging Collection.
Our new stunning paper collection was
designed to match the packaging needs
of the most discerning luxury brands,
without compromise, and includes
an option with the ultimate 100%
post-consumer waste recycled fibre.
Whilst beauty and functionality have
always been expected of luxury products,
today’s consumers also insist they are
environmentally and socially responsible.
Those same high standards applied
to the product itself, now also extend
to the entire supply chain, including the
packaging. The Rydal Packaging Collection
was created to directly answer this need
while safeguarding the beauty of premium
paper and ensuring a variety of packaging
application possibilities for brands.
Since launch Rydal has been selected for
packaging projects in the Coty Luxury
stable and also by the iconic Asian
cosmetics and skincare brand, Shiseido,
where the look and feel of our naturally
derived uncoated board is valued and
resonates with the natural beauty
messaging of the brands.
38
39
Sustainability - ESG Committee
Sustainability - ESG Committee
ENVIRONMENTAL, SOCIAL AND
GOVERNANCE COMMITTEE
James Cropper cares strongly about people and society, sustainable manufacturing and responsible business practices.
Sustainable Manufacturing
All who work for James Cropper care about
our planet, the environment, our neighbours
and society in general. The future belongs
to our children and their children and we see
it as our duty to act in a responsible manner
to safeguard that future. Our actions today
could have a profound impact on the future.
We are custodians of our planet and strive to
care for it, act in a responsible way and look
at ways to ensure sustainable growth which
will not have a negative impact on the planet.
Our values of caring, responsible and forward
thinking, crafted by our employees, drives our
strategic goal of sustainable growth. Whether
that will be from upcycling or recycling in our
own products, decarbonisation, sustainable
raw materials, or by creating lightweight
materials to help our customers reduce their
carbon footprint or protect the environment,
our goal is the same, to live our values to be
caring, responsible and forward thinking.
Our ESG committee, chaired by our CFO,
Isabelle Maddock, and including our
Chairman, Mark Cropper, and comprising
7 non-board members with a blend of
knowledge and strengths from across the
group were tasked with ensuring that the
9 priority areas identified by the Group
are clearly understood and become
embedded in the day to day activities
of all our employees.
Careful consideration of the metrics the
Group will measure is ongoing to ensure
that they achieve the goals of the Group.
The Group has identified three pillars: Sustainable Manufacturing, People and Society and Responsible Business Practices
Below these three pillars lie our nine priority areas, as detailed in the table below. All nine priority areas are at different stages of
progression with all areas awaiting the agreement of final targets and metrics. Examples of three of the key areas are reported on below
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 create sustainable material solutions
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 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
Decarbonisation and energy • Water • Waste and resource management
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
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Tonnes/CO2e/year
38,811
29,470
1
2
3
4
All purchased electricity from
grid to be 100% renewable
Feasibility completed May 2022
Targets for every Division July 2022
Plan defined and enter the
engineering design phase
2
1
3
4
>5,000
2021
‘22
‘23
‘24
‘25
‘26
‘27
‘28
‘29
2030
Our divisions provide materials which
provide solutions to some of the world’s
social and environmental challenges and
help our customers in the challenge of
sustainable growth.
As with society across the world,
decarbonisation is seen as one of the most
urgent and important actions to undertake.
One of our major key priorities is a
commitment to a programme that will
result in net zero emissions by 2030.
For this commitment to be successful
will need a number of work streams
to take place:
• A continued focus on reducing
primary energy usage;
• The installation of further solar
powered panels around the site;
• Continuing research into new
technologies for both energy
generation and energy optimisation;
The Group have undertaken a carbon
footprint exercise in the year which will
form the baseline in setting our metrics
for reducing our footprint around the world.
Working with our supply chain we
will be working to reduce our impact
on the environment from direct and
indirect emissions.
40
41
Sustainability - ESG Committee
Sustainability - ESG Committee
People and Society
Employee well-being • Enhancing livelihoods • Local community
Responsible Business Practices
Materials with purpose • Business ethics and risk • Supply chain
Priority Area
Strategic Intent
UN Sustainable Development Goals
Priority Area
Strategic Intent
UN Sustainable Development Goals
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
Business ethics and risk
To operate responsibly, steering governance,
best practice and in line with our purpose
and core values throughout our operations.
As a responsible, forward thinking
business, the Group aims to adopt
best practice, where appropriate,
for governance, business ethics and risk.
organisational culture which promotes
diversity, inclusivity, personal development
and respect. We know it’s our people who
make James Cropper successful.
During the year, the Group has introduced
a people policy framework. At James
Cropper we are committed to our core
values of Forward Thinking, Responsible
and Caring.
They are key to the way we work and
interact with our customers, suppliers
and employees across the business.
We pride ourselves on driving a
sustainable business that is both
commercially successful and socially
and environmentally responsible.
Our values act as our guiding principles;
ensuring we provide our employees in the
UK and overseas with a safe and healthy
working environment and foster an
We want people to enjoy coming to work
and for the workplace to be free from
discrimination, harassment and
victimisation.
A revised code of Ethics has also been
launched during the year in aligned to
our purpose and vales. Our Code of Ethics
and Behaviours (the "Code") outlines the
standards and behaviours that help to shape
and strengthen our culture. All employees
are expected to uphold these high standards
wherever we conduct business, ensuring that
honesty and integrity are maintained.
The Code sets out in brief, with some
explanation, key company policies
and procedures.
The committee will review the model
and categories used to identify unethical
markets and review current best practice.
The Board have reviewed our products,
the customers we deal with and the
countries we sell into or buy from.
An unethical markets review was
undertaken, identifying some products
that have been identified as potentially
unethical and have agreed to cease
production of the products clearly
identified as being unethical.
The next step is to review other
products that need further investigation.
This investigation is being supported
by the creation of an ethical markets
committee comprising members of the
Board and designated external experts.
At James Cropper we are committed
to promoting a positive safe environment
in our workplaces to support people’s
physical, mental and emotional well-being.
Our people have access to a range
of services to support their broader
well-being and mental health, including
access to physiotherapists and annual
medicals. We run an employee well-being
helpline and have trained mental health
first aiders on site.
Our canteen provides a range of balanced
nutritious meals and an area where
employees can meet and eat away from
their workplace. Plans are in place to
modernise the canteen area to create a
more open sitting area where employees
can meet, eat or just take a break in a
comfortable environment open 24 hours.
We encourage our people to incorporate
physical activity on to their daily lives.
A cycle to work scheme is offered every
year and discounted membership of local
gyms are available.
To support our initiatives, a gym was
opened in June 2022 for free use by any
of our people. Throughout the year various
physical initiatives are undertaken and all
our people are encouraged to join initiatives
such as running and walking clubs.
We are committed to building a workplace
environment that enhances the well-being
of our people. In addition to the upgrading
of the canteen area, the Board have
pledged funding to improve the workplace
environment and facilities. Plans and
priorities are currently being reviewed
together with a time plan.
The Group was awarded the silver
Better Help at Work Award in the year.
42
43
Sustainability - SECR Report
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 190.2GWh
(2021: 156.3GWh), higher than the
previous year, predominantly due
to the level of production being
back to pre Covid-19 levels.
Energy efficiency action
During the year, further roof space was
let to Burneside Community Energy Ltd
placing more solar panels on our roof space
with all solar energy generated purchased
by the Company.
Discussions are underway for a phase 4
installation to be completed in the summer
2022. In the year, 656,000kWh of solar
energy was purchased (2021: 574,000kWh).
In addition, the Company purchases
hydro energy from Ellergreen Estate,
purchasing a total of 206,000kWh of hydro
energy in the year (2021: 275,000kWh).
Greenhouse gas emissions
Scope 1 Direct emissions
52 weeks ended 52 weeks ended
27 March 2021
tCO2e
26 March 2022
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
38,577
417
38,994
1,235
1,235
40,229
(1,418)
(1,418)
38,811
27,512
553
28,065
1,639
1,639
29,704
(234 )
(234 )
29,470
52 weeks ended 52 weeks ended
27 March 2021
tCO2e
26 March 2022
tCO2e
Carbon emissions per £100,000 revenue
36.99
37.41
44
4545
Pride Excellence Awards
Employment Engagement Survey
PRIDE EXCELLENCE AWARDS
During the year we have continued to recognise the amazing contribution our employees make to the Company, their fellow work colleagues and
to the communities we operate in, using our PRIDE scheme to reward our values in action and recognise those who have gone above and beyond.
Paula Butler
Recognised for the improvements
she has made to the way visitors
are welcomed to the business.
• Successful Customers
• Responsible
Leigh Carradus, Stuart Hughes
and Alan Henderson
Working hard to reduce losses on
Hasbro products has resulted in big
savings on broke, time spent and costs.
• Successful Customers
• Profitable Growth
• Sustainability
Tim Walling
Tim showed fantastic community focus
by undertaking a 300 mile bike ride to raise
money for PAPYRUS - the national charity
for the Prevention of Young Suicide.
• Community Focus
Dan Little and Harvey Haygarth
The approach to work by both Dan
and Harvey are a credit to James Cropper.
A perfect example of our desire to promote
a caring, motivated workforce built
on trust, dignity and respect.
• Caring, Motivated Workforce
• Trust, Dignity and Respect
Mark Sorrenson
To avoid hand-written errors on
dye tickets, Mark created a computer
programme - demonstrating great
forward thinking and motivation.
• Forward Thinking
• Motivation
EMPLOYEE ENGAGEMENT SURVEY
Listening to our employees and
working to continually improve
the working environment based on
their feedback is something we are
committed to at James Cropper.
We last ran an employee opinion survey
in 2019, and we were keen to ensure
that as we emerge from the pandemic
we understood how our employee
felt and what was important to them,
especially given the radical changes
we had all experienced over the last
two years.
In November 2021 we ran our first ever
online survey using wethrive engagement
platform, to support us.
The ‘Have you Say’ survey asks our
employees about the experiences that
make up their day to day working
life and helped us understand our
employees thoughts and opinions better,
wherever they are based and whatever
role they undertake.
The survey results shed light on what
is working, and what needs to be
improved or could be introduced.
This survey was about more than
just listening. It's about acting.
Following on from the survey the
Executive Committee has pledged to:
•
•
•
•
Invest £1 million over the next 24
months to upgrade and improve
workplace facilities
Reenergise company-wide updates
each month on latest news, new
products, our facilities upgrades,
changes being made, and how
collectively we are growing our
business for greater success
Support departmental managers
in devising and implementing local
plans the make improvements
Build stronger connections with
our people, learn more about our
colleagues through regular informal
catch-ups and workarounds
We see this exercise as an important
step in helping to improve communication,
working culture and practices and morale
across the company and plan to run
a follow up survey in October 2022,
with the move towards regular pulse
surveys in 2023.
The Executive Committee, also took
the opportunity this year to say thank
you to each and every employee.
We recognise the last two years have
been tough, so on Monday 8th August
2022, James Cropper PLC and all of
our divisions will be closed for one day.
We are encouraging everyone to take
an extended weekend and enjoy some
time with family and friends.
46
47
Our People
OUR PEOPLE
Values, Behaviours & Ethics
Early Careers
Investing in our future workforce
is a vital step to ensure we can
achieve our ambitious plans.
Whether that is through investing in
our technical graduate programme and
engineering apprenticeship scheme or
working with local school and colleges
to build STEM and career awareness we
are committed to providing meaningful
careers for the communities we operate in.
We currently have 27 employees on
apprenticeship schemes and 4 graduates.
We have 8 students expected this
summer to undertake work experience.
Our focus will always be on business
growth in line with our purpose and
values, not on growth at any cost.
Following on from the introduction
of our new purpose and values in 2020
we have during this year bolstered our
commitment to how we do business.
Our Code of Ethics defines the standards
and behaviours expected of us all as
James Cropper employees. Our customers,
shareholders, partners and colleagues
expect and deserve the highest standards
of business conduct from us. It supports
us in making decisions and outlines the
ways in which we can seek help and advice
if we are unsure of the right thing to do.
In 2022, we plan to further strengthen
our shared understanding through the
introduction of behavioural indicators
and mandatory training delivered to
all employees. Ethics training gives
employees a shared understanding of
what is expected of them and helps create
an environment in which all employees
feel they can ask questions and be
supported in making the right decisions.
Leadership Development
Programme
We believe a people leader is critical in
determining whether our business will
continue to be successful, whether we
will effectively navigate and overcome
the challenges we face, and whether our
employees work in a positive environment
where they can thrive.
During this year we invested in the
development of a bespoke Leadership
programme. We have partnered with Instep
a leading expert in Leadership development
to create a development programme
bespoke to James Cropper, to our values,
our employees and our leadership
requirements for the future.
The programme will be rolled out during
2022 and will challenge delegates to think
about their role as a People Leader and how
the James Cropper values and behaviours
apply to them. The experience will require
delegates to reflect on their leadership
career to date, existing strengths and
opportunities for further development
as well as build leadership mind set and
skills for the future.
48
CONTENTS
STRATEGIC REPORT
07
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 Nominations Committee
Report of the Remuneration Committee
QCA Principles
Directors’ Report
49
50
52
56
57
58
62
63
FINANCIAL STATEMENTS
65
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
Appointed: October 2006
Independent: No
Committee Memberships: Nominations
(Chair), Remuneration, Pension, ESG
Qualifications: MA
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)
Phil Wild
Chief Executive Officer
Appointed: October 2012
Independent: No
Committee Memberships:
Executive (Chair)
Qualifications: BEng (Hons)
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)
Isabelle Maddock
Chief Financial Officer
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 (Chair)
Patrick Willink
MD, ColourformTM Division
Appointed: March 1998
Independent: No
Committee Memberships:
Executive, Pension
Qualifications: BSc MBA
Experience: Patrick is the fourth generation 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)
Steve Adams
MD, Paper Division
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: -
James Gravestock
MD, TFP Division
Appointed: November 2021
Independent: No
Committee Memberships: Executive
Qualifications: BA (Hons)
Experience: James previously worked for Halma PLC
as Group Managing Director and prior to that holding
a succession of successful commercial leadership role
in 3M.
External appointments: -
Jim Sharp
Non-Executive Director
Appointed: September 2009
Independent: No
Committee Memberships: Audit
(Chair), Remuneration, Nomination,
Pension
Qualifications: MA
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)
Lyndsey Scott
Non-Executive Director
Appointed: August 2019
Independent: Yes
Committee Memberships:
Remuneration (Chair), Audit,
Nomination
Qualifications: BA DPM Grad IPM
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.
External appointments: International Personal Finance
PLC (Chief HR Officer)
Sarah Miles
Non-Executive Director
Appointed: November 2021
Independent: Yes
Committee Memberships: Audit,
Remuneration, Nomination
Qualifications: MA
Experience: Sarah has a strong track record in a number
of Executive Director roles. She is currently the CEO of
Feelunique.com and has held Executive roles in Amazon
and Diageo. As a Non-Executive Director, she brings a
wealth of commercial experience.
External appointments: Feelunique.com (Chief Executive
Officer), Member of the British Retail Consortium.
Martin Court
Non-Executive Director
Appointed: November 2021
Independent: Yes
Committee Memberships: Audit,
Remuneration, Nomination,
Qualifications: BSc (Eng), PHD
Experience: Martin has a strong track record as both an
Executive and Non-Executive roles in the chemicals and
materials sectors. His experience in strategy, innovation-
driven growth and expansion in commercial and technical
capacities will support the Group's growth plans.
External appointments: Victrex PLC (Executive
Director and Chief Commercial Officer, including
directorships of a number of subsidiaries)
Jim Aldridge
Company Secretary
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 Cropper
Honorary President
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.
50
51
Corporate Governance Statement
Corporate Governance Statement
CORPORATE GOVERNANCE STATEMENT
Governance Statement
The Chief Executive Officer
"I AM PLEASED TO INTRODUCE THE CORPORATE
GOVERNANCE REPORT FOR THE PERIOD ENDED
26 MARCH 2022 . THIS REPORT INCLUDES MY STATEMENT
AND THE CORPORATE GOVERNANCE REPORT."
Chairman’s introduction to Corporate Governance
It has been a year of reflection,
modernisation and, in line with our values,
adoption of a more forward thinking
approach to our governance and how the
Board functions. We have listened to our
stakeholders, looked at how we function,
reviewed our remuneration policies
and reviewed a number of policies.
The changes are not yet completed as we
aim to remain up to date with current best
practices applicable to a Group of our size
and complexity. In line with our values,
the Board strives to be a caring, responsible
and forward thinking Board fit for purpose
as we continue the drive for sustainable
growth throughout the Group.
Following the limitations due to the
pandemic, the Board were once again able
to hold regular face to face meetings from
December, rather than online meetings,
allowing the directors to reflect on the
experiences of online meetings and consider
how the Board can improve how it functions
with constructive and challenging discussions
within our culture of openness, transparency
and respect among the Board members.
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 Group.
Throughout the year, the Board has been
actively addressing the negative voting issues
raised, consulting with key shareholders,
external advisers and our Nomads.
The matters raised mainly concerned the
independence of two of the Non-Executive
Directors, including myself, and also
the construct of my remuneration.
With respect to independence, the Board
has increased the level of independence by
appointing an additional Non-Executive
Director. In addition, the Chair of the Audit
Committee will be reviewed and appointed
annually and I am no longer a member of
the Audit Committee.
Throughout the year the Board have been
consulting with advisers resulting in a new
service construct for the role of Chairman.
With effect from April 2022, my role as
Chairman will be constructed as a purely
non-executive role. The current LTIP
awards will be honoured by the Board,
subject to being vested in accordance
with the set targets. These will be the only
benefits that may be awarded in the future
to me as Chairman.
The Board have also approved changes to
rewards for the Executive Directors making
future rewards more focused on forward
thinking strategic objectives, personal targets
and ESG goals, with all future rewards
complying with appropriate best practice in
terms of malus, clawback compliance and
appropriate post vesting/post cessation
holding periods.
A number of key policies have been
refreshed during the year, including our
ethics policy and our people policy
framework. Lastly, the Board have also
refreshed our Articles of Association to
be more aligned to current best practice
where appropriate. The proposed changes
to the Articles will be shared with our
shareholders for approval at the AGM.
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.
Both I and the Non-Executive Directors
are fully supportive of the strategic
direction being taken by the executive
team. The Strategic Report is on pages
07 to 48 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.
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 28 to 29.
Mark Cropper, Chairman
21 June 2022
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, 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 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 Mark
Cropper. Details of the actions of the ESG
committee can be found on page 40 to 43
of the Annual Report. The ESG Committee
meets at least four times a year.
Board and Committee Meetings
The Board held five 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. 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 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.
52
53
Corporate Governance Statement
Corporate Governance Statement
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.
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.
Board Meetings (5) Meetings attended
Terms of appointment and time commitment
Mark Cropper
Phil Wild
Steve Adams
Isabelle Maddock
Martin Thompson
James Gravestock
Patrick Willink
Andrew Hosty
Jim Sharp
Lyndsey Scott
Martin Court
Sarah Miles
Effectiveness
Board Composition
5
5
5
5
3
3
5
2
5
5
3
3
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 30%.
Appointment of Non-Executive Directors
Non-Executive Directors are appointed to
the Board following a formal, rigorous and
transparent process, involving external
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 Chief Financial Officer 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.
Due to the changes in Board membership
that have taken place, no Board
effectiveness evaluation was undertaken in
the year. The next evaluation process will
take place in September 2022. 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. For further details on Going
Concern please refer to the CFO Review
(pages 16 to 20).
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.
Martin Court is the Senior Independent
Non-Executive Director.
Annual General Meeting (AGM)
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.
Jim Aldridge,
Company Secretary
21 June 2022
54
55
Report of the Audit Committee
Report of the Nominations Committee
REPORT OF THE AUDIT COMMITTEE
REPORT OF THE NOMINATIONS COMMITTEE
"I AM PLEASED TO INTRODUCE THE AUDIT COMMITTEE REPORT
FOR THE PERIOD ENDED 26 MARCH 2022. 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 THE INFLATIONARY PRICE PRESSURES
BY MONITORING THE ACTIONS TAKEN BY THE EXECUTIVE
DIRECTORS IN RESPONSE TO THEM."
Statement from the Chair of the Audit Committee
"I AM PLEASED TO PRESENT THE NOMINATIONS COMMITTEE
REPORT FOR THE PERIOD ENDED 26 MARCH 2022.
DURING THE YEAR, THERE WERE A NUMBER OF CHANGES
IN THE BOARD RESULTING IN A MORE BALANCED BOARD
IMPROVING THE BALANCE BETWEEN INDEPENDENT AND
NON-INDEPENDENT DIRECTORS AND IMPROVING THE
LEVEL OF FEMALE REPRESENTATION ON THE BOARD."
Statement from the Chair of the Nominations Committee
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 24 to 27
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 reactions to risks arising.
Jim Sharp,
Chair to the Audit Committee
21 June 2022
The Audit Committee is responsible
for assisting the Board in discharging
its responsibilities for monitoring the
integrity of the Company’s financial
statements and the effectiveness of the
systems of internal financial controls and
to monitor the effectiveness, performance
and objectivity of the external auditors.
Composition
The Committee comprises the
following members:
• Jim Sharp (Chair)
• Lyndsey Scott
• Martin Court (appointed 9 Nov 2021)
• Sarah Miles (appointed 9 Nov 2021)
In November 2021, Andrew Hosty stepped
down as a Non-Executive Director and two
new Non-Executive Directors appointed,
both of whom have joined the Audit
Committee. I would like to thank Andrew
for his contribution to the Audit Committee
during his tenure and also welcome on board
Sarah and Martin.
Three of the Committee members are
independent Non-Executive Directors.
Following a Board review, it was agreed
by the Board that I should remain as the
Chair of the Committee for the next year.
The Board considered me to be independent
in judgement and character.
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,
including the review of the audit plan and
a review of the audit findings for 2021-
2022, with the auditors BDO LLP, 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 LLP were appointed as auditors
by the Board in 2018, and reappointed
by shareholders at the Annual General
Meeting in July 2021.
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.
and equality of opportunity amongst
its employees and its Board members.
The Company acknowledges the value
of diversity in its widest sense and its
contribution towards effective Board
operations and decisions.
All directors are encouraged to keep up
to date with relevant legal and governance
matters, best practice and evolving areas
of risk. The directors are supported
to undertake any other professional
development identified as necessary
or desirable.
Mark Cropper,
Chair to the Nominations Committee
21 June 2022
The main responsibilities
of the committee include:
• leading the process for Board
appointments and making
recommendations to the Board about
proposed appointments;
• evaluating the skills, experience and
knowledge of the Board; and
• working with management in relation to
inclusion and diversity within the Board.
In November 2021, Dr Andrew Hosty
stepped down as a non-executive director.
The Nominations Committee conducted
a search process, assisted by external
consultants, with two new non-executive
directors appointed. I would like to thank
Andrew for his contribution to the Board
during his tenure.
In June 2021, Martin Thompson announced
his intention to leave the Company in April
2022. Martin joined the Company in 2003
as Managing Director of James Cropper
Converting Ltd, before moving to the role
of Managing Director for the TFP division
in 2013, and was appointed to the Board
in June 2013. Martin has been instrumental
in the growth of the TFP division as well
as supporting the wider strategic objectives
of the Group Board. I would like to thank
Martin for his significant contribution
over the past eighteen years, not least
for his part in the growth of the TFP
division. The Nominations Committee
conducted a search process, assisted by
external consultants.
In November, the Committee recommended
the appointment of Sarah Miles and Martin
Court as independent non-executive
directors and also the appointment of
James Gravestock as executive director
and MD for the TFP division.
The recommendation for all three directors
was approved by the Board. I would like
to welcome James, Sarah and Martin to
the Board who each bring a wealth of
knowledge and experience to the Board
whilst increasing the level of independence
and diversity within the Boardroom.
Further details can be found about the new
directors on the Directors pages (50 to 51).
Composition
The Committee comprises the
following members:
• Mark Cropper (Chair)
• Jim Sharp
• Lyndsey Scott
• Martin Court (appointed 9 Nov 2021)
• Sarah Miles (appointed 9 Nov 2021)
Board appointments:
The Committee operates under formal
terms of reference, reviewed annually.
The Committee assesses the balance, skills,
knowledge, experience, independence and
diversity of the Board to identify any gaps
and consider the need for refreshment.
Candidate profiles were created for the
vacancies, with candidates assessed against
and also interviewed by Committee
members. A short list was drafted and
potential candidates offered a tour of the
main site and an opportunity to meet some
of the executive directors. After careful
consideration, the Committee made
proposals to the Board, which were
accepted. Any new directors appointed
by the Board must be elected at the next
AGM to continue in office.
An induction programme is in place for
new Board members including meeting
with directors and senior managers and
visiting the main site. The Company is
committed to diversity, inclusive practices
56
57
Report of the Remuneration Committee
REPORT OF THE REMUNERATION COMMITTEE
"I AM PLEASED TO INTRODUCE THE DIRECTORS’
REMUNERATION REPORT FOR THE PERIOD ENDED
26 MARCH 2022. THIS REPORT INCLUDES MY STATEMENT,
THE ANNUAL REMUNERATION REPORT AND SETS OUT
OUR DIRECTORS’ REMUNERATION POLICY."
Statement from the Chair of the Remuneration Committee
As the Group works hard to recover
strongly from the pandemic, and in light
of significant macroeconomic pressure
from rising inflation and, in particular,
energy costs, the Remuneration
Committee’s approach remains prudent
but mindful always of consistency and
fairness, and importantly our ability
to retain and attract talent.
The Remuneration Committee has
continued to execute upon its clear plan to
address issues causing negative voting from
proxy voters and we are pleased to report
good progress. The Committee, with
external adviser* assistance and excluding
the Chairman, undertook a full review of the
Chairman’s remuneration construct during
the year. In addition, a review of executive
reward was also undertaken.
Throughout the year, the committee has
held discussions with key stakeholders,
and consulted with external advisers and
our nominated advisers. The review of the
Chairman’s remuneration construct and
executive reward was completed by the
year end with all proposed changes agreed
by the Board for implementation at the
start of April 2022.
Chairman’s remuneration construct:
The Remuneration Committee commissioned
an external market review of Non-Executive
Chairman remuneration by our external
adviser*. Consultations with key
stakeholders and our nominated advisers
were also held. Following these actions, it
was agreed that, the remuneration construct
would be altered to remove all future LTIP
and executive benefits with effect from
April 2022.
In taking this decision it was clear to our
external adviser, and to wider stakeholders,
that the James Cropper Chairman role
has a unique context undertaking as
it does wide ranging support to the
functioning and development of the
Group beyond the normal responsibilities
of a Non-Executive Chairman.
Executive rewards:
During the year, the committee undertook
a review of rewards for executive directors.
The review included a benchmarking exercise
and a review of current best practices to
ensure that any future awards align with
the group values of Forward Thinking,
Responsible and Caring, alignment with
divisional strategic targets and alignment
with current governance best practice.
Annual Incentive award:
The construct for achieving the current
Annual Incentive award is based on
achieving targets for earnings and
working capital, as set out on page 61.
The agreed new construct, with effect
from April 2022, is based on achieving
targets set for:
• Group profits;
• Divisional performance targets; and
• Personal strategic/leadership targets.
The awards are to be based on targets
aligned to the annual budget objectives.
The quantum of the award will remain
the same at 25% of basic salary for all
executive directors. In addition, a stretch
award will be offered for improved
performance greater than the budget
targets. Any awards achieved under the
stretch incentive, will be awarded in shares,
except for members of the concert party,
which will be subject to the following
new governance rules:
• Awards will be subject to
malus and clawback rules;
• Awards will be subject to a two
year post vesting holding period.
The quantum for stretch awards was agreed
at 25% of basic salary for the CEO and
15% for all other executive directors.
The targets for the stretch awards will
be based on group profits and divisional
performance targets only.
Long Term Incentive Plan:
The construct for the current Long Term
Incentive Plan (LTIP) awards are based
on growth in earnings per share and
detailed on page 61.
Following the review of the award,
including external benchmarking and
current best practice, the new construct for
any LTIP award granted after March 2022
will be based on three target areas, namely:
• Earnings per share to deliver
greater long term shareholder value;
• Operating cash flow targets to support
the liquidity and working capital
management of the business; and
• ESG targets, to support our ESG goals.
These targets are again aligned to our
values and will also incorporate current
best governance practice including, malus
and clawback provisions and a two year
post vesting holding periods.
All LTIP awards will be vested in shares with
the exception of any concert party member
who will be vested a cash equivalent.
It was agreed that the quantum for LTIP
awards will remain the same, being 75%
of basic salary for the CEO and 50% for
all other executive directors.
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.
*External advisers to the Remuneration Committee: H2glenfern Remuneration Advisory (a member of the UK Remuneration Consultants Group).
Report of the Remuneration Committee
• 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:
to Directors in the period ended 26
March 2022.
• Directors’ Remuneration Policy
setting out the Group’s current
remuneration policy.
Constitution of the Committee
In November, Martin Court and
Sarah Miles joined the Board and the
Remuneration Committee and Andrew
Hosty resigned. I would like to welcome
Martin and Sarah to the Remuneration
Committee and thank Andrew Hosty
for his support during his tenure.
• Annual Report on Remuneration
providing details of the payments made
Lyndsey Scott, Chair of the Remuneration
Committee, 21 June 2022
In setting the remuneration policy,
the Remuneration Committee takes into
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.
Remuneration policy
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 2022.
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:
• 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.
Service Contracts
Director
Notice Period
M A J Cropper (Chairman)
12 months
P I Wild
I M Maddock
S A Adams
J Gravestock
P J Willink
6 months
6 months
6 months
6 months
12 months
Non-Executive Directors are employed on
contracts of one month’s notice by either side.
Total Shareholder Return
We believe that this, in turn, will help
stimulate sustainable value creation over
the long term.
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.
Annual Remuneration Report for 2022
Remuneration Committee
The Remuneration Committee
comprises the following members:
• Lyndsey Scott (Chair)
• Mark Cropper
• Jim Sharp
• Martin Court (appointed 9 Nov 2021)
• Sarah Miles (appointed 9 Nov 2021)
• Dr Andrew Hosty (resigned 9 Nov 2021)
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 Chair 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 reward.
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 26 March 2022 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.
58
59
James CropperFTSE AIM All ShareFTSE All Share03/1003/1203/1303/1403/1503/1603/1703/1803/1903/2003/2103/2203/11Rebased2004006008001000120014001600 Report of the Remuneration Committee
Report of the Remuneration Committee
Details of Directors’ Remuneration
PURPOSE AND LINK TO STRATEGY
OPERATION
Salary and Fees
2021
2022
Benefits
2022
2021
Annual Bonus
2021
2022
Pension Costs
2021
2022
Total
2022
2021
£’000
Executive
P I Wild
S A Adams
I M Maddock
211
167
167
204
152
155
-
43
23
23
9
40
22
22
-
11
8
8
13
J Gravestock
(Appointed 15 November 2021)
92
M Thompson
(Resigned 20 January 2022)
K D Watson1
(Resigned 1 August 2020)
167
159
23
22
34
-
218
-
9
-
P J Willink
155
148
23
22
27
Non-Executive
M A J Cropper
M Court
(Appointed 9 November 2021)
S Miles
(Appointed 9 November 2021)
L J Scott
J E Sharp
Dr A Hosty
(Resigned 9 November 2021)
83
14
14
33
37
22
77
-
-
29
34
29
11
-
-
-
-
-
11
-
-
-
-
-
-
-
-
-
-
-
1,162
1,205
155
148
101
1 Includes severance costs of £73k
Long Term Incentive Plan
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13
10
10
1
10
10
10
10
-
278
208
208
115
254
184
187
-
10
234
191
-
8
-
235
11
17
216
187
5
-
-
-
-
-
5
-
-
-
-
-
99
14
14
33
37
22
93
-
-
29
34
29
60
70
1,478
1,423
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 26 March 2022 under the Plan to executive
directors were as follows:
Options at
27 March
2021
Options
granted
in period
Mid-market
price (£)
of options
granted
Options
exercised
in period
Options Options at
lapsed in 26 March
2022
period
27,439
14,442
14,442
14,442
11,612
£13.688
6,112
6,112
6,112
£13.688
£13.688
£13.688
-
-
-
-
(13,286)
(6,993)
(6,993)
(20,554)
25,765
13,561
13,561
-
All figures in £’000
P I Wild
S A Adams
I M Maddock
M Thompson1
1 Resigned 20 January 2022
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
27 March
2021
Options
granted
in period
Mid-market
price (£)
of options
granted
Options
exercised
in period
Options Options at
lapsed in 26 March
2022
period
6,947
12,825
2,940
5,700
£13.688
£13.688
-
-
(3,364)
(5,877)
6,523
12,648
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 Group.
Non-Executive Directors’ Fees
To attract and retain the right individuals required
to support the achievement of both short and
long-term goals.
Fees for Non-Executive Directors are based on market practice and are reviewed by the Board each year.
The maximum aggregate amount of fees 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.
Benefits
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.
The Chief Executive is a member 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.
Annual Executive Bonus Plan
To reward the delivery of the Group’s annual
financial and strategic goals.
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 and has
been amended for the period commencing April 2022.
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.
The LTIP awards have been amended for the period commencing April 2022.
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.
60
61
Compliance with the QCA Corporate Governance Code
COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE
PRINCIPLE
COMPLIANCE
1. Establish a strategy and
business model which
promote long-term value
for shareholders
• The Group strategy is set out on pages 08 to 27 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 reviews the strategic plans throughout the year.
• The strategy is communicated to all employees at half yearly employee briefings.
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
• 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 28 to 29 of the Annual Report.
Employees
•
Regular meetings take place with
employees to share strategy, keep
employees updated and seek feedback.
The Group conducts a biennial
employee survey with the latest
level of engagement (2021) at 67%.
•
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 over a 100 year partnership
with one supplier and at the same
time build new partnerships with
new suppliers.
Community
•
The Group has very close links with
the local community built on our
176 year presence at Burneside.
The Group supports local
organisations through its
community support team with
donations this year amounting
to £9,000.
Environment
•
We are proud to introduce
initiatives such as Colourform and
Cupcycling, 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 28 to 29
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
• The Group significant risks are reviewed throughout the year.
• Risk is a fixed item agenda for both the Executive Committee and Board meetings.
• The significant risks are disclosed in the Strategic Report within the Annual report on pages 24 to 27.
• The Board is led by our non-executive Chairman, Mark Cropper.
• The Board comprises five Non-Executive Directors and five Executive Directors.
• The members of the Board maintain the appropriate balance of experience, independence and knowledge of the Group.
•
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 50 to 64.
6. Ensure that between them the
Directors have the necessary
up-to date experience, skills
and capabilities
• 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 50 and 51 of the Annual Report.
7. Evaluate Board performance
based on clear and relevant
objectives, seeking
continuous improvement
•
•
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 plan 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.
8. Promote a corporate culture
that is based on ethical
values and behaviours
•
•
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 normally 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 52 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 50 to 64.
• The website includes historical announcements, copies of the Annual and Interim reports and copies of any presentations made.
Directors’ Report
DIRECTORS’ REPORT
The Directors present their Annual
Report and the audited financial
statements of James Cropper Group
for the 52 weeks ended 26 March 2022.
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 50 to 51.
The Section 172 statement also summarises
how the directors have had regard
to the need to foster the Group’s
business relationships.
Principal activities
Results and dividends
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 10 to 11,
the Strategic Report on pages 08 to 48 and
the Chief Financial Officer’s Review on
pages 16 to 20, report on the performance
of the Group for the period ended 26 March
2022 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
James Gravestock (appointed 15 Nov 2021)
Martin Thompson (resigned 20 Jan 2022)
Patrick Willink
Martin Court (appointed 9 Nov 2021)
Dr Andrew Hosty (resigned 9 Nov 2021)
Sarah Miles (appointed 9 Nov 2021)
Lyndsey Scott
Jim Sharp
Details of the directors’ remuneration are
shown in the Report of the Remuneration
Committee on pages 58 to 61.
The results for the period are shown
in the Statement of Comprehensive
Income on page 73.
An interim dividend of 2.5p per ordinary
share was paid on 14 January 2022.
The Directors are recommending a final
dividend of 7.5p per ordinary share, subject
to approval at the Annual General Meeting
of the Company, making the total dividend
for the year 10.0p (2021: nil) per share.
Full details of dividends in respect of
the year ended 26 March 2022 are given
in note 7 of the financial statements.
Corporate governance
A report on Corporate Governance
is set out on pages 50 to 64, 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.
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.
Further information can be found in the
Section 172 (1) statement on pages 28 to 29.
Charitable and political donations
Environmental policy
It is the Group’s policy not to make any
donations to, or incur expenditure on
behalf of political parties, other political
organisations or independent election
candidates and the Board does not
intend to change this policy.
Donations totalling £9,000
(2021:£10,000) 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 28 to 29 (also known as the
Section 172 statement).
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 40 to 43 and the streamlined energy
carbon report on page 44.
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.
62
62
63
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 10 to 14,
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
16 to 20) 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
Substantial Interests
Shareholdings in excess of 3% of the issued capital at 3 May 2022 were as follows: -
• 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 27 July 2022
at 11am.
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
3,059,531
521,500
52,386
3,633,417
1,234,202
32.0
5.4
0.6
38.0
12.9
1
1. The Cropper, Willink and Acland families are related and are deemed to be acting in concert with a total holding of 38% in the Company.
Details of Directors’ Interests
The interests in the shares of the
Company of those Directors serving
at 26 March 2022 were as follows:
Any material related party
transactions between the directors
and the Company are set out in note
27 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 58. Non-beneficial interests
include shares held jointly as trustee
with other directors.
Approved by the Board of Directors
on 21 June 2022 and were signed on
its behalf by
Mark Cropper, Chairman
At 26 March 2022
Options on
Ordinary
Shares
Ordinary
Shares
At 27 March 2021
Options on
Ordinary
Shares
Ordinary
Shares
Director
Interest
M A J Cropper
Beneficial
Non-beneficial
1,856,896
559,571
-
-
1,851,146
559,571
P I Wild
Beneficial
25,572
25,765
9,741
1,099
500
58,079
69,434
11,380
82,251
500
82,251
500
82,251
500
82,251
13,561
13,561
-
-
-
-
-
-
-
-
-
-
-
I M Maddock
Beneficial
S A Adams
Beneficial
J Gravestock
Beneficial
P J Willink
J E Sharp
L J Scott
M Court
S Miles
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Beneficial
Non-beneficial
64
25,572
11,741
1,099
-
58,079
69,434
11,380
64,951
500
64,951
-
-
-
-
-
-
27,439
14,442
14,442
-
-
-
-
-
-
-
-
-
-
-
CONTENTS
STRATEGIC REPORT
07
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 Nominations 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
49
65
66
67
73
74
75
76
78
114
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 UK adopted international accounting
standards (IFRS).
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 UK adopted
international accounting standards
(IFRS), 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
26 March 2022 and of the Group’s
profit for the 52 week period then ended;
• the Group financial statements have
been properly prepared in accordance
with UK adopted international
accounting standards;
• 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
52 week period ended 26 March 2022
which comprise the Group Statement of
Comprehensive Income, the Group and
Company Statement of Financial Position,
the Group Statement of Cash Flows, the
Group Statement of Changes in Equity, the
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
UK adopted international accounting
standards. 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.
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Independent Auditor’s Report
Independent Auditor’s Report
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. This matter was 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 this matter.
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 26 March 2022, the Group recorded a net
retirement obligation of £13.1m (2021: £18.4m),
comprising scheme assets of £121.1m (2021: £117.1m)
and scheme liabilities of £109.4m (2021: £135.6m).
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.
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. The third party pension specialist confirmed their
independence, and we assessed their competence with reference to
qualifications gained and our previous experience with the third party.
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 (Audit and Assurance Faculty) reports to gain assurance over the
valuation of the assets.
Key observations: Based on our procedures we consider the assumptions
and estimates to calculate the Group's pension obligations to be reasonable.
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. 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:
• Challenged the assumptions used in
the Directors’ base case forecast by
comparing forecast performance to that
historically achieved, comparing actual
performance achieved post year end to the
forecast, and checking that any significant
cash outflows had been correctly included
in the forecast;
• Obtained an understanding of the
• 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 scenario;
• 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;
• Reviewed mitigating actions and cost
savings proposed by the Directors for
their ability to be implemented and the
implementation to be done on a timely
basis; and
required financing facilities by reviewing
third party documentation, including the
nature of the facilities, repayment terms,
covenants and attached conditions;
• 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 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
2022 2021
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
Going Concern
80 % 95 %
89 % 90 %
89 % 91 %
Yes Yes
No Yes
No Yes
Going Concern is no longer considered to be a key
audit matter as the industry is recovering from the
Covid-19 pandemic.
Acquisition Accounting is no longer considered
to be a key audit matter as there are no further
acquisitions in the current year.
Group financial statements as a whole
£168,000 (2021: £200,000) based on 5%
of profit before tax excluding IAS 19 adjustments
(2021: 5% of 3 year average of profit before tax
excluding IAS 19 adjustments)
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 17 (2021: 17) components of the Group,
we determined that 5 (2021: 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.
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Independent Auditor’s Report
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 and performance materiality as follows:
Group financial statements
Parent company financial statements
2022
Materiality
£168,000
2021
£200,000
2022
£67,200
2021
£75,000
Basis for
determining
materiality
5% of Profit before tax
excluding IAS 19
adjustments
5% of 3 year average of
Profit before tax excluding
IAS 19 adjustments
40% of Group
materiality
37.5% of Group
materiality
Calculated based on
a percentage of group
materiality given the
assessment of
aggregation risk.
Calculated based on
a percentage of group
materiality given the
assessment of
aggregation risk.
Rationale for
the benchmark
applied
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 for the users
of the financial statements.
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.
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 for the
users of the financial
statements. The 3 year
average was used as the
actual result was distorted
due to Covid-19 impacts.
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
Basis for
determining
performance
materiality
£109,200
£ 130,000
£ 43,680
£ 48,750
65% of group materiality.
The testing is largely
sample based, with some
complex and judgemental
areas. Based on past
experience, we do not
expect a large number
of errors arising, and
management are open to
making any corrections
we do raise.
65% of group materiality.
The testing is largely
sample based, with some
complex and judgemental
areas. Based on past
experience, we do not
expect a large number
of errors arising, and
management are open to
making any corrections
we do raise.
65% of parent company
materiality. The testing
is largely sample based,
with some complex and
judgemental areas. Based
on past experience, we do
not expect a large number
of errors arising, and
management are open to
making any corrections
we do raise.
65% of parent company
materiality. The testing
is largely sample based,
with some complex and
judgemental areas. Based
on past experience, we do
not expect a large number
of errors arising, and
management are open to
making any corrections
we do raise.
Component materiality
Reporting threshold
We set materiality for each component of the Group
based on a percentage of between 4% and 95% of Group
materiality dependent on the size and our assessment
of the risk of material misstatement of that component.
Component materiality ranged from £6,000 to £159,600.
We agreed with the Audit Committee that we would report
to them all individual audit differences in excess of £5,040
(2021:£6,000). We also agreed to report differences below
this threshold that, in our view, warranted reporting on
qualitative grounds.
In the audit of each component, we further applied
performance materiality levels of 65% of the component
materiality to our testing to ensure that the risk of errors
exceeding component materiality was appropriately mitigated.
Other information
The directors are responsible for the other
information. The other information
comprises the information included in
the annual report 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.
Other Companies Act 2006 reporting
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.
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.
Responsibilities of Directors
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.
70
71
We determined that the group and
components susceptibility material
misstatement and specifically where fraud
may occur 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 pension scheme
assumptions, 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;
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/
auditors responsibilities. 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.
• Discussions with management,
Stuart Wood (Senior Statutory Auditor)
including consideration of known or
suspected instances of non-compliance
with laws and regulation and fraud ;
• Review of minutes of Board meetings
For and on behalf of BDO LLP,
Statutory Auditor
Manchester, UK
throughout the period; and
21 June 2022
• 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 reversal / (loss)
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
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
Foreign tax adjustment
Items that will never be reclassified to profit or loss
Retirement benefit liabilities – actuarial gains / (losses)
Deferred tax on actuarial (gains) / losses on retirement benefit liabilities
Other comprehensive income / (expense) for the period
Total comprehensive income / (expense) for the period
attributable to equity holders of the Company
Note
2
23
4
2
3
3
4
5
6
15
20
52 week period to
26 March 2022
£’000
52 week period to
27 March 2021
£’000
104,922
184
744
385
(39,577 )
(7,428 )
(30,535 )
(4,051 )
(20,960 )
3,684
(924 )
17
2,777
(1,419)
1,358
14.2 p
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
16.4p
1,358
1,566
49
(501 )
10
(13 )
4,777
(179 )
4,143
5,501
(80 )
501
258
-
(8,750 )
1,663
(6,408 )
(4,842 )
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
72
73
Statement of Financial Position
Statement of Cash Flows
Group as at
26 March 2022
£’000
Group as at
27 March 2021
£’000
Company as at
26 March 2022
£’000
Company as at
27 March 2021
£’000
Note
James Cropper PLC
Statement of Cash Flows
For the period ended 26 March 2022 (2021: for the period ended 27 March 2021)
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
Deferred consideration on business acquisition
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
8
9
10
11
12
21
13
14
14
15
16
17
18
18
20
16
21
22
1,264
1,584
30,551
7,358
-
3,534
44,291
17,593
22,184
(777 )
-
7,750
1,838
48,588
92,879
20,936
6
1,595
22,537
18,727
13,130
578
3,093
35,528
58,065
2,389
1,588
553
(1,407 )
-
31,691
34,814
92,879
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
-
769
1,630
343
7,350
3,459
13,551
-
55,027
-
-
4,011
968
60,006
73,557
16,324
6
133
16,463
8,182
13,130
-
123
21,435
37,898
2,389
1,588
-
(1,407 )
-
33,089
35,659
73,557
-
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
The Parent Company reported a profit for the period ended 26 March 2022 of £4,554k (2021: £4,072k).
The financial statements on pages 63 to 111 were approved by the Board of Directors on 21 June 2022 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 SOCI
Past service pension deficit payments
Foreign exchange differences
Gain on early termination of right of use assets
Bank interest income
Bank interest expense
Share based payments
Changes in working capital:
Increase in inventories
(Increase) / decrease in trade and other receivables
Increase / (decrease) in trade and other payables
Tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of intangible assets
Purchases of property, plant and equipment
Acquisition of business net of cash and cash equivalents
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
Group
2022
£’000
Group
2021
£’000
Note
1,358
1,566
1,419
4,051
-
914
(1,443 )
-
-
(17 )
926
(107 )
(2,103 )
(6,220 )
5,545
(972 )
3,351
(56 )
(6,705 )
-
(6,761 )
9,754
(3,123 )
(1,170 )
17
(709 )
(256 )
(236 )
153
4,489
384
802
(498 )
783
(19 )
(4 )
491
245
(1,448 )
3,401
(2,406 )
-
7,939
(42 )
(3,085 )
(1,359 )
(4,486 )
6,390
(10,313 )
(818 )
4
(353 )
100
-
Net cash generated / (used) from financing activities
4,277
(4,990 )
Net increase / (decrease) in cash and cash equivalents
Effects of exchange rate fluctuations on cash held
Net increase / (decrease) 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
867
118
985
6,765
7,750
7,750
7,750
(1,537 )
(662 )
(2,199 )
8,964
6,765
6,765
6,765
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
74
75
Statement of Changes in Equity
Statement of Changes in Equity
James Cropper PLC
Statement of Changes in Equity - Group
All figures in £’000
At 28 March 2020
Share
capital premium
Share Translation
reserve
2,389
1,588
Comprehensive income for the period
- -
Total other comprehensive income
- -
Dividends paid
- -
Distribution of own shares
- -
Share based payment charge
- -
Total contributions by and
distributions to owners of the Group
- -
Own
Shares
(1,251 )
-
-
-
100
-
100
Hedging
reserve
Retained
earnings
-
-
501
-
-
-
-
31,087
1,566
(6,829 )
-
-
246
246
Total
34,397
1,566
(6,408 )
-
100
246
346
James Cropper PLC
Statement of Changes in Equity - Company
All figures in £’000
At 28 March 2020
Comprehensive income for the period
Total other comprehensive income
Dividends paid
Share based payment charge
Distribution of own shares
Total contributions by and
distributions to owners of the Group
Share
capital
2,389
Share
premium
1,588
-
-
-
-
-
-
-
-
-
-
-
-
Own
Shares
(1,251 )
-
-
-
-
100
100
Retained
earnings
27,073
4,072
(7,137 )
-
245
-
245
584
-
(80 )
-
-
-
-
At 27 March 2021
2,389
1,588
504
(1,151 )
501
26,070
29,901
At 27 March 2021
2,389
1,588
(1,151 )
24,253
Comprehensive income for the period
Total other comprehensive income
Dividends paid
Purchase of own shares
Share based payment charge
Total contributions by and
distributions to owners of the Group
-
-
-
-
-
-
-
-
-
-
-
-
-
49
-
-
-
-
-
-
-
(256 )
-
(256 )
At 26 March 2022
2,389
1,588
553
(1,407 )
-
(501 )
-
-
-
-
-
1,358
4,595
(236 )
-
(96 )
(332 )
1,358
4,143
(236 )
(256 )
(96 )
(588 )
31,691
34,814
Comprehensive income for the period
Total other comprehensive income
Dividends Paid
Purchase of own shares
Share based payment charge
Total contributions by and
distributions to owners of the Group
-
-
-
-
-
-
-
-
-
-
-
-
(256 )
-
(256 )
4,554
4,614
(236 )
-
(96 )
(332 )
At 26 March 2022
2,389
1,588
(1,407 )
33,089
35,659
Total
29,799
4,072
(7,137 )
-
245
100
345
27,079
4,554
4,614
(236 )
(256 )
(96 )
(588 )
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
76
77
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 UK adopted
International accounting standards
("IFRS") and with those parts of the
Companies Act 2006 applicable to
companies reporting under IFRS.
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 26
March 2022, (2021: 52 week accounting
period ended 27 March 2021).
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 energy
crisis and other inflationary pressures
have been the major considerations.
The Board has concluded that it is
appropriate to adopt the going concern
basis, having undertaken a rigorous
assessment of the 12 month forecast
period with specific consideration to
the trading position of the Group in
the context of the current inflationary
pressures and energy costs.
The Directors, after reviewing the
Group’s operating forecasts, investment
plans and financing arrangements,
consider that the Company and Group
have sufficient financing available at the
date of approval of this report.
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 Colourform 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 the UK
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.
(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
(d) Foreign currencies
(f) Property plant and equipment
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.
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.
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
78
79
Other development expenditures are
recognised as an expense as incurred.
Development costs with a finite useful
life that have been capitalised are
amortised from the commencement of the
commercial production of the product on
a straight-line basis over the period of its
expected benefit, not exceeding 5 years.
(i) Research & development tax credit
Research and development expenditure
credit (RDEC) is recognised within other
operating income.
(j)
IFRS 16 ‘Leases’
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 26 March 2022,
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:
- 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
Notes to the Financial Statements
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.
(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.
(m) Investments
Trade investments are stated at cost less
any impairment in value. The Group’s
share of the profit is included in the
Statement of Comprehensive Income
on the equity accounting basis.
(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 recognized. 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.
(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
statement of comprehensive income.
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 statement of
comprehensive income. Amounts taken to
equity are transferred to the statement of
comprehensive income when the foreign
entity is sold.
(r) Cash and cash equivalents
Cash and cash equivalents includes cash in
hand, deposits held at call with banks,
other short-term highly liquid investments
with original maturities of three months or
less, and bank overdrafts. Bank overdrafts
are shown as borrowings within current
liabilities on the Statement of Financial
Position. Bank overdrafts that are
repayable on demand and form an integral
part of the Group’s cash management are
included as a component of cash and cash
equivalents for the purpose only of the
Statement of Cash Flows.
(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
Statement of comprehensive income
representing the fair value of outstanding
equity settled share-based payment
awards to employees which have not
vested as at the period end.
The fair values are charged to the
Statement of comprehensive income over
the relevant vesting period adjusted to
reflect actual and expected vesting levels.
(v) Capital Management
The 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.
Notes to the Financial Statements
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
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.
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.
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.
Deferred tax is provided on temporary
differences between the carrying amounts
of assets and liabilities for financial
reporting purposes and the amounts used
for taxation purposes. The following
temporary differences are not provided
for: the initial recognition of goodwill; the
initial recognition of assets or liabilities
that affect neither accounting nor taxable
profit other than in a business
combination, and differences relating to
investments in subsidiaries to the extent
that they will probably not reverse in the
foreseeable future. The amount of deferred
tax provided is based on the expected
manner of realisation or settlement of the
carrying amount of assets and liabilities,
using tax rates enacted or substantively
enacted at the Statement of Financial
Position date.
A deferred tax asset is recognised only to
the extent that it is probable that future
taxable profits will be available against
which the asset can be utilised.
(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.
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
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
(ii) Expected Credit Losses
When determining amounts of expected
credit losses, judgement and estimates are
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
forecasts to calculate the contingent
consideration and the discount rates
and weighted average cost of capital
to calculate the fair value of the
contingent consideration.
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
Colourform 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.
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 26 March 2022
All figures in £’000
Paper ColourformTM
TFP
Group
Continuing
Services Eliminations Operations
Revenue
External
Segment Profit
70,350
70,350
3,363
3,363
31,209
31,209
Adjusted Operating Profit before IAS 19
(2,338 )
(754 )
Exceptional costs
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
-
-
-
-
(2,338 )
(754 )
-
-
-
-
-
-
-
-
-
-
8,684
(354 )
-
8,330
-
-
-
-
-
-
-
(993 )
-
(547 )
(1,540 )
-
-
-
-
-
-
-
(14 )
-
-
(14 )
-
-
-
-
-
104,922
104,922
4,585
(354 )
(547 )
3,684
(924 )
17
2,777
(1,419 )
1,358
71,146
(65,627 )
5,066
(14,464 )
62,981
(52,448 )
68,814
(33,155 )
(115,12 8)
107,629
92,879
(58,065 )
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
Operating Segments
Period ended 27 March 2021
All figures in £’000
Paper ColourformTM
TFP
Group
Continuing
Services Eliminations Operations
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.
Note
2022
2021
Revenue
External
Segment Profit
51,37 6
51,37 6
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
72,17 1
(62,799 )
5,414
(13,913 )
57,643
(48,159 )
68,927
(41,848 )
(123,108 )
115,573
81,047
(51,146 )
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
2022
41,193
29,091
11,114
22,534
851
139
2021
29,955
22,001
5,819
19,996
777
220
2022
36,225
-
-
2021
33,771
-
-
4,532
4,295
-
-
-
-
104,922
78,768
40,757
38,066
All figures in £’000
Paper ColourformTM
Additions to non-current assets
3,452
399
TFP
2,598
Group
Services
312
Total
6,761
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
20
Other finance charges
Fair value adjustment on contingent consideration
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
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 / (reversal)
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)
260
209
367
12
76
924
17
17
295
164
239
32
-
730
4
4
907
726
2022
£’000
30,535
-
3,063
802
186
4,991
(555 )
(37 )
-
(152 )
2,896
(90 )
(184 )
2021
£’000
27,299
1,118
3,474
785
230
3,379
-
(46 )
(2,915 )
(75 )
2,252
1,020
431
2022
2021
36
-
92
29
4
76
128
109
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
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
2022
2021
298
250
548
264
(38 )
645
871
1,419
354
94
448
(150 )
(145 )
-
(295 )
153
21
6 Earnings per share
Basic earnings per share is calculated on the Group profit for the year attributable to equity shareholders of £2.7m
(2021: £1.2m) divided by 9.6m (2021: 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 26 March 2022 there were no potential dilutive share options outstanding (2021: nil).
2022
Earnings
£’000
Weighted
average
number
of share
‘000
2021
Amount
per share
pence
Earnings
£’000
Weighted
average
number
of share
‘000
Amount
per share
pence
1,358
9,555
14.2
1,566
9,555
16.4
Earnings attributable to
ordinary shareholders
Basic and diluted EPS
1,358
9,555
14.2
1,566
9,555
16.4
Deferred tax on actuarial gains on retirement benefit liabilities
179
(1,663 )
Tax on items charged to equity
Deferred tax on share options
(8 )
-
7 Dividends
All figures in £’000
2022
2021
The tax for the period is higher (2021: lower) than the standard rate of corporation tax in the UK of 19% (2021: 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% (2021: 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
2022
2,777
2021
1,719
528
326
212
645
11
115
-
(72 )
(20 )
1,419
(51 )
-
12
178
13
(236 )
(89 )
153
Final paid for the period ended 27 March 2021 / period ended 28 March 2020
Interim paid for the period ended 26 March 2022 / period ended 27 March 2021
Total dividends paid in the year
-
236
236
Final dividend payment paid pence per share for the period ended 27 March 2021 / period ended 28 March 2020
-
Interim dividend payment paid pence per share for the period ended 26 March 2022 / period ended 27 March 2021 2.5p
-
-
-
-
-
In addition, the directors are proposing a final dividend in respect of the financial period ended 26 March 2022
of 7.5p per share (2021: nil per share) which will absorb an estimated £708,000 (2021: £nil) of shareholders’ funds.
If approved by members at the Annual General Meeting, it will be paid on 12 August 2022 to shareholders who
are on the register of members at 8 July 2022. There are no tax implications in respect of this proposed dividend.
The proposed dividend is not accounted for until it is formally approved at the Annual General Meeting.
8 Goodwill
All figures in £’000
At 27 March 2021
At 26 March 2022
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.
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined
based on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount
rate in order to calculate the present value of the cash flows. The recoverable amounts has been determined from value in use calculations
based on cash flow projections from formally approved budgets covering a three year period to 31 March 2025. The present value exceeds
the carrying amount and no impairment has been suffered. There is no reasonable possible change in key assumptions that would lead to
an impairment charge.
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
9 Intangible assets
Group
All figures in £’000
Software
Computer Development
Emission
Costs Secrets Relationships Technology Brands Allowances
Customer
Trade
Total
Cost
At 27 March 2021
Additions
Disposals/surrender of allowances
4,278
457
310
567
359
31
802
6,804
56
-
-
-
-
-
-
-
-
-
-
-
2,567
2,623
(2,799 )
(2,799 )
At 26 March 2022
4,334
457
310
567
359
31
570
6,628
Aggregate amortisation
At 27 March 2021
Charge for Period
At 26 March 2022
4,068
67
4,135
Net book value at 26 March 2022
199
Net book value at 27 March 2021
210
456
-
456
1
1
310
-
310
-
-
12
57
69
498
555
7
36
43
5
26
31
-
-
-
4,858
186
5,044
316
-
570
1,584
352
26
802
1,946
Group
Company
Company
Computer
Emission
Software Allowances
Total
Computer
Emission
Software Allowances
Total
Cost
At 27 March 2021
Additions
Disposals/surrender of allowances
4,138
803
4,941
Cost
At 28 March 2020
56
-
2,567
2,623
Additions
(2,799 )
(2,799 )
Disposals/surrender of allowances
4,096
120
4,216
42
-
1,361
1,403
(678 )
(678 )
At 26 March 2022
4,194
570
4,764
At 27 March 2021
4,138
803
4,941
Aggregate amortisation
Aggregate amortisation
At 27 March 2021
Charge for Period
At 26 March 2022
3,928
67
3,995
-
-
-
3,928
67
3,995
At 28 March 2020
Charge for Period
At 27 March 2021
3,850
78
3,928
-
-
-
3,850
78
3,928
Net book value at 26 March 2022
199
570
769
Net book value at 27 March 2021
210
803
1,013
Net book value at 27 March 2021
210
803
1,013
Net book value at 28 March 2020
246
120
366
All figures in £’000
Software
Computer Development
Emission
Costs Secrets Relationships Technology Brands Allowances
Customer
Trade
Total
Cost
At 28 March 2020
Additions
Assets acquired through business
combinations
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
310
-
310
-
-
-
-
-
-
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
Net book value at 27 March 2021
210
1
-
555
352
26
802
1,946
Net book value at 28 March 2020
260
115
-
-
-
-
120
495
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 UK Emissions Trading Scheme (UKETS) 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.
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
10 Property plant and equipment
Group
All figures in £’000
Cost
At 27 March 2021
Transfers
Transfers to right of use assets2
11
Additions at cost
Effects of movements in foreign exchange
At 26 March 2022
Accumulated Depreciation
At 27 March 2021
Charge for period
At 26 March 2022
Net book value at 26 March 2022
Net book value at 27 March 2021
Note
Freehold land
& buildings
Plant &
machinery
Assets under
construction1
Total
14,963
-
-
280
-
15,243
7,678
292
7,970
7,273
7,285
90,112
6,694
(3,337 )
2,965
114
96,548
73,395
2,771
76,166
20,382
16,717
6,694
111,769
(6,694 )
-
-
(3,337 )
2,896
-
6,141
114
2,896
114,687
-
-
-
2,896
6,694
81,073
3,063
84,136
30,551
30,696
1 Assets under construction comprise the expenditure to date on an embosser and a gas compressor.
2 Assets transferred through right of assets are assets held under finance leases.
Group
All figures in £’000
Cost
At 28 March 2020
Notes
Freehold land
& buildings
Plant &
machinery
Assets under
construction2
Total
Transfers from right-of-use assets3
11
Additions at cost
Assets acquired from business combination
Effects of movements in foreign exchange
14,466
89,38 2
5,502
109,350
-
497
-
-
131
798
71
(270 )
-
1,192
-
-
131
2,487
71
(270 )
At 27 March 2021
14,963
90,112
6,694
111,769
Accumulated Depreciation
At 28 March 2020
Transfers from right-of-use assets3
11
Charge for period
At 27 March 2021
Net book value at 27 March 2021
Net book value at 28 March 2020
7,447
-
231
7,678
7,285
7,019
70,021
131
3,243
73,395
16,717
19,361
-
-
-
-
6,694
5,502
77,468
131
3,474
81,073
30,696
31,882
1 Assets held under right of use assets where ownership is transferred to the Group / Company at the end of the lease are transferred to
property, plant and equipment.
Company
All figures in £’000
Cost
At 27 March 2021
Additions at cost
At 26 March 2022
Accumulated Depreciation
At 27 March 2021
Charge for period
At 26 March 2022
Net book value at 26 March 2022
Net book value at 27 March 2021
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
Freehold land
& buildings
Note
Plant &
machinery
1,694
-
1,694
530
22
552
1,142
1,165
2,809
5
2,814
2,199
127
2,326
488
610
Total
4,503
5
4,508
2,729
149
2,878
1,630
1,774
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
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
Transfers from property, plant & equipment1
10
11 Right of use assets
Group
All figures in £’000
Cost
At 27 March 2021
Additions
Disposals
Right of use reassessments
Effects of movements in foreign exchange
At 26 March 2022
Accumulated Depreciation
At 27 March 2021
Charge for the period
Disposals
At 26 March 2022
Net book value at 26 March 2022
Net book value at 27 March 2021
All figures in £’000
Cost
At 28 March 2020
Additions
Disposals
Right of use 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
Note
Land &
buildings
Plant,
equipment
& vehicles
Total
5,767
526
3,337
2,182
304
3,337
(172 )
(172 )
-
-
37
100
3,585
222
-
-
37
100
3,944
5,651
9,595
586
393
-
979
1,021
1,607
409
(172 )
802
(172 )
1,258
2,237
2,965
4,393
7,358
2,999
1,161
4,160
Note
Land &
buildings
Plant,
equipment
& vehicles
Total
10
10
3,924
432
(514 )
-
-
(257 )
3,585
401
413
(228 )
-
586
2,999
3,523
166
(69 )
(2 )
(131 )
-
598
(583 )
(2 )
(131 )
(257 )
2,182
5,767
834
372
(54 )
(131 )
1,235
785
(282 )
(131 )
1,021
1,607
1,161
1,384
4,160
4,907
Company
All figures in £’000
Cost
At 27 March 2021
Additions
Disposals
At 26 March 2022
Accumulated Depreciation
At 27 March 2021
Charge for the period
Disposals
At 26 March 2022
Net book value at 26 March 2022
Net book value at 27 March 2021
All figures in £’000
Cost
At 28 March 2020
Additions
Disposals
Transfers to property, plant & equipment2
At 27 March 2021
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
2,218
6,142
RoU reassessments
Note
Plant,
equipment
& vehicles
459
251
(172 )
538
223
144
Total
459
251
(172 )
538
223
144
(172 )
(172 )
195
343
236
195
343
236
Note
Land &
buildings
Plant,
equipment
& vehicles
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
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).
1 Assets transferred from property, plant and equipment currently held under finance leases.
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).
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
12 Investments
Investments in subsidiary undertakings
All figures in £’000
At 26 March 2022 and 27 March 2021
Group
2022
-
Group
2021
Company
2022
Company
2021
-
7,350
7,350
Investments in subsidiary undertakings are stated at cost. A list of principal subsidiary undertakings is given below:
Company name
Country of
incorporation
Registered % holding
of ordinary
shares
office
(see below)
Direct or
indirect
holding
Nature of business
James Cropper Speciality Papers Limited
England
(i)
100
Direct
Manufacturer of specialist
13 Inventories
All figures in £’000
Materials
Work in progress
Finished goods
Inventories are stated after a provision for impairment of £1,308k (2021: £1,522k).
The cost of inventories recognised as expenses and included in cost of sales
for the year ended 26 March 2022 was £76,383k (2021: £59,464k).
paper and board
The Company does not hold any inventories.
Group
2022
8,795
3,069
5,729
Group
2021
7,567
2,264
5,638
17,593
15,469
James Cropper (Guangzhou) Trading Co Limited China
(iii)
100
Indirect
Sales and marketing
James Cropper Converting Limited
England
James Cropper 3D Products Limited
England
Technical Fibre Products Limited
England
TFP Hydrogen Products Limited
England
Tech Fibers Inc
Technical Fibre Products Inc
USA
USA
(i)
(i)
(i)
(i)
(ii)
(ii)
100
100
Direct
Direct
organisation
Paper converter
Manufacturer of moulded
fibre products
100
Direct
Manufacturer of
advanced materials
100
Indirect
Manufacturer of
electrochemical materials
100
100
Indirect
Holding company
Indirect
Sales and marketing
organisation
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)
James Cropper Germany GmbH
Germany
(iv)
100
100
100
100
100
100
Direct
Direct
Direct
Direct
Direct
Marketing organisation
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 Ltd, was acquired on 18 January 2021 by Technical Fibre Products Ltd.
Manufacturer of metal
coated carbon fibres
Manufacturer of
metal coated fibres
Dormant company
Dormant company
Dormant company
Dormant company
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
2022
18,555
(777 )
17,778
-
-
945
2,684
Group
2021
14,469
(961)
13,508
-
-
245
1,339
Company
2022
Company
2021
-
-
-
-
-
-
52,468
49,778
-
929
1,630
(260 )
254
831
21,407
15,092
55,027
50,603
The carrying value of trade and other receivables classified at amortised cost approximates fair value.
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 £28m (2021: £26m) with a fixed term of one year with an interest charge of 3.6% pa.
Intercompany funding accounts of £23m (2021: £23m) and intercompany current accounts of £2m (2021: £1m) are settled within 30 days.
15 Other Financial Assets
All figures in £’000
Pulp Hedging fair value adjustment
Group
2022
Group
2021
Company
2022
Company
2021
-
-
501
501
-
-
-
-
The loss arising in the statement of comprehensive income on fair value Hedging instruments was £501k (2021: £nil)
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
94
95
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
Group
2022
11,640
-
2,178
687
6,181
250
Group
2021
Company
2022
Company
2021
8,559
-
1,188
250
5,386
397
2,724
11,777
382
352
1,089
-
2,022
19,345
371
238
1,013
-
20,936
15,780
16,324
22,989
The fair values of trade and other payables approximate their carrying values presented.
1 Deferred consideration is the value of the earn out consideration on the acquisition of PV3 Technologies Ltd
(now known as TFP Hydrogen Products Ltd), acquired on 18 January 2021, following the achievement of the
targets for the period ended 26 March 2022 due for payment in May 2022.
All figures in £’000
Contingent consideration2
Due after one year
Group
2022
Group
2021
Company
2022
Company
2021
578
578
401
401
-
-
-
-
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.
Deferred / contingent consideration
All figures in £’000
Note
Balance as at 27 March 2021 / 28 March 2020
Arising on acquisition
Payments made
New provision for Earn Out due
Fair value adjustment
Balance at 26 March 2022 / 27 March 2021
3
Group only
Deferred consideration
Group only
Contingent consideration
2021
397
-
(400 )
25 0
3
250
2020
-
397
-
-
-
397
2021
401
-
-
104
73
578
2020
-
401
-
-
-
401
The actual performance of TFP Hydrogen Products for the period ended 26 March 2022 exceeded expectations as at acquisition,
resulting in an earn out payment falling due for payment in May 2022. In addition, future projections for the subsidiary have meant
an increase in provision of further potential earn out payments.
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.
2022
2021
-
6
6
16
-
16
18 Borrowings
All figures in £’000
Current
Note
Group
2022
Group
2021
Company
2022
Company
2021
Bank loans and overdrafts due within one year or on demand:
Unsecured bank loans1
Lease liabilities
Non-current loans
Unsecured bank loans1
Lease liabilities
256
1,339
1,595
12,244
6,483
18,727
7,609
692
8,301
1,908
4,058
5,966
-
133
133
8,000
182
8,182
-
94
94
100
111
211
19.3
19.3
1 The bank loans bear interest rates between 1.95% and 2.75% above SOFRA or SONIA, where applicable.
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
Net Debt
27 March Loan reclassified
as lease
2021
Cash
flow
Exchange
Interest Reclassify movement
26 March
2022
(7,609 )
(1,908 )
(9,517 )
(692 )
3,337
461
-
(6,529 )
3,337
(6,068 )
-
-
-
3,749
(3,749 )
(194 )
(58 )
(256 )
(12,244 )
-
(252 )
(12,500 )
-
1,170
(211 )
(1,606 )
-
(1,339 )
(4,058 )
(3,337 )
(563 )
-
1,606
(131 )
(6,483 )
(4,750 )
(14,267 )
6,765
(7,502 )
28 March
2020
(3,008 )
(11,541 )
(14,549 )
(748 )
(3,337 )
607
-
-
-
(5,461 )
868
(4,593 )
(211 )
(211 )
-
(211 )
-
-
-
-
(131 )
(383 )
(7,822 )
(20,322 )
117
7,750
(266 )
(12,572 )
RoU
termination/
reassessment
Cash
flow
Exchange
Interest Reclassify movement
27 March
2021
-
-
-
-
3,008
1,513
4,521
817
-
-
-
(147 )
(7,804 )
7,804
-
(614 )
195
316
511
-
(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 )
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
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
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.
19.1 Financial instruments by category
The fair values of the financial assets and liabilities of the Group are as follows:
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 consideration
Derivatives
Short term borrowings
Non-current
Long term borrowings
Contingent consideration
Company
All figures in £’000
Financial assets
Current
Amounts owed by group undertakings
Other receivables
Cash and cash equivalents
Financial liabilities
Current
Trade payables
Amounts owed to group undertakings
Other payables
Accruals
Derivatives
Short term borrowings
Non-current
Long term borrowings
Fair value through
profit or loss
Amortised cost
loans and receivables
Note
2022
2021
2022
2021
14
14
15
16
16
16
16
17
18
18
16
-
-
-
-
-
-
-
-
250
6
-
256
-
578
578
-
-
501
-
501
-
-
-
397
16
-
413
-
401
401
17,778
945
-
7,750
26,473
11,640
687
6,181
-
-
1,595
20,103
18,727
-
18,727
13,508
245
-
6,765
20,518
8,559
250
5,386
-
-
8,301
22,496
5,966
-
5,966
Fair value through
profit or loss
Amortised cost
loans and receivables
Note
2022
2021
2022
2021
14
14
16
16
16
16
17
18
18
-
-
-
-
-
-
-
-
6
-
6
-
-
-
-
-
-
-
-
-
16
-
16
-
52,468
929
4,011
57,408
2,724
11,777
352
1,089
-
133
49,518
254
2,861
52,633
2,022
19,345
238
1,013
-
94
16,075
22,712
8,182
211
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.
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:
All figures in £’000
Financial assets (Group)
Derivatives
Financial liabilities (Group and Company)
Derivatives
19.2 Credit risk
2022
Level 2
2022
Total
2021
Level 2
2021
Total
-
6
-
6
501
16
501
16
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 26 March 2022 (2021: 27 March) 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.
2022
9,721
1,452
733
6,649
18,555
(777 )
17,778
2021
8,104
1,398
590
4,377
14,469
(961 )
13,508
All trade receivables have been reviewed under the expected credit loss impairment model and a provision of £777k (2021: £961k)
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
2022
961
(184 )
-
777
2021
530
431
-
961
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
Provision for impairment - company disclosure:
At 27 March 2021, 1% of the loan receivables was provided for, equating to an expected £260K credit loss. The Group has subsequently
performed strongly in FY22, with revenue returning to pre-pandemic levels. The Group expects continued robust performance and top-line
growth in FY23, and as a result no expected credit loss is recognised against intra-group loans at 26 March 2022.
Intra-group loan receivables at 26 March 2022 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
Released during the period
Balance at the end of the period
2022
12,000
3,000
4,000
8,519
2021
12,000
3,000
4,000
7,000
27,519
26,000
-
(260 )
27,519
25,740
2022
260
(260 )
-
2021
350
(90 )
260
19.3 Liquidity risk
Liquidity risk is the risk that the Group will not have sufficient funds to meet liabilities. The Group’s policy is to maintain a mix of short,
medium and long term borrowings with a number of banks. Short term flexibility is achieved through overdraft facilities. In addition,
it is the Group’s policy to maintain undrawn committed borrowing facilities in order to provide flexibility in the management of liquidity.
Current and non- current financial liabilities
The maturity profile of the carrying amount of the current and non-current financial liabilities, at 26 March 2022 (2021: 27 March 2021),
was as follows:
Group
All figures in £’000
2022
Lease
2021
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
256
370
6,567
5,307
1,339
1,222
2,317
2,944
6
-
-
-
1,601
1,592
8,884
8,251
7,609
1,808
100
-
692
702
1,256
2,100
16
-
-
-
8,317
2,510
1,356
2,100
Company
All figures in £’000
12,500
7,822
6 20,328
9,517
4,750
16 14,283
2022
Lease
2021
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
-
-
2,693
5,307
133
92
90
-
6
-
-
-
139
92
2783
5,307
8,000
315
6 8,321
-
-
100
-
100
94
72
39
-
205
16
-
-
-
16
110
72
139
-
321
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
2022
11,640
11,640
Group
2021
8,559
8,559
Company
2022
Company
2021
2,074
2,074
2,022
2,022
Borrowing facilities
The Group has the following undrawn committed borrowing facilities available at 26 March 2022:
All figures in £’000
Expiring within one year
Expiring after one year
The Group’s expiry profile of the drawn down facilities is as follows:
Group
at 26 March 2022
Floating rate
3,500
17,000
Group
at 27 March 2021
Floating rate
4,168
7,092
All figures in £’000
June 2021
December 2021
May 2022
October 2023
Dec 2026
March 2029
19.4 Currency risk
Group
Company
27 March 2022 28 March 2021 27 March 2022 28 March 2021
Company
Group
-
-
-
-
4,500
8,000
3,432
4,177
1,808
100
-
-
12,500
1,908
-
-
-
-
-
8,000
8,000
-
-
-
100
-
-
100
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 26 March 2022.
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
4,771
4,823
(2,669 )
(256 )
(125 )
(4,244 )
(2,585 )
(285 )
Euro
4,270
1,112
(1,201 )
-
-
-
-
RMB
7
78
-
-
-
-
-
GBP
8,730
1,737
(7,770 )
-
(1,214 )
(8,000 )
(3,898 )
4,181
85
(10,415 )
Total
17,778
7,750
(11,640 )
(256 )
(1,339 )
(12,244 )
(6,483 )
(6,434 )
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
At the 27 March 2021 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 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 )
This represents the net exposure to foreign currencies, reported in pounds Sterling, and arising from all Group activities.
At the 26 March 2022 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
2,032
-
-
-
-
Euro
890
(13 )
-
-
-
2,032
877
At the 27 March 2021 the Company's exposure to foreign currency risk was as follows:
GBP
1,089
(2,711 )
(133 )
(8,000 )
(182 )
(9,937 )
GBP
(962 )
(2,018 )
(94 )
(100 )
(111 )
USD
1,849
(1 )
-
-
-
Euro
1,974
(3 )
-
-
-
1,848
1,971
(3,285 )
All figures in £’000
Bank overdrafts
Trade payables
Lease liabilities current
Unsecured current loans
Lease liabilities non-current
Net exposure
Total
13,508
6,765
(8,559 )
(7,609 )
(692 )
(1,908 )
(4,058 )
(2,553 )
Total
4,011
(2,724 )
(133 )
(8,000 )
(182 )
(7,028 )
Total
2,861
(2,022 )
(94 )
(100 )
(111 )
534
A one percent strengthening of the pound against the Euro and the US Dollar at 27 March 2021 would have had the following
impact on equity and profit by the amounts shown below.
Group
26 March 2022
26 March 2022
27 March 2021
27 March 2021
Equity
£’000
Income
£’000
Company
Equity
£’000
Income
£’000
USD
Euro
USD
Euro
3
(41 )
11
(42 )
(21 )
(30 )
(1 )
(21 )
26 March 2022
26 March 2022
27 March 2021
27 March 2021
USD
Euro
USD
Euro
(20 )
(9 )
(18 )
(20 )
-
-
-
-
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. 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:
All figures in £’000
Interest bearing liabilities - floating
Borrowings
Interest bearing liabilities - fixed
Lease liabilities
Group
2022
Group
2021
Company
2022
Company
2021
12,500
12,500
7,822
7,822
9,517
9,517
4,750
4,750
8,000
8,000
315
315
100
100
205
205
305
Interest bearing liabilities
20,322
14,267
8,315
The effective interest rates at the balance sheet date were as follows:
Bank overdraft
Borrowings
2022
%
2.75
1.50
2021
%
2.35
2.30
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 £125k for the Group and £83k 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
26 March 2022
27 March 2021
Statement of comprehensive income
£’000
Company
Statement of comprehensive income
£’000
125
37
26 March 2022
27 March 2021
83
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
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
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
2022
2021
-
-
-
-
501
501
501
501
2022
2021
-
6
6
6
-
-
6
16
-
16
16
-
-
16
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 has entered into a SONIA interest rate cap, with effective date 28th March 2022, to manage exposure to interest rate
fluctuations. The Group has a floating rate liability with an interest profile linked to SONIA compounded in arrear maturing
on 28 March 2026. The Cap is set at 1.5%.p.a on a notional £15,000,000. The Cap helps to protect the Group from the risk of
interest rates rising above the Cap Rate, limiting the Group’s exposure to higher interest rates.
The effects of the cash flow interest rate swap hedging relationships are as follows as at 26 March 2022:
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
2022
-
-
-
-
-
2021
16
(24)
(24)
2,170
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 ratio 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 26 March 2022 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 26 March 2022.
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 26 March 2022:
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
2022
2021
6
6
(6 )
7,659
20/03/23
-
-
-
-
-
Net investment in a foreign operation
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 26 March 2022 and 27 March 2021 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 26 March 2022, 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
2022
-
-
-
1,519
2021
1,808
(1,201 )
1,437
2,893
27/06/22
22/12/21
On 25 March 2022, James Cropper PLC purchased a Non Deliverable Forward of notional amount USD 2,000,000.
It is the intention to novate the derivative to TFP Limited. Once novated, the derivative will be designated a hedging item,
to hedge the change in fair value of the net investment in a foreign operation.
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
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
2022
893
38
2021
845
32
Other pension costs totalled £732k (2021: £835k) 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 %
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
Pension increases for in-payment benefits capped at 2.5%, with a 0% floor
Staff Scheme
Works Scheme
2022
3.30
3.75
1.80
2.75
3.90
2.25
2021
2.65
3.15
1.65
1.95
3.60
2.00
2022
3.25
3.65
1.80
2.75
3.65
2.25
2021
2.70
3.15
1.65
2.05
3.40
2.05
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 3.4% for the staff scheme and 4.2% for the works scheme.
Pension payments are not expected to peak until 2040, and expected to continue until 2080.
All figures in £’000
2022
2021
2020
2019
2018
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
(121,130 )
109,388
(11,742 )
(1,388 )
(13,130 )
1,623
(13,365 )
(11,742 )
(1,388 )
(13,130 )
(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 )
109,998
106,607
(22,648 )
(19,472 )
-
-
(22,648 )
(19,472 )
(7,664 )
(14,984 )
(22,648 )
-
(6,408 )
(13,064 )
(19,472 )
-
(22,648 )
(19,472 )
The Covid 19 pandemic created an unusual time in the markets at the March year end and the increased yields available on corporate bonds
at the time drove down liabilities and, together with the lower expected future inflation, has caused the greatest part of the improvement
we see across both schemes. It is highly probable that a surplus on the staff scheme would not have arisen without the impact Covid 19
has had on the year-end position. In view of this, the Company has not recognised the surplus on the staff scheme at 26 March 2022.
The key risks relating to the pension schemes can be found in the Pension Report on pages 21 to 23.
The fair value of the plan assets comprises the following categories of asset in the stated proportions:
All figures in %
Managed Growth
Annuities
Cash
Matching Assets
Staff Scheme
Works Scheme
2022
71.1
2.6
1.3
25.0
2021
66.8
2.6
1.1
29.5
2022
73.6
-
1.1
25.3
2021
73.1
-
1.1
25.8
The pension plan assets do not include any investments in the shares of the Company (2021: 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
2022
Total included within employee benefit costs - current service costs, past service costs and administration costs
1,203
Interest income on plan assets
Interest cost on the defined benefit obligation
Total included within interest
Total
(2,300 )
2,667
367
1,570
2021
1,034
(2,837 )
3,076
239
1,273
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
Analysis of the movement in the Statement of Financial Position liability
Sensitivity analyses
All figures in £’000
At 27 March 2021 / 28 March 2020
Total expense as above
Contributions paid
Actuarial gains / (losses) recognised in Other Comprehensive Income
2022
(18,436 )
(1,570 )
2,099
4,777
2021
(9,382 )
(1,273 )
969
(8,750 )
At 26 March 2022 / 27 March 2021
(13,130 )
(18,436 )
The actual return on plan assets was £3,016k deficit (2021: £6,579k gain). The Company expects to pay £119k (2021: £505k) in contributions
to the Staff Scheme and £1,053k (2021: £933k) 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 2016 triennial valuation, a deficit recovery plan was agreed with the Trustees which included additional contributions
of £1.4m pa to reduce the past service deficits for nine years from 1 April 2017. The current ongoing valuation may change this profile
once completed.
The cumulative amount of actuarial losses recognised in the Statement of Comprehensive Income, since the adoption of IAS 19,
are £12,148k (2021: £16,295k).
All figures in £’000
Works Scheme
2022
Assets
2022
DBO
Staff Scheme
2022
Assets
2022
DBO
Works Scheme
2021
Assets
2021
DBO
Staff Scheme
2021
Assets
2021
DBO
At 27 March 2021 / 28 March 2020
62,047
(79,100 )
55,096
(56,479 )
60,456
(69,838 )
53,512
(51,632 )
Interest Income on plan assets
1,267
-
1,033
-
1,521
-
1,316
-
Current service costs
Benefits paid
(182 )
(712 )
(41 )
(268 )
(124 )
(587 )
(31 )
(224 )
(2,098 )
2,098
(4,895 )
4,895
(2,506 )
2,506
(2,114 )
2,114
Interest cost on the DBO
Past service costs
Return on plan assets
-
-
(1,610 )
-
-
-
(1,057 )
-
-
-
(1,760 )
(40 )
-
-
(1,269 )
(28 )
(3,541 )
6,989
(1,775 )
4,492
1,713
(9,091 )
2,029
(5,328 )
At 26 March 2022 / 27 March 2021
59,242
(72,607 )
50,146
(48,523 )
62,047
(79,100 )
55,096
(56,479 )
Experience adjustments
All figures in £’000
Arising on plan assets
Percentage of scheme assets
Arising on plan liabilities
2022
(5,316 )
(4.86% )
11,481
2021
5,669
2020
2,693
2019
2,503
2018
(1,161 )
4.84 %
2.36 %
2.28 %
(1.09 %)
(14,419 )
12,244
(5,761 )
3,754
Percentage of scheme liabilities
9.48 %
(10.64 %)
10.08 %
(4.34 %)
2.98 %
Contributions by plan participants
272
(272 )
Employer contributions
1,477
-
106
622
(106 )
290
(290 )
112
(112 )
Charge to equity
-
697
-
272
-
Adjustments in respect of prior years
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
2.75%pa
3.75%pa (RPI)
3.30%pa (CPI)
0.25% decrease
1,666
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
2.75%pa
3.65%pa (RPI)
3.25%pa (CPI)
0.25% decrease
3,028
0.25% increase
Mortality
142% of SAPS “S3” series table
Increase in life expectancy of 1 year
+3.4%
+0.8%
+5.6%
+4.2%
+0.9%
+4.9%
365
2,742
637
3,570
21 Deferred taxation
The movement on the deferred tax account is shown below:
All figures in £’000
At 27 March 2021 / 28 March 2020
(Charge) / credit to other comprehensive income
(Charge) / credit to statement of comprehensive income
Movement arising from acquisition of business
At 26 March 2022 / 27 March 2021
Group
2022
1,483
(179 )
8
38
(909 )
-
441
Group
2021
(292 )
1,663
-
145
150
(183 )
1,483
Company
2022
Company
2021
3,604
(179 )
8
(8 )
(89 )
-
1,820
1,663
-
(7 )
128
-
3,336
3,604
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
All figures in £’000
At 28 March 2020
Adjustment in respect of prior years
Credit to the statement
of comprehensive income
Credit to other comprehensive income
At 27 March 2021
Adjustment in respect of prior years
Credit/(charge) to statement
of comprehensive income
Credit/(charge) to equity
Charge to other comprehensive income
Group
Pension
Share
options
1,782
-
58
1,663
3,503
13
(54 )
-
(179 )
23
(7 )
57
-
73
43
(10 )
8
-
Company
Other
Total
Pension
116
1,921
1,782
6
31
(1 )
146
-
58
-
1,663
1,663
153
(54 )
38
3,729
3,503
2
(26 )
13
(54 )
-
-
8
-
(179 )
(179 )
Share
options
23
(7 )
57
-
73
43
(10 )
8
-
Other
Total
129
1,934
-
1
(7 )
116
-
1,663
130
(67 )
(1 )
3,706
(11 )
(65 )
-
-
8
(179 )
At 26 March 2022
3,283
114
137
3,534
3,283
114
62
3,459
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
Notes to the Financial Statements
Deferred tax liabilities
All figures in £’000
Group
Accelerated capital
allowances
(2,213 )
144
5
(182 )
(2,246 )
37
(884 )
-
(3,093 )
At 28 March 2020
Adjustment in respect of prior periods
Charge to statement of comprehensive income
Movement arising from acquisition of business
At 27 March 2021
Adjustment in respect of prior years
Charge to statement of comprehensive income
Movement arising from acquisition of business
At 26 March 2022
22 Share capital
Group and Company
Issued and fully paid
At 26 March 2022 and 27 March 2021
Potential issue of ordinary shares
Company
Accelerated capital
allowances
(114 )
-
12
-
(102 )
-
(21 )
-
(123 )
Total
(2,213 )
144
5
(182 )
(2,246 )
37
(884 )
-
(3,093 )
Total
(114 )
-
12
-
(102 )
-
(21 )
-
(123 )
24 Capital commitments
All figures in £’000
Contracts placed for future capital expenditure
not provided in the financial statements
Group
2022
2,308
Group
2021
730
Company
2022
Company
2021
14
3
25 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.
At the date of authorisation of these financial statements, there are no post-balance sheet events to report.
Number of ordinary shares
9,554,803
£’000
2,389
26 Exceptional items
Period ended 26 March 2022
Increased earn out provisions
Group
£’000
354
Company
£'000
-
Due to future projections exceeding original projections on acquisition of TFP Hydrogen, additional provisions for earn out are required
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 71,748 ordinary shares of 25p by August 2024
(2021: 92,060 ordinary shares of 25p by August 2023). There were no share options exercised in the period
(2021: nil). Further information on directors share options can be seen in the Remuneration Committee Report.
Options at Options granted Options exercised
in the period
in the period
27 March 2021
Options not Options lapsed
Options at
expected to vest
in the period 26 March 2022
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 statement of comprehensive income
Share options
92,060
40,007
nil
nil
(60,319 )
71,748
under Employee benefit costs (note 23), considered exceptional due to being non-recurring costs.
The amount of gains made by Directors on no share options exercised in the year totalled £nil (2021: £nil).
The Statement of Comprehensive Income includes an LTIP credit of £73,689 for the year in relation to Directors (2021: £251,780 charge).
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 statement of comprehensive income under
other expenses, considered exceptional due to being non-recurring costs.
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
Group
2022
25,934
2,391
2,210
-
Group
2021
22,761
2,251
2,287
1,118
30,535
28,417
Company
2022
Company
2021
2,401
315
711
-
3,427
2,678
379
786
289
4,132
The average monthly number of people (including executive directors) employed in the Group during the year, analysed by division
was as follows:
All figures in Number
James Cropper Paper Products
James Cropper 3D Products
Technical Fibre Products
James Cropper PLC
Full Time Equivalent
2021
2022
375
33
135
44
587
366
26
119
62
573
Headcount
2022
384
34
143
67
628
2021
377
27
125
84
613
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
110
111
Notes to the Financial Statements
Notes to the Financial Statements
27 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 Statement of Comprehensive Income page 73.
Details of net assets acquired, as adjusted from book to fair value, are as follows:
Note
Book value
Revaluation
Fair value
Year ended 27 March 2021
All figures in £’000
Net assets acquired
Property, plant and equipment
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 value
Contingent consideration at fair value
Total consideration at fair value
Net cash outflow arising on acquisition
Consideration paid in cash
Cash acquired
Transaction costs paid
10
9
8
16
16
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
Net cash paid per consolidated statement of cash flows
1 Transaction costs of £384k were charged to the consolidated income statement.
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%).
28 Related party transactions
Group
The Group has taken advantage of the exemption not to disclose intra-group transactions that are eliminated on consolidation.
TFP Hydrogen Products Ltd paid £22,000 (2021: £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.
Company
The Company paid £40,000 (2021: £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 £nil (2021: £5,090) 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 £23,528
(2021: £26,207) 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.
The Company also has the following transactions with related entities:
2022
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
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
Compensation for key management
All figures in £’000
Salaries and fees
Short term employee benefits
Short term bonuses
Pension costs
Termination benefits
Total
Management
charges
Receivable /
(Payable )
Loans and net
intercompany
funding
3,285
223
331
1,827
-
5,666
971
12
(3 )
1,185
107
2,272
226
7,720
11,352
19,121
1
38,420
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
2021
1,132
148
-
70
73
2022
1,162
155
101
60
-
1,478
1,423
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 58).
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
112
2021 – 2022 Shareholder Information
Reporting
Interim Results announced and sent to
Ordinary Shareholders
Final results announced
Notification of AGM issued by
9 November 2021
21 June 2022
6 July 2022
Annual General Meeting - at Bryce Institute, Burneside Mills, Kendal. Wednesday 27 July 2022 at 11.00am.
Dividends on Ordinary Shares
Interim dividend paid on 14 January 2022 to Ordinary Shareholders registered on 9 December 2021.
Final dividend proposed to be paid on 12 August 2022 to Ordinary Shareholders registered on 8 July 2022.
Advisers
Independent Auditor
BDO LLP, Manchester
Tax Advisers
PriceWaterhouseCoopers LLP, Manchester
NOMAD & Stockbrokers
Shore Capital, London
Corporate Lawyers
Squire Patton Boggs LLP, Manchester
DWF LLP, Manchester
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
114
Annual Report Production
All the paper used in this report has been made in England by James Cropper PLC.
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VANGUARD®. Blush. 120gsm.
Financial Statements
VANGUARD®. Peppermint. 120gsm.
Design
Plain Creative
Photography
James Cropper Archives
Steven Barber Photography
George Carrick
Plain Creative
Print
Titus Wilson
116
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